Federal Court Denies Attempt to Enjoin Appeal Before Pennsylvania Environmental Hearing Board

On June 5, 2023, the U.S. District Court for the Middle District of Pennsylvania denied Transcontinental Gas Pipeline Co. LLC’s (Transco) attempt to enjoin an administrative appeal proceeding before the Pennsylvania Environmental Hearing Board (PAEHB). In Transcontinental Gas Pipeline Co., LLC, v. Pennsylvania Environmental Hearing Board, et al., Transco claimed the 3rd U.S. Circuit Court of Appeals has original and exclusive jurisdiction to review pipeline-related permits such as those at issue in the PAEHB appeal, and argued that the Natural Gas Act (NGA) preempts PAEHB’s review of those permits.

Under 15 U.S.C. § 717 et seq., the Federal Energy Regulatory Commission (FERC) has exclusive authority to regulate the construction and operation of interstate natural gas sales and transportation under the NGA. The 3rd Circuit wrote in 2016’s Riverkeeper Network v. Sec’y Pa. Dep’t of Env’t Prot. that natural gas companies cannot construct or operate facilities that transport natural gas without obtaining a “certificate of public convenience and necessity” from FERC. The natural gas company must receive various state and federal authorizations for the project to have a FERC certificate issued.

Transco filed an application with FERC and applied for a water quality certification pursuant to the Clean Water Act, which was conditioned on Transco obtaining two permits — an erosion and sediment control permit and a water obstruction and encroachment permit.

The Pennsylvania Department of Environmental Protection issued the permits on Feb. 3, 2023. The issuance of these permits was appealed to the PAEHB on March 14, 2023. Transco then moved the court for a preliminary injunction to enjoin the appeal. In reviewing preliminary injunctions, the court recognized it as an extraordinary remedy to be issued in limited circumstances subject to a four-factor test clarified by the 3rd Circuit in 2017’s Reilly v. City of Harrisburg: (1) likelihood of success on the merits, (2) irreparable harm, (3) potential for harm to others if relief is granted, and (4) whether the public interest favors injunctive relief. A claimant must establish the first two “gateway factors” before the court may consider the final two.

In this case, the court recognized that the NGA specifically “allows states to participate in environmental regulation of [interstate natural gas] facilities under three federal statutes: the Clean Air Act, the Coastal Zone Management Act, and the Clean Water Act.” Riverkeeper, 833 F.3d at 368 (citing 15 U.S.C. § 717b(d)). Because the permits were required under Section 401 of the Clean Water Act, they fell within the NGA’s carve-out for state participation. The Middle District held that Transco had no recourse, moreover, in the NGA’s judicial-review provision because the PAEHB appeal is a quasi-judicial proceeding before an administrative agency, not a civil action for purposes of § 717r(d)(1). On these bases, the court determined that Transco did not establish a likelihood of success on the merits of its claim for “enforcement” of § 717r(d)(1).

The court found that in 2018’s Township of Bordentown v. FERC, the 3rd Circuit concluded that the NGA did not bar an administrative appeal of pipeline-related permits within New Jersey’s Department of Environmental Protection. Transco attempted to differentiate between New Jersey’s and Pennsylvania’s administrative structures, but the court concluded that the factual distinction was without a legal difference — instead, it held that an appeal before the hearing board qualifies as a quasi-judicial proceeding before an administrative agency, not a civil action.

Although a lengthy analysis, the court in Transco goes through the arduous task of stating clearly former legal principles and setting them out explicitly for future use. Ultimately, the court clearly stated that the NGA’s carve-out provisions apply to allow state involvement in what would normally be federal business.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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