Delaware Riverkeeper Network v. Secretary Pennsylvania Departm

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_________________________
No. 15-2122
_________________________
DELAWARE RIVERKEEPER NETWORK;
MAYA VAN ROSSUM, the Delaware Riverkeeper,
Petitioners
v.
SECRETARY PENNSYLVANIA DEPARTMENT OF
ENVIRONMENTAL PROTECTION; PENNSYLVANIA
DEPARTMENT OF ENVIRONMENTAL PROTECTION,
Respondents
TRANSCONTINENTAL GAS PIPE LINE CORP,
Intervenor Respondent
_________________________
No. 15-2158
_________________________
NEW JERSEY CONSERVATION FOUNDATION;
STONY BROOK MILLSTONE WATERSHED
ASSOCIATION; FRIENDS OF PRINCETON
OPEN SPACE,
Petitioners
v.
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL
PROTECTION; TRANSCONTINENTAL GAS
PIPE LINE CORP,
Respondents
On Petition for Review of an Order of the
Federal Energy Regulatory Commission
(Agency Nos. FERC CP13-551-00; EA40-013 & EA45-002)
(Agency Nos. 0000-13-0012.1FHA140001,
0000-13-0012.1FWW140001, 0000-13-0012.2FHA140001
& 0000-13-0012.2FWW140001)
Argued on October 29, 2015
Before: GREENAWAY, JR., SCIRICA
and ROTH, Circuit Judges
(Opinion filed: August 8, 2016)
2
Aaron J. Stemplewicz, Esquire (Argued)
Delaware Riverkeeper Network
925 Canal Street
Suite 3701
Bristol, PA 19007
Counsel for Petitioners Delaware
Riverkeeper Network and
Maya Van Rossum
Katherine V. Dresdner, Esquire
299 Pennington-Titusville Road
Pennington, NJ 08534
Aaron Kleinbaum, Esquire
Eastern Environmental Law Center
744 Broad Street
Suite 1525
Newark, NJ 07102
Susan J. Kraham, Esquire
Edward Lloyd, Esquire (Argued)
Columbia University School of Law
435 West 116th Street
New York, NY 10027
Counsel for Petitioners New Jersey
Conservation Foundation
Stony Brook Millstone Watershed
Association and Friends of
Princeton Open Space
3
Joseph S. Cigan, III, Esquire (Argued)
Commonwealth of Pennsylvania
Department of Environmental Protection
2 Public Square
Wilkes-Barre, PA 18701
Kimberly Hummel Childe, Esquire
Office of Attorney General of Pennsylvania
Department of Environmental Resources
P.O. Box 8464
Harrisburg, PA 17105
Margaret O. Murphy, Esquire
Pennsylvania Department of Environmental Protection
400 Market Street
P.O. Box 8469
Harrisburg, PA 17105
Curtis C. Sullivan, Esquire
Department of Environmental Protection
909 Elmerton Avenue
Harrisburg, PA 17110
Counsel for Respondents Secretary
Pennsylvania Department of
Environmental Protection and
Pennsylvania Department of
Environmental Protection
Pamela S. Goodwin, Esquire
Patrick F. Nugent, Esquire
4
John F. Stoviak, Esquire (Argued)
Saul Ewing
1500 Market Street
Centre Square West, 38h Floor
Philadelphia, PA 19102
Elizabeth U. Witmer, Esquire
Saul Ewing
1200 Liberty Ridge Drive
Suite 200
Wayne, PA 19087
Counsel for Intervenor Respondent
Transcontinental Gas Pipe Line Corp
Mark A. Collier, Esquire
John E. Doyle, Esquire
Timothy P. Malone, Esquire
Lewin J. Weyl, Esquire (Argued)
Office of the Attorney General of New Jersey
Department of Law & Public Safety
Richard J. Hughes Justice Complex
25 Market Street
P.O. Box 093
Trenton, NJ 08625
Counsel for Respondent New Jersey
Department of Environmental Protection
Michael K. Rutter, Esquire
Heather N. Oehlmann, Esquire
5
Christine A. Roy, Esquire (Argued)
Richard G. Scott, Esquire
Watson, Stevens, Rutter & Roy
3 Paragon Way
Suite 300
Freehold, NJ 07728
Counsel for Respondent
Transcontinental Gas Pipe Line Corp
_______________
OPINION
_______________
ROTH, Circuit Judge:
In this appeal, we are called upon to review water
quality-related permitting actions by New Jersey and
Pennsylvania for a project by Transcontinental Gas Pipe Line
Company, LLC (Transco), which operates the
Transcontinental pipeline, a 10,000-mile pipeline that extends
from South Texas to New York City. Transco sought federal
approval to expand a portion of the pipeline, called the Leidy
Line, which connects gas wells in Central Pennsylvania with
the main pipeline. Pursuant to the Clean Water Act, the
Pennsylvania and New Jersey Departments of Environmental
Protection (PADEP and NJDEP, respectively) reviewed
Transco’s proposal for potential water quality impacts and
issued permits for construction. The New Jersey
Conservation Foundation, Stony Brook-Millstone Watershed
Association, and Friends of Princeton Open Space
6
(collectively, the Foundation) petitioned this Court for review
of NJDEP’s decision to issue these permits. In a separate
petition to this Court, the Delaware Riverkeeper Network and
Maya van Rossum (collectively, the Riverkeeper) challenged
PADEP’s issuance of a Water Quality Certification required
under Section 401 of the Clean Water Act. The petitions
were consolidated for review.
For the reasons that follow, we conclude this Court has
jurisdiction to hear these petitions, and NJDEP and PADEP
did not act arbitrarily or capriciously in issuing the permits.
Therefore, we will deny the petitions.
I. Statutory Background
Under the Natural Gas Act of 1938,1 the Federal
Energy Regulatory Commission (FERC) has exclusive
authority to regulate sales and transportation of natural gas in
interstate commerce. Section 7 of the Natural Gas Act grants
FERC the power to authorize the construction and operation
of interstate transportation facilities. 2 Specifically, no
company or person may construct or extend any facilities for
the transportation in interstate commerce of natural gas
without obtaining a “certificate of public convenience and
necessity” from FERC. 3 FERC determines whether a project
serves “public convenience and necessity” by reviewing a
number of factors, such as the project’s impact on
competition for the transportation of natural gas, the
possibility of overbuilding or subsidization by existing
1
15 U.S.C. §§ 717-717z.
2
Id. § 717f.
3
Id.
7
customers, avoidance of unnecessary disruptions to the
environment, the applicant’s responsibility for unsubscribed
capacity, and the avoidance of unnecessary exercise of
eminent domain. 4 The issuance of a “certificate of public
convenience and necessity” is conditioned on receipt of state
and other federal authorizations required for the proposed
project.5
Other federal authorizations may be required because
interstate sales and transmission of natural gas are further
regulated through federal environmental laws, including the
National Environmental Policy Act (NEPA) 6 and the Clean
Water Act.7 To comply with NEPA, before issuing a
certificate of public convenience or necessity, FERC must
examine the potential environmental impact of a proposed
pipeline project and issue an Environmental Assessment or, if
necessary, an Environmental Impact Statement. 8
4
Transcontinental Gas Pipeline Co., LLC, 149 FERC ¶
61,258, 62,676 (2014); see Certification of New Interstate
Natural Gas Pipeline Facilities, 88 FERC ¶ 61,227 (1999); 90
FERC ¶ 61,128 and 92 FERC ¶ 61,094 (2000) (clarifying
policy).
5
See Islander East Pipeline Co., Algonquin Gas
Transmission Co., 102 FERC ¶ 61,054 (2003) (“The
Commission routinely issues certificates for natural gas
pipeline projects subject to the federal permitting
requirements of the . . . [Clean Water Act].”).
6
42 U.S.C. §§ 4321-4370h.
7
33 U.S.C. §§ 1251-1388.
8
42 U.S.C. § 4332; see 15 U.S.C. §§ 717b-1(a), 717n(b)(1);
40 C.F.R. §§ 1501.1-.8 (implementing NEPA regulations); 18
8
Although the Natural Gas Act preempts state
environmental regulation of interstate natural gas facilities,
the Natural Gas Act allows states to participate in
environmental regulation of these facilities under three
federal statutes: the Clean Air Act, the Coastal Zone
Management Act, and the Clean Water Act.9 As relevant
here, the Clean Water Act regulates through a combination of
state and federal mechanisms: the U.S. Environmental
Protection Agency (EPA) limits the discharge of pollutants
into water bodies, 10 and states establish water quality
standards, subject to EPA approval, that must at a minimum
comply with EPA’s limits.11
This combination of state and federal mechanisms is
apparent when a proposed activity involves discharge of
dredged or fill material into the navigable waters of the
United States and thus triggers the permitting requirements of
Section 404 of the Clean Water Act.12 Section 404 permits
typically are issued by the U.S. Army Corps of Engineers;
however, a state may assume the authority to administer these
permits. Whether or not the state assumes this authority, a
Section 404 permit may be issued only if the state where the
discharge will occur issues a Water Quality Certification,
governed by Section 401 of the Clean Water Act. 13 A Water
C.F.R. §§ 380.1-.16 (implementing NEPA regulations for
FERC actions).
