Insights & News

Energy & Regulatory Alert, November 2015
Second Circuit Decision Reinforces FERC Position that Pipeline Certificate Proceedings Do Not Require Region-Wide Environmental Impact Assessment of Potential New Drilling

November 11, 2015
Client Alert

In the Oct. 23, 2015 Energy & Regulatory Alert, we discussed a recent Federal Energy Regulatory Commission (FERC) order in which the commission rejected attempts to force it to perform a region-wide environmental impact assessment of natural gas development, transportation and production as part of its project-specific review. In a similar vein, the Second Circuit Court of Appeals recently upheld the commission’s approval of a pipeline in northeast Pennsylvania, reinforcing the position that the commission need not examine whether a proposed pipeline would spark significant new natural gas development in the region.

The three-judge panel issued a summary order in Coalition for Responsible Growth and Resource Conservation, et al. v. FERC, case number 12-566, in which it denied the petitions for review of both the underlying initial order and the order on rehearing. These orders granted Central New York Oil and Gas Company’s petition for a certificate of public convenience and necessity to build and operate the 39-mile MARC I Hub Line Project. In the underlying proceeding, the commission performed a 296-page environmental assessment, issued a finding of no significant impact, and concluded that a full environmental impact statement was not necessary.

On appeal, the petitioners argued that the commission’s environmental analysis was inadequate and that the commission failed to assess the project’s “cumulative impact” from any increased drilling the pipeline could stimulate. The environmental groups argued that the pipeline would encourage new drilling in as-yet undeveloped areas of Pennsylvania, requiring a full environmental impact statement to consider health issues associated with that new drilling.

In rejecting this assertion, the court noted that its role is to ensure that the agency considered the environmental consequences of its action. The court held that:

FERC’s analysis of the development of the Marcellus Shale natural gas reserves was sufficient. FERC included a short discussion of Marcellus Shale development in the [environmental assessment], and FERC reasonably concluded that the impacts of that development are not sufficiently causally related to the project to warrant a more in-depth analysis.

The court further noted that, in granting the underlying certificate, the commission “required Central NY Oil to take concrete steps to address environmental concerns raised by petitioners and others.” Thus, the “environmental concerns identified by commenting parties, including the Environmental Protection Agency, were considered and addressed by FERC in the [environmental assessment] and the Rehearing Order.”

The decision was released in the form of a summary order, not a formal opinion, meaning that it does not provide precedential value but can be cited in future pleadings.

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