ROBERT D. MARIANI, District Judge.
Plaintiff Tennessee Gas Pipeline Company LLC ("TGPC") filed an Amended Complaint (Doc. 11) and Amended Motion for Emergency Preliminary Injunction (Doc. 12) on January 8, 2013 seeking, inter alia, a declaratory judgment that the Natural Gas Act preempted Pennsylvania's Environmental Hearing Board ("EHB") from reviewing permits that the state's Department of Environmental Protection ("PADEP") had issued to TGPC as required by the Federal Energy Regulatory Commission's ("FERC") Order dated May 29, 2012, These permits had been appealed to the EHB by Defendants Delaware Riverkeeper Network, Maya Van Rossum, and Responsible Drilling Alliance (collectively, "DRN").
The Court orally granted Secretary Krancer's Motion to Intervene (Doc. 19) during a conference call with all parties on January 11, 2013 and later memorialized the Order in a written Order on January 15, 2013. (Doc. 28). At that same conference call, all parties agreed there was no need for an evidentiary hearing for the purposes of Plaintiff's motion. (Tr. of Conf. Call, Doc. 35, at 20:22-21:14). Following briefing by all parties, the Court held oral argument on Plaintiff's motion on January 18, 2013.
The matter is now ripe for disposition.
On March 31, 2011, Plaintiff TGPC applied for a Certificate of Public Convenience and Necessity for TGPC's Northeast Upgrade Project ("Project") under the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717-717z and FERC's regulations, 18 C.F.R. Part 157. (Doc. 31, Ex. A). In November 2011, FERC staff issued an Environmental Assessment ("EA")
On May 29, 2012, FERC issued an Order ("FERC Order") to TGPC (138 F.E.R.C. ¶ 61, 161, submitted as Doc. 13, Ex. A). FERC issued a Certificate of Public Convenience and Necessity which authorized TGPC to "construct, install, modify, operate, and maintain certain pipeline and compression facilities to be located in Pennsylvania and New Jersey." (Id. at ¶ 1). The Order, however, required TGPC to comply "with the environmental mitigation measures set forth in Appendix B," (id. at ¶ (E), at 74) which mandated TGPC's compliance with mitigation measures set forth in the EA. (Id. at App. B, ¶ 1).
The FERC Order addressed many concerns that commenters had raised. In response to one criticism of the EA, the FERC Order stated:
(FERC Order, ¶ 200). Furthermore, the Order sought to allay concerns that the lack of specificity regarding state permits would allow TGPC to shirk its obligations:
(Id. at ¶ 171). The Sierra Club also voiced its belief that TGPC's violation of Pennsylvania's Clean Streams Act, 35 PA. STAT. § 691.401, was a near certainty based on TGPC's history of alleged non-compliance. However, the Order responded that "Tennessee's compliance with the Pennsylvania Clean Streams Act is the responsibility of the Pennsylvania DEP to which Tennessee will answer if it does not comply." (Id. at ¶¶ 176).
On June 28, 2012, DRN and others filed a Request for Rehearing before the FERC in which DRN requested a stay of the May 29 Order; FERC denied the petition for stay on January 11, 2013. (Doc. 20, Ex. A, ¶ 1). Following FERC's denial, on January 18, 2013, DRN appealed FERC's May 29 Order to the United States Court of Appeals for the District of Columbia pursuant to 15 U.S.C. § 717r(b).
Meanwhile, TGPC had obtained three permits from the PADEP on November 21, 2012: one Erosion and Sediment Control General Permit ("ESCGP-1") under 25 PA.CODE CH. 102 and two Water Obstruction & Encroachment Permits under 25 PA.CODE CH. 105.
This Court must consider four factors when ruling on Plaintiff's motion for preliminary injunction: (1) whether TGPC has shown a reasonable probability of success on the merits; (2) whether TGPC will be irreparably injured by denial of the relief; (3) whether granting preliminary relief will result in even greater harm to the Defendants; and (4) whether granting preliminary relief will be in the public interest. Am. Exp. Travel Related Serv., Inc. v. Sidamon-Eristoff, 669 F.3d 359, 366 (3d Cir.2012). "The burden lies with the plaintiff to establish every element in its favor, or the grant of a preliminary injunction is inappropriate." P.C. Yonkers, Inc. v. Celebrations the Party and Seasonal Superstore, LLC, 428 F.3d 504, 508 (3d Cir.2005).