9
15 U.S.C. § 717b(d).
10
See 33 U.S.C. § 1311.
11
See id. § 1313.
12
Id. § 1344.
13
Id. § 1341.
9
Quality Certification confirms that a given facility will
comply with federal discharge limitations and state water
quality standards. 14 Unlike the Section 404 permit, the Water
Quality Certification is by default a state permit, and the
issuance and review of a Water Quality Certification is
typically left to the states.15
New Jersey has assumed authority to issue Section 404
permits and delegated administration of the permitting
program to NJDEP, which exercises this authority pursuant to
the New Jersey Freshwater Wetlands Protection Act. 16
Therefore, for activities that result in discharge of dredged or
fill material into New Jersey waters, NJDEP reviews
applications for Water Quality Certifications and Section 404
permits. In contrast, Pennsylvania has not assumed Section
404 permitting authority. For activities affecting
Pennsylvania waters, Section 404 permits are issued by the
U.S. Army Corps of Engineers, and Water Quality
Certifications are issued by PADEP.
II. Administrative Background
14
Id. § 1341(a)(1), (d).
15
See, e.g., Lake Erie All. for Prot. of Coastal Corridor v.
U.S. Army Corps of Eng’rs, 526 F. Supp. 1063, 1074 (W.D.
Pa. 1981) aff’d, 707 F.2d 1392 (3d Cir. 1983); Roosevelt
Campobello Int’l Park Comm’n v. U.S. EPA, 684 F.2d 1041,
1056 (1st Cir. 1982).
16
N.J. Stat. Ann. § 13:9B-1-30; 33 N.J. Reg. 3045(a); N.J.
Admin. Code § 7:7A-2.1(c); Memorandum of Agreement
between the New Jersey Department of Environmental
Protection and Energy and the United States Environmental
Protection Agency (1993).
10
In September 2013, Transco submitted an application
to FERC for a certificate of public convenience and necessity
for the Leidy Southeast Expansion Project. The Project
consists of two major types of improvements to existing
natural gas pipelines: the construction of four new pipeline
“loops” and the upgrade of turbines at four compressor
stations. “Loops” are sections of pipe connected to the main
pipeline system that reduce the loss of gas pressure and
increase the flow efficiency of the system. Compressor
stations serve a similar function, using gas- and electric-
powered turbines to increase the pressure and rate of flow at
given points along the pipeline’s route. In its application,
Transco proposed installing, within or parallel to existing
Transco pipelines, approximately thirty miles of loops. The
Skillman Loop and the Pleasant Run Loop, totaling 13.23
miles, would be located in New Jersey; the Franklin Loop and
Dorrance Loop, totaling 16.74 miles, would be located in
Pennsylvania.
FERC completed the requisite Environmental
Assessment in August 2014, and issued the certificate of
public convenience and necessity on December 18, 2014.
The certificate was conditioned on, inter alia, Transco’s
receipt of “all applicable authorizations under federal law” 17
enumerated in the Environmental Assessment, some of which
were to be obtained from New Jersey and some from
Pennsylvania.
A. New Jersey
17
Transcontinental Gas Pipe Line Co., LLC, 149 FERC ¶
61,258, 62,687 (2014).
11
FERC required Transco to obtain the following
authorizations for each loop from NJDEP: a Freshwater
Wetlands Individual Permit, a Flood Hazard Area Individual
Permit, a Water Quality Certification, and a Letter of
Interpretation. Transco first obtained Letters of
Interpretation, in which NJDEP sets forth the boundaries of
freshwater wetlands and state-regulated transition areas. 18
Transco then applied for the remaining permits. In December
2014, NJDEP deemed those applications “administratively
complete,” a status that triggered a public notice and
comment process. Two months later, NJDEP held a public
hearing in Princeton, New Jersey. In light of comments from
NJDEP staff and the public, Transco submitted revised plans.
A few days later, NJDEP asked Transco to address additional
comments, and Transco provided responses.
In April, NJDEP issued, for each loop, a Freshwater
Wetlands Individual Permit, a Flood Hazard Area Individual
Permit, and a Water Quality Certification. In addition,
NJDEP released Staff Summary Reports, which set forth the
findings and analysis underlying its permitting decisions.
Transco began construction on May 6, 2015. Two days later,
the Foundation petitioned this Court for review of NJDEP’s
decision to issue the permits.
Later in May, while the Foundation’s petition was
pending, Transco submitted a request to NJDEP for a minor
modification to the Freshwater Wetlands Individual Permit
for the Skillman Loop, to change the excavation method for a
wetland in Princeton, New Jersey. NJDEP approved the
request on June 4, 2015, which the Foundation challenged in
18
N.J. Admin. Code § 7:7A-3.1 (2008).
12
its opening brief. Later in June, the Foundation filed an
emergency motion for a stay of construction. A week later,
we denied the motion. At this time, the New Jersey portion
of the project is substantially complete.19
B. Pennsylvania
FERC required Transco to obtain from PADEP a
Water Quality Certification and a Water Obstruction and
Encroachment Permit. The latter, issued under Chapter 105
of PADEP’s regulations, are referred to as “Chapter 105
Permits.” FERC further required Transco to obtain a Section
404 permit from the U.S. Army Corps of Engineers. Each
certificate or permit covered both loops in Pennsylvania.
Transco applied to PADEP for the Water Quality
Certification in June 2014. In the following month, PADEP
published notice in the Pennsylvania Bulletin that it intended
to issue a Water Quality Certification so long as Transco
obtained certain other state permits, including a Chapter 105
Permit. In April 2015, PADEP issued a Water Quality
Certification for the project. Shortly thereafter, the
Riverkeeper filed a petition in this Court specifically
challenging the Water Quality Certification. Three months
later, PADEP issued a Chapter 105 permit. After receiving
all of its required permits, Transco sought permission from
FERC to proceed with construction. FERC granted this
19
Transco submitted the Declaration of John B. Todd, who
serves as project manager; Todd indicated that construction
along both Skillman and Pleasant Run Loops is between 93 to
100% complete in regulated and non-regulated areas.
13
request in July 2015, during the pendency of the instant
matter.
III. Threshold Challenges
At the outset, we consider challenges by NJDEP and
PADEP regarding this Court’s jurisdiction, the justiciability
of the petitions, and whether sovereign immunity shields state
agency actions. Specifically, NJDEP and PADEP allege that
we lack subject matter jurisdiction to review the petitions and
that, even if we had jurisdiction, the petitions are barred by
the Eleventh Amendment. NJDEP further argues that
because construction in New Jersey is substantially complete,
the petition is moot.
A. Subject Matter Jurisdiction
The Riverkeeper and the Foundation, in petitioning
this Court for review, invoke a provision of the Natural Gas
Act that confers original jurisdiction on Courts of Appeals
over certain state and federal permitting actions for interstate
natural gas pipelines. Both PADEP and NJDEP contest
whether that provision applies. Our jurisdiction ultimately
depends on whether PADEP and NJDEP acted “pursuant to
Federal law” in issuing permits to Transco.
We begin with the statute. In 2005, Congress amended
the Natural Gas Act to subject certain state and federal
permitting decisions for interstate natural gas pipeline
projects to review by the federal Courts of Appeals. 20
20
Energy Policy Act of 2005, Pub. L. No. 109-58, Sec. 313,
119 Stat. 594, 689-90.
14
Specifically, under Section 19(d) of the Natural Gas Act, the
Courts of Appeals have jurisdiction to review actions
undertaken (1) by a State administrative agency; (2) pursuant
to federal law; (3) to issue, condition, or deny a permit,
license, concurrence, or approval; (4) required for an
interstate natural gas facility permitted under the Natural Gas
Act; (5) that is located in the jurisdiction of the circuit Court
of review. 21 The parties do not dispute that all elements are
met except whether NJDEP and PADEP acted “pursuant to
Federal law” in issuing Water Quality Certifications, permits,
and Letters of Interpretation.
NJDEP and PADEP contend that their decisions to
issue Water Quality Certifications are not covered by the
provision that grants jurisdiction to this Court and,
consequently, we lack jurisdiction to hear these petitions.
NJDEP further contests our jurisdiction to review those
authorizations that “exclusively involv[e] issues of State
law,” including the Flood Hazard Area Individual Permits,
the Letters of Interpretation, and those portions of the
Freshwater Wetlands Individual Permits that address state-
regulated issues such as transition areas or state threatened
and endangered species. For the following reasons, we hold
that we have jurisdiction over these petitions.
B. Jurisdiction over Water Quality
Certifications
1. Permits Issued by PADEP
21
15 U.S.C. § 717r(d)(1) (2005). This amended section is
also referred to as “Section 19(d)” based on where it appears
in the Natural Gas Act.
