Court Opinion

ID: 4697473
Source: CourtListenerOpinion
Date Created: 2021-06-22 15:01:08.280307+00
Date Added: 2024-06-11T08:05:46.512162
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 8, 2021                  Decided June 22, 2021

                        No. 20-1016

             ENVIRONMENTAL DEFENSE FUND,
                     PETITIONER

                             v.

       FEDERAL ENERGY REGULATORY COMMISSION,
                    RESPONDENT

     SPIRE MISSOURI INC. AND SPIRE STL PIPELINE LLC,
                      INTERVENORS

                 Consolidated with 20-1017

              On Petitions for Review of Orders
       of the Federal Energy Regulatory Commission

    Natalie M. Karas argued the cause for petitioner
Environmental Defense Fund. With her on the briefs were Erin
Murphy, Jason T. Gray, Kathleen L. Mazure, Matthew L. Bly,
and Sean H. Donahue.

     Henry B. Robertson argued the cause and filed the briefs
for petitioner Juli Steck.
                              2
    Jennifer Danis and Edward Lloyd were on the brief for
amicus curiae Dr. Susan Tierney in support of petitioners.

   Randy M. Stutz was on the brief for amicus curiae the
American Antitrust Institute in support of petitioners.

    Anand R. Viswanathan, Attorney, Federal Energy
Regulatory Commission, argued the cause for respondent.
With him on the brief were David L. Morenoff, Acting General
Counsel, and Robert H. Solomon, Solicitor.

     Jonathan S. Franklin argued the cause for intervenors
Spire STL Pipeline LLC and Spire Missouri Inc. in support of
respondent. With him on the brief were Christopher J. Barr,
Jessica R. Rogers, Matthew J. Aplington, Thomas E. Hirsch III,
David T. Kearns, Daniel Archuleta, and Sean P. Jamieson.

    Paul Korman, Michael R. Pincus, and Michael Diamond
were on the brief for amicus curiae Interstate Natural Gas
Association of America in support of respondent.

   Before: TATEL and MILLETT, Circuit Judges, and
EDWARDS, Senior Circuit Judge.

   Opinion for the Court filed by Senior Circuit Judge
EDWARDS.

     EDWARDS, Senior Circuit Judge: In the action leading to
this petition for review, the Federal Energy Regulatory
Commission (the “Commission” or “FERC”) issued a
certificate of public convenience and necessity (“Certificate”)
under section 7(c) of the Natural Gas Act, 15 U.S.C.
§ 717f(c)(1)(A), to Intervenor-Respondent Spire STL Pipeline
LLC (“Spire STL”) to construct a new natural gas pipeline in
the St. Louis area. The Commission may issue such a
                                3
Certificate only if it finds that construction of the new pipeline
“is or will be required by the present or future public
convenience and necessity.” Id. § 717f(e).

     Pursuant to the Commission’s “Certificate Policy
Statement,” Certification of New Interstate Natural Gas
Pipeline Facilities, 88 FERC ¶ 61,227 (Sept. 15,
1999), clarified, 90 FERC ¶ 61,128 (Feb. 9, 2000), further
clarified, 92 FERC ¶ 61,094 (July 28, 2000), FERC first
considers whether there is a market need for the proposed
project. If there is a need for the pipeline, FERC then
determines whether there will be adverse impacts on “existing
customers of the pipeline proposing the project, existing
pipelines in the market and their captive customers, or
landowners and communities affected by the route of the new
pipeline.” Id. at 61,745. If adverse impacts on these
stakeholders will result, the Commission “balanc[es] the
evidence of public benefits to be achieved against the residual
adverse effects.” Id. In analyzing the need for a particular
project, the Certificate Policy Statement makes it clear that the
Commission will “consider all relevant factors.” See id. at
61,747 (emphasis added).

    The issue in this case arose in 2016, when Spire STL
announced its intent to build a pipeline in the St. Louis
metropolitan area. In August of that year, Spire STL held an
“open season” during which it invited natural gas “shippers” to
enter into preconstruction contracts, also known as “precedent
agreements,” for the natural gas the pipeline would transport.
But no shippers committed to the project during the open
season. Instead, after the open season finished without any
takers, Spire STL privately entered into a precedent agreement
with one of its affiliates, Laclede Gas Company – now known
as Intervenor-Respondent Spire Missouri Inc. (“Spire
                                4
Missouri”) – for just 87.5 percent of the pipeline’s projected
capacity.

     In January 2017, Spire STL applied to the Commission for
a Certificate. It conceded that the proposed pipeline was not
being built to serve new load, as natural gas demand in the St.
Louis area is projected to stay relatively flat for the foreseeable
future. Rather, Spire STL claimed that the pipeline would result
in other benefits, such as enhancing reliability and supply
security, providing access to new sources of natural gas supply,
and eliminating reliance on propane “peak-shaving” during
periods of high demand. As evidence of need, Spire STL
principally relied on its precedent agreement with Spire
Missouri. In September 2017, the Commission – pursuant to its
obligations under the National Environmental Policy Act
(“NEPA”) – released an Environmental Assessment (“EA”) for
construction and operation of the proposed pipeline, finding
that they would have no significant environmental impact.

      Petitioner Environmental Defense Fund (“EDF”), along
with several other parties, challenged Spire STL’s Certificate
application. EDF contended, inter alia, that the precedent
agreement between Spire STL and Spire Missouri should have
only limited probative value in FERC’s assessment of Spire
STL’s application because the two companies were corporate
affiliates. In addition, Petitioner Juli Steck, then known as Juli
Viel, contested the efficacy of the EA.

    On August 3, 2018, in an Order Issuing Certificates
(“Certificate Order”), FERC granted the authorizations for the
new pipeline. See Joint Appendix (“J.A.”) 932. FERC’s
decision acknowledged that the pipeline was not meant to serve
new load demand. Nevertheless, FERC rejected arguments that
a market study should be undertaken to establish the need for
the project. Rather, the Commission’s decision principally
                               5
focused on the precedent agreement between Spire STL and
Spire Missouri in finding that there was market need for the
project. And the Commission stated that it would not “second
guess” Spire Missouri’s purported “business decision” in
entering into the precedent agreement with Spire STL, even
though the shipper and the pipeline were affiliates. J.A. 968. In
November 2019, by a 2-1 vote, FERC denied requests for
rehearing filed by EDF and Steck. These two parties now seek
review in this court.

     EDF asserts that the Commission’s decision to award a
Certificate to Spire STL was arbitrary and capricious because
the Commission uncritically and exclusively relied on the
affiliated precedent agreement to find need and because the
Commission failed to sufficiently justify its conclusion that the
new pipeline’s benefits would outweigh its adverse effects.
Steck, in turn, renews many of her challenges to the
Commission’s environmental analysis, including its EA.

     For the reasons explained below, we find that Petitioner
Steck lacks standing to pursue her claims. However, we find no
jurisdictional infirmities in EDF’s petition for review. On the
merits, we agree with EDF that the Commission’s refusal to
seriously engage with nonfrivolous arguments challenging the
probative weight of the affiliated precedent agreement under
the circumstances of this case did not evince reasoned and
principled decisionmaking. In addition, we find that the
Commission ignored record evidence of self-dealing and failed
to seriously and thoroughly conduct the interest-balancing
required by its own Certificate Policy Statement. Therefore,
FERC’s Certificate Order and Order on Rehearing do not
survive scrutiny under the applicable arbitrary and capricious
standard of review. See Minisink Residents for Env’t Pres. &
Safety v. FERC (“Minisink”), 762 F.3d 97, 105-06 (D.C. Cir.
2014). Because “vacatur is the normal remedy” in
                                6
circumstances such as we find in this case, we vacate FERC’s
Orders and remand the case to the Commission for appropriate
action. See Allina Health Servs. v. Sebelius, 746 F.3d 1102,
1110 (D.C. Cir. 2014).