Before reaching the heart of the issue, the Court would first point out that this is not, as Plaintiff contends, a case that turns on preemption. It is true that the cases which Plaintiff cites stand for the proposition that the NGA generally preempts state review of permits issued pursuant to the NGA or FERC orders. See, e.g., Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 305, 108 S.Ct. 1145, 99 L.Ed.2d 316 (1988) ("Congress occupied the field of matters relating to wholesale sales and transportation of natural gas in interstate commerce."); N. Natural Gas Co. v. Iowa Utils. Bd., 377 F.3d 817, 823 (8th Cir.2004) ("[W]e are obliged to hold that the Iowa provisions regulate in an area over which the FERC exercises authority granted by Congress, and that [the state laws and
The NGA, under 15 U.S.C. § 717b(d), specifically carves out an exception for the CWA: "[e]xcept as specifically provided in this chapter, nothing in this chapter affects the rights of States under the Federal Water Pollution Control Act [the Clean Water Act] (33 U.S.C. 1251 et seq.)." Under Section 401 of the CWA, "[a]ny applicant for a Federal license or permit to conduct any activity ... which may result in any discharge into the navigable waters, shall provide the licensing or permitting agency a certification from the State in which the discharge originates or will originate." 33 U.S.C. § 1341(a)(1).
In fact, Islander East Pipeline Co., LLC v. Connecticut Dep't of Envtl. Prot., states that though "Congress wholly preempted and completely federalized the area of natural gas regulation by enacting the NGA, ... Congress did not, however, thereby supersede any other federal statutory requirements, such as section 401 of the CWA." 482 F.3d 79, 90 (2d Cir.2006) ("Islander I") (citing Schneidewind, 485 U.S. at 300-01, 108 S.Ct. 1145) (other internal citations omitted). "While state and local permits are preempted under the NGA, state authorizations required under federal law are not." Id. at 84 (internal citation omitted). "Under the CWA, ... Congress provides states with the option of being deputized regulators under the authority of federal law." Id. at 90. On the appeal from remand, the Islander East court specifically cited National Fuel Gas, and noted that "[w]hile the NGA generally preempts local permit and licensing requirements, the Clean Water ... Act[] [is] notable in effecting a federal-state partnership to ensure water quality ... around the country, so that state standards approved by the federal government become the federal standard for that state." Islander East Pipeline Co., LLC v. McCarthy, 525 F.3d 141, 143 (2d Cir. 2008) ("Islander II"). As such, deciding the preemption issue would not resolve this case. Rather, the case involves the intersection of the NGA and the CWA and harmonizing the application of the two federal statutes to the fullest extent possible.
Both DRN and PADEP argue that the Water Obstruction and Encroachment Permits were issued pursuant to state law
However, the Second Circuit discussed a similar situation in Islander, when the plaintiff sought CWA water quality certification by submitting to applicable state water quality standards. See Islander II, 525 F.3d at 145 (analyzing "Connecticut's Water Quality Standards Pursuant to the Clean Water Act"). Further, though PADEP contends that they were issued under state substantive law, both water permits state that "[t]he issuance of this permit also constitutes approval of a Water Quality Certification under Section 401 of the Federal Water Pollution Control Act [33 U.S.C. § 1341(a)]." (Permit No. E64-290, Doc. 32, Ex. 3, at 1; Permit No. E52-231, Doc. 32, Ex. 4, at 1). Thus, though the water permits may have been issued using state substantive standards, the permits carry the label of CWA certifications.
Finally, both water permits specifically refer to the ESCGP-1 permit issued in conjunction with the water permits. "Permittee shall implement and monitor an Erosion and Sedimentation Control Plan prepared in accordance with Chapter 102 so as to minimize erosion and prevent excessive sedimentation into the receiving watercourse or body of water." (Permit No. E64-290, Doc. 32, Ex. 3, ¶ 16; Permit No. E52-231, Doc. 32, Ex. 4, ¶ 16). In turn, the ESCGP-1 permit mandates compliance with the Clean Streams Law. (Permit No. ESCGP-02 00 11 801, Doc. 32, Ex. 2, ¶¶ 18, 19).
