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Allegheny Defense Project v. Federal Energy Regulatory Commission

United States Court of Appeals, District of Columbia Circuit

August 2, 2019

Allegheny Defense Project, et al., Petitioners
Federal Energy Regulatory Commission, Respondent Anadarko Energy Services Company, et al., Intervenors

          Argued December 7, 2018

          On Petitions for Review of Orders of the Federal Energy Regulatory Commission.

          Elizabeth F. Benson argued the cause for petitioners Allegheny Defense Project, et al. Siobhan K. Cole argued the cause for petitioners Hilltop Hollow Limited Partnership, et al. With them on the joint briefs was Benjamin A. Luckett. Michael N. Onufrak and Derek O. Teaney entered appearances.

          Beth G. Pacella, Deputy Solicitor, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were James P. Danly, General Counsel, and Robert H. Solomon, Solicitor. Anand Viswanathan, Attorney, entered an appearance.

          John F. Stoviak argued the cause for intervenors. With him on the joint brief were Pamela S. Goodwin, Elizabeth U. Witmer, Patrick F. Nugent, Kevin M. Sweeney, Jesse Stuart Unkenholz, and Scott Borden Grover.

          Before: Garland, Chief Judge, and Tatel and Millett, Circuit Judges.


          Per Curiam.

         In February 2017, the Federal Energy Regulatory Commission approved a natural gas pipeline expansion called the Atlantic Sunrise Project, which stretches from northern Pennsylvania, across the Carolinas, and into Alabama. Environmental Associations whose members live and work in the areas affected by the Project and individual Homeowners whose property was used for the Project seek review of the Commission's orders permitting the Transcontinental Gas Pipe Line Company to move forward with the pipeline expansion. Because the challenges to the Commission's decision cannot surmount the deferential standards of agency review and binding circuit precedent, we deny the petitions.



         Under the Natural Gas Act, 15 U.S.C. § 717 et seq., a company wishing to construct a natural gas pipeline must first obtain a certificate of "public convenience and necessity" from the Federal Energy Regulatory Commission. See id. § 717f(c); Myersville Citizens for a Rural Community, Inc. v. FERC, 783 F.3d 1301, 1307 (D.C. Cir. 2015). The Commission "shall * * * issue[]" the certificate if it finds that the proposed project "is or will be required by the present or future public convenience and necessity." 15 U.S.C. § 717f(e).

         When a pipeline company files a certificate application, the Commission reviews it under criteria set forth in its Certificate Policy Statement, 88 FERC ¶ 61, 227 (1999), clarified, 90 FERC ¶ 61, 128, further clarified, 92 FERC ¶ 61, 094 (2000). The Certificate Policy Statement directs the Commission to consider whether the project meets a market need and whether the public benefits of the project outweigh the harms. See Sierra Club v. FERC, 867 F.3d 1357, 1379 (D.C. Cir. 2017). If market need and public benefit are both established, the Commission will issue a certificate authorizing the pipeline's construction. Id. Once that certificate is granted, the Natural Gas Act empowers the private certificate holder to exercise eminent domain authority if it "cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipeline[.]" 15 U.S.C. § 717f(h).

         A party wishing to challenge the Commission's issuance of a certificate of public convenience and necessity must file a petition for rehearing with the Commission. 15 U.S.C. § 717r(a). Until the Commission disposes of that rehearing petition, the agency action is not final for purposes of judicial review. See id. § 717r(a)-(b); Clifton Power Corp. v. FERC, 294 F.3d 108, 110-111 (D.C. Cir. 2002). The filing and disposition of such a rehearing petition is thus a mandatory prerequisite to obtaining judicial review of the Commission's action. See Delaware Riverkeeper Network v. FERC, 857 F.3d 388, 399 (D.C. Cir. 2017); Clifton Power Corp., 294 F.3d at 110-111. Congress directed that petitions for rehearing may be "deemed to have been denied" if the Commission has not "act[ed] upon the application for rehearing within thirty days after it is filed[.]" 15 U.S.C. § 717r(a).

         The National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321 et seq., "require[s] the Commission to consider and disclose the environmental effects of the actions it certifies." Delaware Riverkeeper Network, 857 F.3d at 394 (internal quotation marks omitted). The Commission may fulfill this requirement by compiling an Environmental Impact Statement, which must consider, among other things, the proposed project's "indirect" environmental effects. See 42 U.S.C. § 4332(C); 40 C.F.R. §§ 1508.8, 1508.25(c).


         In March 2015, the Transcontinental Gas Pipe Line Company ("Transco") applied for a certificate of public convenience and necessity to build the Atlantic Sunrise Project. After notice and public comment, the Commission issued a final Environmental Impact Statement in December 2016. In that Statement, the Commission concluded that "neither construction nor operation of the Project would significantly contribute to [greenhouse-gas] cumulative effects or climate change." J.A. 323.

         On February 3, 2017, the Commission granted Transco its requested certificate of public convenience and necessity. 158 FERC ¶ 61, 125 (2017) ("Certificate Order"). Environmental Associations and the private Homeowners whose land would become subject to an easement for the Project both filed petitions for rehearing with the Commission, along with motions for a stay of construction pending disposition of their petitions. Before Congress's 30-day deadline for action on the rehearing petitions expired, the Commission "granted" rehearing, but only "for the limited purpose of further consideration." J.A. 600 ("Certificate Tolling Order"). The Commission took no action on the stay motions for more than five months, and then denied them.

