Mountain Valley Pipeline, LLC v. Sierra Club ( 2021 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 20-1971
MOUNTAIN VALLEY PIPELINE, LLC,
Petitioner,
v.
NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY;
MICHAEL S. REGAN, in his official capacity as Secretary of the North Carolina
Department of Environmental Quality; S. DANIEL SMITH, in his official capacity
as Director, Division of Water Resources, of the North Carolina Department of
Environmental Quality,
Respondents.
SIERRA CLUB; APPALACHIAN VOICES; CENTER FOR BIOLOGICAL
DIVERSITY; HAW RIVER ASSEMBLY,
Intervenors.
On Petition for Review of a Decision of the North Carolina Department of Environmental
Quality. (FERC Docket No. 20181638)
Argued: January 26, 2021 Decided: March 11, 2021
Before GREGORY, Chief Judge, WYNN, and THACKER, Circuit Judges.
Petition for review granted; vacated and remanded by published opinion. Chief Judge Gregory
wrote the opinion, in which Judge Wynn and Judge Thacker joined.
ARGUED: Catherine E. Stetson, HOGAN LOVELLS US LLP, Washington, D.C., for
Petitioner. Taylor Crabtree, NORTH CAROLINA DEPARTMENT OF JUSTICE,
Raleigh, North Carolina, for Respondents. ON BRIEF: Sean Marotta, HOGAN
LOVELLS US LLP, Washington, D.C., for Petitioner. Joshua H. Stein, Attorney General,
Asher P. Spiller, Assistant Attorney General, Brenda Menard, Special Deputy Attorney
General, NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina,
for Respondents. Jean Y. Zhuang, Alex J. Hardee, SOUTHERN ENVIRONMENTAL
LAW CENTER, Chapel Hill, North Carolina, for Intervenor Haw River Assembly.
Benjamin A. Luckett, APPALACHIAN MOUNTAIN ADVOCATES, Lewisburg, West
Virginia, for Intervenors Sierra Club, Appalachian Voices, and Center for Biological
Diversity.
2
GREGORY, Chief Judge:
Mountain Valley Pipeline, LLC (“MVP”) seeks to build a natural gas pipeline
running through North Carolina and its rivers, streams, and wetlands. To do so, MVP
needed to obtain a Clean Water Act certification from the State’s Department of
Environmental Quality (the “Department”). The Department denied MVP the certification,
and MVP petitioned this Court for relief. On appeal, we hold that the Department’s denial
is consistent with the State’s regulations and the Clean Water Act. Nevertheless, the
Department did not adequately explain its decision in light of the administrative record.
Thus, we grant the petition, vacate the denial, and remand to the agency for additional
explanation.
I.
MVP proposes to build the Southgate Project, a natural gas pipeline stretching 75
miles from Chatham, Virginia to Graham, North Carolina. The Southgate Project is meant
to be an extension of MVP’s Mainline Project—a separate pipeline, still under
construction—that would deliver natural gas from sources in West Virginia, Ohio, and
Pennsylvania. Approximately 48 miles of the Southgate Project, or nearly two-thirds,
would cross through North Carolina and more than 200 of the State’s rivers, streams, and
wetlands, some of which contain fisheries or supply drinking water.
Construction of the pipeline would have several temporary and permanent effects
on those bodies of water. Where the proposed pipeline would cross a stream, MVP would
dam the stream, dry up the area, and pump or pipe the stream to redirect its flow. MVP
3
would then strip vegetation from the streambed and banks, dig a trench, and lay the pipe.
Once done, MVP would backfill the streambed, re-stabilize it, and allow water to flow once
again. But by clearing vegetation and grading along the stream banks, the pipeline’s
construction would expose additional ground to erosion, increasing the sediments that spill
into the water. This increasing sedimentation, in turn, may alter the water’s chemical
balance or decrease its dissolved oxygen, harming aquatic wildlife. The sedimentation
may also harm aquatic wildlife by decreasing light penetration, killing organisms that rely
on photosynthesis to produce oxygen. And the damming and drying of streams during
construction would disrupt the movement of fish and other organisms by imposing physical
barriers to upstream or downstream migration. These effects on the State’s rivers and
streams would primarily be “[t]emporary and localized impacts.” J.A. 848.
For larger or more sensitive bodies of water, MVP proposes drilling a hole beneath
the body of water to place the pipeline. To do this, MVP must excavate a pit nearby, which
again may increase erosion and sedimentation. And there is risk that drilling fluid will
escape into the surface waters, or that the drilled hole might collapse, causing the waterbed
to collapse as well.
Furthermore, the Southgate Project’s proposed route would cross through over
twelve acres of wetlands, carving a 75-foot construction pathway in the process. As with
streams, MVP would dry the area, dig the trench, lay the pipe, and backfill the land. In
addition to increasing water sedimentation, the Project would permanently remove forests
from two acres of wetlands to create paths for the pipeline’s maintenance easements and
access roads.