At oral argument, counsel for DRN opined that PADEP's decision to issue the ESCGP-1 permit would not be appealable to the Circuit Court because it was not a CWA water quality certification, but would be reviewable only by the Pennsylvania Commonwealth Court under state law upon appeal from the EHB. (Tr. of Prel. Inj. Hearing, Doc. 40, 45:17-25). Counsel for Plaintiff agreed insofar as the permit was issued under state law. According to him, however, that meant that review of the permit by the EHB or any state court was preempted by the NGA. (Id. at 76:9-22). Meanwhile, counsel for PADEP argued that it was "beyond dispute" that "the Chapter 102 permit is related to water quality." (Id. at 74:1-4). "DEP's view is we issued these permits together for a reason, and they all represent our protection of water quality standards." (Id. at 74:6-8). Furthermore, though "Chapter 105 permits do explicitly reference [Section] 401, ... Chapter 105, at a substantive level, requires applicants to also meet the Erosion and Sedimentation Control requirements of Chapter 102. So they're all tied together in a very steadfast way." (Id. at 74:8-12).
The Court concludes that PADEP's interpretation is correct. The three permits are interrelated in such a way that separate reviews by the Commonwealth Court for the ESCGP-1 permit and a federal circuit court on the water quality certifications could lead to conflicting outcomes and would be judicially
This case turns on Section 19 of the NGA,
15 U.S.C. § 717r(d)(1).
Relying on this portion of the NGA, TGPC argues that DRN should have appealed the PADEP permits to the Third Circuit, not the EHB.
Section 717r(d)(1) refers to a "State administrative agency," but does not define that term, making it unclear whether the EHB is included in the definition of a "State administrative agency."
Under Pennsylvania law,
"An agency may establish binding policy through rulemaking procedures by which it promulgates substantive rules, or through adjudications which constitute binding precedents." Pennsylvania Human Relations Comm'n v. Norristown Area Sch. Dist., 473 Pa. 334, 374 A.2d 671, 679 (1977). The EHB's decision "is an adjudication [as opposed to a regulation], and constitutes precedent as binding as any other, in that, in a situation which presents the same facts, and applies the same law, it will control the result, until such time as a party argues successfully that it was inaccurate or incorrect." Einsig v. Pennsylvania Mines Corp., 69 Pa. Cmwlth. 351, 452 A.2d 558, 568-69 (1982).
Einsig, 452 A.2d at 569. An "adjudication" is defined as "[a]ny final order, decree, decision, determination or ruling by an agency affecting personal or property rights, privileges, immunities, duties, liabilities or obligations of any or all of the parties to the proceeding in which the adjudication is made." 2 PA. CONS.STAT. § 101. The EHB's decisions are considered adjudications. 2 PA. CONS.STAT. § 704;
Because in Tire Jockey, the Pennsylvania Supreme Court characterized the EQB, DEP, and EHB as being part and parcel of the governing environmental administrative structure, a sound, state-law-based argument can be made that there is no compelling reason to limit the definition of "state administrative agency" in Section 717r(d)(1) to the PADEP only, especially in the absence of any contrary Pennsylvania authority. Plaintiff points to the Environmental Hearing Board Act, 35 P.S. § 7513(a), which says "[t]he Environmental Hearing Board is established as an independent quasi-judicial agency." This statement does nothing to contradict the state Supreme Court's characterization of the Board above, and it also defines the EHB as an agency.
