Chapter 24. Natural Gas Infrastructure Siting The Environmental Angle

Transcription

1 Chapter 24 CITE AS 36 Energy & Min. L. Inst. 24 (2015) Natural Gas Infrastructure Siting The Environmental Angle Kelley M. Goes Jackson Kelly PLLC Charleston, West Virginia Synopsis Introduction Overview of Governing Federal Statutory and Agency Oversight [1] Brief Outline of the Pipeline Approval Process [2] Review of Environmental Impact and Concerns [3] Environmental Review National Environmental Policy Act Requirements The Environmental Assessment, the Draft Environmental Impact Statement and the Final Environmental Impact Statement [1] The Environmental Assessment [2] Consideration of Reasonable Alternatives [3] Finding of No Significant Impact [4] The Draft Environmental Impact Statement and the Final Environmental Impact Statement [a] Segmentation [b] Standing [5] Deference to the Federal Energy Regulatory Commission (FERC) and Its Process [6] Scope of Appeal Or Why You Have to Raise Everything Every Time [7] Obtaining Permits Within the FERC Regulatory Framework [a] Clean Water Act [b] The Clean Air Act [c] Coastal Zone Management Act The Final Preempted Regulatory Scheme Conclusion...960

2 24.01 ENERGY & MINERAL LAW INSTITUTE Introduction. The extraction of shale gas in the Appalachian Basin from the Marcellus and Utica formations caused an explosion in the need for new or improved natural gas infrastructure. Building or upgrading this infrastructure is a heavily regulated, expensive and time-consuming process. Pipelines and compressor stations are not popular with the local residents and environmental groups. With the growth in infrastructure construction, 1 there has been a growth in environmental challenges at both the state and federal level. Thanks to the Natural Gas Act, most of the disputes ultimately end up in one of two places: in front of the Federal Energy Regulatory Commission or in federal appellate courts. But the infrastructure road is fraught with environmental challenges. As the current Federal Energy Regulatory Commission (FERC) chairwoman, Cheryl LaFleur, stated earlier this year: Pipelines are facing unprecedented opposition from local and national groups including environmental activists. These groups are very active in every FERC docket, as they should be, as well as in my inbox seven days a week, in my Twitter feed, at our open meetings demanding to be heard, and literally at our doors closing down First Street so FERC won t be able to work. 2 1 According to the FERC website, as of time of publication, major pipeline projects totaling more than 1,723 miles were submitted for consideration between 2010 and This figure would not include some of the more recent projects that have generated comment and controversy to get gas out of the Appalachian Basin. The miles of pipeline approved by the FERC peaked in 2006 at about 3000 miles and bottomed out in 2012 with three miles approved. In 2014, FERC approved less than 500 miles of pipeline. See industries/gas/indus-act/pipelines/pending-projects.asp; indus-act/pipelines/approved-projects.asp. 2 Tr. Nat l Press Club Luncheon with Cheryl LaFleur, January 27, 2015, p

3 Natural Gas InfraStructure Siting Overview of Governing Federal Statutory and Agency Oversight. Congress enacted the Natural Gas Act (NGA) with the principal purpose of encourag[ing] the orderly development of plentiful supplies of... natural gas at reasonable prices. 3 Subsidiary purposes include respecting conservation, environmental, and antitrust limitations. 4 The NGA vests the FERC with authority to regulate the transportation and sale of natural gas in interstate commerce, including authority to issue certificates permitting the construction or extension of natural gas transportation facilities. 5 The FERC has plenary jurisdiction over the transportation of natural gas in interstate commerce; the sale of natural gas in interstate commerce for resale to the consumer; and natural gas companies that are engaged in such transportation for sale. 6 The exception to FERC s jurisdiction, known as the Hinshaw Amendment exception, excludes a natural gas company that receives all gas from within the boundaries of a state; all such gas is ultimately consumed within the state; and the state regulates the intra-state gas company s accompanying facilities and rates. 7 [1] Brief Outline of the Pipeline Approval Process. A pipeline project begins with an open season in which the midstream company offers contracts for future supplies of gas to potential customers. This can be transportation or storage or a combination. Once contracts are established, the midstream company will file a voluntary pre-filing, which defines the project, the siting of pipelines, storage and compressor stations, 3 Myersville Citizens for a Rural Cmty., Inc. v. FERC, 783 F.3d 1301, 1307 (D.C. Cir. 2015), citing NAACP v. Fed. Power Comm n, 425 U.S. 662, , 96 S. Ct. 1806, 48 L. Ed. 2d 284 (1976). The NGA citation is ch. 556, 52 Stat. 821 (1938), codified as amended at 15 U.S.C. 717 et seq. 4 NAACP, 425 U.S. at 670 and n U.S.C. 717f(c) U.S.C. 717(b), see e.g. Fuel Safe Washington v. FERC, 389 F.3d 1313, 1317 (10th Cir. 2004) (citation omitted) U.S.C. 717(c), see also, Fuel Safe Washington, 389 F.3d at