15
PADEP argues that this Court does not have
jurisdiction over Water Quality Certifications because our
jurisdiction under the Natural Gas Act extends only to state
agency action taken pursuant to federal law, whereas a Water
Quality Certification is required by federal law. This
argument does not pass muster. Although the Clean Water
Act makes clear that states have the right to promulgate water
quality standards as they see fit, subject to EPA oversight, the
issuance of a Water Quality Certification is not purely a
matter of state law. 22 A state issues a Water Quality
Certification for an interstate natural gas facility to certify
compliance with state water quality standards, promulgated
under federal supervision, as well as with federally-
established Clean Water Act requirements.23 Specifically, a
Water Quality Certification confirms compliance with
Sections 301, 306, and 307 of the Clean Water Act, all of
which involve federal standards. 24 Thus, a Water Quality
Certification is not merely required by federal law: it cannot
exist without federal law, and is an integral element in the
regulatory scheme established by the Clean Water Act. To
say otherwise would be to ignore the EPA’s supervisory role
in the setting of state water quality standards, the fact that
Water Quality Certifications must verify compliance with
federal standards, and the role of the federal government in
regulating water quality as envisioned by drafters of the Clean
Water Act.25
22
See 33 U.S.C. § 1251(b).
23
Id. § 1341(a)(1).
24
Id. §§ 1311, 1316, & 1317.
25
See id. § 1251(a) (presenting the Clean Water Act’s goals
as a matter of “national policy”).
16
The conclusion that a Water Quality Certification is
issued pursuant to federal law is bolstered by the Natural Gas
Act’s provisions that allow states to regulate or subject state
action to federal judicial review. The Natural Gas Act
preempts state environmental regulation of interstate natural
gas facilities, except for state action taken under those statutes
specifically mentioned in the Act: the Coastal Zone
Management Act, the Clean Air Act, and the Clean Water
Act.26 In other words, the only state action over interstate
natural gas pipeline facilities that could be taken pursuant to
federal law is state action taken under those statutes. In
another provision, Section 19(d), the Natural Gas Act grants
jurisdiction to the Courts of Appeals to review state agency
action taken pursuant to federal law except for the Coastal
Zone Management Act. 27 Applying the statutory construction
canon, the express mention of one thing excludes all others,
the express exception of the Coastal Zone Management Act
from review by the Court of Appeals indicates that Congress
intended state actions taken pursuant to the two non-excepted
statutes, the Clean Water Act and the Clean Air Act, to be
subject to review by the Courts of Appeals. This
interpretation is supported by the legislative history of the bill
amending Section 19(d), which indicates that the purpose of
the provision is to streamline the review of state decisions
taken under federally-delegated authority. 28 Thus, a state
26
15 U.S.C. § 717b(d).
27
Id. § 717r(d)(1).
28
See Islander East Pipeline Co. v. Conn. Dep’t Envt’l Prot.,
482 F.3d 79, 85 (2d Cir. 2006) (discussing the legislative
history of the judicial review provision); see also The Energy
Policy Act of 2005: Hearing Before the H. Subcomm. on
Energy and Air Quality of the Comm. on Energy and
17
action taken pursuant to the Clean Water Act or Clean Air
Act is subject to review exclusively in the Courts of Appeals.
To bar this Court’s review of PADEP’s actions in permitting
an interstate natural gas facility pursuant to the Natural Gas
Act and the Clean Water Act would frustrate the purpose of
Congress’s grant of jurisdiction and render superfluous the
explicit exception from federal judicial review of the Coastal
Zone Management Act.
2. Permits Issued by NJDEP
NJDEP argues we have no jurisdiction over the
Freshwater Wetlands Individual Permits or the Water Quality
Certifications, and even if we had jurisdiction over those two
authorizations, we cannot reach issues regarding aspects of
the Freshwater Wetlands Individual Permits that concern
transition areas and threatened and endangered species, the
Letters of Interpretation, or the Flood Hazard Area Individual
Permits. We consider each authorization in turn, and
conclude that each is rooted in NJDEP’s exercise of authority
that it assumed pursuant to Sections 401 and 404 of the Clean
Water Act.
Commerce, 109th Cong. 420 (2005) (statement of Donald F.
Santa, Jr., President, Interstate Natural Gas Association of
America) (observing that “[a]lthough state regulatory action
[is] preempted” by the Natural Gas Act, “state action pursuant
to federally delegated authority” is not, and prior to passage
of the Natural Gas Act’s amendments, review of state
permitting decisions could “frustrate pipeline projects already
found by FERC to meet the public convenience and
necessity.” (internal quotation marks omitted)).
18
First, with respect to NJDEP’s argument that we lack
jurisdiction over the Freshwater Wetlands Individual Permits
and the Water Quality Certifications, New Jersey’s
Freshwater Wetlands Protection Act provides for the state’s
administration of Section 404 permits, and its implementing
regulations make clear a permit issued under the Act, called
the Freshwater Wetlands Individual Permit, “constitutes” the
Water Quality Certification.29 Given that the Natural Gas Act
provides this Court with jurisdiction to review state
authorizations issued pursuant to the Clean Water Act, this
Court has jurisdiction over the Freshwater Wetlands
Individual Permits and the Water Quality Certifications.
Next, NJDEP argues that those portions of the
Freshwater Wetlands Individual Permit that address state
threatened and endangered species are governed by state law
rather than the Clean Water Act, and thus are not subject to
our review. A Freshwater Wetlands Individual Permit may
be issued only if the regulated activity “[w]ill not destroy,
jeopardize[,] or adversely modify a present or documented
habitat for threatened or endangered species . . . .”30 In
issuing the permits, NJDEP imposed conditions on the
proposed activity for the protection of state threatened and
endangered species. Given that the Freshwater Wetlands
Individual Permit constitutes both the Section 404 permit and
the Water Quality Certification, and that, under Section 401
of the Clean Water Act, “any other appropriate requirement
of state law set forth in [the] certification” will be treated as a
condition on the federal permit affected by the certification—
29
N.J. Admin. Code § 7:7A-2.1(d).
30
Id. § 7:7A-7.2(b)(3).
19
in this case, the Section 404 permit 31—the conditions that
protect threatened and endangered species are part of the
Freshwater Wetlands Individual Permit, and we have
jurisdiction to review these conditions.
Under similar reasoning, we have jurisdiction over the
Flood Hazard Area Individual Permits. The Freshwater
Wetlands Protection Act requires compliance with the Flood
Hazard Act. 32 Accordingly, Transco applied for and obtained
Flood Hazard Area Individual Permits, which enumerate
conditions on activities in flood hazard areas to protect water
quality. The Flood Hazard Area Individual Permit is, in
effect, a set of conditions on the Freshwater Wetlands
Individual Permit. Given that we have jurisdiction over the
Freshwater Wetlands Individual Permit, we have jurisdiction
over the Flood Hazard Area Individual Permit as conditions
set forth in the Water Quality Certification.
Likewise, the Letters of Interpretation are part and
parcel of the Freshwater Wetlands Individual Permits, and
thus subject to this Court’s review. New Jersey regulations
require an applicant for a Freshwater Wetlands Individual
Permit to submit the Letter of Interpretation as part of the
application package if a Letter has been issued, or “[i]f the
applicant applies for [a Freshwater Wetlands Individual
Permit] without first obtaining [a Letter of Interpretation], the
permit application must include all information that would be
necessary for the Department to issue [a Letter of
Interpretation] for the site . . . . The Department will then
31
33 U.S.C. § 1341(d).
32
N.J. Admin. Code § 7:7A-2.1; see, e.g., id. §§ 7:7A-
4.3(b)(8), (9), 7.2(b)(10).
20
review the submitted wetland delineation as part of the permit
review process.” 33 In other words, a Freshwater Wetlands
Individual Permit application must include either an issued
Letter of Interpretation or all the materials required for
NJDEP to issue such a Letter. Therefore, the Letters of
Interpretation are integral to the Freshwater Wetlands
Individual Permit application and the review process of the
permit, and thus subject to our review.
B. Mootness
We next consider NJDEP and Transco’s argument that
the petition for review is moot because construction is
complete and Transco has been conducting mitigation and
restoration. Thus, any procedural remedy would be
ineffectual. The Foundation argues the petition is not moot
because we can provide relief in the form of additional
analysis of environmental impact and measures to address
those effects.
Mootness raises both constitutional and prudential
concerns. 34 Under Article III, “[i]t is a basic principle . . . that
a justiciable case or controversy must remain extant at all
stages of review . . . .”35 Prudentially, a court may decline to
exercise discretion to grant declaratory and injunctive relief if
33
Id. § 7:7A-3.1(h).
34
Marcavage v. Nat’l Park Serv., 666 F.3d 856, 862 n.1 (3d
Cir. 2012) (citing Int’l Bhd. of Boilermakers v. Kelly, 815
F.2d 912, 915 (3d Cir. 1987)).
