In a decision that may affect how impacts of related pipeline construction projects are analyzed, the D.C. Circuit Court of Appeals recently remanded an environmental assessment (EA) prepared by FERC under the National Environmental Policy Act (NEPA). Delaware Riverkeeper Network et al. v. FERC, D.C. Cir. No 13-101 (June 6, 2014). The Court held that the Commission violated NEPA by improperly considering the project’s environmental impacts in isolation from three inter-related projects undertaken or proposed by the same operator on the same pipeline within a short period of time. The Court remanded the case to FERC for further consideration of the cumulative environmental impacts of the four related natural gas pipeline construction projects.
The project at issue involved the addition of 40 miles of new pipe to an existing natural gas pipeline and modification of existing compressor and metering stations (the “Northeast Project”). It was one of four separate projects proposed as part of an overall upgrade to about 200 miles of the existing line, which runs from Pennsylvania to delivery points in New Jersey. The purpose of the upgrade was to increase capacity on the pipeline in order to accommodate increased production in the Marcellus Shale region. FERC reviewed each of the four projects separately and approved them between 2010 and 2013. The D.C. Circuit found that in doing so, FERC violated NEPA by (1) impermissibly segmenting its review of the Northeast Project by not analyzing it in conjunction with the three related projects; and (2) failing to provide a meaningful analysis of the cumulative impacts of the four projects taken together. Id. at 2.
As the lead agency for review of interstate natural gas pipeline construction and operation certificates, FERC must conduct a NEPA review of each project’s environmental impacts. NEPA review culminates in the preparation of an initial EA and, if further review is warranted, a more thorough analysis in an environmental impact statement (EIS). An essential component of the NEPA process is the determination of the scope of the federal action under review. 40 C.F.R. §1502.4(a). NEPA regulations require federal agencies to consider impacts of a proposed action not in isolation, but in conjunction with “connected,” “cumulative” or “similar” agency actions. 40 C.F.R. § 1508.25.
The D.C. Circuit found that FERC violated this requirement by failing to analyze impacts from the four interrelated actions, choosing instead to view the Northeast Project as essentially a series of standalone improvements designed to provide “contracted-for volumes of gas to different customers within different timeframes.” Delaware Riverkeeper at 14. The Court rejected this approach, in light of the fact that FERC was well aware of the Project’s close relationship to the other three upgrade projects. Id. at 25. The Court emphasized the physical, functional, and financial links among the projects, which were intended to function together for the shared purpose of increasing capacity on the pipeline. Id. at 10 (citing Taxpayers Watchdog v. Stanley, 819 F.2d 294 (D.C. Cir. 1987) (setting fourth four factors required to show that physically connected projects can be analyzed separately under NEPA)). It dismissed FERC’s argument that it was proper to consider impacts of each project separately, pointing out that the projects were part of a single, continuous pipeline proposed within the same general time frame. Id. at 6, 25. “Separated by more time,” the Court said, “the projects could have utility independent of the other projects,” and their financial and functional interdependence would have been less significant. Id.
The Court went on to explain its related holding, that FERC’s EA for the project had not sufficiently considered “cumulative impacts,” as required by NEPA regulations. See 40 C.F.R. § 1508.7 (defining a “cumulative impact” as that resulting from the incremental impact of the action under review when added to other “past, present, and reasonably foreseeable future actions”). While FERC concluded in its EA that the four connected pipeline projects were “not expected to significantly contribute to cumulative impacts in the Project area,” the Court found that this assertion was unsupported by serious consideration of the effects from other project upgrades. Delaware Riverkeeper at 28.
For proponents of pipeline projects and federal agencies in charge of NEPA review, Delaware Riverkeeper will likely prompt increased focus on NEPA analysis for interrelated projects and their potential cumulative effects. Projects that are spatially, financially, and temporally distinct should continue to be permissible for standalone NEPA analysis, but expansion projects and other projects that are interrelated will likely require more scrutiny.