4
Finally, the Southgate Project would impact the Jordan Lake area, which “provides
drinking water to approximately 500,000 people and provides recreational swimming,
boating and fishing opportunities to the area.” J.A. 840. While the pipeline itself would
not cross the Jordan Lake waters, the pipeline would affect the Jordan Lake’s riparian
buffer zones—zones of neighboring wildlife vegetation. The vegetation in these buffer
zones protects water quality by stabilizing stream banks, mediating the temperature of
water, and removing sediment and pollutants before they enter the water. See State of
North Carolina, Envtl. Mgmt. Comm’n, Dep’t of Envtl. Quality, Study of the State’s
Riparian Buffer Protection Program Pursuant to SL 2015-246 (May 11, 2016), available
at https://perma.cc/24UC-5ZU7 (saved as ECF opinion attachment). By removing
vegetation from these riparian zones, the pipeline’s construction would diminish this
natural layer of protection. The proposed pipeline would thereby affect more than 400,000
square feet of riparian buffers, though the Federal Energy Regulatory Commission claims
that “[d]ue to the distance between the Project and the Jordan Lake impoundment and the
proposed surface water protection measures, no impacts would be expected to Jordan
Lake’s water quality or function.” J.A. 840.
In its environmental impact summary, the Federal Energy Regulatory Commission
(“FERC”) concluded that “[m]ost adverse environmental impacts would be temporary or
short-term during construction, but some long-term and permanent environmental impacts
would occur on forest and wetlands.” J.A. 701.
5
A.
Under the Natural Gas Act, a party seeking to build or operate a natural gas pipeline
must acquire a certificate of public convenience and necessity from FERC. 15 U.S.C.
§ 717f(c)(1)(A). When a party requests such a certificate, FERC undertakes an
environmental review of the proposed project under the National Environmental Policy
Act and the Natural Gas Act. See 42 U.S.C. §§ 4321 et seq.; 15 U.S.C. §§ 717 et seq. In
this process, FERC accepts input from the public and produces an environmental impact
statement. While the Natural Gas Act “largely preempts environmental regulation of
interstate natural gas pipelines by states,” the statute expressly preserves State authority to
regulate pipelines under the Clean Water Act. Sierra Club v. State Water Control Bd., 898
F.3d 383, 388 (4th Cir. 2018) (quoting Del. Riverkeeper Network v. Sec’y Pa. Dep’t of
Envtl. Prot., 833 F.3d 360, 368 (3d Cir. 2016)); see also 15 U.S.C. § 717b(d).
In this allocation of authority, Congress recognized the essential role that States
must play in protecting their own waters. Congress enacted the Clean Water Act in part to
“recognize, preserve, and protect the primary responsibilities and rights of States to
prevent, reduce, and eliminate pollution, to plan the development and use (including
restoration, preservation, and enhancement) of land and water resources.” Sierra Club v.
U.S. Army Corps of Eng’rs, 909 F.3d 635, 647 (4th Cir. 2018) (quoting 33 U.S.C.
§ 1251(b)) (emphasis omitted); see also Piney Run Pres. Ass’n v. Cnty. Comm’rs of Carroll
Cnty., 268 F.3d 255, 265 n.9 (4th Cir. 2001) (“Under the CWA, states have the primary
role in promulgating water quality standards.”).
6
North Carolina exercises this authority through its Department of Environmental
Quality. N.C. Gen. Stat. § 143-211(c); see also id. § 143-215.3(c); 15A N.C. Admin. Code
2B. 0100–.0300. The Department, in turn, has promulgated various State water quality
standards. One standard, the State’s antidegradation regulation, protects existing uses of
surface waters. See 15A N.C. Admin. Code 2B .0201(a). This regulation prohibits water
pollution that “preclude[s] any . . . uses[1] on either a short-term or long-term basis,” unless
otherwise permitted by certification. 15A N.C. Admin. Code 2B .0201(f), .0211(2).
Another water quality standard establishes various limitations to protect certain riparian
buffer zones. See 15A N.C. Admin. Code 2B .0262, et seq.
Besides its implementation of water standards, the Department also reviews
applications for certification under Section 401 of the Clean Water Act. See 33 U.S.C.
§ 1341(a); 15A N.C. Admin. Code 2H. 0506. Under Section 401, an entity seeking federal
permits for activity that may pollute a State’s waters must acquire State certification that
the activity will comply with applicable water laws, including the State’s water standards.
33 U.S.C. § 1341(a); see also 40 C.F.R. § 131.4(a). And if a State grants the certification
but with conditions, those conditions “shall become” conditions of the federal license. 33
U.S.C. § 1341(d).
1
All fresh waters throughout the State have designated uses of aquatic life
propagation and survival; maintenance of biological integrity; secondary contact recreation
(e.g. boating); and agriculture. 15A N.C. Admin. Code 2B .0211(1).
7
B.
In May 2018, MVP sought FERC authorization for the Southgate Project. FERC
issued a notice of intent to prepare an environmental impact statement, soliciting public
comments. That same year, MVP submitted a Section 401 certification application to the
North Carolina Department of Environmental Quality. Because MVP had not finalized the
Project’s route, and because FERC had not completed a draft environmental impact
statement, the Department denied this initial application.
FERC issued its draft environmental impact statement in 2019, and a year later, the
agency issued its final environmental impact statement and a certificate of public
convenience and necessity for the Southgate Project. However, FERC’s certificate
included a key condition. Because the Southgate Project depended upon the Mainline
Project, and because the Mainline Project had several of its permits invalidated by this
Court, FERC would permit construction of the Southgate Project only once MVP acquired
all required federal permits for its Mainline Project.