35
Decker v. Nw. Envtl. Def. Ctr., 133 S. Ct. 1326, 1335
(2013) (quoting United States v. Juvenile Male, 564 U.S. 932,
936 (2011)).
21
a controversy is “so attenuated” that considerations of
prudence and comity counsel withholding relief. 36 The
central question in a mootness analysis is “whether changes in
circumstances that prevailed at the beginning of the litigation
have forestalled any occasion for meaningful relief.”37 A case
becomes moot “only when it is impossible for a court to grant
any effectual relief whatever to the prevailing party.” 38 When
a court can fashion “some form of meaningful relief” or
“impose at least one of the remedies enumerated by the
appellant,” even if it only partially redresses the grievances of
the prevailing party, the case is not moot. 39 The Foundation
challenges NJDEP’s conclusions regarding the proposed
pipeline’s environmental impact and the amount of mitigation
required.
This case is not moot because NJDEP may monitor
mitigation outcomes following completion of mitigation.
Specifically, pursuant to New Jersey regulation and as set
forth in the Freshwater Wetlands Individual Permits and the
Flood Hazard Area Individual Permits, Transco must submit
annual reports to NJDEP for three years after completing
mitigation, and NJDEP may monitor the progress of remedial
actions. If mitigation has not met the requirements in the
36
Int’l Bhd. of Boilermakers, 815 F.2d at 915-16 n.3.
37
Jersey Cent. Power & Light Co. v. New Jersey, 772 F.2d
35, 39 (3d Cir. 1985) (citing Mills v. Green, 159 U.S. 651,
653 (1985)).
38
Decker, 133 S. Ct. at 1335 (quoting Knox v. Serv. Emps.
Int’l, 132 S. Ct. 2277, 2287 (2012)).
39
In re Cont’l Airlines, 91 F.3d 553, 558 (3d Cir. 1996);
Isidor Paiewonsky Assocs. v. Sharp Props., Inc., 998 F.2d
145, 152 (3d Cir. 1993).
22
regulations, NJDEP may direct Transco to perform additional
mitigation or other remedial action. 40 Therefore, there
remains possible effectual relief because further
environmental analysis might lead NJDEP to require
additional mitigation from Transco. Thus, we conclude that
this petition is not moot.41
C. Sovereign Immunity
NJDEP and PADEP contend that any challenge
brought under Section 19(d) is barred by the Eleventh
Amendment. With respect to the Water Quality Certifications
and Section 404 permits, NJDEP and PADEP argue that their
mere participation in the Clean Water Act permitting process
does not waive their sovereign immunity provided by the
Eleventh Amendment. NJDEP further argues that when it
assumed authority to administer Section 404, it explicitly
40
N.J. Admin. Code § 7.7A-15:16(c)-(f); see N.J. Admin.
Code § 7:13-10.2(u)(5); N.J. JA 18-19, 35-37 (“The permittee
shall monitor forested and/or shrub scrub wetland mitigation
projects for 5 full growing seasons and emergent wetland or
State open water mitigation projects for 3 full growing
seasons beginning the year after the mitigation project has
been completed . . . The permittee shall monitor the riparian
project for at least 3 years beginning the year after the
riparian zone compensation project has been completed.”)
(Freshwater Wetlands Individual Permits and Flood Hazard
Area Individual Permits, Pleasant Run Loop and Skillman
Loop).
41
See Sierra Club v. U.S. Army Corps of Eng’rs, 803 F.3d 31,
43 (D.C. Cir. 2015) (citing Church of Scientology of Cal. v.
U.S., 506 U.S. 9, 12-13 (1992)).
23
reserved its sovereign immunity for Section 404 actions
through a Memorandum of Agreement with the EPA.
Therefore, according to NJDEP, sovereign immunity bars this
Court from reviewing the Freshwater Wetlands Individual
Permits, Flood Hazard Area Individual Permits, and Letters
of Interpretation. These arguments are unavailing. As
discussed below, we hold that New Jersey and Pennsylvania’s
voluntary participation in the regulatory schemes of the
Natural Gas Act and the Clean Water Act constitutes a waiver
of sovereign immunity, given the clear language in those
statutes subjecting their actions to federal review.
1. Overview
The Eleventh Amendment of the United States
Constitution states that federal courts may not hear “any suit
in law or equity, commenced or prosecuted against one of the
United States by Citizens of another State . . . .” 42 Courts
have interpreted the amendment as applying to suits against
states by their own citizens as well,43 and have extended the
immunity to state agencies.44 The immunity from suit is not
absolute; Congress has limited power to abrogate the states’
immunity. 45
A state may waive its immunity by engaging in
conduct that demonstrates the state’s consent to suit in federal
42
U.S. Const. Amend. XI.
43
See Hans v. Louisiana, 134 U.S. 1 (1890).
44
See Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S.
89, 100 (1984).
45
See Seminole Tribe of Fla. v. Florida, 517 U.S. 44 (1996).
24
court.46 A state may consent to suit in federal court by
accepting a gift or gratuity from Congress when waiver of
sovereign immunity is a condition of acceptance. 47 When
Congress makes a gift to a state that Congress is not obligated
to make and which the state cannot claim as a matter of right,
Congress may attach conditions to this gift, including a
waiver of sovereign immunity. 48 These “gifts” need not only
be monetary awards; a congressional grant of regulatory
authority that a state may not otherwise possess is also a gift.
We addressed the theory of “gratuity waiver” as applied to a
grant of regulatory authority in MCI Telecommunications
Corporation v. Bell Atlantic Pennsylvania, where
Pennsylvania’s Public Utility Commission argued that a
section of the Telecommunications Act of 1996, 49 which
provides for federal court review of state-approved
interconnection agreements, violated the agency’s Eleventh
Amendment immunity. 50 We held that Congress had made
46
See Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 241
(1985); Clark v. Barnard, 108 U.S. 436, 447 (1883).
47
See College Sav. Bank v. Fla. Prepaid Postsecondary Educ.
Expense Bd., 527 U.S. 666, 686-87 (1999) (holding that while
states may not constructively waive immunity to Lanham Act
claims based on term in Trademark Remedy Clarification
Act, waiver may be a proper condition on authority granted
by Congress that the state would not otherwise have).
48
Id.; see Petty v. Tenn.-Mo. Bridge Comm’n, 359 U.S. 275(1959); see also South Dakota v. Dole, 483 U.S. 203, 206
(1987) (holding that Congress may attach conditions to the
receipt of federal funds).
49
Pub. L. No. 104-104, 110 Stat. 56 (codified in scattered
sections of 47 U.S.C.).
50
271 F.3d 491 (3d Cir. 2001).
25
federal judicial review a necessary condition of state
participation in regulation of telecommunications. A state’s
participation in the regulatory scheme constituted acceptance
of the gift, and, thus, a waiver of Eleventh Amendment
immunity. 51 Nevertheless, mere acquiescence is insufficient
to abrogate sovereign immunity. A state’s gratuity waiver
must be knowing and voluntary. 52 In other words, Congress
must make its intention to condition acceptance of a gratuity
on the waiver of Eleventh Amendment immunity
“unmistakably clear.” 53
2. Sovereign Immunity and Section 19(d)
Here, the application of the gratuity waiver doctrine is
consistent with precedent of our sister courts and supported
by the language of Section 19(d) of the Natural Gas Act. In
Islander East Pipeline Company v. Connecticut Department
of Environmental Protection,54 the Second Circuit recognized
that the Natural Gas Act strips states of any authority to
regulate a particular field—in this case, interstate natural gas
transmission facilities—save certain “rights of the states”
granted under those three enumerated statutes, one of which
is the Clean Water Act.55 Consistent with this doctrine, a
state participates in Clean Water Act regulation of interstate
natural gas facilities by congressional permission, rather than
51
MCI, 271 F.3d at 510.
52
College Sav. Bank, 527 U.S. at 675 (citing Beers v.
Arkansas, 61 U.S. 527, 529 (1857)).
53
MCI, 271 F.3d at 506.
54
482 F.3d 79 (2d Cir. 2006).
55
Islander, 482 F.3d at 90.
26
through inherent state authority. 56 A state may refuse the
grant of authority: under the Clean Water Act, a state’s non-
participation in water quality regulation returns authority to
the EPA. A state also may decline to exercise its authority to
issue an applicant a Water Quality Certification, and in so
doing waive the requirement for a Water Quality
Certification, and the proposed activity proceeds without a
Water Quality Certification.57 In the context of an interstate
natural gas facility, a state’s refusal to issue a Water Quality
Certification would waive the need for the facility to obtain a
Certification in order to satisfy conditions of FERC’s
certificate of public convenience and necessity. In effect,
such a refusal would return the state’s delegated authority to
enforce Section 401 of the Clean Water Act to FERC with
respect to the project. 58 Therefore, state participation in the
regulatory schemes of the Clean Water Act and under the
framework of the Natural Gas Act constitutes a gratuity
waiver.