4 24.02 ENERGY & MINERAL LAW INSTITUTE and provides other details. The purpose of pre-filing, according to the FERC, is to proactively pursue issues with the people who are likely to be most affected by the lateral infrastructure, thus minimizing issues before the application is ever brought to the Commission. 8 The gas company must also notify state, local, and federal agencies that would be required to evaluate, permit, or are affected by the project, as well as potentially affected landowners. The pre-filing triggers company-sponsored open houses that are opportunities for transmitting information to the public, but not an opportunity for the public to comment on or participate in the process. At the conclusion of the open houses, the FERC may hold public scoping meetings along the project route. At this time, the public may appear and make comments for the record or may submit written comments to the FERC under the applicable pre-filing docket number assigned to the project. The pre-filing does initiate the environmental review process, and at this point, the FERC will issue a Notice of Intent to prepare an environmental assessment (EA) or an environmental impact statement (EIS) as required by the National Environmental Policy Act (NEPA). 9 NEPA serves as the country s basic national charter for environmental protection by requiring the federal government to consider the environmental consequences of its actions, including permits. 10 Failure to comply with NEPA is a common challenge brought against pipeline construction in these processes. The conclusion of the pre-filing activities initiates the application for a Certificate of Convenience and Public Necessity, which must contain a description of the project, route maps, construction plans, project schedules, information on permits required from other agencies, environmental reports and mitigation strategies, and route alternatives. 8 Industry Activities, Fed. Energy Regulatory Comm n, indus-act.asp U.S.C See 42 U.S.C. 4331(b)(1) and 40 C.F.R (2013), see also Fuel Safe Washington, 389 F.3d at , Sierra Club v. U.S. Army Corps of Eng rs, 990 F. Supp.2d 9, 18 (D.D.C. 2013). 930

5 Natural Gas InfraStructure Siting [2] Review of Environmental Impact and Concerns. With respect to environmental concerns, however, the public input is limited to written comments or participation in the public meetings. That level of interaction in the FERC proceedings is escalated at two points: (1) during the comment period for a draft environmental impact statement and (2) once the application for a certificate is filed. 11 At these points, there is a right to intervene. Almost any individual or group may intervene in the FERC proceeding after an application is submitted by filing a motion, typically within twentyone days of the FERC s notice of the gas company s application in the FederalRegister, though there is a late-filing procedure and intervenor status may be granted for good cause shown See, e.g All motions to intervene should be submitted to the Commission pursuant to 18 C.F.R : (a) Filing. (1) The Secretary of Energy is a party to any proceeding upon filing a notice of intervention in that proceeding. If the Secretary s notice is not filed within the period prescribed under Rule 210(b), the notice must state the position of the Secretary on the issues in the proceeding. (2) Any State Commission, the Advisory Council on Historic Preservation, the U.S. Departments of Agriculture, Commerce, and the Interior, any state fish and wildlife, water quality certification, or water rights agency; or Indian tribe with authority to issue a water quality certification is a party to any proceeding upon filing a notice of intervention in that proceeding, if the notice is filed within the period established under Rule 210(b). If the period for filing notice has expired, each entity identified in this paragraph must comply with the rules for motions to intervene applicable to any person under paragraph (a)(3) of this section including the content requirements of paragraph (b) of this section. (3) Any person seeking to intervene to become a party, other than the entities specified in paragraphs (a)(1) and (a)(2) of this section, must file a motion to intervene. (4) No person, including entities listed in paragraphs (a)(1) and (a)(2) of this section, may intervene as a matter of right in a proceeding arising from an investigation pursuant to Part 1b of this chapter. (b) Contents of motion. (1) Any motion to intervene must state, to the extent known, the position taken by the movant and the basis in fact and law for that position. (2) A motion to intervene must also state the movant s interest in sufficient factual detail to demonstrate that: (i) The movant has a right to participate which is expressly conferred by statute or by Commission rule, order, or other action; 931

6 24.02 ENERGY & MINERAL LAW INSTITUTE [3] Environmental Review National Environmental Policy Act (NEPA) Requirements. At least one court has likened the FERC s docket in the environmental review process as a central conduit and repository for information requests and responses that is the foundation for the consolidated record for (ii) The movant has or represents an interest which may be directly affected by the outcome of the proceeding, including any interest as a: (A) Consumer, (B) Customer, (C) Competitor, or (D) Security holder of a party; or (iii) The movant s participation is in the public interest. (3) If a motion to intervene is filed after the end of any time period established under Rule 210, such a motion must, in addition to complying with paragraph (b)(1) of this section, show good cause why the time limitation should be waived. (c) Grant of party status. (1) If no answer in opposition to a timely motion to intervene is filed within 15 days after the motion to intervene is filed, the movant becomes a party at the end of the 15-day period. (2) If an answer in opposition to a timely motion to intervene is filed not later than 15 days after the motion to intervene is filed or, if the motion is not timely, the movant becomes a party only when the motion is expressly granted. (d) Grant of late intervention. (1) In acting on any motion to intervene filed after the period prescribed under Rule 210, the decisional authority may consider whether: (i) The movant had good cause for failing to file the motion within the time prescribed; (ii) Any disruption of the proceeding might result from permitting intervention; (iii) The movant s interest is not adequately represented by other parties in the proceeding; (iv) Any prejudice to, or additional burdens upon, the existing parties might result from permitting the intervention; and (v) The motion conforms to the requirements of paragraph (b) of this section. (2) Except as otherwise ordered, a grant of an untimely motion to intervene must not be a basis for delaying or deferring any procedural schedule established prior to the grant of that motion. (3)(i) The decisional authority may impose limitations on the participation of a late intervener to avoid delay and prejudice to the other participants. (ii) Except as otherwise ordered, a late intervener must accept the record of the proceeding as the record was developed prior to the late intervention. (4) If the presiding officer orally grants a motion for late intervention, the officer will promptly issue a written order confirming the oral order. 932

