Amicus Curiae Brief — Constitution Pipeline Company, LLC, Petitioner v. New York State Department of Environmental Conservation, et al.

No. 17-1009

IN THE

Supreme Court of the United States

___________

CONSTITUTION PIPELINE COMPANY, LLC,

Petitioner,

v.

NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL

CONSERVATION, et al.,

Respondents.

___________

On Petition for Writ of Certiorari to the United

States Court of Appeals for the Second Circuit

___________

BRIEF OF AMICI CURIAE NATIONAL

ASSOCIATION OF MANUFACTURERS,

AMERICAN PETROLEUM INSTITUTE,

NATURAL GAS SUPPLY ASSOCIATION,

AMERICAN GAS ASSOCIATION,

AMERICAN FUEL & PETROCHEMICAL

MANUFACTURERS, AND INTERSTATE

NATURAL GAS ASSOCIATION OF AMERICA

IN SUPPORT OF PETITIONER

___________

CARTER G. PHILLIPS*

RYAN C. MORRIS

TOBIAS S. LOSS-EATON

SIDLEY AUSTIN LLP

1501 K St. NW

Washington, D.C. 20005

(202) 736-8000

cphillips@sidley.com

February 20, 2018

* Counsel of Record

[Additional counsel listed on inside cover]

LINDA E. KELLY

PETER C. TOLSDORF

NATIONAL ASSOCIATION

OF MANUFACTURERS

733 10th St. NW, Ste. 700

Washington, D.C. 20001

Counsel for National

Association of

Manufacturers

STACY R. LINDEN

ANDREA S. MILES

MARA E. ZIMMERMAN

AMERICAN PETROLEUM

INSTITUTE

1220 L St. NW

Washington, D.C. 20005

Counsel for American

Petroleum Institute

JOAN DRESKIN

VICE PRESIDENT AND

GENERAL COUNSEL

INTERSTATE NATURAL

GAS ASSOCIATION OF

AMERICA

20 F St. NW, Ste. 450

Washington, D.C. 20001

DENA E. WIGGINS

NATURAL GAS SUPPLY

ASSOCIATION

1620 I St. NW, Ste. 700

Washington, D.C. 20006

Counsel for Interstate

Natural Gas Association

of America

RICHARD MOSKOWITZ

GENERAL COUNSEL

TAYLOR HOVERMAN

AMERICAN FUEL &

PETROCHEMICAL

MANUFACTURERS

1667 K St. NW, Ste. 700

Washington, D.C. 20006

MICHAEL L. MURRAY

GENERAL COUNSEL

AMERICAN GAS

ASSOCIATION

400 N. Capitol St. NW

Washington, D.C. 20001

Counsel for American Gas

Association

Counsel for Natural

Gas Supply Association

Counsel for American

Fuel & Petrochemical

Manufacturers

QUESTION PRESENTED

Whether a State’s refusal to issue a water-quality

certification for a federally approved interstate pipeline under Section 401 of the Clean Water Act for failure to provide sufficient information regarding alternative routes for the pipeline exceeds the State’s limited Clean Water Act authority and interferes with the

Federal Energy Regulatory Commission’s exclusive jurisdiction over interstate pipeline routing.

(i)

TABLE OF CONTENTS

Page

QUESTION PRESENTED ...................................

i

TABLE OF AUTHORITIES .................................

iv

INTERESTS OF AMICI CURIAE .......................

1

SUMMARY OF ARGUMENT ..............................

3

ARGUMENT .........................................................

6

I. NATURAL GAS PIPELINES OFFER SIGNIFICANT ECONOMIC, ENVIRONMENTAL, AND NATIONAL SECURITY BENEFITS ...............................................................

6

II. CONGRESS EMPOWERED FERC TO BE

THE KEY DECISIONMAKER IN APPROVING INTERSTATE PIPELINES ..................

10

A. FERC Has Exclusive Authority Over

Pipeline Routing........................................

10

B. FERC Has Primary Authority To Evaluate Environmental Impacts ......................

12

C. The Clean Water Act Delegates To States

Only The Limited Authority To Certify A

Reasonable Assurance That The FERCApproved Project Will Not Violate EPAApproved State Water-Quality Standards ..........................................................

18

III. THE DECISION BELOW DISTORTS THE

CONGRESSIONAL

DESIGN

AND

THREATENS TO DEPRIVE THE NATION

AND OTHER STATES OF SIGNIFICANT

BENEFITS ....................................................

20

CONCLUSION .....................................................

24

(iii)

iv

CASES

TABLE OF AUTHORITIES

Page

California v. FERC, 495 U.S. 490 (1990) .....