Intervenor argues that this Court should impose an exhaustion requirement on Plaintiff because many of the policy reasons for requiring exhaustion apply here. "Exhaustion concerns apply with particular force when the action under review involves exercise of the agency's discretionary power or when the agency proceedings in question allow the agency to apply its special expertise." See McCarthy v. Madigan, 503 U.S. 140, 145, 112 S.Ct. 1081, 117 L.Ed.2d 291 (1992) (holding that federal prisoners need not exhaust their administrative remedies before filing suit in federal court), superseded by statute, Prison Litigation Reform Act, Pub. L. 104-134, 110 Stat. 1321 (instituting requirement of exhaustion of administrative remedies), as recognized in Woodford v. Ngo, 548 U.S. 81, 126 S.Ct. 2378, 165 L.Ed.2d 368 (2006). "The exhaustion doctrine also acknowledges the commonsense notion of dispute resolution that an agency ought to have an opportunity to correct its own mistakes with respect to the programs it administers before it is haled into federal court." Id. Exhaustion also
Id. at 145-46, 112 S.Ct. 1081 (internal citations omitted). In addition, in its opinion denying DRN's petition for supersedeas, the EHB noted that under state law, the permit was not final and that "an appeal to the Board protects important constitutional due process right [sic] of appellants." (Doc. 49, Ex. A, at 27) (citing Morcoal Co. v. Dep't of Envtl. Res., 74 Pa.Cmwlth. 108, 459 A.2d 1303 (1983)).
(Id. at 28).
Nevertheless, Section 717r(d)(1) provides for federal judicial review of "an order or action" by a state administrative agency. It does not mandate that judicial review wait until a final agency decision has been rendered, as DRN and PADEP contend. If Congress had intended to require final agency action, it could easily have said so. See, e.g., Administrative Procedure Act, 5 U.S.C. § 704 ("Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review. A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action.").
Where a federal statute provides for an unqualified right of review, it is impermissible to imply either an additional administrative requirement originating in state law (i.e. a finality requirement) or to recognize an exhaustion requirement by implication. See W. Radio Serv. Co. v. Qwest Corp., 530 F.3d 1186, 1195, n. 6 (9th Cir.2008) (citing AT & T Commc'n Sys. v. Pac. Bell, 203 F.3d 1183, 1184 (9th Cir. 2000) (holding that "exhaustion is not required, because the structure of the federal statute shows that Congress did not intend to incorporate varying state exhaustion requirements into federal law as a prerequisite to federal [district] court review.")
Thus, a fair reading of Section 717r(d)(1) tips the scales in favor of an interpretation that it is in fact PADEP's initial "order or action" that triggers judicial review. While EHB may very well be authorized to issue, condition, or deny a permit under state law, the language of Section 717r(d)(1) suggests its focus is on PADEP's initial determination as to whether a permit should be issued or denied.
Finally, the extremely limited legislative history of Section 717r also supports finding that Congress intended to cut out all review after the original agency made its permitting decision:
Islander I, 482 F.3d at 85 (emphasis added).
These considerations especially are compelling because EHB's reviews of PADEP's permitting decisions are on a de novo basis. "Where a DEP decision is appealed to the EHB, the EHB is required to conduct a hearing de novo to determine whether the evidence taken by the EHB can sustain the DEP's decision." Groce v. Dep't of Envtl. Prot., 921 A.2d 567, 582 (Pa.Commw.Ct.2007). "The EHB is not an appellate body with a limited scope of review attempting to determine if DEP's action can be supported by the evidence received at DEP's fact-finding hearing. Rather, the EHB's duty is to determine if DEP's action can be sustained or supported by the evidence taken by the EHB." Pennsylvania Trout v. Dep't of Envtl. Prot., 863 A.2d 93, 106 (Pa. Commw.Ct.2004) (affirming EHB's upholding of PADEP's issuance of a Chapter 105 water encroachment permit upon several environmental groups' appeal) (emphasis added).
