Pillsbury Winthrop Shaw Pittman

Tennessee Gas decision: oil and gas implications

By Brad Raffle

On 6 June 2014, the US Court of Appeals for the DC Circuit ruled that FERC violated the National Environmental Policy Act (NEPA) by improperly ‘segmenting’ its NEPA analysis of a four-part upgrade to Tennessee Gas Pipeline’s 300 Line System. The Tennessee Gas 300 Line connects the booming gas fields of western Pennsylvania to gas-hungry locations in the north-eastern US. The court held that FERC’s NEPA review needed to consider the project in its entirety, not on a segment-by-segment basis.

The Tennessee Gas decision has important ramifications for the US pipeline industry and other industries that construct complex multi-phased projects that are subject to NEPA. NEPA is often triggered by a federal agency’s approval of major construction activity, as was the case here. Where NEPA-affected projects entail segments that (1) overlap in time and (2) are functionally, physically and financially interrelated, environmental groups often argue that a NEPA review should focus extensively on the project as a whole, rather than each segment. The Tennessee Gas opinion will help to support this line of argument. The result could be more NEPA-related project delays for pipeline and other long-line construction projects that require federal approvals subject to NEPA.

Between 2010 and 2013, four pipeline upgrades were constructed along the entire eastern leg of the 300 Line. Tennessee Gas submitted and ultimately received FERC approval for all four upgrades as separate projects. FERC found that each segment was a standalone project and decided to review each of the four projects individually for NEPA purposes. Under this approach, FERC concluded that no single segment warranted the preparation of an environmental impact statement (EIS). An EIS, in contrast to the simpler environmental assessment used in this case by FERC, can significantly complicate and lengthen the overall NEPA review process. FERC clearly wanted to avoid this kind of delay in bringing needed natural gas to the north east…

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