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Minisink Residents for Environmental Preservation and Safety v. Federal Energy Regulatory Commission

United States Court of Appeals, District of Columbia Circuit

August 15, 2014

MINISINK RESIDENTS FOR ENVIRONMENTAL PRESERVATION AND SAFETY, ET AL., PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT, MILLENNIUM PIPELINE COMPANY, L.L.C., INTERVENOR

Argued: May 1, 2014

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[Copyrighted Material Omitted]

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On Petitions for Review of Orders of the Federal Energy Regulatory Commission.

Carolyn Elefant argued the cause and filed the briefs for petitioners.

Karin L. Larson, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were David L. Morenoff, Acting General Counsel, and Robert H. Solomon, Solicitor.

Aaron M. Streett argued the cause for intervenor. On the brief were Joseph Koury and Ryan J. Collins.

Before: KAVANAUGH, MILLETT and WILKINS, Circuit Judges. OPINION filed by Circuit Judge WILKINS.

OPINION

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Wilkins, Circuit Judge

Given the choice, almost no one would want natural gas infrastructure built on their block. " Build it elsewhere," most would say. The sentiment is understandable. But given our nation's increasing demand for natural gas (and other alternative energy sources), it is an inescapable fact that such facilities must be built somewhere. Decades ago, Congress decided to vest the Federal Energy Regulatory Commission with responsibility for overseeing the construction and expansion of interstate natural gas facilities. And in carrying out that charge, sometimes the Commission is faced with tough judgment calls as to where those facilities can and should be sited. These petitions present one such example.

In July 2012, the Commission approved a proposal for the construction of a natural gas compressor station in the Town of Minisink, New York. Many local residents, hoping to thwart that result, banded together to fight the compressor station's development. They formed a group called " Minisink Residents for Environmental Preservation and Safety" (" MREPS" ) and mounted a vigorous, but ultimately unsuccessful, campaign opposing the project. Undeterred, MREPS and several of its individual members now petition for our

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intervention. In doing so, they mainly argue that the Commission's approval of the project was arbitrary and capricious, particularly given the existence of a nearby alternative site they insist is better than the Minisink locale green-lighted by FERC. They also assail some of the Commission's procedural calls along the way. Though we respect the concerns they raise, we conclude that, as a legal matter, the Commission's decisions were both reasonable and reasonably explained. Consequently, we deny the petitions for review.

I.

We begin with a quick overview of the regulatory framework, before turning to the particulars of these petitions.

A.

Congress enacted the Natural Gas Act, ch. 556, 52 Stat. 821 (1938) (codified as amended at 15 U.S.C. § § 717-717z), with the principal aim of " encourag[ing] the orderly development of plentiful supplies of . . . natural gas at reasonable prices," NAACP v. Fed. Power Comm'n, 425 U.S. 662, 669-70, 96 S.Ct. 1806, 48 L.Ed.2d 284 (1976), and " protect[ing] consumers against exploitation at the hands of natural gas companies," Fed. Power Comm'n v. Hope Natural Gas Co., 320 U.S. 591, 610, 64 S.Ct. 281, 88 L.Ed. 333 (1944). Along with those main objectives, there are also several " 'subsidiary purposes'" behind the NGA's passage, " includ[ing] 'conservation, environmental, and antitrust' issues." Pub. Utils. Comm'n of Cal. v. FERC, 900 F.2d 269, 281, 283 U.S.App.D.C. 285 (D.C. Cir. 1990) (quoting NAACP, 425 U.S. at 670 & n.6).

The Act vests FERC with broad authority to regulate the transportation and sale of natural gas in interstate commerce. 15 U.S.C. § § 717b, 717c; see also Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 301, 108 S.Ct. 1145, 99 L.Ed.2d 316 (1988) (" FERC exercises authority over the rates and facilities of natural gas companies used in [interstate] transportation and sale." ). To achieve this objective, Congress equipped the Commission with a variety of regulatory tools, one of which captures the focus of our review today.

Under Section 7(c) of the Act, before an applicant can construct or extend an interstate facility for the transportation of natural gas, it must obtain a " certificate of public convenience and necessity" from the Commission. 15 U.S.C. § 717f(c)(1)(A); Dominion Transmission, Inc. v. Summers, 723 F.3d 238, 240, 406 U.S.App.D.C. 215 (D.C. Cir. 2013). The statute provides that a certificate " shall be issued to any qualified applicant" upon a finding that " the applicant is able and willing properly to do the acts and to perform the service proposed . . . and that the proposed service" and " construction . . . is or will be required by the present or future public convenience and necessity." 15 U.S.C. § 717f(e). FERC may, in issuing such a certificate, attach " such reasonable terms and conditions as the public convenience and necessity may require." Id.; Murray Energy Corp. v. FERC, 629 F.3d 231, 234, 393 U.S.App.D.C. 433 (D.C. Cir. 2011).

