On March 12, 2019, Judge Kristin G. Farmer for the Stark County Court of Common Pleas dismissed the State of Ohio’s Third Amended Complaint against Rover Pipeline. The State alleged that Rover had committed widespread environmental violations during the construction of its 713-mile interstate natural gas pipeline. The court dismissed the complaint on the grounds that it lacked jurisdiction to hear the case because the State had waited over a year to “act” on Rover’s Clean Water Act §401 Certification request. On April 10, 2019, the State appealed that decision to the Court of Appeals for the Fifth District of Ohio.

The Roles of the Natural Gas Act, the Clean Water Act, and FERC

Construction of interstate natural gas pipelines involves substantial cooperation between state and federal law and authorities. The Natural Gas Act (NGA) is the federal law that governs the transportation of natural gas in interstate commerce. Congress gave regulatory authority over such interstate natural gas pipelines to the Federal Energy Regulatory Commission (FERC). In addition, the NGA designates FERC as the lead agency for coordination of all federal permits, special use authorizations, certifications, or other approvals of a natural gas pipeline. The NGA also requires all federal and state agencies considering an aspect of a natural gas pipeline to cooperate with FERC.

The NGA, however, is subservient to the Clean Water Act (CWA), a federal law that reserves to the states the right to adopt and enforce standards or limitations involving discharges of pollutants into state waterways. Importantly, the CWA requires any project in which discharge of a pollutant into navigable waters may occur to obtain certification from the state in which the discharge will originate. Such certification is known as the §401 Certification.

Rover Pipeline’s Alleged Environmental Violations

During the construction of its pipeline, Rover allegedly committed environmental violations in more than a dozen counties across Ohio due to sediment-laden stormwater, leaks and spills of clay-based drilling fluid and/or the release of water used to pressure-test the pipeline. In the Third Amended Complaint, the State alleges that there were over 23 incidences of drilling-fluid spills into waters of the state. The single largest spill allegedly occurred in April 2017 when several million gallons of drilling fluid were discharged into a Category 3 wetland in Navarre Township, Stark County.

In response to Rover’s alleged environmental violations, the State of Ohio filed suit against Rover and five other defendants in Stark County on November 3, 2017. The State asked the court to issue an order requiring defendants to pay, jointly and severally, a civil penalty of up to $10,000 per day for each violation in addition to reimbursing Ohio EPA and paying the costs of the court action.

Removal to Federal District Court

After the State filed its First Amended Complaint, the case was removed to the U.S. District Court for the Northern District of Ohio by the defendants. Less than two months later, however, the case was remanded back to the Stark County Court of Common Pleas. In the court’s order to remand the case back to state court, Judge John R. Adams concluded that although “[t]his matter necessarily raises a federal issue in some capacity . . . [because] there is a significant interplay herein between Ohio law, the Natural Gas Act (‘the NGA’) and the Clean Water Act (‘the CWA’),” “this Court cannot exercise jurisdiction without disrupting the division of labor between the state of Ohio and the federal government.”

Dismissal of Claims against Rover in the Stark County Court of Common Pleas

With the case back in state court, the Stark County Court of Common Pleas was tasked with determining whether it had jurisdiction over the case. In Rover’s Motion to Dismiss the State’s Third Amended Complaint, Rover argued that the State waived its authority to require the §401 Certification under the federal Clean Water Act because the State failed to respond to Rover’s §401 Certification request within one year of its filing. Rover also made three other arguments for dismissal, which centered on FERC’s role in approving natural gas pipelines under the Natural Gas Act.

As the court noted in its holding, the CWA provides that “[i]f the State . . . fails or refuses to act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request, the certification requirements of this subsection shall be waived with respect to such Federal application.” The court reiterated that the one-year time frame is a “‘bright-line rule’ and not a ‘subjective standard.’”

Rover submitted its §401 Certification request on November 16, 2015, but the State did not act on the request until it asked Rover to resubmit its request on February 23, 2017. The State’s delay in responding to Rover’s original §401 Certification request resulted in a waiver of the State’s authority to enforce the limitations and monitoring requirements under §401. Because the State’s complaint was grounded in its authority under §401, the court dismissed the State’s Third Amended Complaint.

The court’s holding, however, was narrow in its scope. Namely, the court emphasized that the holding “in no way stands for the proposition that the State of Ohio does not have rights relative to the construction of a natural-gas pipeline through the State and a right to impose regulations to curb disastrous environmental impacts on its waterways as a result of such construction.” Instead, the holding simply stands for the proposition that “in order to assert its rights, the State of Ohio is required to act in conformance with the Clean Water Act, as opposed to instigating litigation as a collateral attack subsequent to the completion of a pipeline.” Importantly, the court concluded its holding by noting that “despite the State of Ohio’s inability to pursue the instant litigation, all aspects of the construction of the pipeline, including the discharging of pollutants into waterways, were subject to oversight by FERC, which responded to environmental concerns presented by the State of Ohio, including, but not limited to, halting construction operations.” (Emphasis added.)

To date, there have been no substantive rulings in the appeal. The Sierra Club filed an amicus brief supporting Appellant State of Ohio on June 6th, and the State of Ohio filed its brief one week later. Appellee Rover Pipeline’s brief is currently due July 23rd. Squire Patton Boggs will continue to monitor this litigation.