This case raises critical questions regarding the careful federal-State balance Congress struck in the process for approving interstate pipeline projects.
Interstate pipelines offer significant benefits to the Nation. Their construction, operation and maintenance boost economic activity, and they can lead to lower natural gas and electricity prices, which have benefits throughout the economy, particularly in manufacturing and for consumers. These pipelines offer substantial environmental benefits, by increasing the use of clean-burning natural gas. And they bolster the Nation’s energy independence.
Left to the States, however, the development of interstate pipelines would be hamstrung. Individual States, naturally focused on what might happen within their own borders rather than on the national public interest, could use state law to block the development and construction of new interstate pipelines, depriving other States and the Nation of these many benefits. Recognizing this risk, Congress, through the Natural Gas Act (NGA), occupied the field of interstate natural gas transportation and empowered the Federal Energy Regulatory Commission (FERC) to be the central decisionmaker in the approval of natural gas and other pipeline projects.
Pursuant to this authority, FERC undertakes a robust review of every proposed pipeline, carefully ac-counting for potential environmental impacts and—critically—determining the route the pipeline will follow. FERC’s routing analysis accounts for potential environmental concerns, with significant input from stakeholders, including the environmental agencies of affected States. FERC’s routing authority is exclusive: States have no power to second-guess or collaterally attack FERC’s routing determinations.
Section 401 of the Clean Water Act (CWA) creates a narrow carve-out from FERC’s otherwise-exclusive authority. Section 401 requires any project that might result in a “discharge into the navigable waters” to obtain a Water Quality Certification (WQC) from the State where the discharge originates. States are limited to determining whether there is a “reasonable assurance” that “any such discharge” will not violate state water-quality standards approved by the federal Environmental Protection Agency (EPA). 33 U.S.C. § 1341(a)(1); 40 C.F.R. § 121.2(a)(3). Thus, a State can deny a WQC if the proposed project will violate water-quality standards, but it cannot use the Section 401 process as a pretext to force changes to a route FERC has approved.
The decision below upsets this carefully balanced co-operative-federalism regime. The Second Circuit affirmed the New York Department of Environmental Conservation’s (DEC’s) denial of a WQC based on Petitioner’s ostensible failure to provide DEC with sufficient information regarding “possible alternative routes for the planned pipeline”—alternative routes that FERC evaluated and rejected after considering DEC’s views. Pet. App. 29a. The court held—contrary to every other court to consider the question—that 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.” Id.
If left unreviewed, this decision will serve as a roadmap for States to block the construction of FERC-approved pipelines based on a consideration—routing—that is not merely beyond the scope of the States’ power under Section 401, but is at the core of FERC’s exclusive authority under the NGA. “Such a veto power easily could destroy the effectiveness of” the NGA regime by “subordinat[ing] to the control of the State the ‘comprehensive’ planning” that Congress as-signed to FERC. First Iowa Hydro-Elec. Coop. v. Fed. Power Comm’n, 328 U.S. 152, 164 (1946). That result does violence to Congress’s design, which gives FERC the final word on matters of interstate pipeline routing, and would deprive other States and the Nation of the many benefits that prompted Congress to establish this centralized structure in the first place. And while this case concerns a natural gas pipeline, State “water quality” vetoes of other interstate energy projects raise similar concerns. Given these important federal interests, this Court should grant the petition.
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