                        I. BACKGROUND

    A. Statutory and Regulatory Background

     The Natural Gas Act provides the Commission with
authority “to regulate the transportation and sale of natural gas
in interstate commerce.” City of Oberlin v. FERC, 937 F.3d
599, 602 (D.C. Cir. 2019). To safeguard the public, “Section 7
of the Act requires an entity seeking to construct or extend an
interstate pipeline for the transportation of natural gas to obtain
[a Certificate] from the Commission.” Id. (citing 15 U.S.C.
§ 717f(c)(1)(A)). The Commission may issue Certificates only
if, among other things, it finds that the proposed construction
or extension “is or will be required by the present or future
public convenience and necessity; otherwise such application
shall be denied.” 15 U.S.C. § 717f(e). In deciding whether to
issue Certificates under this standard, the Commission must
“evaluate all factors bearing on the public interest.” Atl. Refin.
Co. v. Pub. Serv. Comm’n of N.Y., 360 U.S. 378, 391 (1959)
(emphasis added). And there is good reason for the
thoroughness and caution mandated by this approach: A
Certificate-holder may exercise eminent domain against any
holdouts in acquiring property rights necessary to complete the
pipeline. 15 U.S.C. § 717f(h).

     In its Certificate Policy Statement, the Commission has set
forth the “analytical steps” that guide its dispositions of
Certificate applications. See 88 FERC at 61,745. The first
question the Commission considers is “whether the project can
proceed without subsidies from [the applicant’s] existing
customers.” Id. “To ensure that a project will not be subsidized
                              7
by existing customers, the applicant must show that there is
market need for the project.” Myersville Citizens for a Rural
Cmty., Inc. v. FERC (“Myersville”), 783 F.3d 1301, 1309 (D.C.
Cir. 2015).

     If there is market need, the Commission then determines
whether there are likely to be adverse impacts on “existing
customers of the pipeline proposing the project, existing
pipelines in the market and their captive customers, or
landowners and communities affected by the route of the new
pipeline.” 88 FERC at 61,745. If adverse impacts on these
stakeholders will result, “the Commission balances the adverse
effects with the public benefits of the project, as measured by
an ‘economic test.’” Myersville, 783 F.3d at 1309 (quoting 88
FERC at 61,745). “Adverse effects may include increased rates
for preexisting customers, degradation in service, unfair
competition, or negative impact on the environment or
landowners’ property.” Id. (citing 88 FERC at 61,747-48).
Public benefits generally include “meeting unserved demand,
eliminating bottlenecks, access to new supplies, lower costs to
consumers, providing new interconnects that improve the
interstate grid, providing competitive alternatives, increasing
electric reliability, or advancing clean air objectives.” Id.
(quoting 88 FERC at 61,748).

    As to market need and interest-balancing, the Certificate
Policy Statement further provides:

         Rather than relying only on one test for need, the
    Commission will consider all relevant factors
    reflecting on the need for the project. These might
    include, but would not be limited to, precedent
    agreements, demand projections, potential cost
    savings to consumers, or a comparison of projected
    demand with the amount of capacity currently serving
                               8
    the market. The objective would be for the applicant
    to make a sufficient showing of the public benefits of
    its proposed project to outweigh any residual adverse
    effects . . . .

        The amount of evidence necessary to establish
    the need for a proposed project will depend on the
    potential adverse effects of the proposed project on
    the relevant interests. Thus, projects to serve new
    demand might be approved on a lesser showing of
    need and public benefits than those to serve markets
    already served by another pipeline. However, the
    evidence necessary to establish the need for the
    project will usually include a market study. . . . Vague
    assertions of public benefits will not be sufficient.

88 FERC at 61,747-48 (emphases added).

    The Certificate Policy Statement also specifically
addresses the significance of precedent agreements in
demonstrating need:

         Although the Commission traditionally has
    required an applicant to present [preconstruction]
    contracts to demonstrate need, that policy . . . no
    longer reflects the reality of the natural gas industry’s
    structure, nor does it appear to minimize the adverse
    impacts on any of the relevant interests. Therefore,
    although contracts or precedent agreements always
    will be important evidence of demand for a project,
    the Commission will no longer require an applicant
    to present contracts for any specific percentage of the
    new capacity. Of course, if an applicant has entered
    into contracts or precedent agreements for the
    capacity, . . . they would constitute significant
    evidence of demand for the project.
                                9
          Eliminating a specific contract requirement
    reduces the significance of whether the contracts are
    with affiliated or unaffiliated shippers, which was the
    subject of a number of comments. A project that has
    precedent agreements with multiple new customers
    may present a greater indication of need than a
    project with only a precedent agreement with an
    affiliate. The new focus, however, will be on the
    impact of the project on the relevant interests balanced
    against the benefits to be gained from the project. As
    long as the project is built without subsidies from the
    existing ratepayers, the fact that it would be used by
    affiliated shippers is unlikely to create a rate impact
    on existing ratepayers.

Id. at 61,748-49 (emphases added).

    B. The Instant Case

      For the last two decades, natural gas consumption in the
St. Louis area has been roughly flat. And when the Commission
issued the Certificate Order in this case, all parties agreed that
future demand projections were not expected to increase. See
Certificate Order, J.A. 979 (noting that “[a]ll parties” agreed
that natural gas demand forecasts “for the region are flat for the
foreseeable future”); see also, e.g., J.A. 583 (July 2017 report
prepared by Concentric Energy Advisors on behalf of Spire
Missouri and submitted to the Commission stating that Spire
Missouri “does not expect any significant growth or decline
in . . . forecasted demand over time”); Spire STL Pipeline LLC
Docket Nos. CP17-40-000 and 001 Response to Data Request
at 9, Accession No. 20180313-5193 (Mar. 13, 2018) (Spire
STL submission to the Commission stating that its “gas supply
annual demand requirement” was projected to “remain
                               10
relatively constant” at “average historical usage” levels for the
next 20 years).

     As of 2016, five natural gas pipelines served the St. Louis
region. At that time, a majority of Spire Missouri’s natural gas
supply was provided via pipelines owned and operated by
Enable Mississippi River Transmission, LLC (“Enable MRT”).
It is undisputed that, prior to Spire STL’s application in this
case, Spire Missouri had declined to subscribe to proposals for
new natural gas pipelines in the region, stating that the
proposed new pipelines did not make operational and economic
sense for its customers.

    In 2016, Spire STL announced its intent to construct a new
natural gas pipeline to serve homes and businesses in the St.
Louis area. Following an amendment to its Certificate
application, the final length of the proposed pipeline was
approximately 65 miles. The initial estimated cost of the
project was approximately $220 million, with a proposed
overall rate of return of 10.5 percent – a return on equity of 14
percent and a cost of debt of seven percent.

     Between August 1, 2016 and August 19, 2016, Spire STL
held an “open season,” during which it sought to enter into
precedent agreements with natural gas shippers. After an
unsuccessful open season, Spire STL then entered into a single
precedent agreement with its affiliate, Spire Missouri, for 87.5
percent of the pipeline’s 400,000 dekatherm-per-day transport
capacity. Spire STL indicated that other shippers expressed
interest, but it did not enter precedent agreements with any of
them.

