Oil and Gas Update
Federal Court Rejects Use of Virginia County Flood Ordinance to Limit Natural Gas Pipeline Construction
April 2, 2020
A federal court in Virginia has ruled that a county’s attempt to impede an interstate gas pipeline with a floodplain ordinance is preempted by the federal Natural Gas Act. See Atlantic Coast Pipeline, LLC v. Nelson County Board of Supervisors, No. 3:18-00115 (W.D. Va. March 9, 2020).
The Atlantic Coast Pipeline (“ACP”) holds a certificate from FERC under the Natural Gas Act to construct and operate a natural gas pipeline starting in West Virginia and running through Virginia to North Carolina. It also obtained an authorization under Section 404 of the Clean Water Act from the Corps of Engineers to discharge material into waters and wetlands as part of the construction process. That authorization approved ACP’s use of the Corps’ Nationwide Permit 12 issued for the construction of utility line projects.
As part of the FERC certification process, FERC and other federal agencies prepared an Environmental Impact Statement that assessed the potential impact of the pipeline on flood hazard areas and floodplains. The Natural Gas Act preempts the application of many state and local land use laws to FERC approved projects—something we’ve written about before. It does not, however preempt the application of the Clean Water Act by either the Corps or States with approved programs.
Despite the preemptive effect of the Natural Gas Act (“NGA”) on local land use controls, ACP committed during the FERC certification process to obtain floodplain permits, where applicable, from local or county officials. Commitments such as these are common in the case of FERC certification. Notwithstanding the preemptive effect of the NGA, every FERC certificate includes a provision encouraging “cooperation between applicants and state and local authorities….” The same provision cautions, however, that “state and local agencies, through the application of state and local laws, may not prohibit or unreasonably delay the construction or operations of facilities approved by FERC” and cautions that “any state or local permits issued … must be consistent with … the authorization issued by FERC.” During the FERC certification process, ACP committed to obtaining floodplain permits, where applicable, from local authorities.
In ACP’s case, Nelson County, Virginia denied a permit allowing the pipeline to cross 4.5 miles of floodplains within the County. The County had amended its ordinance in advance of ACP’s application to prohibit the location of “critical facilities” (including facilities that transport hazardous material or store fuel) in FEMA classified “Special Flood Hazard Areas.” ACP then sued the County in federal district court, seeking a declaration that the county’s application of its floodplain ordinance was preempted because it collided with the FERC certificate in derogation of the NGA. In response, the County argued that there was no preemption because both FERC and the Corps of Engineers also required ACP to comply with county flood plain requirements. The Court rejected both arguments.
As to FERC, the Court observed that it did not “require” that ACP comply with the county ordinance; just that it encouraged cooperation. After determining that FERC’s floodplain review overlapped substantially with the County’s application of its floodplain ordinance, the Court concluded there was a conflict that was preempted. The Court suggested, without holding, that even in the absence of a direct conflict between the County ordinance and the FERC certificate, the concept of “field preemption” might prohibit application of the County ordinance altogether.
The County also argued there was no federal preemption because its ordinance derived from other federal requirements. First, it argued that its ordinance was adopted pursuant to the National Flood Insurance Act, by which local governments must adopt floodplain restrictions meeting certain FEMA requirements. Second, it argued that compliance with its ordinance was a condition of the Corp’s federally-issued NWP 12 (requiring that approved activity must comply with “any applicable FEMA-approved state or local floodplain management requirements”). The Court rejected both arguments after noting that the county requirements at issue exceeded those required by the National Floodplain Insurance Act or FEMA and thus could not escape the preemptive effect of the NGA. As the Court put it: “… because Nelson County’s Floodplain regulations are not an embodiment of federal law through the NFIA, the conflict is not between two federal statutes, but between the NGA and Nelson County’s Floodplain Regulations. As between those two, the latter stands as an obstacle to the former, and … as applied to the [ACP] is preempted.”