Delaware Riverkeeper Network v. Federal Energy Regulatory Commission , 753 F.3d 1304 ( 2014 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 24, 2014 Decided June 6, 2014
No. 13-1015
DELAWARE RIVERKEEPER NETWORK, ET AL.,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
TENNESSEE GAS PIPELINE COMPANY, LLC AND STATOIL
NATURAL GAS, LLC,
INTERVENORS
On Petition for Review of an Order
of the Federal Energy Regulatory Commission
Aaron Stemplewicz argued the cause for petitioners. With
him on the briefs was Susan Kraham. Jane P. McClintock
entered an appearance.
Karin L. Larson, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on
the brief were David L. Morenoff, Acting General Counsel,
and Robert H. Solomon, Solicitor.
John F. Stoviak argued the cause for intervenors. With
him on the brief were Pamela S. Goodwin, Thomas S.
2
Schaufelberger, William G. Myers III, and Kirstin Elaine
Gibbs. Christopher M. Heywood entered an appearance.
Before: BROWN, Circuit Judge, and EDWARDS and
SILBERMAN, Senior Circuit Judges.
Opinion for the Court filed by Senior Circuit Judge
EDWARDS.
Opinion filed by Circuit Judge BROWN concurring in part
and concurring in the judgment.
Concurring opinion filed by Senior Circuit Judge
SILBERMAN.
EDWARDS, Senior Circuit Judge: In May 2012, the
Federal Energy Regulatory Commission (“Commission” or
“FERC”) issued a certificate of public convenience and
necessity to Tennessee Gas Pipeline Company, L.L.C.
(“Tennessee Gas”), authorizing it to build and operate the
Northeast Upgrade Project (“Northeast Project”). The project
included five new segments of 30-inch diameter pipeline,
totaling about 40 miles, and modified existing compression
and metering infrastructure. Petitioners, Delaware
Riverkeeper Network, New Jersey Highlands Coalition, and
Sierra Club, New Jersey Chapter (collectively,
“Riverkeeper”), contend, inter alia, that in approving the
Northeast Project, FERC violated the National Environmental
Policy Act (“NEPA”), 42 U.S.C. §§ 4321-4370h, by: (1)
segmenting its environmental review of the Northeast Project
– i.e., failing to consider the Northeast Project in conjunction
with three other connected, contemporaneous, closely related,
and interdependent Tennessee Gas pipeline projects – and (2)
failing to provide a meaningful analysis of the cumulative
3
impacts of these projects to show that the impacts would be
insignificant.
The Northeast Project upgraded a portion of a much
longer natural gas pipeline known as the 300 Line. Taken
together, the Northeast Project and the three other connected,
closely related, and interdependent Tennessee Gas upgrade
projects on the 300 Line constituted a complete upgrade of
almost 200 miles of continuous pipeline. FERC was
responsible for the environmental review of these projects
because, under the Natural Gas Act, any party seeking to
construct a facility for the transportation of natural gas in
interstate commerce must first obtain a certificate of public
convenience and necessity from the Commission. 15 U.S.C.
§ 717f(c)(1)(A). And before FERC may issue such a
certificate, it must satisfy the requirements of NEPA by
identifying and evaluating the environmental impacts of the
proposed action. This means that FERC was required to
prepare an Environmental Assessment (“EA”) and, if
significant impacts were found, to prepare a more
comprehensive Environmental Impact Statement (“EIS”). 40
C.F.R. § 1501.4.
The 300 Line carries natural gas from wells in western
Pennsylvania to points of delivery east of Mahwah, New
Jersey. When it was first constructed in the 1950s, the entire
pipeline was built of 24-inch diameter pipe, with compressor
stations located every several miles to keep the gas moving
through the pipeline. The 300 Line has a Western Leg and an
Eastern Leg. Expansions to the Western Leg of the pipeline
added 30-inch diameter pipe and allowed it to accommodate
skyrocketing natural gas production in the Marcellus Shale
region, a drilling area that spreads across western
Pennsylvania and neighboring states. By 2010, the Western
Leg consisted of parallel, connected 24-inch and 30-inch
4
pipes, while the Eastern Leg consisted almost entirely of 24-
inch pipe.
In 2010, the pipeline’s owner, Tennessee Gas,
commenced construction of what has turned out to be a
complete overhaul of the Eastern Leg of the 300 Line.
Tennessee Gas’s upgrades to the Eastern Leg have included
construction of new 30-inch pipe segments, as well as
renovations to compression and monitoring infrastructure. As
with the Western Leg, the improvements to the Eastern Leg
produced parallel and connected 24-inch and 30-inch pipes.
The result was fifteen interlocking loop segments of new
pipeline that completed a full and continuous upgrade of the
Eastern Leg of the 300 Line.
Tennessee Gas submitted four separate project proposals
to FERC for the upgrade work on the Eastern Leg. The four
upgrade projects – the third being the Northeast Project –
were reviewed separately by FERC, approved, and then
constructed in rapid succession between 2010 and 2013.
In November 2011, FERC completed the EA for the
Northeast Project – the project that is the subject of the
petition for review in this case – and recommended a Finding
of No Significant Impact. FERC’s NEPA review of the
Northeast Project did not consider any of the other upgrade
projects, even though the first upgrade project was under
construction during FERC’s review of the Northeast Project,
and even though the applications for the second and fourth
upgrade projects were pending before FERC while it
considered the Northeast Project application. In May 2012,
the Commission approved the Northeast Project,
incorporating its EA and the Finding of No Significant Impact
and issuing a certificate of public convenience and necessity
5
to Tennessee Gas. Tenn. Gas Pipeline Co., 139 FERC
¶ 61,161, 2012 WL 1934728 (May 29, 2012) (“Order”).