MVP reapplied for a Section 401 certification from the Department. The
Department began review of the application, requesting public comments and scheduling
a public hearing. During this process, the Department requested information regarding the
permits, litigation, and enforcement actions affecting MVP’s Mainline Project and how
these developments would affect the Southgate Project. In response, MVP acknowledged
a number of lawsuits hindering progress on the Mainline Project, including Sierra Club,
Inc. v. U.S. Forest Serv., 897 F.3d 582 (4th Cir. 2018) (vacating and remanding U.S. Forest
Service’s decision amending the National Forest Land and Resource Management Plan for
8
the Mainline Pipeline); U.S. Army Corps of Eng’rs, 909 F.3d at 639 (vacating the U.S.
Army Corps’ authorization of the Mainline Project under Nationwide Permit 12 and
suggesting that “an individual permit would likely be necessary”); and Wild Va. v. U.S.
Dep’t of the Interior, No. 19-1866 (4th Cir. Oct. 11, 2019) (challenging the U.S. Fish and
Wildlife Service’s Biological Opinion and Incidental Take Statement for the Mainline
Project). MVP also described several enforcement actions against the Mainline Project by
Virginia and West Virginia due to the Project’s violation of various permits and State
environmental laws.
After conducting a public hearing, the Department’s hearing officer issued a report
on MVP’s Section 401 certification application on August 11, 2020. Addressing public
comments, 2 the hearing officer discussed several common subjects, including climate
change, cumulative environmental impacts, project purpose, environmental justice,
sediment and erosion control, the effect of construction on streams and water, and the
project’s reliance on the completion of the Mainline pipeline. For some comments—such
as those questioning the economic need for the Southgate Project—the hearing officer
noted that the comments were “outside the evaluation criteria established in N.C.
Administrative Code for the review of 401 Water Quality Certifications and Buffer
Authorizations.” See, e.g., J.A. 1342. The hearing officer also observed that “[t]he
2
The hearing officer recorded 22 verbal comments and 1,725 written comments on
the proposed pipeline—of the written comments, all but three opposed the Southgate
Project.
9
majority of comments received raised concerns over the degradation of ground and surface
waters as a result of the construction and operation of the pipeline.” J.A. 1346.
The hearing officer then offered his recommendations, addressing each of the
individual criteria for certification under 15A N.C. Admin. Code 02H .0506 (2019). When
considering whether the Southgate Project would sufficiently minimize its effects on
surface waters, the hearing officer determined that “MVP has minimized impacts to surface
waters and wetlands to the greatest extent practical,” but that certain “impacts to surface
waters and wetlands are required due to spatial considerations, natural features and the
purpose of the project.” J.A. 1349, 1351. Consequently, the officer recommended that any
certification impose conditions requiring MVP to adhere to its commitments and otherwise
engage in specific practices to ensure that the pipeline’s effects on water remain minimal.
The officer also wrote that “[t]he project is not expected to violate water quality standards
if the certification is issued and if the conditions in the 401 Water Quality Certification are
fully complied with by the applicant (or its successor).” J.A. 1353.
However, the hearing officer also discussed whether the Southgate Project “[h]as
no practical alternative[s],” J.A. 1347, 1356, a separate requirement in both the State’s
2019 certification regulation 3 and the State’s riparian buffer regulation. See 15A N.C.
Admin. Code 2H .0267(11), .0506(b)(1) (2019). Here, the officer wrote:
In the absence of the MVP Mainline pipeline’s completion in Virginia, the
MVP Southgate project has no independent utility. In essence, it would be a
pipeline from nowhere to nowhere incapable of carrying any natural gas, and
3
The certification regulation was revised after MVP submitted its certification
application but two months prior to the Department’s final decision. See 15A N.C. Admin.
Code 2H .0506(b)(2) (2020).
10
certainly not able to fulfill its basic project purpose, while having no practical
alternative. As such, prior to incurring any impacts to North Carolina natural
resources, and to ensure that the maximum avoidance and minimization of
impacts to North Carolina water and buffer resources occurs, a level of
certainty regarding the completion of the MVP Mainline pipeline is required.
J.A. 1348. Thus, the officer recommended that the Department take one of two options:
(1) issue a certification including the condition “that construction of the MVP Southgate
pipeline (and its corresponding impacts) cannot occur until all legal ambiguities presently
surrounding the mainline pipeline have been resolved, and all necessary permits and
authorizations have been obtained”; or (2) deny certification. J.A. 1349; see also J.A.
1357–58 (recommending the same two options in the practical alternatives analysis
relevant to the riparian buffer standards).