We agree with the Islander court that the principle of
gratuity waiver applies to the regulatory scheme established
by the Natural Gas Act. Section 19(d) grants the Courts of
Appeals jurisdiction to review “state agency action.” This
language is unambiguous. New Jersey and Pennsylvania’s
participation in the regulatory scheme of the Clean Water Act
with respect to interstate natural gas facilities, pursuant to the
56
Id.57
33 U.S.C. § 1341(a)(1).
58
See 15 U.S.C. § 717b(d) (providing that the NGA does not
affect the rights of states under the Clean Water Act); id. §
717f(e) (allowing FERC to attach reasonable conditions to a
certificate of public convenience and necessity).
27
Natural Gas Act and after the amendment of Section 19(d),
constitutes a waiver of their immunity from suits brought
under the Natural Gas Act. In effect, Section 19(d) creates a
small carve out from sovereign immunity. Under this limited
carve out, federal judicial review is proper over those state
actions regarding interstate natural gas facilities pursuant to
the Clean Water Act and the Clean Air Act.
For these reasons, we have jurisdiction over the
petitions. We therefore turn to the merits of these petitions.
IV. Merits Challenges
A. Standard of Review
The standard of review of state action pursuant to the
Clean Water Act for an interstate natural gas facility is a
matter of first impression for this Court. Consistent with our
precedent in MCI, which dealt with a similar regulatory
arrangement, we review de novo state agency interpretation of
federal law, and review under the arbitrary and capricious
standard state action taken pursuant to federal law.59 Agency
action is arbitrary and capricious when the agency fails to
“examine the relevant data and articulate a satisfactory
explanation for its action including a rational connection
between the facts found and the choice made.” 60 When we
review an agency action under this standard, the
Administrative Procedure Act (APA) directs us to take
59
MCI, 271 F.3d at 516; see Islander, 482 F.3d at 93-94.
60
Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm
Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (internal
quotation marks omitted).
28
account of “the rule of prejudicial error.”61 In other words,
we apply a “harmless error” analysis to any administrative
action we review;62 mistakes that have no bearing on the
substantive decision of an agency do not prejudice a party. 63
The party challenging the agency determination bears the
burden of demonstrating prejudice. 64 Where an agency errs in
fact finding, we remand only if the agency relied on the
erroneous finding in its decision.65
B. New Jersey
The Foundation alleges four general problems with
NJDEP’s issuance of the Freshwater Wetlands Individual
Permits, the Flood Hazard Area Individual Permits, the Water
Quality Certifications, and the Letters of Interpretation: (1)
NJDEP deprived the Foundation of sufficient opportunity to
comment, (2) NJDEP issued the Freshwater Wetlands
Individual Permits based on unsupported conclusions, (3)
NJDEP erred in determining that Transco met the
requirements for the Flood Hazard Area Individual Permits
and hardship exceptions for those permits, and (4) NJDEP
misconstrued regulation in granting a minor modification for
the Freshwater Wetlands Individual Permit of the Skillman
61
5 U.S.C. § 706.
62
Shinseki v. Sanders, 556 U.S. 396, 406 (2009) (comparing a
similarly worded provision applying to appeals of Veterans
Affairs claims decisions).
63
See Mass. Trs. of E. Gas & Fuel Assocs. v. United States,
377 U.S. 235, 248 (1964).
64
Sanders, 556 U.S. at 409.
65
See Communist Party of U.S. v. Subversive Activities
Control Bd., 367 U.S. 1, 67 (1961).
29
Loop. We address each in turn and conclude that NJDEP did
not act arbitrarily or capriciously with respect to the first three
alleged errors. We hold that the fourth challenge is not
properly before this Court.
1. Opportunity for Public Comment
State regulations require NJDEP, after determining an
application to be administratively complete, to publish a
notice of the application in the DEP Bulletin, make the
application available at its offices in Trenton, and, in some
circumstances, hold a public hearing. 66 The public may
comment on the application within 30 days of the notice. 67
The Department “shall consider all written public comments
submitted within this time” and “may, in its discretion,
consider comments submitted after this date[,]” although state
regulations do not define “consider.” 68 The Foundation
alleges that NJDEP committed two errors that deprived the
Foundation of the opportunity to comment on Transco’s
application. First, the Foundation argues that NJDEP
prematurely determined that Transco’s application was
“administratively complete,” a designation that triggers the
public notice and comment process, even though Transco had
failed to include a required element of the application.
Second, the Foundation argues that NJDEP failed to provide
proper notice to the public of Transco’s application because
NJDEP’s initial notice of Transco’s application in the DEP
bulletin cited only Hunterdon County as the project location
66
N.J. Admin. Code §§ 7:7A-12.1, .3, & .4.
67
Id. § 7:7A-12.3(d).
68
Id.; see In re Freshwater Wetlands Gen. Permits, 860 A.2d
450, 461-462 (N.J. Super. Ct. App. Div. 2004).
30
and omitted three other affected counties—Somerset,
Princeton, and Mercer.
Although the Foundation argues that it was deprived of
an opportunity to comment on the revisions because Transco
submitted the revised analysis after the close of the public
comment period, the Foundation reviewed the revised
analysis and submitted additional written comments from its
members and two drilling experts and had a face-to-face
meeting with NJDEP to express its continued concern with
the proposal. The record shows that NJDEP asked Transco to
respond to the concerns raised. A party challenging the
sufficiency of the public comment process bears the burden of
showing it was prejudiced by the lack of opportunity to
comment. 69 The fact that NJDEP ultimately did not adopt the
Foundation’s view does not mean that the Foundation lacked
the opportunity to put forth that view. 70
Similarly, petitioners were not harmed by the omission
of three counties from the initial notice because Princeton
Ridge Coalition and Stony Brook-Millstone Watershed
Association—both located in the initially omitted counties—
were aware of the proposal well before the offending initial
notice was published. As early as 2013, both had met with
NJDEP and Transco regarding the proposed project and
provided written comments. Therefore, the Foundation has
69
Am. Radio Relay League, Inc. v. FCC, 524 F.3d 227, 237
(D.C. Cir. 2008).
70
Friends of the Atglen-Susquehanna Trail, Inc. v. Surface
Transp. Bd., 252 F.3d 246, 265 (3d Cir. 2001) (noting the
agency was required to consider the comments but was “not
required to follow the comments”).
31
failed to demonstrate that it was deprived of the opportunity
to comment. For that reason, NJDEP’s actions were not
arbitrary or capricious.
2. Agency Analysis on Environmental
Impact of Proposal
New Jersey regulations require NJDEP to analyze the
environmental impact of the proposed activity, such as the
activity’s potential effect on water quality, the aquatic
ecosystem, and threatened and endangered animals. The
Foundation alleges NJDEP acted in an arbitrary and
capricious manner because NJDEP (1) failed to adequately
analyze alternatives to the proposed activity that would be
less environmentally-adverse or result in the minimum
feasible impairment of the aquatic ecosystem, (2) defined the
project purpose in such a narrow manner as to exclude
potential alternatives to the proposed activity, (3) improperly
concluded that the proposed activity in connection with the
Skillman Loop will not harm threatened or endangered
species or their habitats, and (4) improperly determined that
the proposal is in the public interest.
a. Consideration of Alternatives
New Jersey regulations require NJDEP to issue a
Freshwater Wetlands Individual Permit only if certain
prerequisites are met. As relevant to this petition, New Jersey
regulation requires NJDEP to consider practicable
alternatives to the proposed activity that “would have a less
adverse impact on the aquatic ecosystem or would not involve
a freshwater wetland or State open water” and “would not
have other significant adverse environmental consequences . .
32
. .”71 Where Transco rejected alternatives on the basis of
constraints such as inadequate zoning, infrastructure, or
parcel size, NJDEP must consider whether Transco made
reasonable attempts to remove or accommodate those
constraints. 72 In addition, when a regulated activity would
take place in wetlands or waters deemed of “exceptional
resource value” or related to trout production, NJDEP must
consider whether there is a compelling public need for the
activity and whether denial of the permit would impose
extraordinary hardship on the applicant. 73
The Foundation claims that NJDEP insufficiently
considered alternatives, including those that would have
resulted in the minimum feasible environmental alteration or
impairment of the aquatic ecosystem. The Foundation also
alleges that NJDEP failed to rebut the presumption that the
proposed activity has a practicable alternative—such as in
size, scope, configuration, density, or design—that would
avoid impact or have a lesser impact, a required analysis
because the project is a “non-water dependent activity.”74
The record shows NJDEP considered potential
alternatives, such as replacing the existing pipeline with a
larger one rather than constructing a new loop, increasing
operating pressure within the existing loop, and building
various alternative routes. NJDEP weighed the options,
adopted some, and rejected others as impractical.
Specifically, NJDEP required Transco to reduce the size of
the construction workspace in regulated areas, substitute less
71
N.J. Admin. Code § 7:7A-7.2(b).
72
Id. § 7:7A-7.4(c).
73
Id. § 7:7A-7.5.
74
Id. § 7:7A-7.4.