7 Natural Gas InfraStructure Siting review. 13 For example, in the AES Sparrows Point LNG case, the Army Corps of Engineers was responsible for evaluating authorization under CWA 404, as well as other permits relating to dredging; the EPA, U.S. FWS, and NOAA commented, and the Maryland Department of Environmental Protection was charged with reviewing the project under CWA 401(a)(1). 14 If a project succeeds in securing all of the required state, local and federal permits to construct the pipeline, the last resort for those in opposition to the pipeline is often to challenge the FERC certification, alleging inadequacy of the environmental review. The best strategy is to have a comprehensive Environmental Assessment and Environmental Impact Statement, if required, that takes into account all environmental impacts, mitigation strategies, and possible alternatives. The FERC is given great deference, but only when it has had the opportunity to consider all aspects of the environmental impacts The Environmental Assessment, the Draft Environmental Impact Statement and the Final Environmental Impact Statement. [1] The Environmental Assessment. Frequently the subject of challenges in pipeline processes natural gas and otherwise are the final environmental impact statements (FEIS) issued by the FERC. Environmental Impact Statements (EIS) are required by NEPA before major federal actions that significantly affect the quality of the human environment. 15 Agencies are required by NEPA to take a hard look at potential environmental impacts. 16 An agency may preliminarily prepare an Environmental Assessment (EA) to determine whether the more 13 AES Sparrows Point LNG v. Wilson, 589 F.3d 721, 724 (4th Cir. 2009) (considering Maryland Department of Environmental Protectionʼs denial of a 401(a)(1) permit in an application for an LNG marine import terminal and related pipeline). 14 Id. 15 See Myersville, 783 F.3d at 1322, citing 42 U.S.C. 4332(C). 16 See 42 U.S.C. 4332(2)(C), see also Sierra Club, 990 F. Supp.2d at

8 24.03 ENERGY & MINERAL LAW INSTITUTE rigorous EIS is required. 17 The EA is required to include a discussion of reasonable alternatives to the proposed action, meaning that the alternative must be technically and economically feasible and must meet the purpose and of the agency s directives, including the proposed action. 18 If the EA concludes that there is a finding of no significant impact (FONSI) on the human environment, then an EIS is not required, and the agency s NEPA documentation obligations are discharged. 19 NEPA obligations are essentially procedural and do not mandate a particular substantive result. 20 [2] Consideration of Reasonable Alternatives. Another aspect to the NEPA requirement that the FERC contemplate reasonable alternatives to the proposed action is the requests for alternate siting of projects. 21 As part of a project to expand service capacity in New York s southern border, Millennium Pipeline Company (Millennium) applied to the FERC for a certificate for its project to build a natural gas compressor station in the Town of Minisink, New York. 22 The Town of Minisink responded with hundreds of verbal and written comments to the FERC and the formation of the Minisink Residents for Environmental Preservation and Safety (MREPS). 23 During the FERC process, several residents urged an alternative site for the compressor station, with proponents advocating this less residentially dense area and the proximity to the existing Meter 17 Myersville, 783 F.3d at 1323, citing 40 C.F.R , Id., citing Theodore Roosevelt Conservation P ship v. Salazar, 661 F.3d 66, 72 (D.C. Cir. 2011); 43 C.F.R (b) (additional case citation omitted). 19 Id. at 1322, citing 40 C.F.R (a)(1), ; 18 C.F.R (g). 20 Id., quoting Vermont Yankee Power Corp. v. NRDC, 435 U.S. 519, 558, 98 S. Ct. 1197, 55 L. Ed.2d 460 (1978) and citing Theodore Roosevelt Conservation P ship, 661 F.3d at 66, Minisink Residents for Envtl. Pres. and Safety v. FERC, 762 F.3d 97, 102 (D.C. Cir. 2014). 22 Id. 23 Id. at

9 Natural Gas InfraStructure Siting Station. 24 The alternate site required replacement of a seven-mile segment of pipe, including crossing the Neversink River, which was not required at the Minisink location. 25 In response to the alternate site proponents, the FERC sent notice to landowners in the alternate site vicinity as well as to landowners along the Neversink River and solicited comments. 26 The EA found the Minisink location environmentally preferable, due principally to the negative environmental consequences that would flow from an upgrade of the Neversink segment, even though there were some positive aspects to the alternate site. 27 The EA found that the project would have no significant environmental impact as long as certain mitigation measures were implemented. 28 Predictably, this generated a slew of comments, and the FERC voted to issue a certificate of public convenience and necessity to Millennium, undertaking an extensive environmental analysis in its order, leaning heavily on the results of the EA. 29 In the end, the FERC adopted the EA, its mitigation measures, and its conclusion. 30 MREPS sought review of the FERC s Order. 31 The court reviewed the record, much of it summarized supra and determined that the FERC had satisfied its obligation to consider logical alternatives to the Minisink location, noting the Order s recitation of the exploration, as well as the fact that the FERC went as far as to notify landowners who would be affected by the alternate site and solicit comment 24 Id. 25 Id. 26 Id. 27 Id. 28 Id. 29 Id. at Id. at 104. The FERC s decision was not unanimous. Commissioners Wellinghoff and LaFleur voted against certification and would have selected the alternate site. Id. Commissioner Clark concurred, asserting that the FERC was not required to select the site with the fewest environmental impacts, as long as there were other acceptable sites. Id. 31 Id. at 105. In the meantime, the compressor station was completed and put into service. Id. This did not moot MREPS challenge since the petitioners asserted ongoing harm to their aesthetic, health, and property interests. Id. at