Petitioners contend that FERC violated NEPA when it
segmented its review of the Northeast Project, giving no
consideration to that project in conjunction with the three
other connected, contemporaneous, closely related, and
interdependent Eastern Leg projects. Petitioners also claim
that FERC failed to provide a meaningful analysis of the
cumulative impacts of these projects to show that the impacts
would be insignificant.
FERC argues that because each project resulted in a
measurable increase in the pipeline’s overall capacity, the
agency was justified in completing the NEPA analysis of the
Northeast Project separately from the other projects. But
FERC’s position cannot be squared with the record, which
shows that by May 2012, when FERC issued the certificate
for the Northeast Project, it was clear that the entire Eastern
Leg was included in a complete overhaul and upgrade that
was physically, functionally, and financially connected and
interdependent. During the pendency of Tennessee Gas’s
Northeast Project application, the other three projects that
would constitute the revamped Eastern Leg were either under
construction or were also pending before the Commission for
environmental review and approval. Given the self-evident
interrelatedness of the projects as well as their temporal
overlap, the Commission was obliged to consider the other
three other Tennessee Gas pipeline projects when it conducted
its NEPA review of the Northeast Project.
Under applicable NEPA regulations, FERC is required to
include “connected actions,” “cumulative actions,” and
“similar actions” in a project EA. 40 C.F.R. § 1508.25(a).
“Connected actions” include actions that are “interdependent
6
parts of a larger action and depend on the larger action for
their justification.” Id. § 1508.25(a)(1)(iii). The four pipeline
improvement projects are certainly “connected actions.”
There is a clear physical, functional, and temporal nexus
between the projects. There are no offshoots to the Eastern
Leg. The new pipeline is linear and physically interdependent;
gas enters the system at one end, and passes through each of
the new pipe sections and improved compressor stations on its
way to extraction points beyond the Eastern Leg. The upgrade
projects were completed in the same general time frame, and
FERC was aware of the interconnectedness of the projects as
it conducted its environmental review of the Northeast
Project. The end result is a new pipeline that functions as a
unified whole thanks to the four interdependent upgrades.
FERC has not shown that there are logical termini
between the new segments of the Eastern Leg or that each
project resulted in a segment that has substantial independent
utility apart from the other parts of the Eastern Leg. Rather,
FERC merely argues that one terminus was “no more logical
than another,” Br. of Resp’t at 25, and that the capacity added
by each project was contracted separately. These explanations
are insufficient to address Riverkeeper’s segmentation claim.
On the record before us, we hold that in conducting its
environmental review of the Northeast Project without
considering the other connected, closely related, and
interdependent projects on the Eastern Leg, FERC
impermissibly segmented the environmental review in
violation of NEPA. We also find that FERC’s EA is deficient
in its failure to include any meaningful analysis of the
cumulative impacts of the upgrade projects. We therefore
grant the petition for review and remand the case to the
7
Commission for further consideration of segmentation and
cumulative impacts.
I. BACKGROUND
A. Applicable Statutory and Regulatory Framework
The Natural Gas Act grants FERC jurisdiction over the
transportation and wholesale sale of natural gas in interstate
commerce. 15 U.S.C. § 717(b)-(c). Any person seeking to
construct or operate a facility for the transportation of natural
gas in interstate commerce must first obtain a certificate of
public convenience and necessity from the Commission. Id.
§ 717f(c)(1)(A). FERC is authorized to issue such a certificate
to any qualified applicant upon finding that the proposed
construction and operation of the pipeline facility is required
by the public convenience and necessity. Id. § 717f(e).
NEPA requires that federal agencies fully consider the
environmental effects of proposed major actions, including
actions that an agency permits, such as pipeline construction.
42 U.S.C. § 4332(2)(C); see also La. Ass’n of Indep.
Producers & Royalty Owners v. FERC, 958 F.2d 1101 (D.C.
Cir. 1992). FERC is therefore responsible for the NEPA
review associated with natural gas pipeline construction.
Midcoast Interstate Transmission, Inc. v. FERC, 198 F.3d
960, 967 (D.C. Cir. 2000).
After determining the scope of the federal action, an
agency produces an EA, which is a “concise public
document” that “provide[s] sufficient evidence and analysis
for determining whether to prepare an environmental impact
statement or a finding of no significant impact.” 40 C.F.R.
§ 1508.9. The scope of an agency’s NEPA review must
include both “connected actions” and “similar actions.” Id.
8
§ 1508.25(a)(1), (3). Actions are “connected” if they trigger
other actions, cannot proceed without previous or
simultaneous actions, or are “interdependent parts of a larger
action and depend on the larger action for their justification.”
Id. § 1508.25(a)(1). And actions are “similar” if, “when
viewed with other reasonably foreseeable or proposed agency
actions, [they] have similarities that provide a basis for
evaluating their environmental consequences together, such as
common timing or geography.” Id. § 1508.25(a)(3).
NEPA is “essentially procedural,” designed to ensure
“fully informed and well-considered decision[s]” by federal
agencies. Vt. Yankee Nuclear Power Corp. v. NRDC, 435 U.S.
519, 558 (1978). “‘NEPA itself does not mandate particular
results’ in order to accomplish [its] ends. Rather, NEPA
imposes only procedural requirements on federal agencies
with a particular focus on requiring agencies to undertake
analyses of the environmental impact of their proposals and
actions.” Dep’t of Transp. v. Pub. Citizen, 541 U.S. 752, 756-
57 (2004) (quoting Robertson v. Methow Valley Citizens
Council, 490 U.S. 332, 350 (1989)). “The procedures required
by NEPA . . . are designed to secure the accomplishment of
the vital purpose of NEPA. That result can be achieved only if
the prescribed procedures are faithfully followed . . . .”