21

City of Tacoma v. Taxpayers of Tacoma, 357

U.S. 320 (1958) ...........................................

12

E. End Prop. Co. No. 1, LLC v. Kessel, 851

N.Y.S.2d 565 (N.Y. App. Div. 2007) ..........

11

First Iowa Hydro-Elec. Coop. v. Fed. Power

Comm’n, 328 U.S. 152 (1946) ........ 5, 20, 21, 22

Flint Ridge Dev. Co. v. Scenic Rivers Ass’n of

Okla., 426 U.S. 776 (1976) .........................

14

Guardian Pipeline, LLC v. 529.42 Acres of

Land, 210 F. Supp. 2d 971 (N.D. Ill.

2002) ...........................................................

11

Islander E. Pipeline Co. v. Conn. Dep’t of

Envtl. Prot., 482 F.3d 79 (2d Cir. 2006) ....

18

Kern River Gas Transmission Co. v. Clark

Cty., 757 F. Supp. 1110 (D. Nev. 1990) .....

12

Midcoast Interstate Transmission, Inc. v.

FERC, 198 F.3d 960 (D.C. Cir. 2000) ....... 10, 15

N. Natural Gas Co. v. Iowa Utils. Bd., 377

F.3d 817 (8th Cir. 2004) .............................

11

Niagara Mohawk Power Corp. v. DEC, 624

N.E.2d 146 (N.Y. 1993) ............................. 19, 22

No Tanks Inc. v. Pub. Utils. Comm’n, 697

A.2d 1313 (Me. 1997) ......................... 11, 12, 15

Office of Consumers’ Counsel v. FERC, 655

F.2d 1132 (D.C. Cir. 1980) .........................

10

Power Auth. v. Williams, 60 N.Y.2d 315

(N.Y. 1983)..................................................

19

PUD No. 1 v. Wash. Dep’t of Ecology, 511

U.S. 700 (1994) ...........................................

20

Rapanos v. United States, 547 U.S. 715

(2006) ..........................................................

22

Robertson v. Methow Valley Citizens

Council, 490 U.S. 332 (1989) .....................

14

v

TABLE OF AUTHORITIES—continued

Page

Schneidewind v. ANR Pipeline Co., 485 U.S.

293 (1988) .................................................. 10, 11

Skyview Acres Co-op., Inc. v. Pub. Serv.

Comm’n, 558 N.Y.S.2d 972 (N.Y. App. Div.

1990) .............................................. 11, 12, 13, 15

Wash. Gas Light Co. v. Prince George’s Cty.

Council, 711 F.3d 412 (4th Cir. 2013) ...... 11, 12

STATUTES AND REGULATIONS

15 U.S.C. § 717b(d) ........................................

13

§ 717f(c)(1)(A) ...............................

10

§ 717n(b)(1) .................................. 13, 21

§ 717r ........................................... 12, 15

33 U.S.C. § 1313 ............................................

19

§ 1341(a) ........................................ 4, 19

42 U.S.C. § 4332(C) .......................................

13

18 C.F.R. § 380.6(a)(3)...................................

14

§ 380.7 .......................................... 14, 15

40 C.F.R. § 121.2(a)(3)................................... 4, 19

§ 1501.7(a)(1).................................

13

§ 1502.9 .........................................

14

§ 1503.1(a) .....................................

14

§ 1508.9(a) .....................................

13

ADMINISTRATIVE DECISIONS

Constitution Pipeline Co., LLC Iroquois Gas

Transmission Sys., L.P., 149 FERC ¶

61,199 (2014), reh’g denied, 154 FERC ¶

61,046 (2016) ...................................... 15, 16, 17

Constitution Pipeline Co., LLC Iroquois Gas

Transmission Sys., L.P., 154 FERC ¶

61,046 (2016) ..............................................

18

vi

TABLE OF AUTHORITIES—continued

Page

Order Approving Elec. & Gas Rate Plans,

No. 15-E-0283, 2016 WL 3386590 (N.Y.

Pub. Serv. Comm’n June 15, 2016) ........... 7, 23

OTHER AUTHORITIES

2015 N.Y. State Energy Plan, Vol. 2,

Sources, http://energyplan.ny.gov/Plans/

2015 ............................................................

7

EPA, Draft Inventory of U.S. Greenhouse

Gas Emissions and Sinks (Feb. 2018) .......

8

Dr. David Gordon et al., Ctr. for a New Am.

Sec., Energy, Economic Growth, and U.S.

National Security (Nov. 2017), https://

goo.gl/BoRQHx ...........................................