10 24.03 ENERGY & MINERAL LAW INSTITUTE from them. 32 Interestingly, had Millennium intended, as petitioners asserted, to upgrade the pipeline along the Neversink River in the future regardless of the location of the compressor station, the FERC would have been required to consider this. 33 The saving grace seemed to be that the FERC had heard this argument and considered its merits during the process. 34 [3] Finding of No Significant Impact. In order for a FONSI to withstand judicial scrutiny, the agency must have concluded that either there would be no significant impacts or that there are planned measures to mitigate environmental impacts. 35 The appellate review is to ensure that no arguably significant consequences have been ignored. 36 There are four areas of judicial inquiry: (1) has the agency accurately identified the relevant environmental concern; (2) has the agency taken a hard look at the problem in preparing its EA; (3) is the agency able to make a convincing case for its finding of no significant impact; and (4) has the agency shown that even if there is an impact of true significance, and EIS is unnecessary because changes or safeguards in the project sufficiently reduce the impact to a minimum. 37 In both an EA and an EIS courts are to apply a rule of reason an agency s NEPA analysis and refuse to flyspeck the agencies findings in search of any deficiency 32 Id. at 107. The court observed that filing a supplemental notice in response to the proposal of an alternate site was a relatively unusual additional step by the FERC. Id. 33 Id. The court discussed this at some length even though the FERC had found that this potential upgrade was not sufficiently certain to be taken into account. This is a cautionary practice note, to be sure. See also City of Pittsburgh v. Federal Power Comm n, 237 F.2d 741, (D.C. Cir. 1956). 34 Id. at Myersville, 783 F.3d at 1322, quoting Michigan Gambling Opposition v. Kempthorne, 525 F.3d 23, 29 (D.C. Cir. 2008). 36 Id., quoting TOMAC v. Norton, 433 F.3d 852, 860 (D.C. Cir. 2006) (additional citation omitted). 37 Id., quoting Michigan Gambling, 525 F.3d at 29 (additional citation omitted). 936

11 Natural Gas InfraStructure Siting no matter how minor. 38 The two environmental analyses are not created equal: an agency s consideration of alternatives for an EIS is more rigorous than an EA. 39 [4] The Draft Environmental Impact Statement and the Final Environmental Impact Statement. If there is no FONSI, there are six steps in the FERC s environmental impact review process: (1) a notice of intent to prepare an impact statement, (2) a draft environmental impact statement (DEIS), (3) public hearings, (4) staff review and evaluation of the comments, (5) a final environmental impact statement (FEIS), and (6) FERC consideration of the final statement. 40 The DEIS s adequacy can be a subject for appeal. 41 The standard of review for the DEIS is whether the description in the DEIS is sufficient to provide a springboard for public comment. 42 The National Committee for the New River court considered the content of the comments to the DEIS, which were sufficiently detailed and critical of particular deficiencies in the 38 Id., quoting Nevada v. Dep t of Energy, 457 F.3d 78, 93 (D.C. Cir. 2006); Minisink Residents, 762 F.3d at Id. at 1323, citing cf 40 C.F.R (b) (requiring brief discussion[ ] of alternatives in an EA) with id (a) (requiring agency to [r]igorously explore and objectively evaluate all reasonable alternatives when EIS required); see also Envtl. Prot. Info. Ctr. v. U.S. Forest Serv., 451 F.3d 1005, 1016 (9th Cir.2006) ( [A]n agency s obligation to consider alternatives under an EA is a lesser one than under an EIS ) (internal quotation marks omitted); La. Crawfish Producers Ass n W. v. Rowan, 463 F.3d 352, 357 (5th Cir.2006) ( [T]he range of alternatives that the [agency] must consider decreases as the environmental impact of the proposed action becomes less and less substantial. ) (second alteration in original) (internal quotation marks omitted); Mt. Lookout Mt. Nebo Prop. Prot. Ass n v. FERC, 143 F.3d 165, 172 (4th Cir.1998); Friends of Ompompanoosuc v. FERC, 968 F.2d 1549, 1558 (2d Cir.1992); Olmsted Citizens for a Better Community. v. U. S., 793 F.2d 201, 208 (8th Cir.1986); River Rd. Alliance, Inc. v. Corps of Engineers of U.S. Army, 764 F.2d 445, 452 (7th Cir.1985) (all citations and parentheticals in original). 40 National Committee for the New River v. FERC, 373 F.3d 1232, 1326 (D.C. Cir. 2004). 41 See e.g., National Comm., 373 F.3d at Id. (finding that any deficiencies in the DEIS were ultimately cured by the FEIS) quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, , 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989) (quotes in original). 937

12 24.03 ENERGY & MINERAL LAW INSTITUTE DEIS, the source of the comments, which included both local organizations and federal agencies, and the ability of the FERC to respond to the deficiencies in the DEIS in the FEIS. 43 Notably, the addressed deficiencies did not make the DEIS deficient because the submissions criticizing the DEIS fulfilled its purpose of eliciting comment and suggestion. 44 The court quoted Robertson s explanation of NEPA s action forcing purpose and the EIS s role: an EIS serves in two important respects.... [i]t ensures that the agency, in reaching its decision, will have available, and will carefully consider, detailed information concerning significant environmental impacts; it also guarantees that the relevant information will be made available to the larger audience that may also play a role in both the decision making process and the implementation of that decision. 45 Importantly, this leaves open the possibility that DEIS deficiencies could create circumstances of actual prejudice if the omission left the affected public without information about a proposed project and subsequently left the FERC without public or agency comment on a material environmental aspect of the project. 46 This type of deficiency may not be curable by the FEIS. 47 Also relevant when considering challenges to a FEIS, NEPA does not require that a complete plan be formulated at the beginning of the process, but only that proper procedures be followed for ensuring that environmental consequences have been fairly evaluated. 48 Both the FERC and courts have recognized that in large, complicated projects involving considerable preparation, segments of such projects may proceed at different speeds. 49 The 43 Id. 44 Id. at Id. at 1328, quoting Robertson, 490 U.S. at 349 (omitting internal citations). 46 Id. at Id. 48 Id. citing Robertson, 490 U.S. at Id. The New River court specifically noted that landowners denying survey and environmental assessment access could slow down segments, and that this was not a tactic that could arrest progress on other aspects or segments of the project. Since in the authorʼs experience, such denials for land entry are often encouraged by environmental groups opposed to the pipeline, this is a key recognition by the FERC and the courts. 938

