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National Committee for the New River, Inc. v. Federal Energy Regulatory Commission

July 09, 2004

NATIONAL COMMITTEE FOR THE NEW RIVER, INC. AND BARBARA G. SMITH, AN INDIVIDUAL, PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT EAST TENNESSEE NATURAL GAS COMPANY, INTERVENOR



On Petition for Review of Orders of the Federal Energy Regulatory Commission

Before: Sentelle, Rogers and Garland, Circuit Judges.

The opinion of the court was delivered by: Rogers, Circuit Judge

Argued April 19, 2004

At issue in this appeal are two orders of the Federal Energy Regulatory Commission approving the application of the East Tennessee Natural Gas Company ("East Tennessee") for a certificate of public convenience and necessity to construct a pipeline extension through southwest Virginia and North Carolina known as "the Patriot Project." The National Committee for the New River, Inc. and others (together "New River") contend that the Commission's environmental review of the Patriot Project was deficient in several respects: (1) the draft environmental statement was inadequate and incomplete in its disclosure and analysis of the environmental effect of the project; (2) neither the draft nor the final environmental impact statements adequately identified alternate routes for the pipeline; (3) the location of the underground taps should not have been considered in evaluating alternative routes for the pipeline, or if considered, their environmental impacts should have been considered; and (4) the draft environmental impact statement was deficient for failing to consider the impacts of two proposed generating plants.

We hold that the record demonstrates, consistent with the evolving nature of a major project, that the Commission's process for ventilating and analyzing potential environmental impacts of the Patriot Project involved the requisite "hard look," see Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989), and that any deficiencies in the draft environmental impact statement as may have existed were cured by the final environmental impact statement. Accordingly, because the Commission's approval of East Tennessee's application and the conditional issuance of a certificate of public convenience and necessity to East Tennessee was not arbitrary and capricious or an abuse of discretion, we deny the petition.

I.

On July 26, 2001, East Tennessee Natural Gas Company ("East Tennessee") filed an application for a certificate of public convenience and necessity under § 7(c) of the Natural Gas Act ("NGA"), 15 U.S.C. § 717f(c), to expand an existing natural gas transportation pipeline in Tennessee and southwest Virginia, and to extend a new pipeline from Virginia to North Carolina ("the Patriot Project"). The purpose of the project was to help meet forecasted growth in natural gas consumption in Tennessee, Virginia, and North Carolina, to provide resources to meet the increased demand for natural gas-fired electric generation, and to stimulate industrial development in the region. The project would affect about 2,707 acres of land in three states, with a pipeline right-ofway 100 feet wide. It includes a 94 mile extension of East Tennessee's mainline transmission facilities from near Wytheville, Virginia to an intersection with facilities of the Transcontinental Gas Pipe Line Corporation in Eden, North Carolina, a seven mile extension to service a power plant in Henry County, Virginia, and associated mainline valves and other facilities, including underground taps.

On March 27, 2002, the Commission, following its policy of evaluating non-environmental aspects of a proposed project before the environmental ones, issued a Preliminary Determination on Non-Environmental Issues, finding that the public benefits of East Tennessee's proposal outweighed any adverse impacts. 98 FERC ¶ 61,331, 62,392 (2002). In making this determination, it weighed such factors as the proposal's market support and economic, operational, and competitive benefits. See Certification of New Interstate Natural Gas Pipeline Facilities, 88 FERC ¶ 61,227, 61,743 (1999); Order Clarifying Statement of Policy, 90 FERC ¶ 61,128, 61,396 (2000); Order Further Clarifying Statement of Policy, 92 FERC ¶ 61,094, 61,373 (2000). On the benefits side, the Commission found that the "Patriot Project is in the public interest because it will provide fuel for new electric generation plants, provide additional gas supplies to existing local distribution companies (LDCs), and bring natural gas service to portions of southwestern Virginia for the first time." Preliminary Determination, 98 FERC at 62,392. It also noted that there was ample market demand for the Project, with seven shippers already under contract for 87 percent of the Project's capacity. On the impacts side, the Commission expected many potential adverse effects "will be resolved or mitigated with appropriate conditions in [the] final order" and with provisions for compensating property owners for any damage to property or the taking of property necessary for the pipeline right-of-way. Id. at 62,402. The Commission reserved issuance of the certificate pending completion of its environmental review.

The Commission's process for evaluating the environmental impacts of the project involved six steps: a notice of intent to prepare an impact statement, a draft impact statement, public hearings, staff review and evaluation of comments, a final impact statement, and finally Commission consideration of the final statement. On October 1, 2001, the Commission issued a Notice of Intent to Prepare an Environmental Impact Statement and Request for Comments on Environmental Issues ("NOI"). The NOI described the project and included an overview map as well as a website where further information was available. It advised that public "scoping" meetings would be held to solicit and address public concerns, and that there would be a visit to the proposed route. The NOI was sent to approximately 2,460 individuals, organizations, and interested parties, including federal, state, county, and local agencies, elected officials, and property owners along the proposed route of the extended pipeline. Four public scoping meetings and two public working meetings in various cities along the proposed route were held, and several hundred comments and objections were received.

On April 25, 2002, a draft environmental impact statement ("DEIS") was issued, assessing the environmental impacts associated with the construction and operation of the pipeline.

After the time for comment on the DEIS was extended, five public comment meetings were held in Virginia and Tennessee and one in Washington, D.C. Following evaluation of the comments by Commission staff, a final environmental impact statement ("FEIS") was issued on September 23, 2002. The Commission determined that the Patriot Project would result in limited adverse environmental impacts, and that mitigation measures detailed in the FEIS would "appropriately and reasonably" reduce and compensate for them.

In the first order on review, the Commission on November 20, 2002, issued East Tennessee a final certificate of authorization, subject to 69 conditions to mitigate environmental impacts. See Order Denying Rehearing, Authorizing Abandonment, and Issuing Certificate (" Initial Order "), 101 FERC ¶ 61,188, 61,743 (2002). The Commission rejected New River's petition for reconsideration of the Preliminary Determination, where it had argued that current data failed to support the need for increased gas service in the region, and that the economic benefits of the project were overstated. As relevant here, the Commission addressed the process of its environmental analysis, and explained that it was approving the project and general route, but not the final route delineation, due to survey and environmental study gaps resulting from East Tennessee's inability in some areas to gain access to property, the numerous conditions to be satisfied, and the need to obtain approval by various state and federal agencies regarding various aspects of the project. See Initial Order, 101 FERC at 61,756. It also addressed subjects New River raises in this appeal, such as the consideration of taps and alternative routes, and stated that it was adopting certain recommendations from the Virginia Department of Environmental Quality as added conditions to the Order. Id. at 61,759.

In the second order on review, the Commission, on February 27, 2003, denied the petition for rehearing of the November 20, 2002 order brought by New River, the Blue Ridge Coalition, and other petitioners, and denied New River's separate request for a stay. See Order on Rehearing and Denying Stay (" Rehearing Order "), 102 FERC ΒΆ 61,225, 61,-655 (2003). The Commission rejected the stay as making no attempt to address the criteria for granting a stay, and, offering largely the same reasons as in the Initial Order, addressed the need for the ...


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