Construction stopped despite having permits
Two courts stopped construction of natural gas pipelines in the last few months due to problems with permits.
The cases are a reminder to project developers and lenders to be more careful when assessing whether projects not only have all the permits, but also whether the permits are still open to challenge, or when evaluating the any pending litigation before the start of construction. This is especially important as agencies are being pressured to speed up their reviews and issue permits more quickly.
Another court found problems with permits, but has not stopped construction of a natural gas pipeline in New Jersey.
All three projects had been issued certificates of public convenience and necessity by the Federal Energy Regulatory Commission. The problems were with permits issued by other federal or state agencies. The certificates of public convenience and necessity were contingent on the projects receiving all the other required clearances.
A US court of appeals found problems in early September in a case involving the Transcontinental Gas pipeline with a freshwater wetlands individual permit and water quality certificate and a dewatering permit issued by the New Jersey Department of Environmental Protection (NJDEP).
The pipeline had all the required permits, but challenges to the permits were filed with the NJDEP after the permits were issued. The NJDEP declined to consider the challenges on grounds that the US court of appeals has exclusive jurisdiction to review permits for interstate natural gas pipelines.
The court disagreed that it has exclusive jurisdiction. The federal Natural Gas Act gives the US court of appeals for the circuit where the pipeline is located original and exclusive jurisdiction over civil suits to review actions taken by state agencies pursuant to delegated authority under federal laws. The court said a request for an administrative hearing to decide whether a permit was properly issued is not a such a civil action. The court sent the case back to the NJDEP.
So far, no request has been made to stop construction.
Atlantic Coast pipeline
The Atlantic Coast pipeline, which received its FERC certificate of public convenience and necessity on October 13, 2017, ran into trouble with other permits and had to stop work in August 2018 after construction was already underway.
The 600-mile pipeline would run between West Virginia and eastern Virginia and North Carolina and traverses the Blue Ridge mountains. Some construction activities had been underway for more nine months when the developer had to stop work.
Environmental groups challenged two other federal permits that were issued to the pipeline. One is an incidental “take” permit issued by the US Fish and Wildlife Service (USFWS) that authorizes the “taking” — meaning the harassing, harming or killing — of protected species as long as it does not jeopardize the continued existence of any protected species or destroy or adversely modify a critical habitat of a protected species. They also challenged a right of way granted by the National Park Service to allow the pipeline to pass underneath a scenic road called the Blue Ridge Parkway that runs through the mountains.
A US court of appeals held in August that the agencies acted “arbitrarily and capriciously” when they approved the take permit and right of way.
It is unlawful under the federal Endangered Species Act to “take” any federally endangered or threatened species. Federal agencies must consult with the USFWS before taking any action that may affect any federally-protected species, species proposed to be federally-protected, or any designated critical habitat of protected species or a habitat that is proposed to be designated for protection.
The USFWS identified five threatened or endangered species that may be affected by the Atlantic Coast pipeline, but the court said the analysis did not go far enough. Instead of setting numbers of species that could be taken, the agency used a habitat surrogate. In other words, the USFWS focused on effects on habitats where protected species live as a proxy how many such species might be “taken,” but without satisfying the regulatory requirements for using habitat as a surrogate.
The court also took issue with the right of way issued by the National Park Service because the agency failed to explain how crossing the Blue Ridge Parkway was not inconsistent with the purposes of the Parkway and the overall national park system.
Four days after the court decision, FERC ordered work halted along the entire pipeline route, except for that work that the USFWS and National Park Service determined were needed to stabilize the right of way and work areas. FERC staff explained that while there was no reason to expect the USFWS and National Park Service would be unable to comply with the court’s order and at some point issue approvals, it was hard to predict when, or whether such approvals would be issued for the same route.
As a result, FERC staff said, “allowing continued construction poses the threat of expending substantial resources and substantially disturbing the environment by constructing facilities that ultimately might have to be relocated or abandoned.”
The National Park Service and USFWS moved quickly. The National Park Service reissued the right-of-way permit and the USFWS issued a modified biological opinion with a modified incidental take statement a little over four weeks after the FERC order to stop work. FERC lifted the stop-work order three days later.
However, the pipeline is not in the clear. After FERC issued the stop-work order, the appeals court blocked reliance on a special use permit issued by the US Forest Service. This led environmental groups in late September to ask FERC reinstate the stop-work order since the project no longer has all of its permits. Opponents have also asked the US appeals court to review the FERC approval of the project.
Mountain Valley pipeline
FERC temporarily ordered work halted on the approximately 303.5-mile Mountain Valley pipeline between West Virginia and Virginia before lifting the stop-work order about four weeks later. A US appeals court then blocked work in early October.
The project received a certificate of public convenience and necessity on October 13, 2017. Opponents challenged a 3.6-mile right of way granted by the Bureau of Land Management over federal land and amendments that the US Forest Service made to the Jefferson National Forest resource management plan to accommodate the pipeline.
A US court of appeals set aside the right of way on July 27 because of potential problems under the Mineral Leasing Act. The Mineral Leasing Act requires the Bureau of Land Management to try to get all persons needing authority to cross federal land to use the same right of way to the extent practical in order to minimize environmental impacts and the proliferation of separate rights-of-way across federal land.
The court said that BLM failed in this case to show that use of existing rights of way was impractical before granting the pipeline an alternate route.
FERC considered various alternative routes in an environmental impact statement it prepared before granting the pipeline a certificate of public convenience and necessity. BLM adopted FERC’s environmental impact statement, but the court said the Mineral Leasing Act requires more of BLM. The FERC environmental impact statement weighed the environmental costs of different pipeline routes and whether the routes were economically feasible. BLM never made a separate determination that requiring the pipeline to use an existing right of way was impractical. The court sent the project back to BLM for such a finding.
The court also set aside the US Forest Service decision to amend the Jefferson National Forest land resource management plan on grounds that the Forest Service had failed to comply with the National Environmental Policy Act and the National Forest Management Act.
The National Environmental Policy Act requires federal agencies to evaluate the environmental impacts of their actions. To do this, agencies prepare an environmental analysis such as an environmental impact statement. When multiple federal agencies are involved on a project, the lead agency (in this case FERC) prepares the environmental impact statement that the other agencies may adopt, provided that such agencies independently review the statement and determine that their comments have been addressed. The Forest Service had expressed concerns in comments to the draft environmental impact statement about erosion and sediment impacts, but did not explain when it amended the Jefferson National Forest resource management plan why it was no longer concerned about these issues after the environmental impact statement failed to address them. The court directed the Forest Service to explain its decision in light of its earlier concerns.
FERC issued a stop-work order for construction of all parts of the project, except for work necessary to stabilize the right of way and work areas. Although FERC said it had no reason to suspect that BLM and the Forest Service would ultimately be unable to provide approvals for the project, it was possible that such approvals could be for alternate routes.
FERC released the project to resume work on August 29 after an interim BLM assessment of other potential routes that still favored the original route and in view of the fact that much of the route had already been cleared and graded.
However, the appeals court set aside another of the permits for the project in early October — this time the US Army Corps of Engineers nationwide permit 12 that lets pipelines advance even though they cross waterways. The court said the US Army Corps lacked authority to ignore a West Virginia permitting restriction in such situations. Since it no longer had permission for the water crossing, construction had to stop. The work can resume once the Army Corps issues a permit specifically authorizing such a crossing for this project.
This work will have to remain stopped until the US Army Corps of Engineers issues a permit for this work.