The same day the hearing officer issued his report, the Department issued its final
decision, denying Section 401 certification for the Southgate Project. It determined that
the Southgate Project “is inextricably linked to, and dependent upon” completion of the
Mainline Pipeline Project. J.A. 1362. But because “several federal permits necessary for
the construction of the MVP Mainline project have been suspended or are pending, with
some in litigation,” and because FERC had “issued a stop-work order on the currently
incomplete MVP Mainline project,” the Department explained that “[t]he uncertainty of
the MVP Mainline project’s completion presents a critical risk to . . . the fundamental
purpose of MVP Southgate.” J.A. 1363. Consequently, the Department wrote that
“[c]ertification of this project, without further confidence that it can achieve its stated
purpose, is inappropriate and allows for avoidable environmental impacts to water quality
and protected riparian buffers.” Id. Specifically,
11
The FEIS notes that most adverse environmental impacts of the MVP
Southgate project would occur during construction. And that the MVP
Southgate project has the potential to result in “sedimentation and turbidity,
alteration or removal of instream and stream bank cover, stream bank
erosion, introduction of water pollutants, water depletions, and entrainment
of small fishes and fry during water withdrawals [which] could increase the
rates of stress, injury, and mortality experienced by fish and other aquatic
life.” In addition, the project would unnecessarily risk impacting high-
quality waters and protected and critical drinking water supplies of North
Carolinians.
Id. Accordingly, the Department denied certification, as “[a]pproving construction
activities and thereby allowing the most adverse environmental impacts—without certainty
of the project’s utility upon completion—is inconsistent with principles of minimization.”
Id.
MVP timely petitioned this Court for review. 4
II.
For the proposed construction of a natural gas pipeline, the United States Court of
Appeals for that circuit “shall have original and exclusive jurisdiction over any civil action”
challenging a State agency’s decision “to issue, condition, or deny any permit . . . required
under Federal law[.]” 15 U.S.C. § 717r(d)(1). We review North Carolina’s Section 401
certification decision under the standards set forth in the Administrative Procedures Act
4
This Court also permitted Haw River Assembly, Sierra Club, Appalachian Voices,
and the Center for Biological Diversity to intervene and file a separate, joint brief.
12
(“APA”). 5 Appalachian Voices v. State Water Control Bd., 912 F.3d 746, 753 (4th Cir.
2019). Under the APA, a court must “hold unlawful and set aside agency action, findings,
and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.” 5 U.S.C. § 706(2)(A). An action is arbitrary and capricious
if the agency relied on factors outside those Congress intended it to consider; failed to
consider an important part of the problem; offered an explanation contradicted by the
evidence before the agency; or “is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise.” Defs. of Wildlife v. Dep’t of the
Interior, 931 F.3d 339, 345 (4th Cir. 2019) (internal quotations omitted).
“Review under this standard is highly deferential, with a presumption in favor of
finding the agency action valid.” Id. (quoting Ohio Valley Envtl. Coal. v. Aracoma Coal
Co., 556 F.3d 177, 192 (4th Cir. 2009)). That said, a court “must not reduce itself to a
‘rubber-stamp’ of agency action.” Defs. of Wildlife, 762 F.3d at 396 (quoting N.C. Wildlife
Fed’n v. N.C. Dep’t of Transp., 677 F.3d 596, 601 (4th Cir. 2012)). Rather, it “must ensure
that the agency has examined the relevant data and articulated a satisfactory explanation
for its action.” Defs. of Wildlife, 931 F.3d at 345 (internal quotations omitted).
5
This Court has questioned whether State standards might be more appropriate for
review of State agency actions. See Appalachian Voices, 912 F.3d at 753 n.1 (noting but
declining to decide the issue); Sierra Club, 898 F.3d at 403 n.13 (same). We need not
decide the issue here because North Carolina’s standards for reviewing State agency
actions are materially identical to the APA’s. Compare N.C. Gen. Stat. § 150B-51(b) with
5 U.S.C. § 706(2).
13
III.
A.
MVP first argues that the Department’s denial of certification was arbitrary and
capricious because it did not comply with its own regulations. At the time of the
application, the Department’s regulations stated that the Department “shall issue a
certification upon determining that” the proposed activity:
(1) has no practical alternative under the criteria outlined in Paragraph (f) of
this Rule;
(2) will minimize adverse impacts to the surface waters based on
consideration of existing topography, vegetation, fish and wildlife resources,
and hydrological conditions under the criteria outlined in Paragraph (g) of
this Rule;
(3) does not result in the degradation of groundwaters or surface waters;
(4) does not result in cumulative impacts, based upon past or reasonably
anticipated future impacts, that cause or will cause a violation of downstream
water quality standards;
(5) provides for protection of downstream water quality standards through
the use of on-site stormwater control measures; and
(6) provides for replacement of existing uses through mitigation as described
at Subparagraphs (h)(1) of this Rule.
15A N.C. Admin. Code 2H .0506(b) (2019). A proposed activity lacks practical
alternatives if “the basic project purpose cannot be practically accomplished in a manner
which would avoid or result in less adverse impact to surface waters or wetlands.” 15A
N.C. Admin. Code 2H .0506(f) (2019).
MVP contends that the Department’s own hearing officer found these criteria to be
satisfied. It points to the hearing officer’s report, where he stated that the Southgate Project
14
“has minimized impacts to surface waters and wetlands to the greatest extent practical”;
that “[u]pon successful completion of the restoration and monitoring activities, the streams,
buffers, and wetland impact areas will continue to support existing uses of hydrology,
vegetation, and aquatic and wildlife habitat”; and that “[t]he project is not expected to
violate water quality standards if the certification is issued and if the [recommended]
conditions in the 401 Water Quality Certification are fully complied with by the applicant
(or its successor).” J.A. 1349–50, 1353. From these comments, MVP concludes that the
State was required to issue certification.
