Good News Bulletin: A Major Win Against FERC

A decision issued by the U.S. Court of Appeals on June 6, 2014 could have far-reaching and positive effect on the future of pipeline and infrastructure build out in America.

The case involves the Northeast Upgrade Project (NEUP), a series of four pipeline expansions by the Tennessee Gas Pipeline Company (now owned by Kinder-Morgan). The Court ruled that FERC acted arbitrarily, violated NEPA's segmentation rule, and failed to address the true scope and cumulative impacts of the activities that should have been be under consideration when it issued a "Finding of No Significant Impact," in approving the project back in 2012.

A Breakthrough Ruling

Pipeline companies have long garnered rapid approval of infrastructure by breaking up system-wide expansions into several smaller projects, and by not revealing inevitable future additions to such projects, such as compressor stations, at the time of filing. Spectra Energy is currently attempting to do this very thing, as they file what is a complete, north-to-south, east coast upgrade as if it were unrelated smaller projects. (More on that soon.)

As Maya van Rossum of lead plaintiff, Delaware Riverkeeper, said in reaction to the news, "FERC has been allowing illegal segmentation by pipeline companies for years," and has repeatedly refused to take cumulative and related impacts into account.

Aaron Stemplewicz, who argued the cause for petitioners, said, "The D.C. Circuit’s decision today should put other pipeline companies on notice that the practice of segmenting pipeline projects before the Federal Energy Regulatory Commission will no longer be tolerated, and that the cumulative environmental impacts resulting from these projects must be fully considered before a project is approved.”

A Summary of the Arguments:

A main point under contention was the questions of whether the different parts of the overall project were interdependent, connected financially and had clear starting and stopping places, or in the parlance of the court, "logical termini." FERC argued that since capacity added by each segment was contracted separately, they were off the hook. The Court didn't buy that argument, responding that, "The 'specific customer demand' argument relied on by FERC paints a false picture."

The 31-page decision, written by Senior Circuit Judge, Harry T. Edwards, with unanimous agreement by all three judges, could not have been more explicit in its smackdown of FERC, noting "a clear physical, functional, and temporal nexus between the projects," and that "FERC has not shown that there are logical termini between the new segments."

FERC also argued that the timing of the project applications defeated the petitioners’ segmentation claim because NEPA (the National Environmental Policy Act) analyses should not cover projects already completed or not yet proposed. The court did emphasize the importance placed on the timing of the various projects, saying, "Separated by more time, the projects could have utility independent of the other projects, " which could subsume "indications of the financial and functional interdependence" and allow "each project to be a standalone improvement." However, the judge noted that not only did project applications overlap, but that "FERC plainly was aware of the physical, functional, and financial links between the two projects."

One passage from the decision is particularly bracing: Judge Edwards references NEPA rules which dictate, "In preparing an EA or EIS, an 'agency need not foresee the unforeseeable, but . . . [r]easonable forecasting and speculation is . . . implicit in NEPA, and we must reject any attempt by agencies to shirk their responsibilities under NEPA by labeling any and all discussion of future environmental effects as ‘crystal ball inquiry.’ ”

What Happens Now?

The official result of the ruling is that the case is now remanded back to FERC for further consideration of these the segmentation and cumulative impacts issues. The reality on the ground, like Spectra and Minisink, is that the court's precedent-setting ruling comes after great damage has already been done, as shown in the photo of a clear-cut Right-of-Way that inspired a tree-sit resistance in February of 2013. Says van Rossum,“This decision is important and powerful for every pipeline, related infrastructure and LNG project to come, but sadly for the communities, forests, streams, wetlands and critters impacted by the four projects at issue here, the decision comes too late to ensure their full consideration and protection. We will be able to press for important mitigation and efforts to undo the harms already inflicted, but as for avoiding the full array of harms, that is now impossible. FERC needed to do its job when it had the opportunity–but they were too busy servicing the gas pipeline companies to care.”

While Industry may not be quaking in their boots, and despite the cheeky response of a pipeline spokesperson (who clearly expects the FERC rubberstamping machine to continue to spit out approvals), this decision is clear cause for celebration by our side, and absolutely ammunition for future court battles.