Lathan v. Brinegar, 506 F.2d 677, 693 (9th Cir. 1974). 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.’” Scientists’ Inst. for Pub.
Info., Inc. v. Atomic Energy Comm’n, 481 F.2d 1079, 1092
(D.C. Cir. 1973). While the statute does not demand
forecasting that is “not meaningfully possible,” an agency
must fulfill its duties to “the fullest extent possible.” Id.
9
B. Factual and Procedural History
Both the Eastern and Western Legs of the 300 Line were
initially constructed with 24-inch pipe. To accommodate
increased production and demand in the natural gas market,
however, Tennessee Gas embarked on upgrades installing
what is known as “looped” pipeline. In a looped structure, the
old pipeline is left in place, while a larger pipeline is installed
in parallel, connecting to the old pipe so that the two lines
function as one system. As the overall system structure
expands, each additional length of 30-inch pipe or
compression horsepower results in increasing returns to the
pipeline’s capacity. For example, the first upgrade to the
Eastern Leg (which commenced in 2010 and was completed
in 2011) resulted in the installation of approximately 130
miles of new 30-inch pipe and added 350,000 dekatherms per
day to the pipeline’s capacity (with each dekatherm roughly
equivalent to 1,000 cubic feet of gas). The Northeast Upgrade,
in comparison, added only 40 miles of new pipe but added
636,000 dekatherms per day to the system. Abbreviated Appl.
of Tenn. Gas Pipeline Co. for a Certificate of Public
Convenience and Necessity at 2 n.1, 4, reprinted in Joint
Appendix (“J.A.”) 188, 190 ( “Application”); Br. of Resp’t at
21.
Between 2010 and 2013, Tennessee Gas commenced four
upgrade projects along the Eastern Leg. In chronological
order, they are: (1) the 300 Line Project; (2) the Northeast
Supply Diversification Project; (3) the Northeast Project; and
(4) the MPP Project. In May 2010, FERC certified the 300
Line Project, which placed eight sections of 30-inch pipeline
along the Eastern Leg of the 300 Line, and upgraded various
facilities and compressor stations along the entire line. The
new pipe segments were also looped, or connected, to the
10
existing 24-inch pipeline, and covered approximately 130
miles of the Eastern Leg, leaving seven sections of the
pipeline with only the decades-old 24-inch pipe.
As construction of the 300 Line Project was underway,
Tennessee Gas initiated the three additional projects
mentioned above to fill in the gaps that would be left by the
300 Line Project. Specifically, in November 2010, the
company applied for certification of the Northeast Supply
Diversification Project to add a 6.8-mile segment to the
pipeline, connecting two of the 300 Line Project sections; in
March 2011, it applied for certification of the Northeast
Project to add five segments (40 miles in total) of new
pipeline as well as compression upgrades and various
infrastructure improvements; and in December 2011, four
months after soliciting contracts for the project, it applied for
certification of the MPP Project, which would cover the only
remaining 7.9-mile segment that was still served solely by 24-
inch pipe. In November 2011, the company completed
construction on the 300 Line Project.
As each of the four projects was planned, the expected
increased capacity on the 300 Line (measured in dekatherms
per day) was contracted to natural gas shippers through a
binding open season bidding process. See, e.g., Application at
10, reprinted in J.A. 196. All of the gas transported through
the Eastern Leg, however, uses all of the now-complete
sections from the four projects, passing from one segment to
the next on its way to the pipeline’s delivery point in New
Jersey. In other words, even though each project’s
incremental increase in pipeline capacity was contracted for
separately, all of the projects function together seamlessly.
The 24-inch pipeline is buried underground in a corridor
that is maintained and kept accessible by keeping major tree
11
growth cleared. In general, the new 30-inch pipe was added
by widening the original corridor by 25 feet, clearing and
grading this strip, blasting or digging a trench, installing the
pipe in the trench, covering the pipe, and then restoring the
vegetation. As new segments of pipe were added, they were
connected to the old pipe, to adjacent sections of new pipe,
and to the compressor stations between the sections.
In its challenge to the Northeast Project, Riverkeeper is
concerned with habitat fragmentation, hydrology impacts to
wetlands and groundwater, and “edge effects” of
deforestation. See Br. of Pet’rs at 29, 37, 42-43. Riverkeeper
claims that the Northeast Project alone cleared 265 acres of
forest and impacted 50 acres of wetlands, and that the four
projects together permanently deforested 628 acres. Id. at 4.
Riverkeeper and other commenters raised these concerns
before the Commission.
In July 2010, Tennessee Gas invoked FERC’s pre-filing
process for the Northeast Project, and in October 2010 the
agency issued a Notice of Intent to prepare an EA. Petitioners
submitted comments on the Notice of Intent in November
2010, arguing, inter alia, that
[i]t is clear that the 300 Line Project and the Project at
issue here are all part of a larger development plan, as
they involve interlocking loop upgrades of the same
pipeline. [Tennessee Gas] must not be allowed to
circumvent heightened environmental scrutiny by
segmenting their upgrades in such a way. The cumulative
consequences of all these projects, many of them
previously subject to FERC approval, must be assessed
in the NEPA document.
12
Response to Notice of Intent to Prepare Environmental
Assessment on Behalf of Delaware Riverkeeper et al., Nov.
12, 2010 at 13, reprinted in J.A. 162; see also Pa. Dep’t of
Conservation & Natural Res. Comments on Notice of Intent,
Nov. 23, 2010 at 7, reprinted in J.A. 184 (noting that the
Bureau of Forestry “previously urged FERC to evaluate the
entire corridor parallel to the existing . . . line”).