But the hearing officer did not claim that the Southgate Project satisfied all
certification criteria. Under the “no practical alternative” requirement, the pipeline fell
short. Until the Mainline Project was complete—a milestone stalled by litigation—the
hearing officer found that the Southgate Project’s construction would produce unnecessary
harm to the State’s waters. “[P]rior to incurring any impacts to North Carolina natural
resources,” the hearing officer wrote, the Department should require “a level of certainty
regarding the completion of the MVP Mainline pipeline” to “ensure [] the maximum
avoidance and minimization of impacts to North Carolina water and buffer resources[.]”
J.A. 1357. The Department’s final decision reiterated this same reasoning. See J.A. 1362–
63.
MVP acknowledges these observations by both the Department and its hearing
officer, but it claims that such reasoning strays beyond the scope of the State’s current
certification regulation (made effective two months before the Department’s final
decision). Opening Br. at 24–28. The regulation had been revised, in part, to combine the
15
minimization and practical alternatives criteria into a single criterion that only required
minimization “during and after project completion.” 15A N.C. Admin. Code 2H .0506(b)
(2020). 6 In response, the Department and Intervenors argue that the decision should be
evaluated under the 2019 version of the certification regulation, “in effect for the vast
6
In full, the revised Certification regulation states that the Department “shall issue”
a 401 Certification “upon determining that the proposed activity will comply with state
water quality standards, which includes designated uses, numeric criteria narrative criteria,
and the state’s antidegradation policy[.]” 15A N.C. Admin. Code 2H .0506(b) (2020). “In
assessing whether the proposed activity will comply with water quality standards,” the
Department “shall evaluate” whether the proposed activity:
(1) has avoided and minimized impacts to surface waters and
wetlands to ensure any remaining surface waters or wetlands, and any surface
waters or wetlands downstream, continue to support existing uses during and
after project completion;
(2) would cause or contribute to a violation of water quality
standards;
(3) would result in secondary or cumulative impacts that cause or
contribute to, or will cause or contribute to, a violation of water quality
standards;
(4) provides for replacement of existing uses through
compensatory mitigation as described in Paragraph (c) of this Rule;
(5) for Class SWL wetlands, is water dependent and requires
access to water as a central element of its basic function. Projects funded by
government agencies may be exempted from this requirement; and
(6) for Class UWL wetlands and wetlands that are habitat for state
or federally listed threatened or endangered species, is necessary to meet a
demonstrated public need.
Id.16
majority of the application period.” Resp. Br. at 39–41; see also Intervenors’ Br. at 28–
36. 7
We need not decide which version of the certification regulation to consider. Even
under the current version of the regulation, the Department’s minimization reasoning is
consistent with its water quality standards: namely, its riparian buffer rules. The current
regulation incorporates the riparian buffer rules by requiring the Department to consider
whether the project “would cause or contribute to a violation of water quality standards.”
15A N.C. Admin. Code 2H .0506(b)(2) (2020). Relevant here, North Carolina’s “Jordan
Rules” protect the riparian buffers by the Jordan Reservoir, which supplies water to several
municipalities in North Carolina. See 15A N.C. Admin. Code 2B .0267(1). The Jordan
Rules establish a fifty-foot riparian buffer around the Jordan waters, and they permit
impacts upon the buffer only when there are “no practical alternatives” to the project. 15A
N.C. Admin. Code 2B .0267(4), (10)(b)–(c). And a project has “no practical alternatives”
if “[t]he basic project purpose cannot be practically accomplished in a manner that would
better minimize disturbance, preserve aquatic life and habitat, and protect water quality.”
15A N.C. Admin. Code 2B .0267(10).
The Department’s decision is thereby consistent with the water quality standards
listed in its Jordan Rules. The Department noted that the Southgate Project’s basic
purpose—conveying fuel from the Mainline Project—could be practically accomplished
7
The Department also claims that its decision is consistent with the 2020 revision
of the regulation, arguing that the revision did not narrow or change its avoidance and
minimization requirements. Opening Br. at 42.
17
in a manner that would better minimize disturbance to water quality: by building the
Southgate Project only once the Mainline Project receives the necessary permits. Doing
so would ensure that the State avoids premature or unnecessary harm to its waters.
In reply, MVP argues that the Department did not invoke the riparian buffer rules
as a basis for its denial and that those rules are not applicable water quality standards.
Reply Br. at 14. Neither argument is correct. The Department’s denial letter expressly
invokes the Southgate Project’s effects on riparian buffers: “Certification of this project,
without further confidence that it can achieve its stated purpose, is inappropriate and allows
for avoidable environmental impacts to water quality and protected riparian buffers.” J.A.
1363 (emphasis added). And the riparian buffer rules are clearly applicable water quality
standards 8: “The purpose of this [Jordan] Rule shall be to protect and preserve existing
riparian buffers throughout the Jordan watershed . . . to maintain their nutrient removal and
stream protection functions . . . . [and] help protect the water supply uses of Jordan
Reservoir and of designated water supplies throughout the Jordan watershed.” 15A N.C.