13 Natural Gas InfraStructure Siting solution in the New River case was that gaps in the DEIS, such as proposals for major river crossings considered to be environmentally sensitive, were remedied first, by recognition of the gaps in the DEIS, and second, by including conditions to address those gaps before construction and operation could proceed in the FEIS. 50 Another potential trap is DEIS supplementation. Generally speaking, an agency is not required to supplement an EIS every time new information is received after the EIS is finalized. 51 The analysis is one of the rule of reason that requires a supplemental EIS if the new information shows that the remaining action will affect the quality of the environment in a significant manner or to a significant extent not already considered. 52 If new information would likely generate comments from previously uninterested parties, however, it is likely to become relevant in a challenge. 53 [a] Segmentation. In fairness, the Tennessee Gas Pipeline did not battle to be in the D.C. Circuit on this issue, as it did in a case discussed infra. While it was at war with the PADEP after the Delaware Riverkeepers challenged its permits in Pennsylvania, the Delaware Riverkeepers simultaneously petitioned the FERC for a rehearing of its Order granting certification for the pipeline project discussed infra, and when this was denied, filed a petition for review, 50 Id. Later in the opinion, the New River court specified that the FEIS responded to new information provided in the process subsequent to the DEIS and included proposed conditions responsive to that information that were ultimately adopted by the FERC. Id. at Id. at 1330, citing Marsh v. Oregon Natʼl Resources Council, 490 U.S. 360 (1989) at Id., quoting Marsh, 490 U.S. at 274. The New River court phrases the test slightly differently, requiring a new EIS where new information ʻprovides a seriously different picture of the environmental landscape.ʼ Quoting Olmsted Falls v. FAA, 292 F.3d 261, 274 (D.C. Cir. 2002). Even more helpful is the application of the arbitrary or capricious standard of review and the accompanying deference to the agency to decisions by the FERC that the DEIS supplementation is not required. Id., citing Marsh, 490 U.S. at See e.g., infra, Minisink Residents, 762 F.3d at 97,

14 24.03 ENERGY & MINERAL LAW INSTITUTE but on entirely separate grounds from the ones asserted in Pennsylvania: the Delaware Riverkeepers Network asserted that the FERC impermissibly segmented review of the pipeline project and failed to consider cumulative impacts. 54 The NEPA-mandated environmental impact analysis includes direct, indirect, and cumulative effects. 55 The standard of review under NEPA is the deferential review of agency actions to ensure that the agency has adequately considered and disclosed the environmental impact of its actions and that its decision is not arbitrary or capricious. 56 Reasoned decisionmaking is required not conclusory statements of no impact. 57 Impermissible segmentation of a NEPA review occurs when an agency divides connected, cumulative, or similar federal actions into separate projects and thereby fails to address the true scope and impact of the activities that should be under consideration. 58 Actions or projects that will have cumulative or synergistic environmental impact upon a region that are pending concurrently before an agency must be comprehensively considered. 59 Briefly summarized, there are three types of actions in considering the scope of EIS: (1) actions that may be connected, meaning closely related and including actions that are interdependent parts of a larger 54 Delaware Riverkeepers Network v. FERC, 753 F.3d 1304, 1312 (D.C. Cir. 2014). 55 Fuel Safe Washington, 389 F.3d at 1327, citing 42 U.S.C. 4332(2)(C)(i) (NEPA) and 40 C.F.R Delaware Riverkeepers, 753 F.3d at , quoting Baltimore Gas & Elec. Co. v. NRDC, 462 U.S. 87, 97-98, 103 S.Ct. 2246, 76 L.Ed.2d 437 (1983) (internal quotes omitted); and citing Nat l Comm. for the New River, Inc. v. FERC, 373 F.3d 1323, 1327 (D.C. Cir. 2004); see also Myersville, 783 F.3d at (finding that the Cove Point LNG facility was not a connected action to Dominion s Allegheny Storage Project since they are unrelated and neither depended on the other for justification). 57 Id. at 1313, citing Found. On Econ. Trends v. Heckler, 756 F.2d 143, 154 (D.C. Cir. 1985); and quoting Motor Vehicle Mfrs. Ass n of the U.S., Inc. v. State Farm Mut. Auto Ins., 463 U.S. 29, 43and 52, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). 58 Id. 59 Id., quoting Kleppe v. Sierra Club, 427 U.S. 390, 410, 96 S. Ct. 2718, 49 L.Ed.2d 576 (1976) (internal quotes omitted). 940