On March 31, 2011, Tennessee Gas submitted its
certificate application for the Northeast Project. Application,
reprinted in J.A. 186. On November 21, 2011, FERC issued
an EA that recommended a Finding of No Significant Impact.
Northeast Upgrade Project Environmental Assessment at 4-1,
reprinted in J.A. 580 (“Northeast Project EA”). Petitioners
and other interested parties intervened and submitted timely
comments. These comments reiterated the concern that the
Project’s NEPA analysis was improperly segmented and
deficient in its cumulative impacts inquiry:
Remarkably, the EA fails to assess the additive effect of
the Project together with the effects of existing or
reasonably foreseeable gas development activities in the
Project area, including . . . compressor stations, and other
infrastructure. . . .
The EA is likewise inadequate in considering the
combined environmental impacts of related existing and
reasonably foreseeable pipelines within the
Commission’s Jurisdiction. The EA identifies ten
existing or proposed pipelines within fifty miles of the
Project area, totaling at least 240 miles of new or
improved pipeline construction. EA at 2-123-124. Five of
these projects will either connect or be adjacent to the
Project. EA at 2-126. However, the EA provides
absolutely no detailed information or analysis relating to
13
the additive environmental impacts of these past, present,
and proposed actions.
Comments on Environmental Assessment at 13, 17, reprinted
in J.A. 699, 703; see also Hay & Newman Comments, Aug.
25, 2011 at 2, reprinted in J.A. 390 (“The fact that the ‘300
Line’ gas pipeline project was approved by FERC the same
year of the submission of the subject application raises
concerns of impermissible segmentation. It seems unlikely the
approved . . . projects are not related segments to a broader
phased development plan. . . .”); Pike Cnty. Conservation
Dist. Comments, Dec. 20, 2011 at 3, reprinted in J.A. 746
(raising the same concerns).
On May 29, 2012, FERC issued the Order including a
Finding of No Significant Impact and certificate approval for
the Northeast Project. Order, 2012 WL 1934728, at *1, *11.
On June 28, 2012, Petitioners submitted a request for
rehearing. Petitioners claimed that:
The Commission violated NEPA by granting the
Certificate for construction of the [Northeast Project]
without properly applying the NEPA regulations in
evaluating the significance of the Project’s impacts,
without ensuring an adequate review of the Project’s
cumulative impacts, and without ensuring that necessary
mitigation measures would be fully implemented and
complied with to minimize and avoid significant negative
environmental impacts. Moreover, the Commission
violated NEPA by unlawfully segmenting consideration
of the [Northeast Project’s] impacts from other
interdependent and inter-related projects on the Eastern
Leg of the 300 Line.
Request for Reh’g at 3-4, reprinted in J.A. 837-38.
14
FERC denied this request for rehearing. It reiterated the
position it took in the May 29 Order, stating that it “found that
each project is a stand-alone project and designed to provide
contracted-for volumes of gas to different customers within
different timeframes.” Tenn. Gas Pipeline Co., 142 FERC
¶ 61,025, 2013 WL 240878, at *10 (Jan. 11, 2013) (“Reh’g
Order”). Petitioners timely filed the instant petition for review
in this court.
II. ANALYSIS
A. Standard of Review
Judicial review of agency actions under NEPA is
available “to ensure that the agency has adequately considered
and disclosed the environmental impact of its actions and that
its decision is not arbitrary or capricious.” Baltimore Gas &
Elec. Co. v. NRDC, 462 U.S. 87, 97–98 (1983); see also Nat’l
Comm. for the New River, Inc. v. FERC, 373 F.3d 1323, 1327
(D.C. Cir. 2004). Courts may not use their review of an
agency’s environmental analysis to second-guess substantive
decisions committed to the discretion of the agency. Where an
issue “requires a high level of technical expertise,” we “defer
to the informed discretion of the [Commission].” Marsh v. Or.
Natural Res. Council, 490 U.S. 360, 377 (1989) (internal
quotation marks omitted).
Although the standard of review is deferential, we have
made it clear that “[s]imple, conclusory statements of ‘no
impact’ are not enough to fulfill an agency’s duty under
NEPA.” Found. on Econ. Trends v. Heckler, 756 F.2d 143,
154 (D.C. Cir. 1985). The agency must comply with
“principles of reasoned decisionmaking, NEPA’s policy of
public scrutiny, and [the Council on Environmental Quality’s]
15
regulations.” Id. at 154 (citations omitted). And under the
applicable arbitrary and capricious standard of review,
the agency must examine the relevant data and articulate
a satisfactory explanation for its action including a
rational connection between the facts found and the
choice made. In reviewing that explanation, we must
consider whether the decision was based on a
consideration of the relevant factors and whether there
has been a clear error of judgment. Normally, an agency
rule would be arbitrary and capricious if the agency has
relied on factors which Congress has not intended it to
consider, entirely failed to consider an important aspect
of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or is
so implausible that it could not be ascribed to a
difference in view or the product of agency expertise.
The reviewing court should not attempt itself to make up
for such deficiencies: We may not supply a reasoned
basis for the agency’s action that the agency itself has not
given.
Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut.
Auto. Ins., 463 U.S. 29, 43 (1983) (internal quotation marks
and citations omitted). In sum, an agency action will be set
aside as arbitrary and capricious if it is not the product of
“reasoned decisionmaking.” Id. at 52.
