Pipeline Company Prevails in Court Battle over Environmental Permits

With the help of Rutter & Roy, LLP, Transcontinental Gas Pipe Line Company, LLC (Transco) won a case brought by several conservation groups challenging the issuance of permits and authorizations granted by the New Jersey Department of Environmental Protection (NJDEP) to Transco for its Leidy Southeast Expansion Project.

Transco, which operates a 10,000-mile pipeline that extends from South Texas to New York City, sought federal approval to expand a portion of its pipeline, called the Leidy Line, which connects gas wells in Central Pennsylvania with its main pipeline. Transco’s natural gas pipeline expansion would add approximately 30 miles of additional pipe segments, called loops, as well as upgrade turbines at four compressor stations.  Transco proposed to construct two pipeline loops in New Jersey, the Pleasant Run and Skillman Loops.

The project required approval from the Federal Energy Regulatory Commission (FERC), as well as state permits and authorizations in New Jersey and Pennsylvania. The NJDEP reviewed Transco’s proposal for potential water quality impacts, and impacts to freshwater wetlands and flood hazard areas. The NJDEP ultimately issued Freshwater Wetlands Protection Act and Flood Hazard Area Control Act Individual Permits, and Letters of Interpretation for both the Pleasant Run and Skillman Loops.

The New Jersey Conservation Foundation, along with two other New Jersey environmental groups, appealed the issuance of the permits directly to the U.S. Court of Appeals for the Third Circuit. The appeal was consolidated with a similar case brought by the Delaware Riverkeeper Network for permits issued to Transco by the Pennsylvania Department of Environmental Protection.

Although the conservation groups argued that NJDEP acted “arbitrarily or capriciously in issuing the permits”, the court had to determine whether it even had authority to review the appeals in the first place. Both NJDEP and PADEP argued that although Congress, through the Natural Gas Act, provided for direct appeal to the U.S Circuit Courts of Appeal, the States are immune from suit in federal court pursuant to the Eleventh Amendment of the U.S. Constitution.

The Court disagreed with the state agencies and held that the Natural Gas Act stripped the states of their authority to regulate interstate natural gas transmission facilities, except when exercising their rights under the Clean Air Act, Coastal Zone Management Act, and, as in this case, the Clean Water Act.  The Court went on to hold that because NJDEP’s issuance of the Freshwater Wetlands Protection Act Individual Permit constitutes both the Water Quality Certificate and the dredge and fill permit under Sections 401 and 404, respectively, of the Clean Water Act, it had jurisdiction to hear the appeals of those permits granted to interstate pipeline companies such as Transco.

The Third Circuit also held that it had jurisdiction to hear the appeal of the Flood Hazard Area permits and the issuance of Letters of Interpretation, even though these are state permits. The Third Circuit reasoned that the Flood Hazard Area permits were a condition of obtaining the Freshwater Wetlands permits and that the Letters of Interpretation were an integral part of Freshwater Wetlands permits. Therefore, both were subject to review by the Court.

Turning to the merits of the case, the Court rejected each of the claims raised by the conservation groups that the NJDEP did not adequately consider the environmental impact the project would have on water quality, freshwater wetlands and threatened and endangered species. The Third Circuit found that the NJDEP did in fact consider several potential alternatives, including alternative routes, construction methodologies, system upgrades and even replacing the existing pipeline with a larger one.

“For the most part, the case revolved around whether NJDEP’s environmental impact analysis was supported by the facts,” said Christine A. Roy, a partner with Rutter & Roy and a member of the firm’s legal team, which also included Michael Rutter, Heather Oehlmann and Richard Scott. “The decision will be helpful in connection with Transco’s permit modification/Flood Hazard Area Control Act application that is still pending with NJDEP for the remaining unbuilt 2,000 foot section of the Skillman Loop.”

The Court found that “NJDEP not only considered but also acted upon alternatives, in direct contrast to the [conservation groups’] allegations. Adoption of alternatives reduced open water and wetland disturbance by 38 percent for the Pleasant Run Loop and 48 percent for the Skillman Loop, according to an NJDEP analysis. For the Skillman Loop, NJDEP consideration of alternatives led to the selection of the shortest proposed route, of which 86 percent is collocated within Transco’s existing pipeline right-of-way.”

 

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