Admin. Code 2B .0267(1).
MVP also claims that the Department’s practical alternatives analysis ventured into
a “freeform weighing” of the pipeline’s benefits against its costs. But the Department does
not dispute the merit of the Project. It did not weigh, for instance, the pipeline’s economic
8
MVP claims that the Jordan Rules are not State water quality standards solely
because they are not listed in an EPA guidance document. See Reply Br. at 14. But the
cited document lists the State’s water quality standards as the “Surface Water and Wetlands
Standards” in subchapter 2B. 0100–.0300, a section that includes the Jordan Rules in
2B.0267.
18
benefits or the energy it would produce. Rather, the Department had to consider the
pipeline’s function to assess the reasonable range of alternatives that would minimize its
adverse impact on water while still allowing the pipeline to work as intended. While an
agency’s analysis often takes the form of considering spatial alternatives (such as the
pipeline’s path), 9 here, the Department’s analysis considered a temporal alternative
(postponing construction of the Southgate Project until the predicate Mainline Project
completes the permitting process). As the Department points out, it denied certification
without prejudice to MVP re-submitting its application at a later time. Thus, the
Department properly denied certification, as it found that the temporal adjustment
constituted a practical alternative that would better minimize harm to the State’s waters.
B.
Next, MVP contends that the Department exceeded its statutory authority under the
Clean Water Act because the Department based its decision on policy goals unrelated to
water quality. Opening Br. at 30–36. But for the same reasons that the Department’s
decision is consistent with its water standards, its decision is consistent with the Clean
Water Act.
The Clean Water Act “requires each State, subject to federal approval, to institute
comprehensive water quality standards establishing water quality goals for all intrastate
waters.” PUD No. 1 of Jefferson Cnty., 511 U.S. at 700. While a State’s authority under
9
See, e.g., Constitution Pipeline Co., LLC v. N.Y. State Dep’t of Envtl.
Conservation, 868 F.3d 87, 101 (2d Cir. 2017) (“A state’s consideration of a possible
alternative route that would result in less substantial impact on its waterbodies is plainly
within the state’s authority.”).
19
the Clean Water Act “is not unbounded,” id. at 712, the Supreme Court recognizes that a
State’s antidegradation rules—rules to maintain existing, beneficial uses of water—are
appropriate requirements under the Clean Water Act. Id. at 713. North Carolina’s riparian
buffer rules fall plainly within that authority. See 15A N.C. Admin. Code 2B .0267(1)
(“The purpose of this Rule shall be to protect and preserve existing riparian buffers
throughout the Jordan watershed . . . to maintain their nutrient removal and stream
protection functions . . . . [and] help protect the water supply uses of Jordan Reservoir and
of designated water supplies throughout the Jordan watershed.”); see also Envtl. Prot.
Agency, EPA-841-B-05-003, National Management Measures to Protect and Restore
Wetlands and Riparian Areas for the Abatement of Nonpoint Source Pollution (2005)
(explaining how “[w]etlands and riparian areas play a significant role in protecting water
quality and reducing adverse water quality impacts”).
Additionally, the State’s minimization requirements flow from the Clean Water Act.
The EPA’s regulations specify that States must engage in minimization analysis as part of
their antidegradation rules. “Before allowing any lowering of higher water quality,” States
must “find, after an analysis of alternatives, that such a lowering is necessary to
accommodate important economic or social development . . . . The analysis of alternatives
shall evaluate a range of practicable alternatives that would prevent or lessen the
degradation associated with the proposed activity.” 40 C.F.R. § 131.12(a)(2)(ii). Under
Section 404 of the Clean Water Act, the EPA and U.S. Army Corps have also issued
regulations using similar language, stating that a permit should not issue if, among other
things, “practicable, environmentally superior alternatives are available” or “appropriate
20
and practicable steps have not been taken to minimize potential adverse impacts[.]” 40
C.F.R. § 230.10; see also James City Cnty. v. E.P.A., 12 F.3d 1330, 1333 (4th Cir. 1993).
Thus, North Carolina’s minimization regulations are consistent with the Clean Water Act,
which is replete with similar language.
MVP argues that the Department exceeded its statutory role by stepping into
FERC’s shoes and making a judgment about the Southgate Project’s public convenience
and necessity. Opening Br. at 30–35. To MVP, any proposed project would have some
potential impact on water; thus, a State could reject any project by invoking this
hypothetical risk when the State was in fact motivated by concerns with the project’s
viability or utility. But this argument assumes MVP’s premise that the Department’s
decision rested on weighing the costs and benefits of the Project. As explained above, that
is not the case. The Department considered the Southgate Project’s function only to
determine the reasonable range of alternatives that would minimize its adverse impact on
water while still accomplishing its function. Nor is such reasoning without limit. To deny
certification under a practical alternatives requirement, a State’s decision must be grounded
in impacts to water; the alternatives considered must be practical; the consideration of
alternatives must be reasonably consistent with the administrative record; and the agency’s
decision must not be arbitrary and capricious. By invoking such analysis here, the
Department acted within the boundaries of the Clean Water Act.
