On April 24, the D.C. Circuit issued its opinion in Myersville Citizens for a Rural Community v. FERC, upholding the Federal Energy Regulatory Commission’s (“FERC” or the “Commission”) approval of Dominion Transmission’s construction of a natural gas compressor station in Myersville, Maryland. Local citizens challenged the approval on a host of procedural and substantive grounds, but the court rejected them all.
First, the court held that FERC’s finding of public need for the project was supported by substantial evidence in the record, even though Dominion did not submit the most recent versions of its long-term contracts to sell its expanded supply, because the company did submit a summary of the agreements’ terms and an affidavit from a corporate officer stating that it had executed binding agreements for 100 percent of the additional capacity resulting from the project. (Here, the court also rejected petitioners’ argument that the project would “overbuild” capacity beyond the amount disclosed in its application; the compressor under construction is more powerful than the one originally proposed, but that is due to differences between the originally proposed location and the final one.)
Second, the court held that FERC did not intrude on Maryland’s rights under the Clean Air Act. Specifically, petitioners argued that the Commission, in granting approval conditional on Dominion’s subsequent receipt of a permit under that act, violated Maryland’s rights as the permit issuer, because the conditional approval forced the state’s hand and unlawfully influenced it to grant a permit to Dominion. As a threshold matter, it held that petitioners had standing to raise this issue, rejecting Dominion’s argument that they fell outside of the Act’s “zone of interests.” But on the merits, the court held that this conditional approval did not intrude on state jurisdiction; Maryland remained free to interpret its own law and independently determine whether to issue a permit under the Clean Air Act, and the question of whether the state properly did so was not before this court, but instead is being challenged in a separate action in state court.
Third, the court upheld FERC’s environmental assessment under the National Environmental Policy Act, ruling that the agency adequately considered and rejected alternatives to the project and took the required “hard look” at the project’s impact on property values and development opportunities. Here, the court rejected petitioners’ argument that the project was a “connected action” with Dominion’s project for a natural gas export terminal elsewhere in Maryland and that the cumulative impact of the two projects should have been assessed together. The court distinguished a 2014 precedent in which it had found FERC should not have separately reviewed applications for four segments of one continuous pipeline. There, the projects were clearly physically, financially, and environmentally interdependent and cumulative, but here, there was no evidence compelling “a finding of connectedness,” Slip Op. at 42.
Fourth and finally, the court held that petitioners suffered no due process violation from FERC’s alleged failure to timely provide certain hydraulic flow diagrams. Because petitioners did not allege that they lacked sufficient time to comment on this evidence before the deadline to seek rehearing, and because they did not articulate what they would have done differently had the Commission provided this evidence at an earlier stage, any procedural error here was harmless.
Challenges to FERC’s approval of natural gas projects are common these days. This opinion shows that, in such suits, the D.C. Circuit will continue to review the Commission’s actions with considerable deference. In particular, the opinion suggests that a firm need not be overly concerned that separate projects will be considered sufficiently linked to require a holistic environmental review – so long as the projects are actually separate and not merely chopped-up segments of one continuous project. However, in holding that petitioners had standing to raise arguments based on states’ rights under federal environmental law, the court kept open an avenue to bring this type of challenge, ensuring that citizens’ groups and others will continue to do so in the future.