B. Segmentation
An agency impermissibly “segments” NEPA review
when it divides connected, cumulative, or similar federal
actions into separate projects and thereby fails to address the
true scope and impact of the activities that should be under
consideration. The Supreme Court has held that, under NEPA,
16
“proposals for . . . actions that will have cumulative or
synergistic environmental impact upon a region . . . pending
concurrently before an agency . . . must be considered
together. Only through comprehensive consideration of
pending proposals can the agency evaluate different courses
of action.” Kleppe v. Sierra Club, 427 U.S. 390, 410 (1976).
Regulations promulgated by the Council on
Environmental Quality in 1978 dictate the appropriate scope
of a NEPA document. The regulations state, in relevant part,
that:
To determine the scope of environmental impact
statements, agencies shall consider 3 types of actions
. . . . They include:
(a) Actions (other than unconnected single actions) which
may be:
(1) Connected actions, which means that they are
closely related and therefore should be discussed
in the same impact statement. Actions are
connected if they:
***
(iii) Are interdependent parts of a larger action
and depend on the larger action for their
justification.
(2) Cumulative actions, which when viewed with
other proposed actions have cumulatively
significant impacts and should therefore be
discussed in the same impact statement.
(3) Similar actions, which when viewed with other
reasonably foreseeable or proposed agency
actions, have similarities that provide a basis for
evaluating their environmental consequences
17
together, such as common timing or
geography. . . .
40 C.F.R. § 1508.25.
The justification for the rule against segmentation is
obvious: it “prevent[s] agencies from dividing one project into
multiple individual actions each of which individually has an
insignificant environmental impact, but which collectively
have a substantial impact.” NRDC v. Hodel, 865 F.2d 288,
297 (D.C. Cir. 1988) (internal quotation marks omitted).
NEPA is, “in large measure, an attempt by Congress to instill
in the environmental decisionmaking process a more
comprehensive approach so that long term and cumulative
effects of small and unrelated decisions could be recognized,
evaluated and either avoided, mitigated, or accepted as the
price to be paid for the major federal action under
consideration.” NRDC v. Callaway, 524 F.2d 79, 88 (2d Cir.
1975).
Thus, when determining the contents of an EA or an EIS,
an agency must consider all “connected actions,” “cumulative
actions,” and “similar actions.” 40 C.F.R. § 1508.25(a); see
also, e.g., Am. Bird Conservancy, Inc. v. FCC, 516 F.3d 1027,
1032 (D.C. Cir. 2008) (reviewing the agency’s application of
the regulations in its preparation of an EA); Allison v. Dep’t of
Transp., 908 F.2d 1024, 1031 (D.C. Cir. 1990) (reviewing the
agency’s application of the regulations in its preparation of an
EIS). As noted above, in their claims before FERC,
Petitioners and other commenters argued that, in the NEPA
review of the Northeast Project, FERC was obliged to
consider the impacts from other connected actions on the
Eastern Leg of the 300 Line, and to assess the cumulatively
significant impacts of the four closely related and interrelated
projects. In our view, these claims are meritorious.
18
The disputed Northeast Project was the third of the four
pipeline construction projects completed in quick succession
on the Eastern Leg of the 300 Line. As noted above, when
FERC issued the certificate for the Northeast Project, it was
clear that the entire Eastern Leg was included in a complete
overhaul and upgrade. During the course of FERC’s review of
the Northeast Project application, the other three upgrade
projects were either under construction (as with the 300 Line
Project) or were also pending before FERC for environmental
review and approval (as with the Northeast Supply
Diversification Project and the MPP Project). The end result
is a single pipeline running from the beginning to the end of
the Eastern Leg. The Northeast Project is, thus, indisputably
related and significantly “connected” to the other three
pipeline upgrade projects.
It is noteworthy that FERC does not at all address the
requirements of 40 C.F.R. § 1508.25(a)(1) or § 1508.25(a)(3)
in defending its determination that the four projects should be
treated separately. Indeed, FERC never even cites the
applicable regulations which form the basis of Petitioners’
claims in this case. See Br. of Resp’t at ix (nowhere citing 40
C.F.R. § 1508.25). Instead, FERC relies on the four factors
we announced in Taxpayers Watchdog v. Stanley, 819 F.2d
294 (D.C. Cir. 1987), to argue that it did not impermissibly
“segment” its NEPA analysis. But as we made clear in
Coalition on Sensible Transportation, Inc. v. Dole, 826 F.2d
60, 68 (D.C. Cir. 1987), an agency’s consideration of the
proper scope of its NEPA analysis should be guided by the
governing regulations. There, we stated that “[i]n considering
the proper scope of the . . . project, the district court quite
properly referred to Federal Highway Administration
regulations.” Id. We then quoted the agency-specific scoping
regulations that govern in the context of a federal highway
19
project. Id. (quoting 23 C.F.R. § 771.111(f)). We then
remarked that Taxpayers Watchdog relied on “the same or
closely similar factors.” Id. But even if the analyses were
closely related, the point remains: the agency’s determination
of the proper scope of its environmental review must train on
the governing regulations, which here means 40 C.F.R.
§ 1508.25(a). In any event, as we explain below, FERC’s
position fails even on its own terms.
In Taxpayers Watchdog we stated that “[t]he rule against
segmentation . . . is not required to be applied in every
situation.” 819 F.2d at 298. It is possible, in some
circumstances, for an agency to determine that physically
connected projects can be analyzed separately under NEPA.
Taxpayers Watchdog, for example, involved a NEPA review
of a subway construction project in which plans for a large
project were abandoned in favor of a shorter length of rail.
The court explained that the new plans could be properly
analyzed without regard to potential further development
because the shorter segment “(1) has logical termini; (2) has
substantial independent utility; (3) does not foreclose the
opportunity to consider alternatives; and (4) does not
irretrievably commit federal funds for closely related
projects.” Id. The first two factors cited in Taxpayers
Watchdog are relevant in this case.