    On January 26, 2017, Spire STL applied to the
Commission for a Certificate to begin construction of the
proposed pipeline. The stated purpose of the pipeline was to
“enhance reliability and supply security; reduce reliance upon
                               11
older natural gas pipelines; reduce reliance upon mature natural
gas basins . . . ; and eliminate reliance on propane peak-
shaving infrastructure.” J.A. 89. In particular, the new pipeline
would provide gas from newly accessed sources in the Rocky
Mountains and Appalachian Basin; avoid transecting the New
Madrid Seismic Zone, unlike other pipelines in the area; and
reduce use of propane for “peaking” during periods of high
demand, which purportedly has negative environmental,
operational, and cost-related impacts.

     Spire STL made it clear that its new pipeline “was not
[being] developed to serve new demand.” J.A. 265. It further
stated that “conjecture” as to whether Spire Missouri might
“reduce its contract entitlements on other pipelines” as a result
of contracting for capacity on the proposed pipeline “would be
inappropriate.” J.A. 104. The application also asserted that the
proposed project was “the result of a fair process undertaken
by [Spire Missouri] to examine competitive alternatives and
select the one that would best meet its needs.” J.A. 105. In
materials it later submitted to the Commission, Spire Missouri
acknowledged that it used propane peaking on only three days
between 2013 and 2018 – a consecutive three-day period in
January 2014.

      Several parties either protested or conditionally protested
Spire STL’s application, including the Missouri Public Service
Commission (the “Missouri Commission”) – a state body that
regulates natural gas shippers – and Enable MRT. In its
conditional protest, the Missouri Commission expressed
skepticism as to the “need for the project,” J.A. 143, while also
urging FERC to undertake a particularly thorough review of the
impact the project might have on customers of existing
pipelines given that “the St. Louis market is static and there is
no demonstrated need . . . for . . . new capacity,” see J.A. 152.
In its protest, Enable MRT claimed that the project “ha[d] been
                               12
shielded from a truly competitive market,” J.A. 155, and that
“where a proposed project does not have precedent agreements
for all of the capacity of the project and the project’s only
precedent agreement is with a single affiliated shipper with
predominantly captive retail customers, the mere existence of
such a precedent agreement is insufficient to show adequate
market demand,” J.A. 161. See also J.A. 181 (“As a[] [shipper]
with captive retail customers, [Spire Missouri] can pass
through to those customers the costs associated with its
contract with Spire [STL]. Rather than pay lower rates to
receive gas from an unaffiliated pipeline, Spire [STL] and
[Spire Missouri] can maximize the revenue and return earned
by their corporate parent by having [Spire Missouri] pay to
receive service from Spire’s Project.”). Enable MRT also
highlighted certain public-facing comments by Spire Missouri
and Spire STL’s corporate parent indicating that construction
of the pipeline would increase shareholder earnings. And in
later submissions to the Commission, Enable MRT asserted
“that the affiliate relationship between [Spire Missouri] and
Spire STL [had] thwarted fair competition,” J.A. 812, and that
economic risks of the pipeline would be shifted onto Spire
Missouri’s “captive ratepayers [for natural gas] and the
ratepayers of pipelines that would experience decontracting
due to” the new pipeline, J.A. 813.

     In May 2017, EDF sought to intervene and filed a protest.
It raised several arguments regarding the probative weight of
the precedent agreement between Spire STL and Spire
Missouri in demonstrating market need for the proposed
pipeline, given their affiliated relationship. In particular, EDF
expressed concerns regarding the growing trend for

    utility holding companies [to] enter[] into affiliate
    transactions whereby the retail utility affiliate
    commits to new long term capacity with its pipeline
                               13
    developer affiliate. The essence of this financing
    structure is to take a cost pass-through for a retail gas
    or electric distribution utility – a contract for natural
    gas transportation services – and pay those
    transportation fees to an affiliated pipeline developer
    entitled to accrue return on its investment from that
    same revenue. Thus ratepayer costs which may not be
    justified by ratepayer demand are being converted
    into shareholder return.

J.A. 550 (footnote omitted). EDF also requested that the
Commission “apply heightened scrutiny” to the Certificate
application given the affiliated relationship between Spire STL
and Spire Missouri. See J.A. 556-58; see also J.A. 856
(asserting that “there is a gap . . . between state and federal
regulatory oversight of affiliate precedent agreements, such as
the one Spire STL has submitted in this proceeding to
demonstrate market need”). And it asserted that “[w]here, as
here, there is evidence of self-dealing calling into question the
need for a project, th[e] Commission should take steps to
ensure that customers are protected.” J.A. 558; see also J.A.
559 (explaining why “record evidence” should have resulted in
“enhanced regulatory scrutiny” in this case); J.A. 855
(reiterating “that the pursuit of earnings growth must be
balanced against the inherent risk to customers embedded in
[this] affiliate transaction”).

     In September 2017, Commission staff published an
Environmental Assessment for the proposed pipeline,
including their finding of no significant impact from
constructing and operating the pipeline. In reaching that
conclusion, the EA noted that the pipeline “was not developed
to serve new demand.” J.A. 765, 768.
                               14
     On October 30, 2017, Petitioner Steck moved to intervene.
In comments to the Commission, she alleged that there were
several deficiencies in the EA, “particularly in its treatment of
the purpose and need for the project and of climate change.”
J.A. 791. She therefore requested preparation of either a full
Environmental Impact Statement or a revised EA.

     On August 3, 2018, by a 3-2 vote, the Commission issued
the Certificate Order, granting a Certificate to Spire STL.
Therein, the Commission referenced the concerns of the
protestors and intervenors regarding the affiliated precedent
agreement, see, e.g., J.A. 938-40, 944-47, 950-51, and noted
that “[a]ll parties, including Spire, agree that the new capacity
is not meant to serve new demand, as load forecasts for the
region are flat for the foreseeable future,” J.A. 979. The
Commission also found that data provided by Spire STL and
Enable MRT “show[ed] that the difference in the cost of gas
delivered to Spire Missouri via the proposed [pipeline] as
compared with gas accessed via” current pipelines “was not
materially significant.” J.A. 980.

     The Commission purported to apply the Certificate Policy
Statement in reaching its decision. See J.A. 940-41; see also
J.A. 941 n.31 (“[T]he current Certificate Policy Statement
remains in effect and will be applied to natural gas certificate
proceedings pending before the Commission as appropriate.”
(citation omitted)). However, the Commission’s decision
appeared to rely entirely on the precedent agreement between
Spire STL and Spire Missouri in finding that there was market
need for the project. See J.A. 963 (“The fact that Spire Missouri
is affiliated with the project’s sponsor does not require the
Commission to look behind the precedent agreements to
evaluate project need. . . . [T]he Commission may reasonably
accept the market need reflected by the applicant’s existing
contracts with shippers and not look behind those contracts to
                              15
establish need.” (footnotes omitted)); J.A. 967 (“We disagree
with [Enable] MRT’s stance that the mere existence of a
precedent agreement is insufficient to show adequate market
demand when a project is subscribed by affiliates for less than
the full project capacity.” (footnote and internal quotation
marks omitted)). FERC also explicitly rejected calls for a
market study to assess the need for a new pipeline. See J.A.
966-67. And it dismissed arguments that Spire STL had
engaged in anticompetitive behavior, while finding that
whether Spire Missouri or its corporate parent had engaged in
anticompetitive behavior was irrelevant to its determination.
Rather, according to the Commission, any concerns regarding
anticompetitive behavior could only be addressed by the
Missouri Commission, as “Spire Missouri is not regulated by
this Commission and thus we have no authority to dictate its
practices for procuring services.” J.A. 964.

