On March 19, 2019, the U.S. Court of Appeals for the First Circuit (“First Circuit”) found that FERC’s issuance of a certificate of public convenience and necessity (“CPCN”) authorizing Algonquin Gas Transmission, LLC’s (“Algonquin”) compressor station construction in the Town of Weymouth, Massachusetts (“Weymouth”) preempted Weymouth’s later denial of a Wetland Protection Ordinance (“WPO” or “Ordinance”) permit that ultimately prohibited Algonquin from constructing a compressor station in Weymouth. Notably, the First Circuit found that Weymouth’s WPO permit denial was preempted, in part, because FERC considered essentially the same environmental factors Weymouth relied on to deny the WPO permit.

As a matter of background, Algonquin proposed to build a natural gas compressor station in Weymouth as part of its Atlantic Bridge Project. After concluding a National Environmental Policy Act (“NEPA”) analysis, where FERC found that the Atlantic Bridge Project would have no significant environmental impact, FERC issued a CPCN approving the Atlantic Bridge Project. However, the CPCN required that Algonquin receive a consistency determination from the Massachusetts Office of Coastal Zone Management (“OCZM”), in accordance with the Coastal Zone Management Act (“CZMA”), prior to the compressor station’s construction. To receive such a determination, Algonquin applied for permits from Weymouth pursuant to the Weymouth WPO and the Massachusetts Wetland Protection Act. Weymouth denied Algonquin’s applications, concluding that Algonquin had not adequately addressed hurricane and explosion risks associated with the project, and that the Weymouth WPO permit could not be adequately conditioned to mitigate air, water, aesthetic, and recreational impacts resulting from the project.

Algonquin appealed Weymouth’s permit denial to the Massachusetts Department of Environmental Protection (“Mass DEP”), and the Mass DEP agreed with Algonquin and reversed the permit denial. Weymouth administratively appealed the reversal to the Mass DEP, and Mass DEP stayed the matter pursuant to a court’s determination of whether federal law preempts Weymouth’s WPO permit denial. Accordingly, the Massachusetts OCZM stated it would not issue its CZMA consistency determination until Mass DEP conclusively ruled in favor of Algonquin on Weymouth’s appeal.

Algonquin petitioned the U.S. District Court for the District of Massachusetts (“District Court”) to find that the construction and operation of the Weymouth compressor station is not subject to the Weymouth WPO and enjoin Weymouth’s enforcement of the WPO permit denial because the Ordinance is preempted under federal law. The District Court entered summary judgment in Algonquin’s favor on the grounds of field preemption and conflict preemption, and Weymouth appealed.

On appeal, the First Circuit found that prior to issuing a CPCN, FERC, in accordance with NEPA, prepared an environmental assessment evaluating environmental, siting, and safety factors, including the project’s proximity to wetlands. The First Circuit further noted that FERC’s regulations require natural gas pipeline project applicants to provide environmental reports addressing the impacts a proposal may have on wetland, land use, public health, safety, aesthetic, and air quality. The court found that FERC, in its NEPA analysis and its CPCN order approving the project, considered essentially the same environmental and safety concerns Weymouth relied upon in denying Algonquin a WPO permit. The First Circuit noted, for instance, that FERC considered the compressor station’s risks from flooding and impacts from hurricanes and concluded that the compressor station’s proposed design would mitigate potential impacts—an area Weymouth also explored in making its determination. Accordingly, the First Circuit concluded that Weymouth’s permit denial posed a “complete obstacle” to FERC’s determination that the public convenience and necessity require that FERC approve the project. As a result, the court found that FERC’s issuance of a CPCN to Algonquin in this case conflict preempts Weymouth’s WPO permit denial.

To read the full decision, a copy of the First Circuit’s opinion is available here.