Logical Termini
FERC has not articulated any viable reason why it
completed its NEPA review of the Northeast Project without
regard to the other three projects on the Eastern Leg of the
300 Line. The agency does not contend that the four projects
were properly divided pursuant to some “logical termini,” or
rational end points. Rather, FERC simply asserts – in its brief
to this court, not in the agency action under review – that its
20
choice is not arbitrary and capricious if “one terminus is no
more logical than another.” Br. of Resp’t at 25. This will not
do. Under this line of reasoning, FERC could have certified
pipeline construction in one-mile sections, or hundred-yard
sections, or one-foot sections.
FERC relies on a NEPA case that addressed highway
construction, Coalition for Sensible Transp., 826 F.2d 60. But
that case lends little support to the agency’s position.
Coalition for Sensible Transportation concerned a road
construction project in Montgomery County, Maryland. Id. at
62. The project was intended to widen approximately sixteen
miles of Interstate 270 and modify five interchanges along the
way. “The stretch of I-270 at issue runs north from the Spur
connecting I-270 to I-495 (the Washington Beltway). It is a
heavily travelled route for traffic entering and leaving the
District of Columbia and also for local traffic between and
within the various nearby towns.” Id. The opinion noted that
“in the context of a highway within a single metropolitan area
– as opposed to projects joining major cities – the ‘logical
terminus’ criterion is unusually elusive. . . . Fully 45 percent
of the traffic now using the road neither originates nor
terminates at the Beltway. Thus the Beltway is no more
logical as a terminus than the Spur.” Id. at 69. To the extent
that the Eastern Leg pipeline is comparable to a highway, it is
more analogous to a highway that connects two major points
than one section of a web of metropolitan roadways for which
the logical termini criterion loses significance.
In rejecting the appellants’ claims in Coalition for
Sensible Transportation, the court also noted that “it is
inherent in the very concept of a highway network that each
segment will facilitate movement in many others; if such
mutual benefits compelled aggregation, no project could be
said to enjoy independent utility.” Id. The same cannot be said
21
about a single pipeline on which each newly constructed part
facilitates service only within the bounds of the same start and
end points. There are no spurs, interchanges, or corridors
connected to the Eastern Leg. There is a single pipeline
running from the beginning to the end of the Eastern Leg. The
pipeline is linear and physically interdependent, and it
contains no physical offshoots. In sum, Coalition for Sensible
Transportation is inapposite.
Substantial Independent Utility
FERC has also failed to show that the Northeast Project
had substantial independent utility separate from the other
three pipeline renovation projects on the Eastern Leg of the
300 Line. Tennessee Gas and FERC contend that the
Northeast Project has independent utility because the
company secured new shipping contracts in anticipation of the
increased capacity that would come with the completion of
the project. Br. of Resp’t at 20-24; Br. of Intervenors at 10-12.
This argument is unpersuasive.
First, FERC has a “threshold requirement” for pipelines
proposing new projects: the “pipeline must be prepared to
support the project financially without relying on
subsidization from existing customers.” Order, 2012 WL
1934728, at *4. As a result of this policy, Tennessee Gas was
required to contract for increased capacity prior to upgrading
the Eastern Leg of the pipeline. The commercial and financial
viability of a project when considered in isolation from other
actions is potentially an important consideration in
determining whether the substantial independent utility factor
has been met. FERC’s reliance on the shipping contracts in
this case, however, is insufficient because the contracts do not
show that the Northeast Project was driven by independent
financial considerations apart from the other projects.
22
Indeed, it is clear from FERC’s Order that the upgrade
projects on the Eastern Leg are financially interdependent.
The Order states:
Tennessee calculated this [Northeast Project capacity]
rate using the costs and design capacities of both the
proposed Northeast Upgrade Project and the . . . 300 Line
Project. . . . The 300 Line Project makes it possible for
Tennessee to achieve the capacity increase of the
Northeast Upgrade Project at a much lower cost than
would have been possible absent construction of the 300
Line Project Market Component facilities.
Id. at *2.
It is also noteworthy that Tennessee Gas sought an
“exception” to the normal policy of “incremental pricing for
all projects” in its Northeast Project application. FERC
explained this in its Order:
Tennessee maintains the inexpensive expansibility of the
Northeast Upgrade Project facilities is a result of the
earlier, more expensive capacity created by the 300 Line
Project . . . . Although Tennessee is not proposing to roll
the Northeast Upgrade Project costs into its general
system rates, Tennessee contends its proposal to roll the
project’s costs into the rates of the 300 Line Project . . . is
consistent with the premise that such rolled-in rate
treatment is appropriate in cases of inexpensive
expansibility made possible because of earlier costly
construction.
Tennessee further notes that in the precedent
agreement that provided the market support for the 300
23
Line Project, Tennessee and EQT Energy, LLC agreed to
a rate adjustment to the negotiated rate “to the extent a
subsequent project meeting certain criteria would be
constructed and eventually placed in-service within a
specified time period.” Tennessee also explains that the
parties agreed to this negotiated rate adjustment in
recognition that Tennessee would likely be able to
construct a subsequent project (such as the Northeast
Upgrade Project) at a lower cost than would have been
possible without the 300 Line Project.
Id. at *6. Not only did Tennessee Gas acknowledge the
functional interdependence of the 300 Line Project and the
Northeast Project, it made clear that the projects are
financially interdependent as well. Indeed, Tennessee Gas’s
prior agreement with EQT Energy was made in express
contemplation of the synergies to be obtained between the
300 Line and the Northeast Project. Even if the Northeast
Project has utility, it is plainly not independent utility.