To be clear, FERC plays an important part in reviewing any proposed pipeline. But
the Natural Gas Act expressly preserves States’ duties under the Clean Water Act, and
21
FERC’s powers cannot sideline States from protecting their own waters. See Sierra Club,
898 F.3d at 388.
MVP also cites two State court cases rejecting agency actions as beyond their
statutory authority. But both arose in different circumstances. In Commonwealth Power
Co. v. Department of Natural Resources, the Michigan Court of Appeals reversed the
State’s denial of a Section 401 certificate on the grounds that the applicant refused to
submit a study on a proposed hydroelectric power plant’s effects on fish mortality. 2000
WL 33521869, at *2 (Mich. Ct. App. Mar. 21, 2000) (per curiam). There, the court held
that the agency exceeded the bounds of its authority by ordering a study on fish mortality
because the State “did not know or did not express what level of fish kill was acceptable
or what type of protective measures were necessary to maintain the proper ‘use’ of the
particular river for particular species of fish.” Id. By contrast, North Carolina’s water
standards have set a clear standard for the degree of acceptable impact on its water and
riparian buffers: the least amount practicably possible.
In Summit Hydropower v. Commissioner of Environmental Protection, the
Connecticut Superior Court reversed the State’s denial of a Section 401 certificate because
the State denied it for aesthetic reasons. No. CV91050 26 43, 1992 WL 175241, at *12
(Conn. Super. Ct. July 20, 1992) (“The enabling statutes do not give the DEP authority for
water quality regulations based on section 22a-426 to consider aesthetics in viewing the
water.”), rev’d on other grounds, 629 A.2d 367 (Conn. 1993). Here, however, the
Department made its decision, not for aesthetic reasons, but for the express aim of
preventing needless harm to the State’s rivers, streams, and wetlands.
22
C.
Last, MVP claims that the Department’s denial was arbitrary and capricious because
it failed to adequately explain its decision. Specifically, MVP argues that the Department:
(1) did not respond to MVP’s analysis for why its Mainline Project would receive the
appropriate certification; (2) did not cite the water quality standards that the Southgate
Project would purportedly violate; (3) did not explain its disagreement with the hearing
officer’s findings; and (4) did not explain why the Department chose to deny MVP’s
application rather than granting the Southgate Project a certificate conditioned upon the
Mainline Project receiving all necessary permits. The Department’s decision adequately
explained its concerns with the Mainline Project and the adverse effects of the Southgate
Project. But it failed to address the hearing officer’s minimization findings and explain
why it chose to deny certification rather than granting it conditionally.
First, MVP claims that the Department did not address the company’s assurances
that it was in the process of acquiring the necessary permits for its Mainline Project.
Opening Br. at 39–40. But the Department adequately explained its concerns with the
uncertainty surrounding the Mainline Project, as the information disclosed by MVP
revealed that “several federal permits necessary for the construction of the MVP Mainline
project have been suspended or are pending, with some in litigation.” J.A. 1363.
Moreover, the Department observed that FERC had issued a stop-work order on the
Mainline Project. Id. Taking these facts together, the Department determined that
“[c]ertification of this project, without further confidence that it can achieve its stated
23
purpose, is inappropriate and allows for avoidable environmental impacts to water quality
and protected riparian buffers.” Id.MVP insists that the Department should have addressed a chart MVP provided and
its representations that it was working diligently to obtain all permits for the Mainline
Project. 10 Opening Br. at 39–40. MVP also claims that the Department never explained
its criteria for what constituted an unacceptable degree of uncertainty. Reply Br. at 25.
But there is no requirement that the Department comment on every pending certificate and
lawsuit, individually, to observe that the slew of suits and missing permits poses a barrier
to the Mainline Project’s completion. See U.S. Forest Serv., 897 F.3d at 597 (“It is of
course always possible to explore a subject more deeply and to discuss it more
thoroughly.”). Nor is there a requirement that the Department establish a quantifiable
metric for declaring a project to be too risky, especially when observing that a predicate
project simply has not obtained the requisite certification. So long as the agency “provides
an explanation of its decision that includes a rational connection between the facts found
and the choice made, its decision should be sustained.” Am. Whitewater v. Tidwell, 770
F.3d 1108, 1115 (4th Cir. 2014) (cleaned up). The Department’s explanation provided that
rational connection.
10
MVP also cites the fact that FERC did eventually lift the Mainline Project’s stop-
work order. But this happened after the Department’s decision, and we review the agency’s
decision based only on the administrative record before it. Vt. Yankee Nuclear Power
Corp. v. Nat. Res. Def. Council, Inc., 435 U.S. 519, 549 (1978).