9

Agnia Grigas, America’s Natural Gas Hurdles, N.Y. Times (Jan. 30, 2018), https://

goo.gl/F6q7nb .............................................

7

IHS Economics, The Economic Benefits of

Natural Gas Pipeline Development on the

Manufacturing Sector (May 2016),

http://www.nam.org/Data-and-Reports/

Reports/Natural-Gas-Study/EnergizingManufacturing-Full-Report/ .............. 6, 7, 8, 10

INGAA Found., North American Midstream

Infrastructure Through 2035: Leaning into

the Headwinds (Apr. 12, 2016), http://

www.ingaa.org/File.aspx?id=27961&v=db

4fb0ca......................................................... 6, 7, 9

Elizabeth Roesenberg, Ctr. for a New Am.

Sec., Energy Rush: Shale Production and

U.S. National Security (Feb. 2014),

https://goo.gl/Gv15td ..................................

9

INTERESTS OF AMICI CURIAE 1

The National Association of Manufacturers (NAM) is

the largest manufacturing association in the United

States, representing small and large manufacturers in

every industrial sector and in all 50 States. Manufacturing employs more than 12 million men and women,

contributes $2.25 trillion to the U.S. economy annually, has the largest economic impact of any major sector, and accounts for three-quarters of private-sector

research and development in the Nation. The NAM is

the voice of the manufacturing community and the

leading advocate for a policy agenda that helps manufacturers compete in the global economy and create

jobs across the United States.

The American Gas Association (AGA), founded in

1918, represents more than 200 state regulated or municipal natural gas distribution companies. AGA members serve 95 percent of the 74 million natural gas customers, representing more than 160 million people, in

the United States. These customers daily rely on AGA

members to provide safe, reliable, and affordable natural gas service as a basic life necessity or for business

purposes. AGA and its members are committed to continuing to improve the already high level of safety and

reliability throughout the natural gas industry, in-

1 Pursuant to Supreme Court Rules 37.2 and 37.6, amici state

that (a) counsel of record for all parties have been notified of

amici’s intent to file this brief and have consented to its filing,

and (b) no counsel for any party authored this brief in whole or in

part and that no entity or person, aside from amici and their

counsel, made any monetary contribution towards the preparation or submission of this brief.

2

cluding interstate transmission. Numerous AGA programs and activities focus on the safe and efficient delivery of natural gas to customers.

The American Petroleum Institute is the only national trade association that represents all aspects of

America’s oil and natural gas industry. Its over 625

corporate members, from the largest major oil companies to the smallest of independents, come from all segments of the industry. They are producers, refiners,

suppliers, marketers, pipeline operators and marine

transporters, as well as service and supply companies

that support all segments of the industry.

The Interstate Natural Gas Association of America

(INGAA) is a trade association representing the interstate natural gas pipeline industry, including virtually

all of the interstate pipelines in the United States. Its

members transport over 95% of the Nation’s natural

gas through a network of over 200,000 miles of pipelines.

The Natural Gas Supply Association (NGSA) represents the major integrated and independent companies that produce and market U.S. natural gas.

Founded in 1965, NGSA focuses on producer-marketer

issues related to the downstream natural gas industry

and has been involved in a substantive manner in

every one of the Federal Energy Regulatory Commission’s significant natural gas rulemakings since

FERC’s creation in 1977.

The American Fuel & Petrochemical Manufacturers

(AFPM) is a national trade association whose members comprise virtually all U.S. refining and petrochemical manufacturing capacity. AFPM’s members

supply consumers with a wide variety of products that

are used daily in homes and businesses.

3

As some of the largest producers, transporters, and

users of natural gas in the country, many of amici’s

members are affected by the decision under review,

which affirmed the denial of a certification necessary

for the construction of an important interstate pipeline. Further, amici are concerned by the broader impacts of the decision below on the development of

much-needed energy infrastructure. Total natural gas

demand, driven in particular by manufacturing and

power generation, is poised to increase by 40 percent

over the next decade, and the U.S. supply is expected

to increase by 48 percent over the same period. Amici

thus have a strong interest in promoting Congress’s

policy for the efficient, transparent, and predictable

approval of natural gas pipelines. Amici are concerned

that the decision below stymies that policy and will

have negative effects on the development of other

types of energy infrastructure as well.

SUMMARY OF ARGUMENT

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

4

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 accounting 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 waterquality standards, but it cannot use the Section 401

process as a pretext to force changes to a route FERC

has approved.

5

The decision below upsets this carefully balanced cooperative-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 FERCapproved 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 assigned 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.

