Once large infrastructure projects, such as oil and natural gas pipelines, receive federal government approval, they are often the target of legal challenges from opposition groups. Opponents repeatedly argue that the environmental review, pursuant to the National Environmental Policy Act (NEPA), was insufficient. If a court finds deficiencies in the government’s NEPA analysis, can a court halt construction or cease operations even after years of project design, permit approvals at all levels of government, and tens of millions of dollars in investment? This question was at the heart of the ongoing litigation involving the controversial Dakota Access Pipeline (DAPL), and, on October 11, Judge James Boasberg determined “no,” the court would not shut down the pipeline. This case is important precedent for projects being challenged under NEPA. The same issue is at play in the Sabal Trail case currently under review by the US Court of Appeals for the DC Circuit. See Sierra Club, et al. v. FERC, No. 16-1329 (D.C. Cir. filed Sept. 21, 2016).
On September 15, 2017, the Federal Energy Regulatory Commission (FERC or the Commission) issued an order in which it concluded that delays by the New York Department of Environmental Conservation (NYDEC or the Department) in processing Millennium Pipeline Company’s application for Clean Water Act (CWA) water quality certification constituted a waiver of the certification requirement. The order resolves a lengthy saga regarding water quality certification for Millennium’s Valley Lateral Project. It reaffirms previous FERC precedent establishing that the one-year waiver period for CWA water quality certification decisions by state agencies begins when the state agency receives a written application for certification, regardless of the state agency’s determination that the application is incomplete or requests for further information.
As previously reported on PipelineLaw, the ongoing controversy over an April 2016 decision by the New York Department of Environmental Conservation (NYDEC or the Department) to deny a Clean Water Act (CWA) water quality certification to Constitution Pipeline Company (Constitution or the Company) for its interstate natural gas pipeline project in Pennsylvania and New York highlights tensions between federal and state oversight of such projects. In the latest chapter of this controversy, the Second Circuit recently denied Constitution’s petition for review of the NYDEC decision, concluding that (1) the Court lacked jurisdiction over the Company’s claims to the extent that they challenged the timeliness of the decision; and (2) the Department acted within its statutory authority in denying the certification, and its denial was not arbitrary or capricious.
Since the Administration denied a Presidential (border crossing) Permit to the Keystone XL Project in 2015, a number of regional, state or local objections to new pipeline construction projects have emerged around the U.S. Most of the protests have continued themes relied on by opposition to Keystone, including the claim that fossil fuels should remain in the ground in order to limit the impacts of climate change. Groups such as the Sierra Club and Earth Justice have acknowledged that they selected Keystone as a tangible subject to carry their climate change message, which is otherwise rather abstract. Ironically, the Keystone and subsequent protests seem to focus on oil and gas as more emblematic of fossil fuels than coal, and they ignore the significant safety advantages in transporting energy by pipeline as compared to any other method. In addition, they ignore economic and safety factors that counsel in favor of new pipeline construction, and avoid discussion about the realistic availability of alternative energy resources provide a majority of U.S. demand in the near future.
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.
Recent developments in cases brought by Constitution Pipeline Company to challenge New York’s denial of certain water quality authorizations highlight tensions between federal and state oversight of interstate natural gas pipeline construction projects, and the accompanying potential for costly and protracted delays. Under the scheme of “cooperative federalism” set up by many environmental statutes—such as the Clean Water Act (CWA), the Clean Air Act, and the Endangered Species Act—even where a natural gas project is under the exclusive federal regulatory jurisdiction of the Federal Energy Regulatory Commission (FERC), it will often require state-issued permits or other authorizations to go forward. The controversy in the pending Constitution Pipeline cases concerns the extent to which a state may assert authority over discrete aspects of a federally-regulated project in a manner that delays or prevents its construction.
The question of whether Presidential Permit authority is constitutional and/or subject to judicial review has been and continues to be an unsettled issue. A little more than a month after the State Department’s November 2015 denial of TransCanada’s application for a Presidential Permit to construct its Keystone XL pipeline project, the United States District Court for the District of Minnesota ruled in White Earth Nation et al. v. Kerry et al. that State Department Presidential Permitting decisions are Presidential in nature and are therefore not subject to judicial review. Approximately one month later, in January 2016, TransCanada filed two separate actions to challenge the Obama administration’s rejection of its application for a Presidential Permit for the Keystone XL pipeline. The first action was filed in federal district court in Texas to challenge the denial of the Keystone Presidential Permit, and the second is a Notice of Intent to submit a claim to arbitration under Chapter 11 of the North American Free Trade Agreement (NAFTA).
On September 29, 2015, the D.C. Circuit Court of Appeals ruled that the National Environmental Policy Act (NEPA) did not require federal agencies authorizing portions of an interstate oil pipeline project to conduct a “whole-pipeline” environmental review. The case, Sierra Club v. U.S. Army Corps of Engineers, et al., clarifies the appropriate scope of NEPA review for oil pipeline construction projects where federal involvement is limited to granting authorizations for discrete aspects of the project.
Environmental groups often seek to delay or stop pipeline projects by filing legal challenges under various state and federal environmental and/or energy laws. Recent court decisions have illustrated the difficult nature of such challenges, and in particular the difficulty environmental groups have in making a threshold showing of the legal basis for their challenge. An offshoot of the well-established principle that a litigant cannot raise someone else’s rights in court, the legal doctrine of ‘standing’ requires a litigant to demonstrate its interest in an actual case or controversy as a preliminary requirement for a case to be heard and decided in a court of law. In addition, a litigant citing a particular statute as the basis for a lawsuit must establish that it has an interest at stake that is within the ‘zone of interests’ protected by that statute.
The United States Court of Appeals for the Ninth Circuit has affirmed dismissal of a lawsuit brought in 2012 by the City and County of San Francisco (San Francisco) to challenge PHMSA’s oversight of State enforcement of pipeline safety standards before and after the San Bruno pipeline incident in 2010. Specifically, in its lawsuit San Francisco took issue with PHMSA’s approval of the California Public Utilities Commission (CPUC) certification to regulate intrastate pipelines in California and the Agency’s disbursement of federal funds to the CPUC to carry out its pipeline safety program in compliance with its certification. The Ninth Circuit opinion affirms the District Court’s ruling in the case that the federal Pipeline Safety Act (PSA or the Act) citizen suit provision does not authorize mandamus-type citizen suits against PHMSA, and that any decision by the Agency to refrain from reviewing or rejecting a State’s certification to regulate its intrastate pipelines or to fund a State pipeline safety program is not subject to judicial review.