33
environmentally-adverse crossing techniques for six
wetlands, and use specific drilling methods at three locations
to reduce impacts. NJDEP provided explanation for those
alternatives not adopted. For example, the use of horizontal
direct drilling and direct pipe drilling at certain locations
would be more costly and carried the risk of equipment
failure, damage to the pipe, and inadvertent release of drilling
fluid into the soil. Similarly, alternative routes were
impracticable because they might interfere with an existing
water line or cause greater land or wetland disturbance.
Additionally, NJDEP considered whether the proposed
activity would affect wetlands or waters categorized as
“exceptional resource value” or related to trout production.
NJDEP noted that wetlands in the Pleasant Run Loop were
neither of exceptional resource value nor trout-producing, and
that, although certain wetlands in the Skillman Loop were of
exceptional resource value, compelling public need for the
project outweighed the impact on wetlands and waters.
NJDEP not only considered but also acted upon
alternatives, in direct contrast to the Foundation’s allegations.
Adoption of alternatives reduced open water and wetland
disturbance by 38 percent for the Pleasant Run Loop and 48
percent for the Skillman Loop, according to an NJDEP
analysis. For the Skillman Loop, NJDEP consideration of
alternatives led to the selection of the shortest proposed route,
of which 86 percent is collocated within Transco’s existing
pipeline right-of-way. NJDEP also required those portions
not collocated to be constructed with a specific drilling
technique to reduce wetland disturbance. Therefore,
NJDEP’s actions were not arbitrary or capricious.
34
b. Definition of Project Purpose
Next, the Foundation charges NJDEP defined the
project purpose in such way as to preclude alternatives, by
including a durational limitation as part of the purpose. The
limitation rendered impracticable those construction methods
that are less environmentally-adverse but more time-
consuming.75 The Foundation’s challenge relies on language
regarding project purpose in New Jersey regulations on
practicable alternatives. Regulations define “practicable
alternative” as “other choices available and capable of being
carried out after taking into consideration cost, existing
technology, and logistics in light of overall project purposes .
. . .”76 However, neither New Jersey regulations nor case law
defines the term “project purpose.” For the present project,
NJDEP stated that the project purpose was “to construct the
pipeline and . . . to begin service through the proposed
pipeline by . . . December 31, 2015.” 77 A “short construction
window” for the project was recommended by the U.S. Army
Corps of Engineers to reduce disturbance to waterbodies, and
FERC discussed temporal limitations on construction in its
order granting the certificate of public convenience and
necessity.78 Given this concern, NJDEP considered the
75
Pet. Br. 46.
76
N.J. Admin. Code § 7:7A-1.4 (emphasis added).
77
See N.J. JA 1302 (NJDEP Staff Summary Report, Pleasant
Run Loop).
78
E.g., Transcontinental Gas Pipe Line Co. LLC, 149 FERC
¶ 61,258, 62,686 (2014) (“Back Brook . . . will be crossed
within a 48 hour period . . . which will maintain water flow
during construction and avoid in-stream construction
impacts.”).
35
duration of disturbance of water bodies in choosing a drilling
method, in addition to other factors, such as the number of
trees that would need to be cleared to provide space for
worksites. Therefore, NJDEP’s incorporation of a temporal
term into the project purpose was not arbitrary and capricious.
c. Conclusions Regarding
Threatened or Endangered Species in the Skillman Loop
The Foundation alleges that NJDEP ignored reports by
the Princeton Ridge Coalition that the project would
adversely affect the Red-shouldered Hawk and Barred Owl
and that it failed to impose conditions in the Freshwater
Wetlands Individual Permit for the Skillman Loop to address
these impacts. A Freshwater Wetlands Individual Permit may
be issued only if NJDEP determines that the regulated activity
“[w]ill not destroy, jeopardize[,] or adversely modify a
present or documented habitat for threatened or endangered
species; and shall not jeopardize the continued existence of a
local population of a threatened or endangered species . . . .” 79
NJDEP stated in its Staff Summary Reports, “[t]he project
right-of-way is documented and suitable habitat for . . .
Barred Owl, Red-shouldered Hawk, Wood Turtle, Indiana
Bat, and Northern Long-eared Bat.” 80 In the Freshwater
Wetlands Individual Permit for the Skillman Loop, NJDEP
imposed conditions to protect most of the enumerated species
but not the Barred Owl or Red-shouldered Hawk.
Nevertheless, NJDEP stated in its Staff Summary Report that
“[p]rovided the conditions of the permits are followed . . . no
79
N.J. Admin. Code § 7:7A-7.2(b)(3).
80
N.J. JA 1426 (Freshwater Wetlands Individual Permit,
Skillman Loop).
36
adverse impacts are anticipated upon threatened/endangered
species.” To explain why it did not impose conditions to
protect the species, NJDEP filed with this Court affidavits
from a staff member who explained her review of Transco’s
application and the Foundation’s reports, and her
consideration of factors such as limited sightings of the
species, small sizes of the wetlands, and fragmentation of
habitat because of open areas and neighboring homes. Based
on these considerations, NJDEP determined it would not
impose conditions on the permit regarding the Barred Owl or
Red-shouldered Hawk. The Foundation argues that NJDEP’s
submission constitutes an attempt to supplement the
administrative record after the fact. The administrative record
is supposed to reflect the information available to the decision
maker at the time the challenged decisions were made, as well
as the rationale for why the agency acted as it did, but “since
the bare record may not disclose the factors that were
considered or the [agency’s] construction of the evidence,” it
is sometimes appropriate to look to further explanation from
agency officials to ascertain this rationale.81 Here, the
affidavits explain staff review conducted prior to issuance of
the permit. Therefore, the submissions do not constitute post
hoc rationalization of agency action. The Foundation has not
demonstrated that NJDEP failed to consider potential adverse
impacts in issuing the Freshwater Wetlands Individual Permit
for the Skillman Loop.
d. Public Interest Analysis
81
Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402,
420 (1971) (abrogated on other grounds by Califano v.
Sanders, 430 U.S. 99 (1977); see Motor Vehicle Mfrs. Ass’n,
463 U.S. at 50.
37
To issue a Freshwater Wetlands Individual Permit,
NJDEP must determine the proposal is “in the public interest”
on the basis of seven factors.82 The Foundation argues
NJDEP failed to consider five of the seven factors:
[1] The public interest in preservation of natural
resources and the interest of the property
owners in reasonable economic development . .
.;
[2] The extent and permanence of the beneficial
or detrimental effects which the proposed
regulated activity may have on the public and
private uses for which the property is suited;
[3] The quality and resource value classification
pursuant to N.J.A.C. 7:7A-2.5 of the wetland
which may be affected and the amount of
freshwater wetlands to be disturbed;
[4] The economic value, both public and
private, of the proposed regulated activity to the
general area; and
[5] The functions and values provided by the
freshwater wetlands and probable individual
and cumulative impacts of the regulated activity
on public health and fish and wildlife . . . .83
NJDEP did not fail to consider these factors.
Regarding the first factor, the record shows consideration of
82
N.J. Admin. Code § 7:7A-7.2(b)(12).
83
Id.38
impact on landowners, surrounding communities, and the
environment. For example, NJDEP sought to minimize any
adverse economic impact by requiring the use of existing
rights-of-way and areas adjacent and the installation and
modification of compressors within existing compressor
station facilities. As for the second factor, NJDEP considered
the extent of any detrimental effects and required Transco to
implement best management practices during construction
and restoration to limit disturbance to the immediate
construction and restoration period and avoid permanent
detrimental effects.
Likewise, regarding the third factor, NJDEP reviewed
submissions, inspected sites to verify wetland and water
boundary lines, and made wetlands resource value
classifications as set forth in the Letters of Interpretation. In
determining whether the proposal is in the public interest,
NJDEP considered that wetlands in the Pleasant Run Loop
were not of exceptional resource value, and that certain
wetlands in the Skillman Loop were of exceptional resource
value. Similarly, with respect to the proposed activity’s
public and private economic value, NJDEP found that the
project would provide public and private economic value by
expanding Transco’s pipeline system capacity and serving
end-users. Finally, the record shows NJDEP considered the
functions and values provided by the freshwater wetlands and
probable impact of the activity on public health and fish and
wildlife. NJDEP examined the wetlands’ fishery resources,
resource value classification, and its role as habitat for
endangered and threatened species. The Department also
considered the scale and duration of disturbance of the
wetlands, and whether the proposed activity would discharge
toxic effluent or degrade ground or surface water.
39
The record rebuts the Foundation’s charge that NJDEP
reached its public interest determination without considering
the appropriate factors. We therefore hold that NJDEP did
not act arbitrarily or capriciously in issuing the Freshwater
Wetlands Individual Permits.
3. Flood Hazard Area Individual Permits
The Foundation claims that NJDEP erred by (1)
impermissibly issuing the Flood Hazard Area Individual
Permit for the Skillman Loop because the Flood Hazard Area
Control Act also prohibits the issuance of permits for
activities that would adversely affect state threatened or
endangered species and their habitats; and (2) improperly
determining that Transco met the requirements of a hardship
exception for the permits.