6

ARGUMENT

I. NATURAL GAS PIPELINES OFFER SIGNIFICANT ECONOMIC, ENVIRONMENTAL,

AND NATIONAL SECURITY BENEFITS.

The petition in this case arises in an area that significantly affects uniquely national interests.

a. The nation currently needs greater natural gas infrastructure development. Recent economic developments—including access to abundant supply, low commodities prices, and uncertainty in the global economy—have underscored the need for natural gas infrastructure growth. One study estimates that capital expenditures on midstream oil and gas infrastructure—

which includes natural gas gathering, transport, and

storage—will range from $471 billion to $621 billion

over the next 21 years, with roughly $267 billion to

$352 billion going to natural gas infrastructure. See

INGAA Found., North American Midstream Infrastructure Through 2035: Leaning into the Headwinds

8–9 (Apr. 12, 2016), http://www.ingaa.org/File.aspx?id

=27961&v=db4fb0ca (Headwinds). Moreover, between

167,400 to 208,600 miles of natural gas gathering and

transmission pipeline must be built during the same

period. Studies like this “clearly demonstrate that

much new infrastructure is needed,” with even less optimistic economic projections “requir[ing] significant

infrastructure development.” Id. at 11. Indeed, there

are currently “bottlenecks in some parts of the U.S.

where there is insufficient transmission pipeline capacity to move the [natural gas] to market.” IHS Economics, The Economic Benefits of Natural Gas Pipeline

Development on the Manufacturing Sector 4 (May

2016), http://www.nam.org/Data-and-Reports/Reports/Natural-Gas-Study/Energizing-Manufacturing-

7

Full-Report/ (Economic Benefits). This winter, such

bottlenecks “led to significant increases in oil-fired and

dual-fuel electricity generation to meet energy demands in New England” and “soaring” natural gas

prices. Agnia Grigas, America’s Natural Gas Hurdles,

N.Y. Times (Jan. 30, 2018), https://goo.gl/F6q7nb. New

York State itself has recognized “the need to improve

the capacity to transport [natural] gas into New York.”

2015 N.Y. State Energy Plan, Vol. 2, Sources 87,

http://energyplan.ny.gov/Plans/2015.

Such investments bring significant benefits: Projected infrastructure development over the next two

decades could “add $655 billion to $861 billion of value

to the U.S. and Canadian economies and result in employment of 323,000 [to] 425,000 people per year.”

Headwinds, at 11. These benefits are not limited to

companies and States directly involved in midstream

operations; “there are many indirect and induced benefits that occur in many other industries, and a substantial number of service sector jobs are created as a

result.” Id. at 12. In turn, such growth can increase tax

revenues. Simply put, “[a]ll sectors and regions of

North America benefit from infrastructure development.” Id.; see also Economic Benefits, at 4 (“[M]any

firms across a diverse set of industry sectors are beneficiaries of tens of billions of dollars in capital expenditures and operating and maintenance … expenditures ….”). The same, of course, is true of other types

of energy infrastructure development.

These benefits include the lower natural gas prices

that can result from increased capacity. Natural gas

has a variety of uses: electricity generation, residential, commercial, and industrial. Economic Benefits, at

5–6; see also Order Approving Elec. & Gas Rate Plans,

No. 15-E-0283, 2016 WL 3386590, at *39 (N.Y. Pub.

8

Serv. Comm’n June 15, 2016) (PSC Order) (“[T]he expansion of natural gas service will bring more affordable heat to New York homes and businesses.”). In all

of these areas, “lower natural gas prices will result in

benefits to consumer purchasing power and confidence, higher profits among businesses, and improvements in cost-competitiveness for domestic manufacturers relative to their international competitors.”

Economic Benefits, at 4.

Lower natural gas prices can also lead to lower electricity prices and reduce costs in “energy-intensive industries such as chemicals, metals, food, and refining.”

Id. at 4, 34–37. Likewise, “[m]any industries use [natural gas] as a fuel or a feedstock for production,” id. at

5, and thus cheap and plentiful natural gas is a boon

to the growth or resurgence of manufacturing across

the country, see id. at 21. In 2015 alone, “economic

benefits from increased domestic shale gas production

and the accompanying lower [natural gas] prices include[d] contributions of $190 billion to real gross domestic product (GDP), 1.4 million additional jobs, and

$156 billion to real disposable income.” Id. at 4.

b. Natural gas projects also offer significant environmental benefits. Pipeline development enables and encourages access to and use of natural gas, which has

broadly recognized environmental benefits. Conversely, obstructing natural gas infrastructure development frustrates efforts to transport abundant supplies of clean-burning fuel to power and heat American

homes and businesses. See EPA, Draft Inventory of

U.S. Greenhouse Gas Emissions and Sinks ES-4 (Feb.

