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Delaware Riverkeeper Network v. Federal Energy Regulatory Commission

United States Court of Appeals, District of Columbia Circuit

June 6, 2014

DELAWARE RIVERKEEPER NETWORK, ET AL., PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT, TENNESSEE GAS PIPELINE COMPANY, LLC AND STATOIL NATURAL GAS, LLC, INTERVENORS

Argued,  February 24, 2014

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[Copyrighted Material Omitted]

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On Petition for Review of an Order of the Federal Energy Regulatory Commission.

Aaron Stemplewicz argued the cause for petitioners. With him on the briefs was Susan Kraham. Jane P. McClintock entered an appearance.

Karin L. Larson, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were David L. Morenoff, Acting General Counsel, and Robert H. Solomon, Solicitor.

John F. Stoviak argued the cause for intervenors. With him on the brief were Pamela S. Goodwin, Thomas S. Schaufelberger, William G. Myers III, and Kirstin Elaine Gibbs. Christopher M. Heywood entered an appearance.

Before: BROWN, Circuit Judge, and EDWARDS and SILBERMAN, Senior Circuit Judges. Opinion for the Court filed by Senior Circuit Judge EDWARDS. Opinion filed by Circuit Judge BROWN concurring in part and concurring in the judgment. Concurring opinion filed by Senior Circuit Judge SILBERMAN.

OPINION

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Edwards, Senior Circuit Judge

In May 2012, the Federal Energy Regulatory Commission (" Commission" or " FERC" ) issued a certificate of public convenience and necessity to Tennessee Gas Pipeline Company, L.L.C. (" Tennessee Gas" ), authorizing it to build and operate the Northeast Upgrade Project (" Northeast Project" ). The project included five new segments of 30-inch diameter pipeline, totaling about 40 miles, and modified existing compression and metering infrastructure. Petitioners, Delaware Riverkeeper Network, New Jersey Highlands Coalition, and Sierra Club, New Jersey Chapter (collectively, " Riverkeeper" ), contend, inter alia, that in approving the Northeast Project, FERC violated the National Environmental Policy Act (" NEPA" ), 42 U.S.C. § § 4321-4370h, by: (1) segmenting its environmental review of the Northeast Project -- i.e., failing to consider the Northeast Project in conjunction with three other connected, contemporaneous, closely related, and interdependent Tennessee Gas pipeline projects -- and (2) failing to provide a meaningful analysis of the cumulative impacts of these projects to show that the impacts would be insignificant.

The Northeast Project upgraded a portion of a much longer natural gas pipeline known as the 300 Line. Taken together, the Northeast Project and the three other connected, closely related, and interdependent Tennessee Gas upgrade projects on the 300 Line constituted a complete upgrade of almost 200 miles of continuous pipeline. FERC was responsible for the environmental review of these projects because, under the Natural Gas Act, any party seeking to construct a facility for the transportation of natural gas in interstate commerce must first obtain a certificate of public convenience and necessity from the Commission. 15 U.S.C. § 717f(c)(1)(A). And before FERC may issue such a certificate, it must satisfy the requirements of NEPA by identifying and evaluating the environmental impacts of the proposed action. This means that FERC was required to prepare an Environmental Assessment (" EA" ) and, if significant impacts were found, to prepare a more comprehensive Environmental Impact Statement (" EIS" ). 40 C.F.R. § 1501.4.

The 300 Line carries natural gas from wells in western Pennsylvania to points of delivery east of Mahwah, New Jersey. When it was first constructed in the 1950s, the entire pipeline was built of 24-inch diameter pipe, with compressor stations located every several miles to keep the gas moving through the pipeline. The 300 Line has a Western Leg and an Eastern Leg. Expansions to the Western Leg of the pipeline added 30-inch diameter pipe and allowed it to accommodate skyrocketing natural gas production in the Marcellus Shale region, a drilling area that spreads across western Pennsylvania and neighboring states. By 2010, the Western Leg consisted of parallel, connected 24-inch and 30-inch pipes, while the Eastern Leg consisted almost entirely of 24-inch pipe.

In 2010, the pipeline's owner, Tennessee Gas, commenced construction of what has turned out to be a complete overhaul of the Eastern Leg of the 300 Line. Tennessee Gas's upgrades to the Eastern Leg have included construction of new 30-inch pipe segments, as well as renovations to compression and monitoring infrastructure. As with the Western Leg, the improvements to the Eastern Leg produced

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parallel and connected 24-inch and 30-inch pipes. The result was fifteen interlocking loop segments of new pipeline that completed a full and continuous upgrade of the Eastern Leg of the 300 Line.