15 Natural Gas InfraStructure Siting action and depend on the larger action for their justification; (2) cumulative actions that when viewed with other proposed actions have cumulatively significant impacts; and (3) similar actions that, when viewed with other reasonably foreseeable or proposed agency actions, have similarities that provide a basis for evaluating their environmental consequences together, such as common timing or geography. 60 The justification against segmentation is to prevent agencies from finding insignificant environmental impact by chopping up a project into multiple individual actions. 61 The 40-mile pipeline project that was the subject of Tennessee Gas Pipeline Co. LLC v. Delaware Riverkeepers Network was actually an upgrade of a much longer natural gas pipeline, the 300 Line, for which Tennessee Gas Pipeline had submitted four separate project proposals each reviewed separately by the FERC totaling 200 miles of continuous pipeline, each approved and constructed in rapid succession from 2010 to The legal kerfluffle began when the FERC recommended a FONSI for the Northeast Project after the agency completed the EA, even though the applications for the second and fourth upgrade projects were pending before the FERC at the time. 63 As an initial matter, the four projects had a clear physical, functional, and temporal nexus between them, described as self-evident interrelatedness. 64 Since the FERC did not consider the other segments of 60 Id. at , quoting 40 C.F.R Id. at 1314, quoting NRDC v. Hodel, 865 F.2d 288, 287 (D.C. Cir. 1988) (internal quotes omitted). 62 Id. at The Western Leg of the project resulted in parallel lines; the Eastern project consisted of parallel lines and renovations to compression and monitoring infrastructure; the Northeast project was five new segments of pipe, as well as modification to existing compression and metering infrastructure. 63 Id. at The Northeast Project belongs to our friends from the Tennessee Gas Pipeline Co. LLC case, see infra. 64 Id. Other observations made by the court include: there are no linear offshoots to the Eastern Leg; the gas enters the system at one end and exits at a terminus after passing through new pipe sections and improved compressor stations; the upgrade projects were completed in the same general timeframe; FERC was aware of the interconnectedness of the project during the environmental review of the Northeast Project. Id. at

16 24.03 ENERGY & MINERAL LAW INSTITUTE the overall projects, the court found the EA deficient in its failure to include any meaningful analysis of the cumulative impacts of the upgrade projects. 65 Because the FERC violated NEPA, the entire pipeline project was remanded back to the FERC for further consideration. 66 [b] Standing. Just when proposed pipelines appear destined to spend years in court being challenged by environmental opponents, the courts remind parties that Article III still applies. As an initial matter, a petitioner must have standing, even if the petitioner has been involved in the FERC proceeding. 67 Constitutional standing has three elements: (1) petitioner must have suffered an injury in fact; (2) the injury must be fairly traceable to the challenged action of the defendant; and (3) the injury must be redressable by a favorable judicial decision. 68 The conjectural or hypothetical injury does not satisfy Article III. 69 In the No Gas Pipeline case, there was no 65 Id. at The Council on Environmental Quality defines cumulative impacts as the impact on the environment which results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency (Federal or non-federal) or person undertakes such other actions. Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time. Id. at 1319, quoting 40 C.F.R Meaningful cumulative impact analysis must identify (1) the area in which the effects of the proposed project will be felt; (2) the impacts that are expected in that area from the proposed project; (3) other actions past, present, and proposed, and reasonably foreseeable that have had or are expected to have impacts in the same area; (4) the impacts or expected impacts from these other actions; and (5) the overall impact that can be expected if the individual impacts are allowed to accumulate. Id., quoting Grand Canyon Trust v. FAA, 290 F.3d 339, 345 (D.C.Cir.2002) (internal quotes omitted). The court determined that the three... upgrade projects preceding and following the Northeast Project were clearly other actions past, present, and proposed, and reasonably foreseeable. Id., quoting Grand Canyon Trust at Id. 67 No Gas Pipeline v. FERC, 756 F.3d 764, 767 (D.C. Cir. 2014). 68 Id., citing Lujan v. Defenders of Wildlife, 504 U.S. 555, , 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (quotations in original). 69 Occidental Permian Ltd. v. FERC, 673 F.3d 1024, 1026 (D.C. Cir. 2012), quoting Lujan, 504 U.S. at 560. The takeaway from Occidental Permian Ltd. is that the hypothesized injury does not confer standing if that injury relates to events or actions performed by a third party 942

17 Natural Gas InfraStructure Siting standing for petitioners claiming injury in the form of certainty that radon levels in the residences will increase once gas from [Marcellus shale] sources that have higher radon levels... then currently supplied gas begins to flow through [the proposed] pipelines into their homes. 70 The court characterized these injuries as those that have neither occurred nor become imminent. 71 In the Myersville Citizens for a Rural Community, Inc. the FERC conditioned its certificate to Dominion for its proposed expansion of natural gas facilities in the northeastern U.S., including the compressor station at issue, on receipt of appropriate permits under the Clean Air Act, and this was attacked as a violation of the either the NGA or the portions of the Clean Air Act within the NGA s savings clause. 72 Dominion, who intervened in the proceeding against the FERC challenging its certificate, asserted that the Myersville Citizens group lacked standing to argue that the FERC had violated the NGA s savings clause, arguing that the Myersville Citizens group lack prudential standing to challenge the FERC certificate as they are outside of the zone of interest of the NGA. 73 The FERC s interpretation of its authority to grant a certificate of public convenience and necessity is judicially reviewed by application of the two-step, agency deferential, Chevron analysis: (1) has Congress spoken directly to the issue, and if not, (2) is the agency s interpretation based on permissible construction of the statute. 74 The court upheld the FERC, but determined that Dominion had it wrong the Myersville Citizens group did have standing. 75 The zone of interest test is a simple determination, using traditional tools of statutory interpretation, whether a legislatively conferred cause of in reaction to the project permitted by the FERC or if that injury is based on speculation regarding what the FERC might do with rates in the future. Id. at No Gas Pipeline, 756 F.3d at 767 (emphasis omitted). 71 Id. at Myersville Citizens, 783 F.3d at Id. at Id. at 1315, citing Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, , 104 S. Ct. 2778, 81 L. Ed.2d 694 (1984); Okla. Natural Gas Co. v. FERC, 28 F.3d 1281, (D.C. Cir. 1994); N. Natural Gas Co. v. FERC, 827 F.2d 779, 784 (D.C. Cir. 1987). 75 Id. 943