     The Commission explained that it was generally unwilling
to consider arguments raising “issues fall[ing] within the scope
of the business decision of a shipper,” even if the shipper and
the pipeline were affiliates. J.A. 968; see also J.A. 943 (“The
Commission is not in the position to evaluate Spire Missouri’s
business decision to enter a contract with Spire [STL] for
natural gas transportation, which . . . will be evaluated by the
[Missouri Commission].”). In particular, FERC was unwilling
to assess the challenges that protestors had raised questioning
the purported justifications that Spire STL had offered in
support of the proposed new pipeline. As the Commission
phrased it:

    The lengthy arguments the protestors make regarding
    whether Spire Missouri should have chosen to utilize
    existing infrastructure to meet the project purposes or
    committed to capacity on previously proposed
    projects, whether retiring Spire Missouri’s propane
                                16
    peaking facilities and replacing them with capacity
    from the [proposed pipeline] is a cost effective
    approach, whether choosing a transportation path that
    avoids the New Madrid fault is unnecessarily
    cautious, and even, in the first instance, the extent to
    which the [proposed pipeline] will provide economic
    and rate benefits to Spire Missouri’s customers, all go
    to the reasonableness and prudence of Spire
    Missouri’s decision to switch transportation
    providers.

J.A. 968. As to why Spire Missouri had declined to subscribe
to, or otherwise endorse, “prior failed [pipeline] projects” in the
area, the Commission found that such questions were “not
necessarily relevant to [its] decision” and explicitly declined to
resolve any related factual questions. See J.A. 968-69.

    Regarding its balancing of the benefits and adverse
impacts of the project, the Commission, without deeper
analysis, simply concluded

    that the benefits that the [proposed pipeline] will
    provide to the market, including enhanced access to
    diverse supply sources and the fostering of
    competitive alternatives, outweigh the potential
    adverse effects on existing shippers, other pipelines
    and their captive customers, and landowners or
    surrounding communities. Consistent with the criteria
    discussed in the Certificate Policy Statement and
    [Natural Gas Act] section 7(e), . . . we find that the
    public convenience and necessity requires approval of
    Spire [STL]’s proposal.

J.A. 986.
                               17
     Finally, the Commission rejected the vast majority of
challenges to its Environmental Assessment, including those of
Petitioner Steck.

     Commissioners LaFleur and Glick dissented. Both
believed that the Commission should have looked behind and
beyond the precedent agreement in evaluating market need,
given the facts of the case and the affiliated nature of the two
Spire entities. Commissioner Glick noted that “[t]here are
several potential business reasons why [Spire STL]’s corporate
parent might prefer to own a pipeline rather than simply take
service on it, such as the prospect of earning a 14 percent return
on equity rather than paying rates to [Enable] MRT or another
pipeline company.” J.A. 1058. In addition, both dissenting
Commissioners would have found that adverse impacts of the
proposed pipeline outweighed benefits.

     Several parties filed rehearing requests, including Steck on
August 31, 2018 and EDF on September 4, 2018. In her
request, Steck renewed several of her challenges to the EA and
also objected to the Commission’s environmental analysis in
the Certificate Order. EDF argued that the precedent agreement
was not dispositive evidence of market need. It also challenged
Spire STL’s contentions as to the benefits of the new pipeline,
including possible cost savings to Spire Missouri and whether
the new pipeline was needed to allow Spire Missouri to cease
using propane peaking facilities. And more generally, EDF
argued that the Commission had failed to adequately balance
costs and benefits in the Certificate Order.

     On October 1, 2018, the Secretary of the Commission
issued a tolling order solely “to afford additional time for
consideration of the matters raised.” J.A. 1107. It appears that
during the period between the issuance of the Certificate Order
and September 2019, Spire STL completed virtually all
                                 18
construction of the pipeline. See J.A. 1135 (notice of Enable
MRT withdrawing its petition for rehearing and asserting that
“[i]n the year in which the [rehearing requests] ha[d] been
pending, Spire STL . . . ha[d] nearly completed construction of
the proposed pipeline”). During that period, Spire STL also
submitted a revised cost estimate to the Commission of almost
$287 million, or approximately $67 million more than it had
originally estimated.

     On November 21, 2019, the Commission issued an Order
on Rehearing (the “Rehearing Order”), denying the requests for
rehearing on the merits. The Commission reaffirmed its belief
that it “is not required to look behind precedent agreements to
evaluate project need, regardless of the affiliate status of the . . .
shipper.” J.A. 1149 (footnote omitted). It also asserted that it
had “evaluated the record and did not find evidence of
impropriety or self-dealing to indicate anti-competitive
behavior or affiliate abuse.” J.A. 1152 (footnote omitted). And
it reiterated that, in its view, it was “not in the position to
evaluate Spire Missouri’s business decision to enter a contract
with Spire STL for natural gas transportation.” J.A. 1152
(footnote omitted).

     The Commission also stated that several of the benefits
Spire STL touted in its application and subsequent submissions
to the Commission were “sufficient to overcome any concerns
of overbuilding.” J.A. 1155. As to cost, the Commission
clarified that the Certificate Order had “evaluated cost
differences of gas delivered to Spire Missouri from both the”
proposed new pipeline and Enable MRT’s existing system and
found that they “were not materially significant.” J.A. 1159
(citing J.A. 980). Finally, the Rehearing Order found that the
EA, and the Commission’s resulting environmental analysis,
were sound.
                               19
     Commissioner Glick again dissented. He argued that the
Commission had acted arbitrarily and capriciously by refusing
to engage with counterevidence or seriously consider
countervailing arguments as to market need and benefits of the
pipeline. See, e.g., J.A. 1183 (“Whatever probative weight that
[precedent] agreement has, the Commission cannot simply
point to the agreement’s existence and then ignore the evidence
that undermines the agreement’s probative value.”); J.A. 1185
(“The Spire companies’ obvious financial motive coupled with
the abundant record evidence casting doubt on the need for the
project ought to have caused the Commission to carefully
scrutinize the record to determine whether the [proposed
pipeline] is actually needed or just financially advantageous to
the Spire companies.”). In his view, the issuing of the
Certificate to Spire STL had also represented “an unreasonable
application of the . . . Certificate Policy Statement.” J.A. 1188.

    Steck and EDF filed their petitions for review in this court
on January 21, 2020.

                         II. ANALYSIS

    A. Standard of Review

     The Commission’s award of a Certificate is reviewed
under the Administrative Procedure Act’s arbitrary and
capricious standard. See Minisink, 762 F.3d at 105-06 (citations
omitted); 5 U.S.C. § 706(2)(A). Under this standard, an action
by the Commission may be set aside “if the agency has relied
on factors which Congress has not intended it to consider,
entirely failed to consider an important aspect of the problem,
offered an explanation for its decision that runs counter to the
evidence before the agency, or is so implausible that it could
not be ascribed to a difference in view or the product of agency
expertise.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Thus, the
                                20
overarching question in this case is whether “the Commission’s
‘decisionmaking [wa]s reasoned, principled, and based upon
the record.’” Myersville, 783 F.3d at 1308 (quoting Am. Gas
Ass’n v. FERC, 593 F.3d 14, 19 (D.C. Cir. 2010)). “A passing
reference to relevant factors . . . is not sufficient to satisfy the
Commission’s obligation to carry out ‘reasoned’ and
‘principled’ decisionmaking”; this means that “[t]he
Commission must ‘fully articulate the basis for its decision.’”
Am. Gas Ass’n, 593 F.3d at 19 (quoting Mo. Pub. Serv.
Comm’n v. FERC, 234 F.3d 36, 41 (D.C. Cir. 2000)). When the
Commission’s explanation for a contested action is lacking or
inadequate, it will not survive judicial review and the matter
will be returned to FERC for appropriate action. See, e.g., Mo.
Pub. Serv. Comm’n, 234 F.3d at 42.