Regarding the first allegation, the Flood Hazard Area
Control Act, similar to the Freshwater Wetlands Protection
Act, requires NJDEP to determine that any proposed activity
will not adversely affect threatened or endangered species or
their habitats before issuing a Flood Hazard Area Individual
Permit.84 The Foundation alleges that NJDEP failed to
consider the expert reports, which concluded that the clearing
of forest canopy over riparian zones for construction would
increase fragmentation of mature forest and thus damage the
habitat of the Red-Shouldered Hawk and the Barred Owl.
The record shows that NJDEP considered the expert reports
because, after the Foundation submitted its expert reports, in a
March 11, 2015, letter, NJDEP directed Transco to address
84
N.J. Admin. Code § 7:13-10.6(d).
40
the Department’s concern of “significant adverse impacts” on
habitat areas of threatened or endangered species and to
consider alternative construction methods. In a March 17,
2015, letter, Transco addressed NJDEP’s concern by
developing “a unique construction approach” that allowed
Transco to cut “25 feet off of a typical 75 foot [worksite]
corridor through environmentally sensitive areas” so that
fewer trees would be removed and the impact of construction
on the forest would be “half of what is typically required.”
That NJDEP directed Transco to revise its application and
address the Department’s concerns demonstrates NJDEP
considered potential adverse environmental impact on
habitats. Therefore, the grant of a Flood Hazard Area
Individual Permit for the Skillman Loop was not arbitrary or
capricious.
As to the second allegation, the Foundation argues that
NJDEP incorrectly determined that Transco met the
requirements of a hardship exception for the Flood Hazard
Area Individual Permits. Transco had requested hardship
exceptions in its applications because the Skillman Loop
would affect 13.2 acres of riparian zone vegetation, and
Pleasant Run Loop 7.54 acres, both exceeding regulatory
limits.85 A hardship exception requires the applicant to
demonstrate:
(1) Due to an extraordinary situation of the
applicant or site condition, compliance with this
chapter would result in exceptional and/or
undue hardship for the applicant; (2) The
85
N.J. Admin. Code § 7:13-10.2, Table C, Maximum
Allowable Disturbance to Riparian Vegetation.
41
proposed activities will not adversely affect the
use of contiguous or nearby property; (3) The
proposed activities will not pose a threat to the
environment or to public health, safety, or
welfare; and (4) The hardship was not created
through the action or inaction of the applicant or
its agents. 86
In addition, one or more of the following requirements must
be met:
1. The Department determines that there is no
feasible and prudent alternative to the proposed
project, including not pursuing the project,
which would avoid or substantially reduce the
anticipated adverse effects of the project, and
that granting the hardship exception would not
compromise the reasonable requirements of
public health, safety and welfare, or the
environment;
2. The Department determines that the cost of
compliance with the requirements of this
chapter is unreasonably high in relation to the
environmental benefits that would be achieved
by compliance; and/or
3. The Department and applicant agree to one or
more alternative requirements that, in the
judgment of the Department, provide equal or
86
Id. § 7:13-9.8(b).
42
better protection to public health, safety and
welfare and the environment. 87
Further, because the proposed construction would cross
regulated waters, NJDEP must find that the construction of an
open trench through the riparian zone is necessary to install
the pipeline.88
NJDEP’s grant of hardship exceptions was not
arbitrary or capricious. Although neither New Jersey
regulations nor case law defines the term “hardship” as used
here, state regulations indicate that the nature of the hardship
may be economic, related to impact from floods, or otherwise
subject to NJDEP’s determination. 89 NJDEP determined that
Transco addressed all the requirements, namely, that (1) there
was not a feasible and prudent alternative; (2) the method of
construction was necessary for safety; (3) granting the
exception would not compromise reasonable requirements of
public health, safety and welfare, or the environment; and (4)
requiring compliance would impose a hardship on Transco,
which Transco did not create through action or inaction.
Given these determinations, we hold that the Department did
not act arbitrarily or capriciously in granting the hardship
exceptions to the Flood Hazard Area Individual Permits.
4. Grant of Minor Modification to the
Freshwater Wetlands Individual Permit for the Skillman
Loop
87
Id. § 7:13-9.8(a), 10.2(s).
88
Id. § 7:13-10.2(k)(1)(i).
89
See id. § 7:13-9.8.
43
The Foundation challenges NJDEP’s grant of a minor
modification for Transco’s Freshwater Wetlands Individual
Permit for the Skillman Loop as contrary to New Jersey
regulation. After hard rock and boulders under wetlands in
the Princeton Ridge damaged drilling equipment, Transco
sought a minor modification to the permit to use a different
drilling method than the method NJDEP had originally
permitted. By regulation, a modification of the Freshwater
Wetlands Individual Permit is “minor” if it involves
[a] change in materials, construction techniques,
or the minor relocation of an activity on a site, if
the change is required by another permitting
agency. However, this change is not a minor
modification if the change would result in
additional wetland, State open water or
transition area impacts over those of the original
permit or waiver. 90
In granting the minor modification, NJDEP concluded FERC
was the requisite “permitting agency” that required the
change, because in approving the particular route of the
Skillman Loop, FERC implicitly required the change in
drilling technique to maintain the route. NJDEP also
concluded the change in drilling method would not result in
additional disturbance.
This challenge is not properly before us. At the time
of the filing of the petition, the challenged agency action must
90
Id. § 7:7A-14.3(c)(4) (emphasis added).
44
be ripe for review. 91 The Foundation petitioned for review on
May 8, 2015, but the minor modification was not applied for
until May 29, 2015, and granted on June 4, 2015.
Based on the foregoing, we hold NJDEP did not
deprive the Foundation of sufficient opportunity to comment
and did not act arbitrarily or capriciously in issuing permits
and other authorizations. We further hold the challenge of the
minor modification for the Freshwater Wetlands Individual
Permit of the Skillman Loop is not properly before this Court.
C. Pennsylvania
The Riverkeeper raises two challenges to PADEP’s
issuance of a Water Quality Certification: (1) PADEP failed
to review an environmental assessment prepared by Transco
before issuing the Water Quality Certification, as required by
state regulations; and (2) the materials that PADEP did
review were substantively insufficient. The Riverkeeper has
not demonstrated prejudice from these alleged errors.
91
See TeleSTAR, Inc. v. FCC, 888 F.2d 132, 133 (D.C. Cir.
1989) (agency action that was not final at the time of filing of
petition may only be reviewed upon the filing of another
petition); W. Union Tel. Co. v. FCC, 773 F.2d 375, 378 (D.C.
Cir. 1985) (court lacked jurisdiction over a challenge to a
now-final agency action that was filed before action became
final); Pennzoil Co. v. FERC, 645 F.2d 394, 398 (5th Cir.
1981) (requirement that an agency’s action be ripe for judicial
review before merits of any review petition will be addressed
is one which applies to action of other agencies as well as that
of FERC).
45
1. Sequence of Agency Action
The Riverkeeper’s first challenge involves whether
PADEP was required to engage in an environmental review
prior to issuing a Water Quality Certification, or whether
PADEP may, as it did here, postpone environmental review
until after a Water Quality Certification has been issued.
Although PADEP has not published any procedures for
issuing Water Quality Certifications, applicants for the
Chapter 105 permits who are required to obtain Water Quality
Certifications must “prepare and submit” an environmental
assessment for PADEP’s review.92 The Riverkeeper infers
from this requirement that PADEP must review an
environmental assessment prepared as part of an application
for a Water Quality Certification before issuing a
Certification. Based on this inference, and because PADEP
did not do so, the Riverkeeper alleges that PADEP erred by
failing to review an environmental assessment prior to issuing
a Water Quality Certification to Transco. PADEP argues that
for complex projects that require a large number of state and
federal permits to ensure compliance with state water quality
standards—such as interstate natural gas pipelines—this
sequence is not mandatory and would cause unnecessary
delay if strictly followed.93
92
25 Pa. Code § 105.15(b) (2011).
93
See Clean Water Act Section 401 State Water Quality
Certification: A Water Quality Protection Tool for States and
Tribes, EPA Office of Wetlands, Oceans and Watersheds, 25
(April 2010) (stating that states are not required to implement
Water Quality Certification procedures).
46
The Riverkeeper has failed to demonstrate that it
suffered harm from the sequence of PADEP’s permitting
actions. According to FERC’s certificate, Transco could not
begin construction until it obtained all applicable
authorizations required under federal law. One of these
federal authorizations, the Water Quality Certification, was
conditioned on the issuance of, inter alia, a Chapter 105
Permit. Prior to issuing a Chapter 105 Permit, PADEP was
required to review an environmental assessment prepared by
Transco. Thus, construction could not begin until after
PADEP had reviewed an environmental assessment,
regardless of whether this review occurred before the Water
Quality Certification was issued. Because environmental
review was required before construction could begin, the
Riverkeeper was not harmed by the timing of the required
review, and PADEP did not act arbitrarily or capriciously.
