FERC’s Certificate Order Did Not Violate CWA Sequencing Requirements

Many large and complicated construction projects require the issuance of several differed permits having different requirements. Courts strive to interpret their requirements in a rational and reasonable manner.

On May 23, the U.S. Court of Appeals for the DC Circuit decided the case of Delaware Riverkeeper Network, et al. v. FERC. This case involves three federal statutes: the Natural Gas Act, 15 U.S.C. §§ 717 et seq. (NGA), the Clean Water Act,  formally titled the Federal Water Pollution Control Act Amendments of 1972, 33 U.S.C. §§ 1251 et seq. (CWA); and the National Environmental Policy Act, 42 U.S.C. §§ 4321 et seq. (NEPA). Although the Federal Energy Regulatory Commission (FERC) administers only the NGA, all three statutes applied to FERC’s issuance of a Certificate of Public Convenience and Necessity (Certificate Order) conditionally approving the construction and operation of the proposed Leidy Project. This project is an expansion of the capacity of Transcontinental Gas Pipe Line Company, LLC’s (Transco) existing natural gas pipeline and addition of new facilities in Pennsylvania and New Jersey (the Leidy Project). FERC issued the Certificate Order prior to Transco obtaining a Section 401 of the CWA water quality certification from Pennsylvania (the state in which the discharge would originate).

The Court of Appeals, after reviewing the NGA, CWA and NEPA, held that FERC followed the law, and none of the objections filed by the plaintiffs had merit. Importantly, the Court of Appeals held that FERC’s conditional approval of the project did not violate the sequencing requirements of Section 401 of the CWA because it did not in fact authorize any activity that might result in a discharge into navigable waters. The Court of Appeals also concluded that the record shows that FERC seriously and competently reviewed all of the arguments made against the project and found them unavailing.

On September 30, 2013, Transco, a pipeline company, filed an application with FERC to construct and operate the “Leidy Project,” which would expand its existing pipeline facilities in Pennsylvania and New Jersey. In August 2014, pursuant to the requirements of NEPA, FERC issued an Environmental Assessment (EA) and found that the project would, with mitigation steps, not have any significant environmental impacts. However, before FERC could authorize construction, Transco needed to obtain a Section 401 certification from Pennsylvania. Transco applied for the Section 401 certification, and FERC granted the Certificate Order before the Section 401 certification was granted, and this lawsuit followed.

The Court of Appeals confirmed that the principal issue before it was “not whether FERC’s disputed Certificate Order is a ‘license or permit’ covered by the CWA, but whether it approved ‘activity . . . which may result in any discharge’ and thus triggered the requirements of the CWA.” It further confirmed that “[i]f the activity that FERC approved would not result in a discharge, then the sequencing requirement of § 401 was not ‘trigger[ed].'”  It found that “the record indicates that [FERC’s] Certificate Order did not authorize any activity that could result in a discharge. Instead, the conditional Certificate Order was merely a first step for Transco to take in the complex procedure to actually obtaining construction approval.”  It further found that “FERC required Transco to obtain the appropriate state agency permits, including a § 401 certification from Pennsylvania, prior to FERC granting Transco permission to proceed with activity that could result in a discharge.”