         In late August, a Pennsylvania federal district court presiding over Transco's eminent domain action entered an order that declared Transco's "right to immediate possession of the properties in question," based on the presumed validity of FERC's Certificate Order. Transcontinental Gas Pipe Line Co. v. Permanent Easements for 2.14 Acres & Temp. Easements for 3.59 Acres in Conestoga Township, Lancaster County, Pa., Tax Parcel No. 1201606900000, 2017 WL 3624250, at *1, *3 (E.D. Pa. Aug. 23, 2017) (rejecting the Homeowners' objections as "attacks on the FERC order itself," which "can only be challenged in front of FERC, and then in the United States Court of Appeals for the District of Columbia Circuit"), aff'd, 907 F.3d 725 (3d Cir. 2018).

         On September 15, 2017, while the Environmental Associations' and Homeowners' petitions for rehearing were still pending, the Commission issued an order authorizing Transco to begin construction of the Project. J.A. 616 ("Construction Order"). Transco broke ground that same day.

         The Environmental Associations promptly moved for rehearing of the Construction Order and an order halting construction. As its 30-day statutory deadline for action on the Construction Order rehearing petition approached, the Commission again issued an order granting rehearing "for the limited purpose of further consideration." J.A. 815 ("Construction Tolling Order").

         The Commission eventually denied the Homeowners' and Environmental Associations' petitions for rehearing in December 2017, more than nine months after rehearing was sought and three months after construction began. 161 FERC ¶ 61, 250 (2017) ("Certificate Rehearing Order"). Three months after that-and nearly six months after construction commenced-the Commission denied rehearing of the Construction Order. 162 FERC ¶ 61, 192 (2018) ("Construction Rehearing Order").


         This consolidated case arises out of four petitions for review collectively challenging the Certificate Order, the Certificate Tolling Order, the Construction Order, the Construction Tolling Order, and the Certificate Rehearing Order. Because the Homeowners and Environmental Associations both properly sought rehearing of the Certificate Rehearing Order, which encompasses all of their claims for our review and is the final agency decision greenlighting the Project, this court has jurisdiction. See 15 U.S.C. § 717r.[1]

         The Commission's factual findings are conclusive so long as they are supported by substantial evidence. See 15 U.S.C. § 717(b). Where the Commission "has examined the relevant considerations and articulated a satisfactory explanation for its action, including a rational connection between the facts found and the choice made," we must uphold its decision. FERC v. Electric Power Supply Ass'n, 136 S.Ct. 760, 782 (2016) (formatting altered).

         The Homeowners and Environmental Associations argue that the Commission's Certificate Order suffers from fatal substantive and procedural flaws. Specifically, they argue that the Commission improperly conducted its environmental assessment under NEPA, failed to substantiate market need for the Project as required by the Natural Gas Act, and denied them due process by authorizing construction to commence before the issuance of the Certificate Order could be judicially reviewed. None of those arguments succeed.


         The administrative record forecloses the Homeowners' and Environmental Associations' three NEPA arguments.

         First, the Homeowners and Environmental Associations argue that the Commission did not factor downstream greenhouse-gas emissions into its evaluation of the Project's environmental impacts.

         The Homeowners and Environmental Associations are correct that customers' burning of the natural gas that the Project transports will produce greenhouse-gas emissions. See Sierra Club, 867 F.3d at 1374. They are also correct that NEPA required the Commission to consider both the direct and indirect environmental effects of the Project, and that, despite what the Commission argues, the downstream greenhouse-gas emissions are just such an indirect effect. See id.; 40 C.F.R. § 1502.16(b).

         But that is as far as the argument gets them, because the Commission already took the steps the Homeowners and Environmental Associations request. The Commission addressed downstream emissions in the Environmental Impact Statement, the Certificate Order, and the Certificate Rehearing Order. In particular, the Commission estimated the amount of CO2 emissions resulting from the gas that the Project would transport and predicted that those emissions would be partially offset by reductions in higher carbon-emitting fuel that the Project's natural gas would replace. Neither the Homeowners nor the Environmental Associations have identified what more the Commission should have said. That failure is fatal. Unsubstantiated objections are not enough to stop an agency's action.

         Second, the Homeowners and Environmental Associations assert that the Commission impermissibly segmented its environmental review by failing to consider the synergistic effect of the Project on emissions associated with a different pipeline-the Southeast Market Pipeline. Improper segmentation occurs when FERC creates separate Environmental Impact Statements for interconnected pipelines that should have been evaluated as a single project. See City of Boston Delegation v. FERC, 897 F.3d 241, 251-252 (D.C. Cir. 2018).

         But NEPA requires more to make out an improper segmentation claim than the Homeowners and Environmental Associations have offered. Specifically, the Commission has no duty to consider the environmental effects of a separate project if the project in question has "substantial independent utility." City of Boston Delegation, 897 F.3d at 252 (internal quotation marks omitted); see also Coalition on Sensible Transp., Inc. v. Dole, 826 F.2d 60, 69 (D.C. Cir. 1987) ...

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