Big Bend Conservation Alliance v. Fed. Energy Regulatory Comm'n
Opinion
Big Bend Conservation Alliance petitions for review of two orders of the Federal Energy Regulatory Commission authorizing facilities to export natural gas from the United States to Mexico. Seeking an expanded environmental review, Big Bend argues that FERC, in addition to exercising jurisdiction over the export facilities at the border, also should have exercised jurisdiction over the intrastate pipeline delivering gas to the border. Alternatively, Big Bend contends that regardless of the scope of FERC's jurisdiction under the Natural Gas Act, an expanded review was required by the National Environmental Policy Act.
I
A
The Natural Gas Act regulates transporting and selling natural gas in "interstate commerce," as well as importing and exporting natural gas in "foreign commerce."
*420
Section 3 of the Act prohibits the "export" or "import" of natural gas, to or from a foreign country, without prior authorization by FERC.
See
15 U.S.C. § 717b(a). (This grant of authority to the Federal Power Commission was transferred to the Secretary of Energy,
Section 7 of the Natural Gas Act prohibits constructing or operating a facility to transport or sell natural gas in interstate commerce without a certificate of public convenience and necessity from FERC. 15 U.S.C. § 717f(c)(1)(A) ;
see
The National Environmental Policy Act (NEPA) requires federal agencies to prepare an environmental impact statement (EIS) for "major Federal actions significantly affecting the quality of the human environment."
B
In the proceeding below, Trans-Pecos Pipeline, LLC, a Texas company, sought authorization under Section 3 to construct and operate an export facility consisting of a 1,093-foot pipeline running from a meter station in Presidio County, Texas, to the international border (the Export Facility). At the same time, Trans-Pecos undertook to construct and operate, with regulatory approval from the Railroad Commission of Texas, a 148-mile intrastate pipeline (the Trans-Pecos Pipeline) that would transport natural gas produced in Texas to the Export Facility. At its upstream end, this pipeline would connect with other intrastate pipelines in West Texas, and might later connect with interstate pipelines. Big Bend intervened and argued that the Trans-Pecos Pipeline was an interstate pipeline covered by Section 7 and, alternatively, that this pipeline should be subject to NEPA review because FERC effectively controlled it.
FERC authorized the Export Facility under Section 3.
Trans-Pecos Pipeline, LLC
,
*421
FERC's jurisdictional determinations affected the scope of its environmental review. In particular, FERC issued an environmental assessment addressing impacts of the Export Facility and recommending a finding of no significant impact. Because FERC concluded that the Trans-Pecos Pipeline was intrastate and not under federal control, the assessment did not analyze its environmental impacts. FERC concluded that an EIS was not required because approval of the Export Facility "would not constitute a major federal action significantly affecting the quality of the human environment."
Authorizing Order
,
Big Bend raises three lines of attack on these decisions. First, it contends that the Trans-Pecos Pipeline is itself an export facility subject to Section 3 of the Natural Gas Act. Second, it contends that the pipeline is an interstate pipeline subject to Section 7. Third, it contends that even if the pipeline were not subject to FERC's direct regulatory authority, it should nonetheless have been subject to NEPA review.
II
We begin with Big Bend's argument that the Trans-Pecos Pipeline is an export facility. Because Big Bend failed to present this argument to FERC on rehearing, we lack jurisdiction to consider it.
Section 19(a) of the Natural Gas Act bars judicial review of a FERC order "unless the person seeking review has first 'made application to the Commission for a rehearing thereon.' "
ASARCO, Inc. v. FERC
,
Big Bend insists that it did raise its Section 3 argument on rehearing before FERC. It highlights two statements in its application for rehearing. First, in its argument summary, Big Bend asserted that "[t]he Commission erred in allowing the applicant's requested classification of the system, incorrectly isolating the project into a single jurisdictional border-crossing facility under [the] Natural Gas Act [of] 1938, Section 3, and a non-jurisdictional associated facility regulated as an intrastate pipeline." J.A. 492. Second, Big Bend argued that the entire project should be subject to NEPA review because "the 'jurisdictional' segment is entirely, wholly dependent on the upstream 'non-jurisdictional' segment." J.A. 506.
These statements were not made in support of any argument that the Trans-Pecos Pipeline was subject to Section 3. Rather, they were made in support of Big Bend's second and third arguments-that the pipeline was an interstate one subject to Section 7 and that FERC impermissibly declined to review a project over which it had control. Thus, in developing the argument that FERC misclassified the pipeline, Big Bend asserted that the Export Facility "in fact combines with the so-called 'non-jurisdictional' segment into an interstate system." J.A. 492; see also , e.g. , J.A. 495 ("The applicant's clear intent is to operate the system as an interstate pipeline."); J.A. 496 ("this is a post-facto *422 attempt to bypass required Section 7 classification"). Likewise, in developing the argument that whole-project review was required because FERC had control over the pipeline, Big Bend asserted that FERC's "underlying error" was its failure to classify the pipeline "as [an] interstate facilit[y] subject to ... Section 7." J.A. 504. Nowhere did Big Bend alternatively assert that FERC also erred in failing to classify the pipeline as an export facility subject to Section 3.