The Commission has issued a policy statement outlining the criteria it considers in reviewing such certificate applications. Certification of New Interstate Natural Gas Pipeline Facilities, 88 FERC ¶ 61,227 (Sept. 15, 1999), clarified, 90 FERC ¶ 61,128 (Feb. 9, 2000), further clarified, 92 FERC ¶ 61,094 (July 28, 2000) (" Certificate Policy Statement " ). The Commission will first confirm " whether the project can proceed without subsidies from the[] existing [pipeline's] customers." Id., 88 FERC ¶ 61,227, at 61,745. Then, it will " balanc[e] the public benefits against the adverse effects of the project." Id., 90 FERC ¶ 61,128, at 61,396.

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FERC will approve a project only " where the public benefits of the project outweigh the project's adverse impacts." Id.; see also Fla. Gas Transmission Co. v. FERC, 604 F.3d 636, 649, 390 U.S.App.D.C. 328 (D.C. Cir. 2010) (Brown, J., concurring in part and dissenting in part) (summarizing the factors examined under FERC's Certificate Policy Statement ).[1]

In conjunction with the certificating process, the Commission must also complete an environmental review of the proposed project, as mandated by the National Environmental Policy Act (NEPA), 42 U.S.C. § § 4321-4370h. E.g., Midcoast Interstate Transmission, Inc. v. FERC, 198 F.3d 960, 967, 339 U.S.App.D.C. 213 (D.C. Cir. 2000). Simply stated, the Commission's NEPA obligation requires that it " 'identify the reasonable alternatives to the contemplated action' and 'look hard at the environmental effects of [its] decision[].'" Id. (quoting Corridor H Alternatives, Inc. v. Slater, 166 F.3d 368, 374, 334 U.S.App.D.C. 240 (D.C. Cir. 1999)) (alterations in original).

B.

For years, Millennium Pipeline Company (" Millennium" ) has owned and operated a natural gas pipeline system extending across much of New York's southern border. In July 2011, seeking to expand its service capacity, Millennium applied to the Commission for a certificate of public convenience and necessity that would allow for the construction and operation of a natural gas compressor station along its existing pipeline. Joint Appendix (" J.A." ) 304-19. The proposed site for the project was located in the Town of Minisink, New York.

As explained in its application to FERC, the aim of Millennium's project was twofold. First, the new station would allow Millennium to increase natural gas deliveries to its eastern interconnection by about 225,000 additional dekatherms per day. Second, the compressor would enable bi-directional gas flow on an existing segment of Millennium's pipeline. J.A. 305. The project's footprint, as proposed by Millennium, would consist of: (a) two 6,130-horsepower natural gas-fired compressor units, to be housed in a newly built structure; (b) an additional 1,090 feet of pipe connecting the compressor station to the existing pipeline; (c) and several ancillary facilities, including a new mainline valve, an access driveway, a station control/auxiliary building, intake and exhaust silencers, and a filter-separator with a liquids tank. The compressor station was to be sited on a small part of a much larger, 73.4-acre parcel--a parcel acquired and owned by Millennium. See J.A. 305-07. We refer to Millennium's proposal as the " Minisink Project."

Consistent with agency regulations, notice of the proposed Minisink Project was published in the Federal Register. See 76 Fed. Reg. 46,786 (Aug. 3, 2011). Around the same time, the Commission issued a " Notice of Intent to Prepare an Environmental Assessment," which was sent to a range of interested stakeholders, including

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lawmakers, potentially affected landowners, and environmental and public-interest groups. In the months following, Millennium sponsored a community meeting at the Minisink Town Hall so that those interested could learn more about the proposal and voice their views. FERC also hosted its own meeting in Minisink concerning the proposal. As might be expected, the Minisink Project sparked its fair share of local interest; during the review process, the Commission received hundreds of verbal and written comments. See J.A. 8-9.

Most significantly for our purposes, several residents urged Millennium and the Commission to pursue a nearby alternative site for the compressor station--what came to be known as the " Wagoner Alternative." Under the Wagoner Alternative, Millennium would construct a smaller, 5,100-horsepower compressor station directly adjacent to its existing Wagoner Meter Station, a site located along the pipeline about seven miles northwest of Minisink. J.A. 10-11. This alternative, its proponents insisted, was far better suited for the project, in large part because it was less residentially dense than the site proposed in Minisink. See, e.g., J.A. 347-50. But it came with a catch: Its implementation would require the replacement of a 7-mile segment of pipe along the pipeline--a segment the parties call the " Neversink Segment" due to its crossing of the Neversink River; according to Millennium, no such upgrade would be required by the Minisink Project. See J.A. 390-91. Reacting to commenters who were pushing the Wagoner Alternative, FERC sent notice to ...


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