    B. Standing

     The “irreducible constitutional minimum” of standing
requires three elements. Spokeo, Inc. v. Robins, 136 S. Ct.
1540, 1547 (2016) (citation omitted). “The plaintiff must have
(1) suffered an injury in fact, (2) that is fairly traceable to the
challenged conduct of the defendant, and (3) that is likely to be
redressed by a favorable judicial decision.” Id. (citation
omitted). The party invoking federal jurisdiction bears the
burden of demonstrating standing. Id. (citation omitted).
Generally, “[t]o establish injury in fact, a plaintiff must show
that he or she suffered an invasion of a legally protected interest
that is concrete and particularized and actual or imminent.” Id.
at 1548 (citation and internal quotation marks omitted).
However, where a party alleges procedural injury, “courts relax
the normal standards of redressability and imminence.” Sierra
Club v. FERC, 827 F.3d 59, 65 (D.C. Cir. 2016) (citing
Summers v. Earth Island Inst., 555 U.S. 488, 496-97 (2009)).
                                21
     In a NEPA procedural injury case, the causation
requirement is met when a “causal chain” contains “at least two
links: one connecting the omitted [NEPA analysis] to some
substantive government decision that may have been wrongly
decided because of the lack of [proper NEPA analysis] and one
connecting that substantive decision to the plaintiff’s
particularized injury.” Id. (alterations in original) (citation
omitted). In other words, “[i]t must be substantially probable
that the substantive agency action that disregarded a procedural
requirement created a demonstrable risk, or caused a
demonstrable increase in an existing risk, of injury to the
particularized interests of the plaintiff.” Id. (citation and
internal quotation marks omitted).

        1. Steck’s Standing

     Steck does not have standing to pursue her claims against
FERC in this court. She does not own land transected by Spire
STL’s pipeline and has not had property rights taken via
eminent domain. Instead, Steck asserts in a declaration that she
lives “half a mile from” the new Chain of Rocks meter and
regulation station (the “Chain of Rocks Station”) at “the
southern end of the pipeline,” Final Br. of Pet’r Juli Steck
Addendum 1 (hereinafter “Steck Decl.”) ¶ 4; that the metering
station “sits between . . . blind curves,” id. ¶ 5; that the station
“is a looming eyesore and a traffic hazard” which “is not in
keeping with the character of [her] neighborhood,” and which
she passes approximately three times per week, id. ¶ 7; and that
the now-completed construction of the pipeline “interfered
with [her] use and enjoyment of” a local park through which
part of the pipeline was built, id. ¶¶ 9-10, and that she
“experienced the noise, dust, diesel fumes, and traffic stops
from construction both at home and in” the park, id. ¶ 8.
                                22
     Steck claims that the “blind curves” near the metering
station are a “traffic hazard” to which she objects. Even if this
is sufficient to show a cognizable injury-in-fact, Steck has not
met her burden on causation as to this alleged injury. This is so
because she does not claim that the blind curves resulted from
the construction of the Chain of Rocks Station. Therefore, she
has not shown that issuance of a Certificate to Spire STL
caused any “traffic hazard” that now exists.

     In addition, any alleged injuries that Steck suffered during
the now-completed construction of the pipeline and metering
station cannot support standing for want of redressability.
Those alleged injuries, including that Spire’s “drill[ing] under
[a] lake” to construct the pipeline interfered with her “use and
enjoyment of the [nearby] park,” id. ¶ 9, ended when the
construction was completed. Nor does Steck assert that there is
any lasting impact from these prior injuries. Therefore, a
favorable judicial decision will not redress her alleged injuries.

     Steck also alleges that the metering station “is a looming
eyesore,” id. ¶ 7, as if to suggest that this constitutes a
cognizable injury-in-fact. It is true that some intangible injuries
may be concrete enough to support standing. See Spokeo, 136
S.Ct. at 1549. And “[t]he Supreme Court has recognized that
harm to ‘the mere esthetic interests of [a] plaintiff . . . will
suffice’ to establish a concrete and particularized injury”
sufficient to support standing. Sierra Club v. Jewell, 764 F.3d
1, 5 (D.C. Cir. 2014) (third alteration in original) (quoting
Summers, 555 U.S. at 494). However, Steck’s claims that
allude to aesthetic injuries do not correspond with the types of
aesthetic interests that the Supreme Court has said will suffice
to establish concrete and particularized injuries.

    At no point in her declaration does Steck indicate any ways
in which the new metering station injures her specific aesthetic
                               23
interests, beyond labeling it a “looming eyesore” that “is not in
keeping with the character of [her] neighborhood.” See Steck
Decl. ¶ 7. She never alleges that she used and enjoyed the land
on which the station now exists; that she intended to use the
land in the future; or that her planned future uses of the land
have been foreclosed by the construction. In other words, she
never indicates how she derived aesthetic value from the land
as it had existed before the construction. See, e.g., Sierra Club
v. Morton, 405 U.S. 727, 735 (1972) (holding that
environmental group lacked standing because “[n]owhere in
the pleadings or affidavits did the [group] state that its members
use [the affected area] for any purpose, much less that they use
it in any way that would be significantly affected by the
proposed actions of the respondents” (emphases added)); Lujan
v. Defs. of Wildlife, 504 U.S. 555, 565-66 (1992) (explaining
that “a plaintiff claiming injury from environmental
damage must use the area affected by the challenged activity”
(emphasis added)); Friends of the Earth, Inc. v. Laidlaw Env’t
Servs. (TOC), Inc., 528 U.S. 167, 181-83 (2000) (explaining
that organizations’ members would have had standing as a
result of the detailed ways in which the challenged actions had
led them to modify their prospective behavior, reduced their
property values, or otherwise diminished their enjoyment of the
affected areas); Jewell, 764 F.3d at 5-6 (recounting detailed
declarations explaining the ways in which the challenged
action would diminish declarants’ ability to “use, enjoy, and
appreciate,” or “ability to visit and enjoy,” affected areas
(citations omitted)).

     Steck does not even allege that she can see the new station
from her property. Rather, the only aesthetic injury that might
be implied from her declaration is that she must look at an
“eyesore” several times per week while driving past. Viewed
in full frame, Steck’s alleged aesthetic injuries reflect nothing
more than generalized grievances, which cannot support
                                24
standing. See Lujan, 504 U.S. at 573-74 (explaining that
generalized grievances do not raise Article III cases or
controversies for standing purposes).