18 24.03 ENERGY & MINERAL LAW INSTITUTE action encompasses a particular plaintiff s claim. 76 In other words, does the plaintiff s claim come within the zone of interests protected by the law invoked. 77 As the terminology used implies, this is a lenient test utilizing a general presumption that a statutory cause of action is limited to plaintiff s whose injuries are proximately caused by violations of the statute. 78 The Myersville Citizens group s claims that the FERC certificate and CAA permit caused environmental injuries to them as residents near the compression station, including noise and air pollution, was sufficient to confer standing under the NGA and the CAA. 79 Dominion s was a valiant effort, but keeping environmental intervenors from taking a shot at a certification and issued permits is an uphill climb. Fortunately, Dominion s case has a happy ending. 80 [5] Deference to the FERC and Its Process. There is some judicial comfort in defending FERC certificates. In describing the attempts of environmental groups, aligned with fuel oil dealers, protesting a natural gas pipeline, the D.C. Court of Appeals paid closer attention to the facts in the record than to the accusations made by this coalition, noting that [t]he Coalition cannot, by sheer multiplication of innuendo, overcome the strong presumption of agency regularity.... [d] 76 Id., quoting Lexmark Int l, Inc. v. Static Control Components, Inc., U.S., 134 S. Ct. 1377, 1387, 188 L.Ed.2d 392 (2014) (internal quotes omitted). 77 Id., quoting Lexmark, 134 S. Ct. at 1388 (internal quotes omitted). 78 Id., quoting Lexmark, 134 S. Ct. at 1390 (internal quotes omitted). Indeed, a wouldbe plaintiff is outside the statute s zone of interests only if the plaintiff s interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit. Id. at 1316, quoting Match E Be Nash She Wish Band of Pottawatomi Indians v. Patchak,132 S. Ct. 2199, 2210, 183 L. Ed.2d 211 (2012) (quoting Clarke v. Securities Indus. Ass n, 479 U.S. 388, 399, 107 S. Ct. 750, 93 L. Ed.2d 757 (1987)) (internal quotes omitted). 79 Id. at The court also dismissed Dominion s argument that the Myersville Citizens group lacked Article III standing because the injuries were only procedural and not concrete. Id. In fact, the court found that the alleged injuries depressed property values around the compressor, increased noise and air pollution, visual blight, and heightened safety risks were concrete, stemmed from the allegedly unlawful certificate, and was redressable through judicial review. Id. 80 The Myersville Citizens group s petition for review of the FERC s order was denied. Id. at 1327 and discussed in more detail, supra. 944

19 Natural Gas InfraStructure Siting espite all their sound and fury, the attacks of the Coalition ultimately prove impotent. 81 The coalition s challenge to the certification included a laundry list of allegations from improper ex parte communications to due process violations, which were picked apart easily by the court. 82 Of perhaps more interest to gas companies and legal practitioners is the discussion of what constitutes the substantial evidence test under the NGA. 83 The statement of the test is that the evidence relied upon by the FERC must be substantial in light of the whole record. 84 There is a corollary that fits the description of the FERC s role as previously discussed: interested parties must have an opportunity to introduce adverse evidence and criticize evidence introduced by others. 85 Again, the court reviewed the record, the criticisms leveled by the coalition at the project and its data, and the totality of the proceedings in determining that the evidence was substantial and that there was ample opportunity to present evidence and criticism. 86 [6] Scope of Appeal Or Why You Have to Raise Everything Every Time. One reason why proceedings in front of the FERC are so vigorous and why obtaining a Certificate of Public Convenience and Necessity is not the end of the saga, is because of 19(b) of the NGA. 87 No objection to the FERC s issuance of a certificate shall be considered by the appellate court 81 Louisiana Ass n of Indep. Producers and Royalty Owners v. FERC, 958 F.2d 1101, 1111 (D.C. Cir. 1992) (per curiam), citing e.g., Withrow v. Larkin, 421 U.S. 35, 55, 95 S.Ct. 1456, 43 L.Ed.2d 712 (1975); United States v. Morgan, 313 U.S. 409, 421, 61 S.Ct. 999, 85 L.Ed.2d 1429 (1941). 82 See id. at 1113 and Id. at Id., citing Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 464, 95 L.Ed. 456 (1951); Association of Data Processing Serv. Orgs. v. Board of Governors of the Fed. Reserve Sys., 745 F.2d 677, (D.C. Cir. 1984). 85 Id., quoting Mobil Oil Corp. v. FPC, 483 F.2d 1238, 1258 (D.C.Cir.1973) (emphasis omitted); see also Wisconsin Gas Co. v. FERC, 770 F.2d 1144, & n. 38 (D.C.Cir.1985) (limiting Mobil Oil on other grounds), cert. denied, 476 U.S. 1114, 106 S.Ct. 1968, 90 L.Ed.2d 653 (1986). 86 Id. at U.S.C. 717r(b). 945