FERC’s argument in this case that the “substantial
independent utility” standard is satisfied when an individual
project is “completed and in-service” and “meets specific
customer demand,” Br. of Resp’t at 21, proves too much.
Under this approach, Tennessee Gas could have proposed
two-mile segments, or one-mile segments, or one-hundred-
yard segments for NEPA review, so long as it produced
shipping contracts in anticipation of the increased capacity
attributable to each of these new segments. To interpret the
“substantial independent utility” factor to allow such
fractionalization of interdependent projects would subvert the
whole point of the rule against segmentation.
The “specific customer demand” argument relied on by
FERC paints a false picture. In truth, what happened is that
24
Tennessee Gas had to justify its applications for pipeline
upgrades by showing that there would be customers to
purchase the increased gas volume that would come as a
result of an upgrade. There are no “Northeast Project
customers” as such. Gas does not enter and exit the pipeline
between segments on the Eastern Leg of the 300 Line. See
Application at 1, 15, reprinted in J.A. 187, 201; Tennessee
Gas Pipeline Environmental Report at 10-5, reprinted in J.A.
329. And customers do not take gas from the Northeast
Project portion of the Eastern Leg. In this respect, the
Northeast Project portion of the pipeline is not the equivalent
of a highway spur, interchange, or corridor that has utility
independent of another highway to which it connects. The
Northeast Project’s utility is inextricably intertwined with the
other three improvement projects that, together, upgrade the
entire Eastern Leg of the 300 Line.
Project Timing
FERC also argues that the timing of the project
applications defeats Petitioners’ segmentation claim because
NEPA analyses should not cover projects already completed
or not yet proposed. Br. of Resp’t at 26. NEPA, of course,
does not require agencies to commence NEPA reviews of
projects not actually proposed. E.g., Weinberger v. Catholic
Action of Haw., 454 U.S. 139, 146 (1981). While
Riverkeeper’s challenge is limited to FERC’s NEPA review
of the Northeast Project, this challenge includes the question
whether FERC was obliged to take into account the other
“connected” or “similar” projects on the Eastern Leg when it
conducted the NEPA review for the Northeast Project.
The temporal nexus here is clear. Tennessee Gas
proposed the Northeast Project while the 300 Line Project
was under construction, and FERC plainly was aware of the
25
physical, functional, and financial links between the two
projects. And FERC’s consideration of the Northeast Project
application overlapped with its consideration of the remaining
two projects. Indeed, FERC’s review of the Northeast Project
overlapped with its review of the Northeast Supply
Diversification Project for the first six months and with the
MPP Project’s review for the final six months. Thus, FERC
was obliged to take into account the condition of the
environment reflected in the recently related and connected
upgrades. The adjacent lands were recently disturbed, wildlife
faced a larger habitat disruption, there was an increase in
pressure and gas moving through the system, and wetlands
and groundwater flow was disrupted. These effects could not
be ignored in FERC’s NEPA review of the Northeast Project.
Tennessee Gas states that it did not know at the time it
commenced the 300 Line Project that it was embarking on a
series of upgrade projects that would soon transform the
entire pipeline. That may be so. But the important question
here is whether FERC was justified in rejecting commenters’
requests that it analyze the entire pipeline upgrade project
once the Northeast Project was under review and once the
parties had pointed out the interrelatedness of the sequential
pieces of pipeline which were, in fact, creating a complete,
new, linear pipeline. Because of the temporal overlap of the
projects, the scope and interrelatedness of the work should
have been evident to FERC as it reviewed the Northeast
Project. Yet FERC wrote and relied upon an EA that failed to
consider fully the contemporaneous, connected projects.
We emphasize here the importance we place on the
timing of the four improvement projects. Separated by more
time, the projects could have utility independent of the other
projects. That is, the indications of the financial and
functional interdependence of the projects might have been
26
subsumed by the fact that Tennessee Gas constructed each
project to be a standalone improvement for a substantial
period of time. To take an obvious example, if the 300 Line
Project had been placed into service a decade before FERC
considered the Northeast Project application, the timing of the
projects would support, rather than undermine, the conclusion
that the projects had utility independent of each other. Here,
however, the timing does not support the independence of the
projects; rather, we are left with the fact that financially and
functionally interdependent pipeline improvements were
considered separately even though the there was no apparent
logic to where one project began and the other ended.
* * *
For the reasons explained above, we find that FERC’s
NEPA review of the Northeast Project violated the
segmentation rule. When FERC was reviewing the Northeast
Project application, it was undeniably aware that the previous
and following projects were also under construction or
review, and that each phase of the development fit with the
others like puzzle pieces to complete an entirely new pipeline.
FERC has suggested that the Petitioners should have
anticipated the future upgrades and raised their concerns
during FERC’s NEPA review of the 300 Line Project. This
argument rings hollow in light of Tennessee Gas’s and
FERC’s assertions that they did not know of the future
upgrades when FERC initially reviewed the 300 Line Project.
Petitioners raised their objections to FERC’s segmented
analysis of the connected projects once it became clear that
there were going to be four connected and interrelated
upgrade projects on the Eastern Leg of the 300 Line. When
the connections and interdependencies became clear and were
27
brought to FERC’s attention, the agency was obliged to assess
the entire pipeline for environment effects.
On the record before us, we find that FERC acted
arbitrarily in deciding to evaluate the environmental effects of
the Northeast Project independent of the other connected
actions on the Eastern Leg. There were clear indications in the
record that the improvement projects were functionally and
financially interdependent, and the absence of logical termini
suggests that the four projects functioned as one unified
upgrade of the Eastern Leg. And the temporal overlap serves
to reinforce this conclusion.
