A Trio of Environmental Decisions from the Fourth Circuit

Within the past few weeks, the U.S. Court of Appeals for the Fourth Circuit has issued some very significant rulings regarding the construction of new natural gas pipelines. These cases are Berkley, et al. v. Mountain Valley Pipeline, LLC, decided July 25; Sierra Club, Inc., et al., v. U.S. Forest Service, The Wilderness Society, et al., v. U.S. Forest Service, and Sierra Club, Inc. et al. v. U.S. Department of the Interior, decided July 27, 2018; and Sierra Club v. U.S. Department of the Interior and Defenders of Wildlife, et al., v. U.S. Department of the Interior, decided August 6, 2018. The first two cases involve the Mountain Valley Pipeline, and the last case involves the Atlantic Coast Pipeline.

The Federal Energy Regulatory Commission (FERC) has issued Certificates of Public Convenience and Necessity to these pipelines, but since the construction and operation will require various federal permits and authorizations, these federal regulatory actions are frequently being challenged in the courts.In the Berkley case, the plaintiff are Virginia landowners whose lands lie along the path of the proposed Mountain Valley Pipeline, LLC. They filed a lawsuit in the U.S. District Court for the Western District of Virginia against the Mountain Valley Pipeline and FERC, challenging the constitutionality of various provisions of the Natural Gas Act (NGA). The District Court dismissed the complaint, and the Fourth Circuit affirmed this ruling. FERC issued a Certificate to Mountain Valley in October 2017, but apparently the plaintiffs did not participate in that proceeding. Since the challenges made in this lawsuit inhere in the FERC order, and the NGA sets forth an exclusive means to challenge the FERC order, the District Court was divested of jurisdiction to hear this complaint.

The next Mountain Valley Pipeline case, consisting of the Fourth Circuit’s review of three petitions challenging the permitting actions of the U.S. Forest Service, the U.S. Department of the Interior and the U.S. Bureau of Land Management (BLM), resulted in an order vacating these permitting decisions that would have allowed the construction of this pipeline across federal lands. Following this decision, on August 3, 2018, FERC issued a “Notification to Stop Work Order” notifying the Mountain Valley Pipeline that “construction activity along all portions of the Project and in all work areas must cease immediately,” except for those deemed necessary by the land management agencies and the FERC staff.

In a long and complex opinion, the Fourth Circuit held that the decision of the Forest Service to amend the Jefferson National Forest Land Resource Management Plan to accommodate the pipeline’s right of way requirements failed to comply with the National Environmental Policy Act (NEPA) and the National Forest Management Act. NEPA was violated because the Forest Service failed to take a required “hard look “ at the Environmental Impact Statement (EIS) that had been prepared, in particular the “sedimentation analysis” that was contained in the EIS.

The BLM, in December 2017, granted the pipeline a 30 year, 50 foot operational right of way through the Jefferson National Forest. However, the petitioners argued, and the Fourth Circuit agreed, that the BLM was required to adhere to the applicable provisions of the Mineral Leasing Act to ensure that existing rights of way are used as much as possible. The Fourth Circuit vacated these permitting decisions and remanded the matter back to the agencies for additional work.

The third case, involving the construction of the Atlantic Coast Pipeline through segments of the Blue Ridge Parkway, required the Fourth Circuit to review the right of way permitting decisions of the U.S. Fish and Wildlife Service (Service) and the National Park Service (NPS). FERC issued a Certificate of Public Convenience and Necessity in October 2017, conditioning the construction of the pipeline on the acquisition of valid authorizations from both the Service and NPS.

Again, the Fourth Circuit concluded that these permitting decisions were arbitrary and capricious and must be vacated. At issue was the Service’s Endangered Species Act (ESA) “Incidental Take” Statement (ITS) in the Service’s Biological Opinion that was required because the construction of the pipeline would affect five endangered or threatened species (the Club shell, the Rusty Patched Bumble Bee, the Madison Cave Isopod, the Indiana Bat, and the Northern Long-Eared Bat). The ITS provided by the Service must set out the amount or extent of take anticipated, and is usually expressed in numeric values, and it is subject to review under the Administrative Procedure Act. Instead of numeric values, the Service used what is known as a “habitant surrogate “ in especially demanding instances.

As the Fourth Circuit noted, the Service’s rules regulate the use of a habitat surrogate, and the ITS did not adhere to these criteria and were therefore deficient, arbitrary and capricious. The Fourth Circuit vacated the Service’s ITS and the right of way permit.

The NPS issued the pipeline a right of way authorization under the Blue Ridge Parkway Organic Act, which was challenged by the petitioners. The Fourth Circuit refused to provide any deference to NPS’s view of its authority under the Organic Act based on its reading of the U.S. Supreme Court’s decisions in Chevron U.S.A., Inc. v. NRDC, U.S. v. Mead Corp., and Skidmore v. Swift & Co.

Turning to the statutes themselves (the Blue Ridge Parkway Organic Act and the Mineral Leasing Act), the Fourth Circuit concluded that the NPS may have some right-of-way permitting authority, but only if it takes the additional step of making a determination that the construction of the pipeline is consistent with “the values and proposes of the Blue Ridge Parkway unit and the overall National Park System.” For the present, the right of way permit issued to the Atlantic Coast Pipeline is vacated.

These rulings demonstrate, once again, the complicated and challenging regulatory structure at work here.