24
Second, MVP suggests that the Department’s decision is inadequate because “the
Department does not cite—much less analyze—any specific North Carolina water-quality
standard the Southgate Project might violate.” 11 Opening Br. at 34–35. But the
Department did use language tracking North Carolina’s minimization and avoidance
provisions. The Department explained that the Southgate Project as proposed is
“inconsistent with principles of minimization,” as it “allows for avoidable environmental
impacts to water quality and protected riparian buffers.” J.A. 1363. The Department
further stated that the Southgate Project could cause “sedimentation and turbidity,
alteration or removal of instream and stream bank cover, stream bank erosion, introduction
of water pollutants, water depletions, and entrainment of small fishes and fry during water
withdrawals [which] could increase the rates of stress, injury, and mortality experienced
by fish and other aquatic life.” Id. And the Department observed that “the project would
unnecessarily risk impacting high-quality waters and protected and critical drinking water
supplies of North Carolinians.” Id. This analysis tracks the requirements of the State’s
riparian buffer rule and its antidegradation requirements. See 15A N.C. Admin. Code 2B
.0201(f), .0211(2) (declaring a violation of water quality standards where activity produces
pollution that “preclude any [designated] uses on either a short-term or long-term basis”);
15A N.C. Admin. Code 2H .0267(11) (permitting a project affecting riparian buffers only
11
Though MVP offers this point in its argument as to why the Department exceeded
its statutory authority, the argument challenges the adequacy of the Department’s
explanation.
25
if “[t]he basic project purpose cannot be practically accomplished in a manner that would
better minimize disturbance, preserve aquatic life and habitat, and protect water quality”).
True, the Department’s decision did not offer direct citations to the North Carolina
general statute or administrative code. Regardless, we may “uphold a decision of less than
ideal clarity if the agency’s path may reasonably be discerned.” Roe v. Dep’t of Def., 947
F.3d 207, 220 (4th Cir. 2020) (quoting Bowman Transp., Inc. v. Arkansas-Best Freight
Sys., Inc., 419 U.S. 281, 285–86 (1974)). Even without direct citations to State code, we
can reasonably discern from the Department’s language that it relied on the State’s riparian
buffer rule and its minimization and avoidance requirements.
Third, MVP claims that the Department did not explain why it diverged from the
hearing officer’s findings that the Southgate Project fully minimized its potential impacts
on surface waters. Opening Br. at 37–39. The hearing officer wrote that “MVP has
minimized impacts to surface waters and wetlands to the greatest extent practical.” 12 J.A.
1349. That statement seems to conflict with the hearing officer’s other statements and the
language used in the Department’s denial letter. Cf. J.A. 1349 (hearing officer
recommending conditional certification or denial “to ensure that . . . all appropriate
avoidance and minimization occur”); J.A. 1363 (Department concluding that “[a]pproving
12
The Department and Intervenors argue that the hearing officer’s findings are not
binding upon the Department. See Resp. Br at 54–57; Intervenors’ Br. at 43–45. But the
issue is not whether the hearing officer’s findings are binding—the issue is whether the
agency adequately explained its decision given the full administrative record, which
includes the hearing officer’s report. See Dep’t of Commerce v. New York, 139 S. Ct. 2551,
2571 (2019) (noting that “[t]he Secretary [of Commerce] was required to consider the
evidence and give reasons for his chosen course of action,” even if the Secretary is not
required to defer to the Census Bureau’s technocratic experts).
26
construction activities and thereby allowing the most adverse environmental impacts—
without certainty of the project’s utility upon completion—is inconsistent with principles
of minimization.”). While this apparent inconsistency may be resolved by noting that the
hearing officer was using the term “minimization” with respect to the specific language in
a regulatory sub-provision, see J.A. 1349, the Department did not offer that or any other
explanation to reconcile its conclusions with those of its officer. Accordingly, we remand
for the Department to address the hearing officer’s findings. See Fred Meyer Stores, Inc.
v. Nat’l Labor Relations Bd., 865 F.3d 630, 638 (D.C. Cir. 2017) (remanding because the
agency failed to “reasonably reflect upon the information contained in the record and
grapple with contrary evidence”).
Finally, the Department failed to explain why it chose to deny certification instead
of conditioning certification upon the Mainline Project receiving its permits. The
Department’s hearing officer recommended that the Department take either of those two
options. On appeal, the Department—and Intervenors—explain why the State might have
preferred to deny the certification. The Department states that the hearing officer’s
suggested condition of completion for the Mainline Project may be too vague to be
enforceable. See Resp. Br. at 65–66. Intervenors add that MVP’s acquisition of various
permits for the Mainline Project provides no guarantee, given several lawsuits that later
revealed deficiencies in that Project and its permits. Intervenors’ Br. at 49–55. These are
fair reasons why the Department may have considered it the better policy to deny
certification rather than issue it conditionally. But the Department did not offer those
rationales in its decision; its denial letter did not explain at all why it chose outright denial
27
over conditional certification. And the Department cannot now supplement its reasoning
through representations made on appeal. See Michigan v. EPA, 576 U.S. 743, 758 (2015)
(citing SEC v. Chenery Corp., 318 U.S. 80, 87 (1943)). Given a choice between two
options, the Department had the obligation to explain why it chose one over another. See
Dep’t of Homeland Sec. v. Regents of the Univ. of Cal., 140 S. Ct. 1891, 1912 (2020) (citing
Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 46–
47 (1983)). It did not do so here.
Thus, on remand, the Department must address the hearing officer’s findings and
explain why the Department chose denial over conditional certification.
IV.
For the foregoing reasons, we grant MVP’s petition, vacate the North Carolina
Department of Environmental Quality’s denial of certification, and remand to the
Department for further proceedings consistent with this opinion.
PETITION FOR REVIEW GRANTED;
VACATED AND REMANDED
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