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Oil and Gas Update

Third Circuit Rejects Challenge to Corps of Engineers’ Permit for Pipeline

September 6, 2017

By: Robert G. McLusky

On August 23, the Third Circuit Court of Appeals affirmed the Corps’ decision to issue a Clean Water Act § 404 “fill” permit to a pipeline developer for 13 miles of pipeline in Pennsylvania. See Delaware River Network v. U.S. Army Corps of Engineers, No. 17-1506 (3rd Cir. Aug. 23, 2017).  The Riverkeeper’s challenge was an original action filed in the 3rd Circuit pursuant to the Natural Gas Act. See 15 U.S.C. § 717r(d)(1) (providing Circuit Court with original and exclusive jurisdiction over order of a federal agency (other than FERC) issuing a permit under federal law for an interstate gas project). 

There, Tennessee Gas Pipeline Company sought a permit from the Corps for water crossings needed for a “looping” pipeline that would allow an increase in the volume of gas transported across Pennsylvania. The Corps’ Clean Water Act rules provide that it should not issue a permit where there is a “practicable alternative” with less aquatic ecosystem impact, “so long as the alternative does not have other significant adverse environmental consequences.” 40 C.F.R. § 230.10(a).  The Riverkeeper argued that the Corps should have denied the permit because the need for the water crossings associated with the pipeline could have been obviated by the construction of a compressor to force more gas through the existing line. 

The Riverkeeper offered three specific arguments. First, permit applicants are required to define the basic purpose and need for the project.  The Riverkeeper argued that the permit applicant defined the “basic” project purpose “to construct natural gas pipeline loops,” a definition that unlawfully constrained the Corps’ alternative analysis to avoid consideration of other means of increasing the volume of gas transported.  The court rejected this, noting that the applicant identified the “overall” purpose as increasing natural gas transportation, a construction which did not, under the obscure rules administered by the Corps, limit the Corps’ consideration of alternatives to just “loops.”

Second, the Riverkeeper argued that the Corps failed to consider the compressor alternative. This, the court quickly rejected, noting that the applicant’s alternative analysis expressly discussed compression, and the Corps identified it as an alternative that was considered. 

Finally, the Riverkeeper argued that the Corps erroneously rejected the compressor alternative by failing to make appropriate findings under its so-called § 404(b)(1) Guidelines.  Under the applicable rule, “no discharge of … fill material shall be permitted if there is a [i] practicable alternative to the proposed discharge [ii] which would have less adverse impact on the aquatic ecosystem, [iii] so long as the alternative does not have other significant adverse environmental consequences.”  40 C.F.R. § 230.10(a).  The Riverkeeper argued that the compressor alternative satisfied all three prongs of the rule and, therefore, a permit for the pipeline loops was inappropriate.  The Court agreed as to the first two prongs, but not the third.  Thus, it implicitly ruled that the Corps need not reject a permit for a project unless there are alternatives that satisfy all three prongs of the rule.

As to the first prong, “practicability,” the Court did not find support in the record for the Corps’ conclusion that the compressor alternative was impracticable on a cost basis.  As to the second prong—“aquatic impacts”—the rule provides that a permit shall be denied if the alternative is practicable and “would have less impact on the aquatic ecosystem.”  The Court observed that the compressor station qualified under this test because it would obviate the need for the stream crossings associated with the pipeline.  As to the third prong, though, the Court held that the Corps properly found that the compressor alternative would have “other significant adverse environmental consequences” and, therefore, lawfully rejected it as an alternative that required denial of the pipeline permit. 

This article was authored by Robert G. McLusky.

 

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