     At oral argument, Steck’s counsel was unable to identify
any authority that would allow mere incidental viewership of
something unappealing to qualify as an injury-in-fact for
standing purposes. See Oral Arg. Tr. at 27:21-28:23. This is not
surprising, for we can find nothing in the existing case law to
suggest that a person who incidentally views something
unpleasant has suffered an injury-in-fact for purposes of
standing. In her brief, Steck cites Sierra Club v. FERC for the
proposition that “[a]esthetic and recreational harm [may]
bestow[] standing.” Final Br. of Pet’r Juli Steck 10 (citing 827
F.3d 59, 66 (D.C. Cir. 2016)). However, the declaration in
support of standing in Sierra Club is strikingly different from
Steck’s declaration in this case. The declarant in Sierra Club
“fishe[d], boat[ed], and seasonal duck hunt[ed] frequently
around” the affected areas. 827 F.3d at 66 (citation and
alterations omitted). The declarant further averred that the
resulting “‘increase in liquefied natural gas vessel
traffic’ . . . w[ould]: (1) harm his aesthetic interests in the
[nearby] waterways . . . ; (2) inconvenience him, given the
‘large exclusion zone the Coast Guard maintains around
tankers’; and (3) ‘diminish his use and enjoyment of the
waterways.’” Id. (citation and alterations omitted). He also
noted that, because of the “existing levels of operation” in the
affected areas, he had “moved his ‘primary boat’” away from
them. Id. (citation omitted). These concrete injuries, including
those to his aesthetic interests, are a far cry from those asserted
by Steck, who has neither altered her behavior nor explained
why she has any particularized connection to the land on which
the metering station now sits.
                               25
     Finally, Steck claims that she has suffered a procedural
injury as a result of the Commission’s alleged failure to comply
with its NEPA obligations. See Final Br. of Pet’r Juli Steck 10;
Steck Decl. ¶ 10; see also Oral Arg. Tr. at 27:18-20, 33:19-25.
Steck argues that this procedural injury is “an independent
source of standing.” Oral Arg. Tr. at 33:24-25. “But
deprivation of a procedural right without some concrete interest
that is affected by the deprivation—a procedural right in
vacuo—is insufficient to create Article III standing.” Summers,
555 U.S. at 496; see also Spokeo, 136 S. Ct. at 1550 (explaining
that a plaintiff “cannot satisfy the demands of Article III by
alleging a bare procedural violation”). Because Steck has failed
to allege a concrete injury that is “tethered to” the
Commission’s issuance of the Certificate, she has not shown a
viable Article III injury. Sierra Club v. FERC, 827 F.3d 36, 43
(D.C. Cir. 2016) (quoting WildEarth Guardians v. Jewell, 738
F.3d 298, 305 (D.C. Cir. 2013)).

     In sum, on the record before us, we hold that Steck has
failed to satisfy her burden of demonstrating standing. We
therefore dismiss her petition for review.

       2. EDF’s Standing

     EDF clearly has standing to pursue its claims.
“An association has standing to bring suit on behalf of its
members when: (1) its members would otherwise have
standing to sue in their own right; (2) the interests it seeks to
protect are germane to the organization’s purpose; and (3)
neither the claim asserted nor the relief requested requires the
participation of individual members in the lawsuit.” Nat’l
Lifeline Ass’n v. FCC, 983 F.3d 498, 507-08 (D.C. Cir. 2020)
(citation and internal quotation marks omitted). EDF’s
members include at least four individuals who own land
transected by Spire STL’s pipeline, each of whom have had
                                 26
property rights taken via eminent domain. These EDF members
also allege various ways in which the presence of the pipeline
has harmed, and continues to harm, their property, economic,
aesthetic, and emotional interests.

     “[A] landowner made subject to eminent domain by a
decision of the Commission has been injured in fact because
the landowner will be forced either to sell its property to the
pipeline company or to suffer the property to be taken through
eminent domain. . . . [I]t is enough that [eminent domain
proceedings] have been deemed authorized and will proceed
absent a sale by the owner.” Gunpowder Riverkeeper v. FERC,
807 F.3d 267, 271-72 (D.C. Cir. 2015) (citing B&J Oil & Gas
v. FERC, 353 F.3d 71, 74-75 (D.C. Cir. 2004)). Moreover,
“credible claims of exposure to increased noise and . . .
disruption of daily activities . . . are sufficient to satisfy Article
III’s injury-in-fact requirement.” Sierra Club v. FERC, 867
F.3d 1357, 1366 (D.C. Cir. 2017) (quoting Sierra Club, 827
F.3d at 44). Those injuries were caused by the Commission’s
orders, which allowed for the exercise of eminent domain
against the EDF members’ land, and vacatur of those orders
likely will allow those injuries to be redressed. See City of
Oberlin, 937 F.3d at 604-05. “And nobody disputes that the
prevention of this sort of injury is germane to [EDF]’s
conservation-oriented purposes, or cites any reason why these
individual members would need to join the petition in their own
names.” Sierra Club, 867 F.3d at 1366. Thus, EDF has
associational standing.

    C. EDF’s Petition Was Timely

     The Natural Gas Act requires that, prior to obtaining
judicial review, an aggrieved party must have sought rehearing
before the Commission “unless there [wa]s reasonable ground
for failure so to do.” 15 U.S.C. § 717r(b). The Act also states
                               27
that “[u]nless the Commission acts upon the application for
rehearing within thirty days after it is filed, such application
may be deemed to have been denied.” Id. § 717r(a) (emphasis
added). As to the timing of judicial review, the act provides that
an aggrieved party “may obtain a review” of a Commission
order “by filing” a petition for review “within sixty days after
the order of the Commission upon the application for
rehearing.” Id. § 717r(b).

     In Allegheny Defense Project v. FERC, 964 F.3d 1 (D.C.
Cir. 2020) (en banc), we confronted the Commission’s then-
consistent practice of issuing “tolling orders” following
rehearing requests. See id. at 9-11. The tolling orders were
fashioned so that they “d[id] nothing more than prevent
[rehearing requests] from being deemed denied by agency
inaction and preclude . . . applicant[s] from seeking judicial
review until the Commission act[ed]” on the merits. Id. at 9.
This court found that such tolling orders were insufficient for
FERC to avoid a “deemed denial” per 15 U.S.C. § 717r(a). Id.
at 18-19.

     In this case, EDF filed a request for rehearing with the
Commission on September 4, 2018. On October 1, 2018, the
Secretary issued a tolling order that did nothing more than
“afford additional time for consideration of the matters raised”
in rehearing requests. J.A. 1107; see Allegheny Def. Project,
964 F.3d at 6-7 (same language in tolling order at issue). The
Commission did not dispose of the merits of the rehearing
requests in this case until November 21, 2019, when it issued
the Rehearing Order. See J.A. 1144. EDF then filed its petition
for review in this court on January 21, 2020. According to the
Spire Intervenor-Respondents (but not the Commission),
EDF’s petition for review was untimely because, under
Allegheny Defense Project, the requests for rehearing were
“deemed denied” as of October 4, 2018. And, since the petition
                               28
for review was submitted more than 60 days thereafter, the
court lacks jurisdiction. See Br. for Intervenors-Resp’ts Spire
STL Pipeline LLC and Spire Missouri Inc. 1-2. We reject this
argument.

     In Texas-Ohio Gas Co. v. Federal Power Commission, 207
F.2d 615 (D.C. Cir. 1953), we held that the 60-day requirement
of Section 717r(b) did not preclude our consideration of a
petition for review from a final denial of relief, even if there
had been a deemed denial in the interim and the petition for
review was filed more than 60 days following that deemed
denial. See id. at 616-17. Allegheny Defense Project did not
disturb this binding precedent, which is squarely controlling in
this case.

      Moreover, in Allegheny Defense Project, the petitioners
filed two sets of petitions for review. See 964 F.3d at 6-9. The
first set was filed in March and May 2017, within 60 days of
the March 2017 tolling order, see id. at 6-7, while the second
was filed in December 2017 and January 2018, after the
Commission rejected the merits of the rehearing requests, see
id. at 8-9. Though this court found that the tolling order failed
to prevent a deemed denial as of March 2017, the court
proceeded to evaluate the merits of both sets of petitions for
review, including the later set of petitions filed more than 60
days following the date of “deemed denial.” See id. at 19.

