Beveridge & Diamond

D.C. Circuit Court Ruling Highlights Changing Context for FERC NEPA Reviews

Beveridge & Diamond, P.C., June 10, 2014

Rejecting the Federal Energy Regulatory Commission’s (“FERC”) Environmental Assessment that considered a pipeline upgrade project separately from other related projects on the same pipeline, the D.C. Circuit’s recent decision in Delaware Riverkeeper Network v. FERC, No. 13-1015, 2014 U.S. App. LEXIS 10523 (D.C. Cir. June 6, 2014), shows that FERC must reform its NEPA review process to withstand future challenges.  As more high-profile pipeline projects supporting LNG exports and natural gas development generate national headlines, FERC’s environmental reviews will be subject to increasing public scrutiny.  Additionally, the Department of Energy announced just last month that it will no longer issue conditional approvals for LNG export facilities to countries with which the United States does not have a free trade agreement until agency environmental reviews are completed, a decision focusing even greater attention on FERC decision-making.  See Proposed Procedures for Liquefied Natural Gas Export Decisions, 79 Fed. Reg. 32,261 (June 4, 2014).  Given these developments, Delaware Riverkeeper provides guidance to reduce the threat of future adverse NEPA rulings.   

In Delaware Riverkeeper, FERC approved four separate Tennessee Gas Pipeline Company, LLC pipeline upgrade projects between 2010 and 2013.  Taken together, these four projects upgraded nearly 200 miles of continuous pipeline.  FERC approved one of the four pipeline upgrade projects, the Northeast Project, in 2012 after determining through an Environmental Assessment that an Environmental Impact Statement was unnecessary.  Delaware Riverkeeper Network and other environmental groups subsequently challenged FERC’s NEPA review of the Northeast Project as inadequate.

Agreeing with Delaware Riverkeeper Network, the D.C. Circuit held that FERC improperly “segmented” its NEPA review of “connected” pipeline upgrades and failed to consider the cumulative impacts of the other three pipeline projects.  Looking to the Council on Environmental Quality’s (“CEQ”) regulations, the court reasoned that the Northeast Project was “connected” to the other three pipeline projects because all four projects together upgraded a single continuous pipeline.  FERC should have considered all four project proposals together in its NEPA review according to the court, not independently.  The court reinforced its conclusion that the projects were “connected” by emphasizing the timing of the pipeline upgrade proposals; when FERC approved the Northeast Project the other three project proposals were either under construction or awaiting FERC approval. 

The court rejected FERC’s argument that the project was not improperly “segmented” because there were no “logical termini” between the upgrades and the projects were financially and functionally interdependent.  Moreover, the D.C. Circuit also agreed with plaintiffs that FERC failed to give “any meaningful analysis” of the projects’ cumulative impacts.  The timing of the other three pipeline upgrade projects showed they were “reasonably foreseeable” current and future actions that FERC’s NEPA review needed to consider.

This ruling could have significant implications for future project proponents under FERC jurisdiction.  Moving forward, FERC’s NEPA reviews should adhere more closely to CEQ’s regulations by avoiding segmented reviews and requiring a thorough cumulative impacts analysis.  These changes may represent a modification of FERC’s own practices, but should not come as a surprise to stakeholders working with a variety of other federal development agencies.  For example, the Federal Highway Administration routinely resolves issues of segmentation when approving large transportation corridors involving phased development.  Cumulative impacts review has also become fairly standard, as that agency recognizes the relationship between regional transportation projects. 

Some commentators predicting substantial delays in FERC’s permitting process as a result of Delaware Riverkeeper overlook how the D.C. Circuit’s concerns have been part of general NEPA practice for years.  As FERC’s environmental reviews are increasingly a target of future litigation, the agency and project proponents alike need to conduct the type of defensible NEPA review that other federal agencies perform and Delaware Riverkeeper demands.   




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