Tennessee Gas submitted four separate project proposals to FERC for the upgrade work on the Eastern Leg. The four upgrade projects -- the third being the Northeast Project -- were reviewed separately by FERC, approved, and then constructed in rapid succession between 2010 and 2013.

In November 2011, FERC completed the EA for the Northeast Project -- the project that is the subject of the petition for review in this case -- and recommended a Finding of No Significant Impact. FERC's NEPA review of the Northeast Project did not consider any of the other upgrade projects, even though the first upgrade project was under construction during FERC's review of the Northeast Project, and even though the applications for the second and fourth upgrade projects were pending before FERC while it considered the Northeast Project application. In May 2012, the Commission approved the Northeast Project, incorporating its EA and the Finding of No Significant Impact and issuing a certificate of public convenience and necessity to Tennessee Gas. Tenn. Gas Pipeline Co., 139 FERC ¶ 61,161, 2012 WL 1934728 (May 29, 2012) (" Order " ).

Petitioners contend that FERC violated NEPA when it segmented its review of the Northeast Project, giving no consideration to that project in conjunction with the three other connected, contemporaneous, closely related, and interdependent Eastern Leg projects. Petitioners also claim that FERC failed to provide a meaningful analysis of the cumulative impacts of these projects to show that the impacts would be insignificant.

FERC argues that because each project resulted in a measurable increase in the pipeline's overall capacity, the agency was justified in completing the NEPA analysis of the Northeast Project separately from the other projects. But FERC's position cannot be squared with the record, which shows that by May 2012, when FERC issued the certificate for the Northeast Project, it was clear that the entire Eastern Leg was included in a complete overhaul and upgrade that was physically, functionally, and financially connected and interdependent. During the pendency of Tennessee Gas's Northeast Project application, the other three projects that would constitute the revamped Eastern Leg were either under construction or were also pending before the Commission for environmental review and approval. Given the self-evident interrelatedness of the projects as well as their temporal overlap, the Commission was obliged to consider the other three other Tennessee Gas pipeline projects when it conducted its NEPA review of the Northeast Project.

Under applicable NEPA regulations, FERC is required to include " connected actions," " cumulative actions," and " similar actions" in a project EA. 40 C.F.R. § 1508.25(a). " Connected actions" include actions that are " interdependent parts of a larger action and depend on the larger action for their justification." Id. § 1508.25(a)(1)(iii). The four pipeline improvement projects are certainly " connected actions."

There is a clear physical, functional, and temporal nexus between the projects. There are no offshoots to the Eastern Leg. The new pipeline is linear and physically interdependent; gas enters the system at one end, and passes through each of the new pipe sections and improved compressor stations on its way to extraction points beyond the Eastern Leg. The upgrade

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projects were completed in the same general time frame, and FERC was aware of the interconnectedness of the projects as it conducted its environmental review of the Northeast Project. The end result is a new pipeline that functions as a unified whole thanks to the four interdependent upgrades.

FERC has not shown that there are logical termini between the new segments of the Eastern Leg or that each project resulted in a segment that has substantial independent utility apart from the other parts of the Eastern Leg. Rather, FERC merely argues that one terminus was " no more logical than another," Br. of Resp't at 25, and that the capacity added by each project was contracted separately. These explanations are insufficient to address Riverkeeper's segmentation claim.

On the record before us, we hold that in conducting its environmental review of the Northeast Project without considering the other connected, closely related, and interdependent projects on the Eastern Leg, FERC impermissibly segmented the environmental review in violation of NEPA. We also find that FERC's EA is deficient in its failure to include any meaningful analysis of the cumulative impacts of the upgrade projects. We therefore grant the petition for review and remand the case to the Commission for further consideration of segmentation and cumulative impacts.

I. Background

A. Applicable Statutory and Regulatory Framework

The Natural Gas Act grants FERC jurisdiction over the transportation and wholesale sale of natural gas in interstate commerce. 15 U.S.C. § 717(b)-(c). Any person seeking to construct or operate a facility for the transportation of natural gas in interstate commerce must first obtain a certificate of public convenience and necessity from the Commission. Id. § 717f(c)(1)(A). FERC is authorized to issue such a certificate to any qualified applicant upon finding that the proposed construction and operation of the pipeline facility is required by the public convenience and necessity. Id. § 717f(e).