20 24.03 ENERGY & MINERAL LAW INSTITUTE unless such objection shall have been urged before the Commission in the application for rehearing unless there is reasonable ground for failure so to do. 88 In other words, a party like an intervenor must exhaust its administrative remedies before seeking judicial review. 89 The courts have fleshed out the legal concept of exhaustion : a prerequisite to judicial review is the presentation of a ground for objection in an application for rehearing in front of the Commission. 90 This exhaustion policy applies to procedural matters as well as substantive matters. 91 More particularly in Fuel Safe Washington, this applied to challenges to the scope of the FERC s regulatory authority. 92 The issue in Fuel Safe Washington seemed at first blush to be 88 Id. 89 Fuel Safe Washington, 389 F.3d 1313, 1320 (10th Cir. 2004), quoting Fed. Power Comm n v. Colo. Interstate Gas Co., 348 U.S. 492, 499, 75 S. Ct. 467, 99 L. Ed. 583 (1955). 90 Id. 91 Id. at , citing, e.g., R.R. Comm n v. FERC, 874 F.2d 1338, 1342 (10th Cir.1989) (refusing to consider an objection to expert witnesses because not raised in petition for rehearing before FERC); Phillips Petroleum Co. v. Fed. Power Comm n, 556 F.2d 466, 471 (10th Cir.1977) (refusing to consider whether a contract was renewed for purposes of obtaining a new rate because the issue was not raised in the petition for rehearing before FERC); Skelly Oil Co. v. Fed. Power Comm n, 401 F.2d 726, 729 (10th Cir. 1968) (refusing to consider arguments by amicus because not raised by any party on an application for rehearing as required by 19(b) of the Act ); Pan Am. Petroleum Corp., 268 F.2d at (refusing to consider challenge to an order which was not challenged in a petition for rehearing). Other courts have similarly applied 19(b). See, e.g., Nat l Comm. for the New River, Inc. v. FERC, 373 F.3d 1323, 1332 (D.C. Cir. 2004) (refusing to consider whether Commission adequately considered alternatives because not raised in petition for rehearing); Consol. Gas Supply Corp. v. FERC, 611 F.2d 951, 959 (4th Cir. 1979) (noting that this rule [of exhaustion of administrative remedies] is particularly applicable when, as here, the objections are procedural and, if sound, subject to correction ). 92 Id. at , citing Sunray Mid Continent Oil Co. v. Fed. Power Comm n, 364 U.S. 137, , 80 S. Ct. 1392, 4 L. Ed.2d 1623 (1960) (applying 19(b) s requirement that all issues submitted for judicial review must be raised before the Commission to refuse to address an argument that the Commission s order might violate the Natural Gas Act and thereby impermissibly extend its regulatory jurisdiction); Intermountain Municipal Gas Agency v. FERC, 326 F.3d 1281, 1285 (D.C. Cir. 2003) (refusing to address, because not raised in the petition for rehearing, petitioner s challenge to FERC s interpretation of the Hinshaw Amendment to preclude exempting [from FERC regulation] a system which delivers gas that is subsequently transported temporarily out of state but returned for ultimate consumption within the state of delivery );4 Aquenergy Sys., Inc. v. FERC, 857 F.2d 227, 230 (4th Cir.1988) (expressly responding to petitioner s argument that the Commission lacks 946

21 Natural Gas InfraStructure Siting straightforward. The pipeline at issue did not transport gas in interstate commerce and the FERC has plenary jurisdiction over the transportation of natural gas in interstate commerce. 93 Further, Whatcom County but not the petitioners had raised the exact issue in a motion to dismiss the application. 94 There is no bootstrapping an argument before an appellate court, even if another party argued the precise issue in front of the FERC. 95 [7] Obtaining Permits Within the FERC Regulatory Framework. The NGA does have pre-emption assistance for pipeline projects seeking to thwart environmental legal and process protests or at the least, gain certainty in the regulatory system for environmental and related permits. 96 There are three exceptions to the FERC certificate pre-emption under the NGA: the Clean Water Act (CWA); the Clean Air Act (CAA); and the Coastal Zone Management Act (CZMA). All three of these regulatory programs are at the intersection of state and federal environmental protection, and therefore all three have been the subject of challenges to natural gas projects. What is at jurisdiction because operation of the project does not affect interstate commerce and stating [w]e decline to consider this contention because it was not presented to the Commission and [w]e will not consider a contention not presented to, or considered by, the Commission ). Cf. City of Farmington v. FERC, 820 F.2d 1308, 1311 n. 1 (D.C. Cir. 1987) (in rejecting FERC s argument that the court lacked jurisdiction to hear petitioner s challenge to FERC s decision that petitioner s gas purchases were subject to FERC s regulatory jurisdiction, the court did not rely upon the rule that subject matter jurisdiction may be raised at any time). 93 Id. at Id. at Id., citing inter alia, Process Consumers Group v. FERC, 912 F.2d 511, 514 (D.C. Cir. 1990) ( [T]he party seeking review must raise its objections in its own application for rehearing to the Commission. ); Columbia Gas Transmission Corp. v. FERC, 848 F.2d 250, 255 (D.C. Cir. 1988). (stating that a court cannot consider an objection not raised by petitioner but argued to FERC by another party to the same proceeding ). 96 See Tennessee Gas Pipeline Co. LLC v. Delaware Riverkeeper Network, 921 F. Supp. 2d 381 (M.D. Pa. 2013). Although this case is discussed for its analysis of the interplay between the FERC certification and CWA 401 permits, this case is only the beginning of the story. The Delaware Riverkeepers, once in the proper court, successfully challenged the environmental assessment for improper segmentation of the project, Delaware Riverkeeper Network v. FERC, 753 F.3d 1304 (D.C. Cir. 2014), a case discussed supra. 947