Because Big Bend did not raise its Section 3 argument on rehearing before FERC, we cannot consider it here.
III
We review the remaining issues on the merits. The Administrative Procedure Act requires us to set aside FERC orders that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."
A
Big Bend contends that the Trans-Pecos Pipeline is an interstate pipeline subject to Section 7. In determining that the pipeline is an intrastate one subject to the regulatory authority of the Railroad Commission of Texas, FERC found that the pipeline initially will transport only gas produced in Texas.
See
Authorizing Order
,
Big Bend first asserts that the Trans-Pecos Pipeline is interstate because it will immediately ship natural gas that crossed state lines. However, substantial evidence supports FERC's conclusion that the pipeline "initially will only transport natural gas produced in Texas and received from other Texas intrastate pipelines or Texas processing plants."
Rehearing Order
,
Next, Big Bend contends that the pipeline is interstate because Trans-Pecos anticipates using it to transport gas produced outside of Texas. Big Bend acknowledges that Section 311 of the Natural Gas Policy Act permits FERC to authorize an intrastate pipeline to transport gas on behalf of an interstate pipeline without triggering Section 7, but it argues that Section 311 does not apply to new pipelines. Otherwise, Big Bend asserts, pipeline operators could avoid Section 7 by building nominally intrastate pipelines that in reality will engage solely in Section 311 transportation.
Whatever the merits of such concerns about future developments, they are misplaced on this record. First, the orders under review do not prospectively authorize the Trans-Pecos Pipeline to transport natural gas under Section 311. They simply observe that
if
the pipeline someday
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provides qualifying service under Section 311, that service will not subject the pipeline to Section 7.
See
Authorizing Order
,
Second, this is not a case where the only realistic, or even primary, use of an intrastate pipeline is to provide Section 311 service. Rather, as noted above, FERC permissibly found both that there is enough Texas-sourced gas to support the pipeline and that it initially will carry only Texas-sourced gas. Although we can imagine a pipeline operator submitting an artificially narrow application in order to evade federal regulation, this is not such a case. Here, FERC found "no evidence" that building the Trans-Pecos Pipeline would frustrate the purposes of the Natural Gas Act or of the Natural Gas Policy Act,
see
Rehearing Order
,
In sum, substantial evidence supports FERC's finding that the Trans-Pecos Pipeline is a non-jurisdictional intrastate pipeline subject to regulation by the State of Texas. We affirm its refusal to exercise jurisdiction over the pipeline.
B
Big Bend finally contends that even if the Trans-Pecos Pipeline were not subject to FERC's direct regulatory authority, the agency nonetheless should have included it in its NEPA review. Big Bend asserts two alternative theories: the projects at issue were impermissibly segmented, and the pipeline should be "federalized" for NEPA purposes. FERC rejected both theories,
see
Authorizing Order
,
1
CEQ regulations require federal agencies, in conducting NEPA reviews, to jointly consider "[c]onnected actions."
The connected-actions doctrine does not require the aggregation of federal and non-federal actions. In
Sierra Club
, we held that the need for federal approvals to construct discrete segments of an oil pipeline did not subject the entire pipeline to NEPA review.
See
This reasoning controls here. The Export Facility was subject to FERC's jurisdiction, but the Trans-Pecos Pipeline was not. Because no federal action was required to authorize the pipeline's construction, there were no connected federal actions, and so the connected-actions regulation does not apply.
Big Bend errs in its reliance on
Delaware Riverkeeper
, which held that FERC had arbitrarily divided a single natural-gas pipeline into four separate projects for purposes of its NEPA review.
See
2
Big Bend alternatively contends that FERC's involvement in authorizing the Export Facility was enough to "federalize" the Trans-Pecos Pipeline. This Court has declined to adopt that theory on several occasions.
We first discussed the federalization theory in
Macht v. Skinner
,
Subsequent developments have called into question whatever support
Macht
's dictum may have given to the federalization theory. As we explained in
Karst Environmental Education & Protection, Inc. v. EPA
,
In light of Karst , we view Big Bend's remaining arguments about which federalization test should govern as largely beside the point. But, at the risk of gilding the lily, we note that they fail even on their own terms.
The Commission assessed its control over the Trans-Pecos Pipeline under the four-factor balancing test it had set out in
Algonquin Gas Transmission Co.
,
* * *
For these reasons, we deny the petition for review.
So ordered.
Reference
- Full Case Name
- BIG BEND CONSERVATION ALLIANCE, Petitioner v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent Trans-Pecos Pipeline, LLC, Intervenor
- Cited By
- 6 cases
- Status
- Published