NEPA requires that federal agencies fully consider the environmental effects of proposed major actions, including actions that an agency permits, such as pipeline construction. 42 U.S.C. § 4332(2)(C); see also La. Ass'n of Indep. Producers & Royalty Owners v. FERC, 958 F.2d 1101, 294 U.S.App. D.C. 243 (D.C. Cir. 1992). FERC is therefore responsible for the NEPA review associated with natural gas pipeline construction. Midcoast Interstate Transmission, Inc. v. FERC, 198 F.3d 960, 967, 339 U.S.App. D.C. 213 (D.C. Cir. 2000).

After determining the scope of the federal action, an agency produces an EA, which is a " concise public document" that " provide[s] sufficient evidence and analysis for determining whether to prepare an environmental impact statement or a finding of no significant impact." 40 C.F.R. § 1508.9. The scope of an agency's NEPA review must include both " connected actions" and " similar actions." Id. § 1508.25(a)(1), (3). Actions are " connected" if they trigger other actions, cannot proceed without previous or simultaneous actions, or are " interdependent parts of a larger action and depend on the larger action for their justification." Id. § 1508.25(a)(1). And actions are " similar" if, " when viewed with other reasonably foreseeable or proposed agency actions, [they] have similarities that provide a basis for evaluating their environmental consequences together, such as common timing or geography." Id. § 1508.25(a)(3).

NEPA is " essentially procedural," designed to ensure " fully informed and

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well-considered decision[s]" by federal agencies. Vt. Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 558, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978). " 'NEPA itself does not mandate particular results' in order to accomplish [its] ends. Rather, NEPA imposes only procedural requirements on federal agencies with a particular focus on requiring agencies to undertake analyses of the environmental impact of their proposals and actions." Dep't of Transp. v. Pub. Citizen, 541 U.S. 752, 756-57, 124 S.Ct. 2204, 159 L.Ed.2d 60 (2004) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989)). " The procedures required by NEPA . . . are designed to secure the accomplishment of the vital purpose of NEPA. That result can be achieved only if the prescribed procedures are faithfully followed . . . ." Lathan v. Brinegar, 506 F.2d 677, 693 (9th Cir. 1974). In preparing an EA or EIS, an " agency need not foresee the unforeseeable, but . . . [r]easonable forecasting and speculation is . . . implicit in NEPA, and we must reject any attempt by agencies to shirk their responsibilities under NEPA by labeling any and all discussion of future environmental effects as 'crystal ball inquiry.'" Scientists' Inst. for Pub. Info., Inc. v. Atomic Energy Comm'n, 481 F.2d 1079, 1092, 156 U.S.App. D.C. 395 (D.C. Cir. 1973). While the statute does not demand forecasting that is " not meaningfully possible," an agency must fulfill its duties to " the fullest extent possible." Id.

B. Factual and Procedural History

Both the Eastern and Western Legs of the 300 Line were initially constructed with 24-inch pipe. To accommodate increased production and demand in the natural gas market, however, Tennessee Gas embarked on upgrades installing what is known as " looped" pipeline. In a looped structure, the old pipeline is left in place, while a larger pipeline is installed in parallel, connecting to the old pipe so that the two lines function as one system. As the overall system structure expands, each additional length of 30-inch pipe or compression horsepower results in increasing returns to the pipeline's capacity. For example, the first upgrade to the Eastern Leg (which commenced in 2010 and was completed in 2011) resulted in the installation of approximately 130 miles of new 30-inch pipe and added 350,000 dekatherms per day to the pipeline's capacity (with each dekatherm roughly equivalent to 1,000 cubic feet of gas). The Northeast Upgrade, in comparison, added only 40 miles of new pipe but added 636,000 dekatherms per day to the system. Abbreviated Appl. of Tenn. Gas Pipeline Co. for a Certificate of Public Convenience and Necessity at 2 n.1, 4, reprinted in Joint Appendix (" J.A." ) 188, 190 ( " Application" ); Br. of Resp't at 21.

Between 2010 and 2013, Tennessee Gas commenced four upgrade projects along the Eastern Leg. In chronological order, they are: (1) the 300 Line Project; (2) the Northeast Supply Diversification Project; (3) the Northeast Project; and (4) the MPP Project. In May 2010, FERC certified the 300 Line Project, which placed eight sections of 30-inch pipeline along the Eastern Leg of the 300 Line, and upgraded various facilities and compressor stations along the entire line. The new pipe segments were also looped, or connected, to the existing 24-inch pipeline, and covered approximately 130 miles of the Eastern Leg, leaving seven sections of the pipeline with only the decades-old 24-inch pipe.

As construction of the 300 Line Project was underway, Tennessee Gas initiated the three additional projects mentioned above to fill in the gaps that would be left by ...


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