C. Cumulative Impacts
Many of the same points that support Riverkeeper’s
segmentation claim also sustain its contention that FERC’s
EA is deficient in its failure to include any meaningful
analysis of the cumulative impacts of Tennessee Gas’s
projects.
Cumulative effects are defined by the Council on
Environmental Quality as “the impact on the environment
which results from the incremental impact of the action when
added to other past, present, and reasonably foreseeable future
actions regardless of what agency (Federal or non-Federal) or
person undertakes such other actions. Cumulative impacts can
result from individually minor but collectively significant
actions taking place over a period of time.” 40 C.F.R. §
1508.7. We have explained that “a meaningful cumulative
impact analysis must identify (1) the area in which the effects
of the proposed project will be felt; (2) the impacts that are
expected in that area from the proposed project; (3) other
actions – past, present, and proposed, and reasonably
foreseeable – that have had or are expected to have impacts in
28
the same area; (4) the impacts or expected impacts from these
other actions; and (5) the overall impact that can be expected
if the individual impacts are allowed to accumulate.” Grand
Canyon Trust v. FAA, 290 F.3d 339, 345 (D.C. Cir. 2002).
The three Eastern Leg upgrade projects preceding and
following the Northeast Project were clearly “other actions –
past, present, and proposed, and reasonably foreseeable.” Id.
FERC’s Order approving the Northeast Project
acknowledges that commenters requested that the agency
consider the other upgrade projects on the Eastern Leg and the
cumulative impacts of the projects viewed together. Order,
2012 WL 1934728, at *49. In response, FERC summarily
stated that the construction impacts “were temporary,” and
“separated by time and distance” from the Northeast Project.
Id. As we have explained, the record simply does not support
this conclusion.
FERC’s EA for the Northeast Project states, in
conclusory terms, that the connected pipeline projects were
“not expected to significantly contribute to cumulative
impacts in the Project area.” Northeast Project EA at 2-127,
reprinted in J.A. 557. This cursory statement does not satisfy
the test enunciated in Grand Canyon Trust. The EA also
contains a few pages that discuss potential cumulative impacts
on groundwater, habitat, soils, and wildlife, but only with
respect to the Northeast Project. It is apparent that FERC did
not draft these pages with any serious consideration of the
cumulative effects of the other project upgrades on the
Eastern Leg of the 300 Line. In light of the close connection
between the various sections of the line that have been
upgraded with new pipe and other infrastructure
improvements, FERC was obliged to assess cumulative
impacts by analyzing the Northeast Project in conjunction
with the other three projects.
29
III. CONCLUSION
For the foregoing reasons, we grant the petition for
review insofar as it challenges FERC’s segmentation of its
NEPA review of the Northeast Project, and its failure to
adequately address the cumulative impacts of the four
upgrade projects on the Eastern leg of the 300 Line. We
hereby remand the case to FERC for further consideration of
these two issues.
BROWN, Circuit Judge, concurring in part and concurring
in the judgment: I join Part II.C of the majority opinion,
granting the petition for FERC’s failure to adequately address
the cumulative impacts of the four upgrade projects. As I see
it, the practical effect of the Court’s segmentation holding—
now that several of the projects are complete—can only be
FERC’s need for a more thorough cumulative impacts
analysis. Therefore, I would have focused on that aspect of
Petitioners’ wide-ranging and evolving challenges, and I
would have declined to delve into the murky waters of
backwards-looking segmentation review, especially since
improper segmentation was raised only at the end of the
lengthy approval process and scarce case law is available
concerning gas pipelines, which, as the majority also explains,
are distinct from highways and railways.
Nevertheless, I agree with the majority that “[m]any of
the same points [from] Riverkeeper’s segmentation claim . . .
sustain its contention that FERC’s EA is deficient in its failure
to include any meaningful analysis of the cumulative impacts
of Tennessee Gas’s projects.” Maj. Op. at 27. The close
timing, functional interdependence, and physical
connectedness of the four upgrade projects inform the need
for FERC to address the cumulative impacts of the other
projects within the Northeast Project’s EA. Here, FERC
utterly failed to explain why timing and distance—factors that
actually show the connectedness of the projects—justify
excluding the other upgrade projects from the cumulative
impacts analysis. See J.A. 554–57 (excluding consideration
of the Northeast Supply Project because it was “at least 25
miles from” the Northeast Upgrade Project). For this reason,
I would grant the petition and remand the case to FERC for
further consideration of the appropriate cumulative impacts.
SILBERMAN, Senior Circuit Judge, concurring: I join Judge
Edwards’ opinion because of the emphasis he puts on the timing
of these different projects, but I do think Judge Brown has a
good point in suggesting that the “cumulative impact” issue is
a stronger ground upon which to base the decision.
***
Petitioner’s brief, unfortunately, was laden with obscure
acronyms notwithstanding the admonitions in our handbook
(and on our website) to avoid uncommon acronyms. Since the
brief was signed by a faculty member at Columbia Law School,
that was rather dismaying both because of ignorance of our
standards and because the practice constitutes lousy brief
writing.
The use of obscure acronyms, sometimes those made up for
a particular case, is an aggravating development of the last
twenty years. Even with a glossary, a judge finds himself or
herself constantly looking back to recall what an acronym
means. Perhaps not surprisingly, we never see that in a brief
filed by well-skilled appellate specialists. It has been almost a
marker, dividing the better lawyers from the rest.
We have recently been rejecting briefs that do not adhere to
our instructions, and counsel should be warned that if a brief is
rejected and has to be rewritten, they will not be able to alter the
word limits.