At oral argument, the parties agreed, or at the very least did not dispute, that this Court would be writing on a clean slate. (Tr. of Prel. Inj. Hearing, Doc. 40, at 28:6-12; 44:5-9; 67:24-68:1), The seminal cases that have discussed the application of Section 717r(d)(1) are the Islander cases
Upon a first reading of both Islander cases, it is unclear whether the state agency which denied the water quality certification to Islander East was the equivalent of PADEP or the EHB. However, upon reading the briefs submitted in those cases, it is apparent that the plaintiff never appealed the denial of the certifications to the applicable state hearing board. On Islander East's appeal to the Second Circuit, Respondent CTDEP argued in its Supplemental Brief that CTDEP's § 401 certification decision was not a "final decision" from which federal appellate judicial review was available. Islander I, Supplemental Brief for Respondent with Attached Appendix, No. 05-4139-AG, 2006
In both the Islander cases, after the Second Circuit found that the CTDEP had waived any arguments regarding the exhaustion of administrative remedies, the Court proceeded as if there were no hurdles in appealing directly from the determination of a state administrative body, such as the PADEP. "[EPACT], in part amended section 19 of the NGA to provide an expedited direct cause of action in the federal appellate courts to challenge a state administrative agency's order, action, or failure to act with respect to a permit application." Islander I, 482 F.3d at 83. Implicit within both of its opinions is the Court's determination that it is not necessary for a state administrative quasi-judicial body to first review the propriety of the issuance or denial of permits by a state administrative agency before judicial review of that agency's decision may be sought.
In AES Sparrows, the Maryland Department of the Environment ("MDE") had also denied a water certification to the plaintiff. 589 F.3d at 726. In its denial letter, it specifically informed the plaintiff that it could appeal to the Fourth Circuit. Id. at 727. However, after the plaintiff appealed to the Fourth Circuit, the MDE argued that it had not waived sovereign immunity, and thus, the plaintiff was required to abide by state law and pursue any and all appeals pursuant to state law. Under Maryland law, an aggrieved party's "request for judicial review of the Secretary's action on any application shall be made within 30 days after the decision has been rendered." Coastal Facilities Review Act, MD.CODE, ENV. § 14-509(a). The Fourth Circuit rejected the sovereign immunity argument and found that MDE had waived it. AES Sparrows, 589 F.3d at 727.
As such, there is more support for Plaintiff's position from these Second and Fourth Circuit cases than there is for DRN's.
At oral argument, both counsel for DRN and counsel for Intervenor asserted that the record would be insufficient for a Circuit Court to review PADEP's decisions because: (1) the record, which was now "closed," contained only what FERC had before it when it issued its May 29, 2012 Order, and (2) PADEP never developed a record ("Right now, none exists. One would have to be created"). (Tr. of Prel. Inj. Hearing, Doc. 40, at 31:17-23, 33:12-24; 65:12-16).
Furthermore, FERC, as "lead agency" under the NGA, "shall, with the cooperation of Federal and State administrative agencies and officials, maintain a complete consolidated record of all decisions made or actions taken by the ... State administrative agency ... acting under delegated Federal authority) with respect to any Federal authorization." 15 U.S.C. §§ 717n(b), (d). This consolidated record "shall be the record for judicial review under section 717r(d) of this title of decisions made or actions taken of Federal and State administrative agencies and officials,..." Id. at § 717n(d)(2). "For any action described in this subsection, the Commission shall file with the Court the consolidated record of such order or action to which the appeal hereunder relates." Id. at § 717r(d)(4). Thus, the consolidated record should contain the decisions made and actions taken by PADEP with respect to the three permits, including the Environmental Reviews (see above) and other documents PADEP produced to this Court. Whether the reviewing Circuit Court will find the documentation sufficient to review whether PADEP's decisions were arbitrary or capricious has been removed from this Court's consideration as the NGA expressly has provided a mechanism by which a Circuit Court can obtain "further development of the consolidated record." Id. at § 717n(d)(2).
Moreover, in both Islander and AES Sparrows, the Circuit Courts were able to review the consolidated record under 717r(d), which included the decisions made by the respective state administrative agencies (counterparts to PADEP). Unlike this case, at issue in those cases were the denials of permits by the relevant state administrative agencies. Both the Second and Fourth Circuits discussed various documents presented to and issued by the respective DEPs in their cases. On both occasions, the Islander court was able to glean from the consolidated record what actions CTDEP had taken or omitted. Islander I, 482 F.3d at 87-88, 95-105 (citing the CTDEP denial letter, the Final EIS, and various reports which contradicted CTDEP's findings); Islander II, 525 F.3d
Counsel for PADEP made a persuasive point during oral argument. "[A]llowing the EHB to create an administrative record actually furthers the goals encapsulated in 717r by allowing effective state court review, without setting up a scenario where, okay, we go to the Third Circuit and they find, I don't quite have the right record for this, I'm remanding to get the right record, and then go on. That delay doesn't help anyone, either." (Tr. of Prel. Inj. Hearing, Doc. 40, at 68:14-20). According to PADEP, because it is exempt from the requirement to develop a record under Pennsylvania law, there is substantial risk that there may be a repeat of the Islander cases. In those cases, CTDEP's initial denial of a water quality certification occurred in February 2004. Until the Second Circuit found in May 2008 that CTDEP had not acted in an arbitrary and capricious manner, the question of whether the plaintiff was entitled to a water quality certification remained unanswered. This hardly seems like an expeditious process when EHB review (which admittedly would take several months, even on an expedited schedule) would greatly reduce the likelihood that a federal appellate court would find the record insufficient. Nonetheless, this is the framework that Congress has implemented, and the Court will not second-guess the wisdom of that framework when Congress has provided explicit mechanisms for supplementing an incomplete consolidated record.
