The Third Circuit held in a highly anticipated recent decision that state actions on water quality-related permits for interstate natural gas pipeline projects are reviewable only in the federal Circuit Courts of Appeals, in accordance with the Natural Gas Act (NGA).  The case, Delaware Riverkeeper v. Secretary, Pennsylvania Department of Environmental Protection et al., concerned petitions for review filed by environmental and conservation groups in New Jersey and Pennsylvania to challenge state permitting decisions for the Transcontinental Pipeline (Transco) Leidy project.  Specifically, the groups challenged the decisions of the Pennsylvania and New Jersey Departments of Environmental Protection (PDEP and NJDEP, respectively) to issue water quality certifications under Section 401 of the Clean Water Act (CWA) and, in the case of the NJDEP, other water quality-related permits required under State law.

The conservation groups originally filed their petitions in the Third Circuit, invoking the Court’s jurisdiction under the NGA juridical review provision, 15 U.S.C. § 717r(d)(1), which provides for “original and exclusive” jurisdiction in the federal Circuit Courts of Appeals over any “civil action for the review of an order or action of a [federal or state] administrative agency acting pursuant to Federal law” to issue, condition, or deny permits or other authorizations required for NGA projects.  PDEP and NJDEP challenged jurisdiction in the Third Circuit, however, arguing that the appropriate forum for review of a State-issued water quality certification and/or related permits is the state administrative appeals process (as the PDEP had advised in its public notice when Transco’s water quality certification was issued). The state agencies also raised the defense of sovereign immunity.

The Third Circuit ruled against PDEP and NJDEP on the jurisdictional arguments, and it ruled against the petitioners on the merits, finding that the state agencies had not acted improperly in issuing certifications and related permits to the project.  In doing so, the Court clarified several important points of law:

  • Jurisdiction Under NGA Section 19(d)(1).  The question of the Court’s jurisdiction under 15 U.S.C. § 717r(d)(1) came down to whether issuance of the water quality certifications at issue was action taken “pursuant to federal law.”  PDEP had argued that while a water quality certification is required under federal law, the certifications were issued “pursuant to” state, rather than federal law.  The Court rejected this argument, stating that issuance of a water quality certification is not purely a matter of state law.  As for other water quality-related state permits that (according to NJDEP) “exclusively involved issues of State law,” the Court held that it had jurisdiction to review these State-issued authorizations as “each is rooted in NJDEP’s exercise of authority that it assumed pursuant to Sections 401 and 404 of the Clean Water Act.”
  • Mootness.  NJDEP and Transco argued that the issues raised in the petitions were moot, as Transco has completed construction of the Leidy project, and mitigation and restoration efforts are underway.  The Court rejected these arguments, however, finding that the case was not moot, as NJDEP may still monitor mitigation outcomes following completion of mitigation.
  • Sovereign Immunity.  The Court dismissed the state agencies’ arguments that the challenges to the certifications and other state permits were barred by sovereign immunity, holding that the states’ voluntary participation in the CWA and NGA regulatory schemes constituted a waiver of sovereign immunity, given the clear language in those statutes subjecting their actions to federal review.

In issuing this ruling, the Third Circuit joins several other federal district and circuit courts that have exercised their jurisdiction under the NGA (specifically, 15 U.S.C. § 717r(d)(1)) to review state water quality certification decisions.  Constitution Pipeline has recently invoked federal appellate jurisdiction under this provision in the Second Circuit, seeking review of the decision by the New York Department of Environmental Conservation to deny water quality certification and delay issuance of other water quality-related projects.  The Third Circuit decision in Delaware Riverkeeper will likely help to remove any doubts concerning the Court’s jurisdiction over the case.