    EDF filed its petition for review on January 21, 2020,
within the period allowed by statute “after the order of the
Commission upon the application for rehearing.” 15 U.S.C.
§ 717r(b). The petition for review was therefore timely and we
may consider the merits of EDF’s contentions.
                               29
    D. FERC’s Grant of a Certificate of Public
       Convenience and Necessity Was Arbitrary and
       Capricious

     Under established law, precedent agreements are
“always . . . important evidence of demand for a project.”
Minisink, 762 F.3d at 111 n.10 (quoting 88 FERC at 61,748).
And, in some cases, such agreements may demonstrate both
market need and benefits that outweigh adverse effects of a
new pipeline. See City of Oberlin, 937 F.3d at 605-06;
Myersville, 783 F.3d at 1311. But there is a difference between
saying that precedent agreements are always important versus
saying that they are always sufficient to show that construction
of a proposed new pipeline “is or will be required by the present
or future public convenience and necessity.” 15 U.S.C.
§ 717f(e).

      According to the Commission’s Certificate Policy
Statement, “the evidence necessary to establish the need for [a]
project will usually include a market study. . . . Vague
assertions of public benefits will not be sufficient.” 88 FERC
at 61,748. In addition, the Certificate Policy Statement
indicates that pipelines built for reasons other than demand
growth might require greater showings of need and public
benefits. See id. (“[P]rojects to serve new demand might be
approved on a lesser showing of need and public benefits than
those to serve markets already served by another pipeline.”).
The Policy Statement also explicitly states that “[a] project that
has precedent agreements with multiple new customers may
present a greater indication of need than a project with only a
precedent agreement with an affiliate.” Id. In addressing why
it is unnecessary for the Commission to categorically discount
the value of affiliated precedent agreements when assessing
applications to construct new pipelines, the Policy Statement
explains that, in all cases, the Commission invariably focuses
                               30
on “the impact of the project on the relevant interests balanced
against the benefits to be gained from the project.” Id. Finally,
it is noteworthy that nothing in the Certificate Policy Statement
suggests that a precedent agreement is conclusive proof of need
in a situation in which there is no new load demand, no
Commission finding that a new pipeline would reduce costs,
only a single precedent agreement in which the pipeline and
shipper are corporate affiliates, the affiliate precedent
agreement was entered into privately after no shipper
subscribed during an open season, and the agreement is not for
the full capacity of the pipeline.

     In this case, the Commission was presented with strong
arguments as to why the precedent agreement between Spire
STL and Spire Missouri was insufficiently probative of market
need and benefits of the proposed pipeline. Indeed, those
arguments drew on the Commission’s own Certificate Policy
Statement for support. But rather than engaging with these
arguments, the Commission seemed to count the single
precedent agreement between corporate affiliates as conclusive
proof of need. Nothing in the Certificate Policy Statement
endorses this approach.

    Furthermore, we can find no judicial authority endorsing a
Commission Certificate in a situation in which the proposed
pipeline was not meant to serve any new load demand, there
was no Commission finding that a new pipeline would reduce
costs, the application was supported by only a single precedent
agreement, and the one shipper who was party to the precedent
agreement was a corporate affiliate of the applicant who was
proposing to build the new pipeline. This is hardly surprising
because evidence of “market need” is too easy to manipulate
when there is a corporate affiliation between the proponent of
a new pipeline and a single shipper who have entered into a
precedent agreement. See Chinook Power Transmission, LLC,
                                31
126 FERC ¶ 61,134, 61,767 (2009) (explaining that, in a
different context, the Commission “will apply a higher level of
scrutiny” to certain affiliate transactions “due to the absence of
arms’ length negotiations as a basis for the commitment,
concerns that the affiliate would receive unduly preferential
treatment, further concerns that a utility affiliate contract could
shift costs to captive ratepayers of the affiliate and subsidize
the . . . project inappropriately, and the lack of transparency
that would surround the arrangement”).

     Moreover, in this case the Commission failed to
adequately balance public benefits and adverse impacts. This
is a serious problem in a case in which there is no new load
demand and only one affiliated shipper. In the Certificate
Order, the Commission’s balancing of costs and benefits
consisted largely of its ipse dixit “that the benefits that the
[proposed pipeline] will provide to the market, including
enhanced access to diverse supply sources and the fostering of
competitive alternatives, outweigh the potential adverse effects
on existing shippers, other pipelines and their captive
customers, and landowners or surrounding communities.” J.A.
986. The Commission pointed to no concrete evidence to
support these assertions.

     In the Rehearing Order, the Commission made a
superficial effort to remedy the obvious deficits of the
Certificate Order by noting that Spire Missouri had articulated
several public benefits for the proposed pipeline. See J.A.
1155-56. However, the Commission never addressed the
claims raised by EDF and others challenging whether these
purported benefits were likely to occur. Instead of evaluating
the legitimate claims that had been raised, the Commission
simply stated that it had “no reason to second guess the
business decision of” Spire Missouri as reflected in the
precedent agreement. Rehearing Order, J.A. 1155; see also
                               32
Rehearing Order, J.A. 1159 (declining to evaluate extent to
which Spire Missouri’s customers would experience economic
benefit from pipeline construction because doing so would
“second guess the business decisions of an end user”). Before
this court, EDF has continued to challenge the Commission’s
failure to appropriately scrutinize the costs and alleged benefits
of the project. See Final Opening Br. of Pet’r EDF 39-40; see
also Final Reply Br. of Pet’r EDF 15-18 (asserting that
purported benefits of proposed pipeline were invoked post hoc
by the Commission, unlikely to be realized, or pretextual).
Under the circumstances presented in this case – with flat
demand as conceded by all parties, no Commission finding that
a new pipeline would reduce costs, and a single precedent
agreement between affiliates – we agree with EDF that the
Commission’s approach did not reflect reasoned and principled
decisionmaking.

     The Commission and the Spire Intervenor-Respondents
advance several arguments in response, but none carry the day.
First, they rely on isolated statements this court has made while
reviewing previous Commission grants of Certificates. In
Minisink, we echoed the Certificate Policy Statement in
explaining that precedent “agreements ‘always will be
important evidence of demand for a project.’” 762 F.3d at 111
n.10 (quoting 88 FERC at 61,748). Similarly, in Myersville, we
noted that the petitioners had “‘identif[ied] nothing in the
policy statement or in any precedent construing it to suggest
that it requires, rather than permits, the Commission to assess
a project’s benefits by looking beyond the market need
reflected by the applicant’s existing contracts with shippers.’”
783 F.3d at 1311 (quoting Minisink, 762 F.3d at 111 n.10). In
City of Oberlin, we upheld the Commission’s decision to treat
both affiliated and unaffiliated precedent agreements as
evidence of market need, as “it is Commission policy to not
look behind precedent or service agreements to make
                               33
judgments about the needs of individual shippers.” 937 F.3d at
606 (quoting Myersville, 783 F.3d at 1311). And in
Appalachian Voices v. FERC, No. 17-1271, 2019 WL 847199,
(D.C. Cir. Feb. 19, 2019) (per curiam) (unpublished), the court
upheld the Commission’s decision not to distinguish between
affiliated and unaffiliated precedent agreements under the facts
of that case. See id. at *1. According to the Commission and
the Spire Intervenor-Respondents, these cases stand for two
broad propositions: (1) that the Commission generally need not
look behind precedent agreements in determining whether
there is market demand; and (2) that affiliated precedent
agreements should almost always be treated the same as
unaffiliated precedent agreements. We disagree, because it is
quite clear that our case law does not go so far as Respondents
claim.