Thus, the Court concludes that Plaintiff has demonstrated a reasonable probability of success on the merits, warranting the grant of a preliminary injunction.
Plaintiff asserts that construction delays in building the pipeline can constitute irreparable harm and that because of the likely unenforceability of any money judgments it might obtain against DRN, it has shown irreparable harm. See, e.g., Gerardi v. Pelullo, 16 F.3d 1363, 1373-74 (3d Cir.1994); Steckman Ridge GP, LLC v. An Exclusive Natural Gas Storage Easement Beneath 11.078 Acres, Civ. A. Nos. 08-168, 08-169, 08-177, 08-179, 08-180, 2008 WL 4346405 (W.D.Pa. Sept. 19, 2008). The Court agrees insofar as delays and the likely inability to collect on a money judgment constitute irreparable harm.
Lastly, because the Court concludes that the EHB does not have jurisdiction to hear appeals of the permits at issue, Plaintiff would suffer irreparable injury by being subjected to a protracted process before a body lacking in jurisdiction, and the costs associated with the de novo nature of the proceedings, both now and each time it receives a CWA certification which DRN
The balance of the equities favors TGPC because of the immediacy and urgency of FERC's timetable (in-service deadline of November 1, 2013) versus the speculative nature of DRN's alleged harms. See Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531, 545, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987). Congress's intent in passing the NGA was to bypass the exhaustive rounds of administrative, state, and federal appeals and to provide for a mechanism whereby an aggrieved party could appeal directly to a federal circuit court. This policy is especially forceful in a case such as this when the EHB reviews PADEP's decisions de novo. It is not a matter of reviewing the sufficiency of the evidence considered by and analyzed by PADEP, but rather, an entirely new process in which hearings are held, testimony is received, experts reports are submitted, etc.
Weighed against the certainty of the harms that TGPC would experience if the Project were delayed, DRN's harms are speculative considering that both FERC
Allowing this Project to move forward in a timely manner would also favor the public interest because the Project will add jobs to the local economies, increase revenues for New Jersey and Pennsylvania by hundreds of millions of dollars, and also provide natural gas to residents of New Jersey and Pennsylvania during peak winter months. (Heckman Aff., Doc. 13, Ex. C, ¶¶ 7, 11).
For the foregoing reasons, the Court will grant Plaintiff's Amended Motion for Preliminary Injunction (Doc. 12). A separate Order follows.
DRN disputes this characterization and insists the water permits were issued pursuant to state law only and not under the delegated authority of the CWA (Doc. 32, at 4) ("In its EHB appeals, DRN challenges TGP's Ch. 102 and 105 permits ... based solely on violations of Pennsylvania statutes and regulations, DRN's claims do not allege violations of federal law as implemented by a delegated state program."). DRN argues that "[a]lthough Ch. 105 permits also serve as Water Quality Certifications under the state's delegated CWA Section 401 program, 33 U.S.C. § 1341, PADEP issues Ch. 105 permits under the separate state authorities provided by the Clean Streams Law, Flood Plain Management Act, and Dam Safety and Encroachments Act." (Id. at 3, n,2; see also Doc. 41, Ex. A, 1-2). The Court will address this disputed characterization infra.
Id. at 105 (internal quotation and punctuation marks omitted).