The Riverkeeper alleges that as a result of PADEP’s
failure to review the environmental assessment prior to
issuing the Water Quality Certification, FERC prematurely
authorized tree felling activities. According to the
Riverkeeper, in delaying review of the environmental
assessment, PADEP postponed substantive determinations
until after the issuance of the Water Quality Certification,
which allowed trees to be felled in contravention of
Pennsylvania water quality standards. The record does not
support the Riverkeeper’s view of the timeline of events. In
fact, FERC authorized tree felling several weeks before
PADEP issued the Water Quality Certification. Therefore,
the Water Quality Certification could not have led to tree
felling because such felling was approved without a
Certification.
47
Moreover, the Riverkeeper is incorrect in assuming
that tree-felling is implicated by PADEP’s substantive water
quality determinations: the Army Corps of Engineers stated
that the tree-felling activity for which Transco sought
authorization would not trigger the need for permits under the
Clean Water Act. FERC designated the tree-felling activity
as “pre-construction activity,” while FERC’s certificate
requires a Water Quality Certification only for “construction
activity.” This suggests that FERC allows tree-felling activity
to be authorized without Transco obtaining any Clean Water
Act permits. Thus, there is no nexus between the tree felling
activity and the Water Quality Certification, and the
Riverkeeper’s challenge fails.
2. Sufficiency of Factfinding
The Riverkeeper alleges that PADEP relied on an
incomplete environmental assessment from Transco and
failed to correct the assessment’s deficiencies prior to issuing
the Water Quality Certification. PADEP and Transco counter
that the majority of the Riverkeeper’s arguments relate not to
the issuance of the Water Quality Certification, but the
issuance of the Chapter 105 Permit. We find this argument
unavailing. Because the Chapter 105 Permit was a condition
of the Water Quality Certification, it is inextricably
intertwined with the Water Quality Certification. 94
Nevertheless, because the Riverkeeper does not challenge the
Chapter 105 Permit specifically and argues only that the
Water Quality Certification itself was improperly issued, we
94
See Tenn. Gas Pipeline Co. LLC. v. Delaware Riverkeeper
Network, 921 F. Supp. 2d 381, 387-88 (M.D. PA. 2013).
48
will address the Riverkeeper’s challenges only as they pertain
to the issuance of the Water Quality Certification.
The Riverkeeper alleges two problems with PADEP’s
environmental review: (1) PADEP relied on incorrect
wetlands classifications without gathering data necessary to
correct these classifications; and (2) construction activity was
improperly authorized because the faulty wetlands
classifications led PADEP to ignore construction impacts on
exceptional value wetlands. We will consider these
arguments in turn.
a. Wetlands Classifications
Under Pennsylvania regulations, classifying a wetland
as “exceptional value”95 triggers a number of regulatory
protections, including a more stringent permitting process that
disallows construction where construction will have an
“adverse impact” on these wetlands. 96 The Riverkeeper
contends that Transco improperly classified wetlands in the
application it submitted to PADEP for a Water Quality
Certification, because Transco (1) used incorrect
95
“Exceptional value” wetlands are those that serve as habitat
for a threatened or endangered species, or are hydrologically
connected to, or lie within one half mile of, such a wetland;
are located in or along the floodplain of a wild trout stream or
a national wild or scenic river, or such a tributary; are located
along an existing drinking water supply; or are located in an
area designated as a “natural” or “wild” area within a state
forest or park or a designated federal wilderness or natural
landmark. 25 Pa. Code § 105.17(1).
96
See id. § 105.18a(a).
49
classification terms, and (2) miscategorized wetlands that are
of “exceptional value” as belonging to a lesser protected
category. As evidence, the Riverkeeper cites to a table in an
environmental assessment prepared by Transco that identified
affected Pennsylvania wetlands and their state classifications.
This table identifies wetlands as “ordinary,” “intermediate,”
“exceptional,” and “other.” As the Riverkeeper correctly
points out, these terms are not used by PADEP, which
classifies wetlands either as “exceptional value” or “other.” 97
The Riverkeeper argues that Transco’s incorrect
classifications frustrated PADEP’s ability to determine the
correct classification for the affected wetlands and adhere to
state water quality standards. In addition, the Riverkeeper
alleges that at least eleven wetlands affected are “exceptional
value” wetlands but were marked as “ordinary” or
“intermediate” in Transco’s table. According to the
Riverkeeper, PADEP’s failure to address these problems is
evidence that it has acted arbitrarily and capriciously. 98
To prevail in its petition, the Riverkeeper must show
not only that an error was made but that the error in question
prejudiced the Riverkeeper in some way.99 In this instance,
the Riverkeeper can only claim to have suffered prejudice
from Transco’s classifications if PADEP actually relied on
those classifications; otherwise, the error, if any, was
harmless. The prejudice the Riverkeeper alleges is simple:
PADEP would not have issued the Water Quality
97
Id. § 105.17.
98
See Pa. Trout v. Dep’t Envt’l Prot., 863 A.2d 93, 98 (Pa.
2004) (discussing requirements for wetlands classifications).
99
See supra Section IV.A.
50
Certification if Transco had properly classified wetlands in its
environmental assessment.
The Riverkeeper’s argument falls short. PADEP is not
required to review a project’s effect on wetlands prior to
issuing a Water Quality Certification. In this case, a review
was required before PADEP could issue the Chapter 105
Permit, and Transco had to obtain the Chapter 105 Permit as a
condition of the Water Quality Certification. 100 Thus, while
Transco may have submitted miscategorized information for
the Water Quality Certification, that submission was of no
consequence since a full review of the appropriate wetland
categories was conducted before the Chapter 105 Permit was
issued. PADEP had ample time and opportunity to request
that Transco remedy any shortcoming in analysis during these
review processes, and the Riverkeeper also had the
opportunity to submit its comments on the Chapter 105
Permit as well as other state permits not at issue. No
additional review was required before PADEP could issue the
Water Quality Certification. There is nothing in the record to
indicate that PADEP relied on Transco’s miscategorized
submission in issuing the Certification. Therefore, we hold
that any error in Transco’s initial classification of wetlands
did not prejudice the Riverkeeper.
Because the Riverkeeper has not demonstrated that
PADEP relied on these classifications, we need not address
the Riverkeeper’s argument that PADEP failed to collect and
100
See 25 Pa. Code § 105.14(b)(13) (requiring determination
of impact on wetlands for Chapter 105 permits); cf. id. §
92a.21(d)(3) (allowing PADEP to require an applicant for an
NPDES permit to provide information on a project’s wetlands
impact).
51
analyze the necessary data to make appropriate wetlands
classifications following their receipt of Transco’s
environmental assessment.
b. Authorization of Construction Activity
The Riverkeeper also alleges that PADEP erred in
authorizing construction activity that violates state water
quality standards. This challenge is broader than the
Riverkeeper’s challenge regarding FERC’s authorization of
tree-felling: rather than arguing that a sequencing error
resulted in some particular activity, the Riverkeeper here
alleges that any construction that would follow the issuance
of a Water Quality Certification violates Pennsylvania water
quality standards. The Riverkeeper contends that this is true
because any construction impact on an exceptional value
wetland is “adverse.” According to the Riverkeeper, because
construction could not begin without the issuance of the
Water Quality Certification, and construction would
adversely affect what the Riverkeeper alleges are exceptional
value wetlands, PADEP’s decision to issue a Water Quality
Certification authorized construction activity that violated
Pennsylvania water quality standards. However, PADEP
itself has no power to “authorize” construction of interstate
natural gas facilities because the only government entity that
may do so is FERC. 101 While FERC would not allow
construction to occur without a Water Quality Certification,
the Certification is only relevant because it is required by
FERC’s certificate of public convenience and necessity. The
Natural Gas Act grants FERC exclusive authority to authorize
101
See Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 302-
04 (citing 15 U.S.C. § 717f(c)).
52
construction by issuing a certificate of public convenience
and necessity, as FERC did here. 102 Any interested party may
file a petition with FERC for a hearing on the issuance of a
certificate, and we note that the Riverkeeper did participate in
such a hearing.103 In contrast, PADEP’s role in the permitting
process is to certify that any construction that occurs is in
accordance with Pennsylvania water quality standards.
PADEP did so here by requiring Transco to obtain various
state permits and submit to the review processes associated
with these permits.
Because the Riverkeeper has not shown that it was
prejudiced by PADEP’s permitting actions, we see no reason
to disturb PADEP’s decision to issue the Water Quality
Certification.
VI. Conclusion
For the foregoing reasons, we conclude NJDEP and
PADEP did not act arbitrarily or capriciously in issuing
permits and related authorizations to Transco. We decline to
address the challenge of NJDEP’s grant of a minor
modification to the Freshwater Wetlands Individual Permit of
the Skillman Loop. Accordingly, we will deny the petitions.
102
15 U.S.C. § 717f(c).
103
See 15 U.S.C. § 717n(e); 18 C.F.R. § 156.10.
53