     In both Minisink and Myersville, the precedent agreements
at issue were not alleged to be between affiliated entities. See
Minisink, 762 F.3d at 111 n.10; Myersville, 783 F.3d at 1307,
1309-10. Thus, those cases presented significantly different
facts than the instant Certificate application. Appalachian
Voices was an unpublished opinion, meaning that the panel
found its opinion to be of “no precedential value” when
disposing of the case. See D.C. CIR. R. 36(e)(2). Moreover,
unlike in this case, the Certificate applicant in that case had
submitted a market study to the Commission to show the need
for, and benefits of, the proposed project. See Mountain Valley
Pipeline, LLC, 161 FERC ¶ 61,043, 61,297 (2017).

    In City of Oberlin, the pipeline applicant had entered into
four precedent agreements with affiliate shippers but had
entered eight precedent agreements in total. See 937 F.3d at
603. The facts of that case are therefore easily distinguishable,
and the evidence of market demand was much stronger than in
the instant case, where there is but a single precedent
                                34
agreement and it is with an affiliated shipper. It is true that City
of Oberlin says that FERC can put precedent agreements with
affiliates on the same footing as non-affiliate precedent
agreements (i.e., it may “fully credit[]” them), but only so long
as FERC finds “no evidence of self-dealing” or affiliate abuse
and the pipeline operator “bears the risk for any unsubscribed
capacity.” Id. at 605. And tellingly, the Commission made an
uncontested finding that there was “no evidence of self-
dealing” or affiliate abuse in City of Oberlin. See id.

     Here, by contrast, EDF and others have identified
plausible evidence of self-dealing. This evidence includes that
the proposed pipeline is not being built to serve increasing load
demand and that there is no indication the new pipeline will
lead to cost savings. FERC’s failure to engage with this
evidence did not satisfy the requirements of reasoned
decisionmaking. Indeed, as noted above, FERC’s ostrich-like
approach flies in the face of the guidelines set forth in the
Certificate Policy Statement. The challenges raised by EDF
and others were more than enough to require the Commission
to “look behind” the precedent agreement in determining
whether there was market need. If it was not necessary for the
Commission to do so under these circumstances, it is hard to
imagine a set of facts for which it would ever be required.
Because the Commission declined to engage with EDF’s
arguments and the underlying evidence regarding self-dealing,
its decisionmaking was arbitrary and capricious.

     Next, the Commission contends that its balancing of
benefits and adverse impacts was sufficient because the Natural
Gas Act “vests the Commission with ‘broad discretion to
invoke its expertise in balancing competing interests and
drawing administrative lines.’” Br. for Resp’t FERC 42
(quoting Minisink, 762 F.3d at 111). The Commission’s
discretion in this sphere is, indeed, broad, but it may not go
                              35
entirely unchecked. The Commission must provide a cogent
explanation for how it reached its conclusions. As discussed,
FERC failed to balance the benefits and costs in both the
Certificate Order and Rehearing Order.

     Finally, Respondents claim that there is evidence in the
record supporting their assertions as to the benefits of the
pipeline, even in the absence of increasing demand or potential
cost savings. However, it is not enough that such evidence may
exist within the record; the question is whether the
Commission’s decisionmaking, as reflected in its orders, will
allow us to conclude that the Commission has sufficiently
evaluated that evidence in reaching a reasoned and principled
decision. See SEC v. Chenery Corp., 318 U.S. 80, 87-88, 93-95
(1943); SEC v. Chenery Corp, 332 U.S. 194, 196 (1947). Based
on the Certificate Order and Rehearing Order, we cannot say
that the Commission has done so. It is not surprising that the
Commission failed to seriously engage with the question of
whether these benefits were real or illusory given that it took
the position that it would “not second guess the business
decisions” of the pipeline shipper in this case. Certificate
Order, J.A. 968.

     In sum, it was arbitrary and capricious for the Commission
to rely solely on a precedent agreement to establish market
need for a proposed pipeline when (1) there was a single
precedent agreement for the pipeline; (2) that precedent
agreement was with an affiliated shipper; (3) all parties agreed
that projected demand for natural gas in the area to be served
by the new pipeline was flat for the foreseeable future; and (4)
the Commission neglected to make a finding as to whether the
construction of the proposed pipeline would result in cost
savings or otherwise represented a more economical alternative
to existing pipelines. In addition, the Commission’s cursory
                                36
balancing of public benefits and adverse impacts was arbitrary
and capricious.

                          III. REMEDY

     The final question that we must address concerns remedy.
The Spire Intervenor-Respondents urge that, if we set aside
FERC’s certification, we should remand without vacatur. EDF,
in turn, contends that vacatur is appropriate. “The decision
whether to vacate depends on the seriousness of the order’s
deficiencies (and thus the extent of doubt whether the agency
chose correctly) and the disruptive consequences of an
interim change that may itself be changed.” Allied-Signal, Inc.
v. Nuclear Regul. Comm’n, 988 F.2d 146, 150-51 (D.C. Cir.
1993) (citation and internal quotation marks omitted).
However, “[v]acatur ‘is the normal remedy’ when we are faced
with unsustainable agency action.” Brotherhood of Locomotive
Eng’rs & Trainmen v. Fed. R.R. Admin., 972 F.3d 83, 117
(D.C. Cir. 2020) (quoting Allina Health Servs. v. Sebelius, 746
F.3d 1102, 1110 (D.C. Cir. 2014)).

     Based on these considerations, we believe that vacatur is
appropriate. Given the identified deficiencies in the
Commission’s orders, it is far from certain that FERC “chose
correctly,” see Allied-Signal, 988 F.2d at 150 (citation
omitted), in issuing a Certificate to Spire STL. We understand
that the pipeline is operational, and thus there may be some
disruption as a result of the “interim change,” see id. at 150-51
(citation omitted), i.e., de-issuance of the Certificate, caused by
vacatur. However, we have identified serious deficiencies in
the Certificate Order and Rehearing Order. And “the
second Allied–Signal factor is weighty only insofar as the
agency may be able to rehabilitate its rationale.” Comcast
Corp. v. FCC, 579 F.3d 1, 9 (D.C. Cir. 2009) (citation omitted).
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The Commission’s ability to do so is not at all clear to us at this
juncture.

     Furthermore, remanding without vacatur under these
circumstances would give the Commission incentive to allow
“build[ing] first and conduct[ing] comprehensive reviews
later.” Standing Rock Sioux Tribe v. Army Corps of Eng’rs, 985
F.3d 1032, 1052 (D.C. Cir. 2021). We certainly do not wish to
encourage such an approach given the significant powers that
accompany a certificate of public convenience and necessity.
See 15 U.S.C. § 717f(h) (allowing holder of Certificate to
exercise eminent domain); see also Rehearing Order, J.A.
1195-96 (Glick, Comm’r, dissenting) (noting that “Spire STL
prosecuted eminent domain actions against over 100 distinct
entities . . . involving well over 200 acres of privately owned
land”). See generally Rehearing Order, J.A. 1202 (Glick,
Comm’r, dissenting) (“A regulatory construct that allows a
pipeline developer to build its entire project while
simultaneously preventing opponents of that pipeline from
having their day in court ensures that irreparable harm will
occur before any party has access to judicial relief.”).

                        IV. CONCLUSION

     For the foregoing reasons, we dismiss Juli Steck’s petition
for review and grant EDF’s petition for review. We vacate the
Certificate Order and Rehearing Order and remand to the
Commission for further proceedings.