2018) (“substitution from coal to natural gas” contributed to “decrease in CO2 emissions”). Studies anticipate that much growth in electricity demand will be

met by natural gas generation and renewable capacity,

9

which are economic to build to meet new demand. See

Headwinds at 25.

c. Energy infrastructure growth, including natural

gas development, also benefits the Nation’s energy security, and, in turn, its national security. Increased

U.S. energy supplies, combined with (among other unpredictable forces) “growth in Asian demand for energy” and continued “global oil supply disruptions”

have produced “a dynamic new map of energy trading

partners and supply routes.” Elizabeth Rosenberg,

Ctr. for a New Am. Sec., Energy Rush: Shale Production and U.S. National Security 6 (Feb. 2014),

https://goo.gl/Gv15td. In turn, these developments create opportunities for the United States to “use … new

energy supplies to pressure or support international

actors and underscore strategic policy,” id., and to

“promote more open energy markets globally, which is

positive for both the U.S. economy and U.S. national

security interests,” Dr. David Gordon et al., Ctr. for a

New Am Sec., Energy, Economic Growth, and U.S. National Security 1 (Nov. 2017), https://goo.gl/BoRQHx.

For example, energy supply resiliency “provided by the

U.S. shale revolution” has “alleviated fears that sanctions [on Iran] would lead to an oil price spike” and has

“prevented the dramatic uptick in political tension and

instability in the Middle East from being transmitted

to the rest of the world in the form of higher oil prices.”

Id. at 8. “Open U.S. energy markets also deepen foreign interdependence with the United States and create interests in continued U.S. economic strength.” Id.

By contrast, where U.S. infrastructure is inadequate,

the Nation must rely on imports from volatile areas or

strategic adversaries.

10

All of these benefits can be realized, however, only if

energy infrastructure keeps pace with increased demand. “New pipeline and processing infrastructure expansion will be a key to connecting new supply sources

with new and growing sources of demand.” Economic

Benefits, at 20.

II. CONGRESS EMPOWERED FERC TO BE

THE KEY DECISIONMAKER IN APPROVING INTERSTATE PIPELINES.

Given how important pipeline infrastructure is to

the Nation’s economy and wellbeing, Congress gave

FERC the key decisionmaking authority over pipelines, including any routing and environmental issues.

A. FERC Has Exclusive Authority Over

Pipeline Routing.

Under the NGA, “a natural gas company must obtain from FERC a ‘certificate of public convenience and

necessity’ before it constructs, extends, acquires, or operates any facility for the transportation or sale of natural gas in interstate commerce.” Schneidewind v.

ANR Pipeline Co., 485 U.S. 293, 302 (1988); see 15

U.S.C. § 717f(c)(1)(A). In assessing the “public convenience and necessity,” FERC considers “all factors bearing on the public interest,” see Office of Consumers’

Counsel v. FERC, 655 F.2d 1132, 1146 (D.C. Cir. 1980),

including any potential environmental impacts, e.g.,

Midcoast Interstate Transmission, Inc. v. FERC, 198

F.3d 960, 967–68 (D.C. Cir. 2000). “FERC will grant

the certificate only if it finds the company able and

willing to undertake the project in compliance with the

rules and regulations of the federal regulatory

scheme.” Schneidewind, 485 U.S. at 302.

11

FERC’s authority under the NGA is exclusive: “Congress occupied the field of matters relating to wholesale sales and transportation of natural gas in interstate commerce.” Id. at 305. “FERC’s exclusive purview” includes the regulation of “facilities [that] are a

critical part of the transportation of natural gas and

sale for resale in interstate commerce.” Id. at 308. In

this “exclusively federal domain,” States may not regulate. Id. at 305; see, e.g., N. Natural Gas Co. v. Iowa

Utils. Bd., 377 F.3d 817, 819–20, 822–24 (8th Cir.

2004) (NGA preempted state-law environmental provisions); E. End Prop. Co. No. 1, LLC v. Kessel, 851

N.Y.S.2d 565, 571 (N.Y. App. Div. 2007) (similar); No

Tanks Inc. v. Pub. Utils. Comm’n, 697 A.2d 1313, 1315

(Me. 1997) (similar).

Pipeline routing is the paradigmatic example of an

issue committed to FERC’s exclusive authority. See

Wash. Gas Light Co. v. Prince George’s Cty. Council,

711 F.3d 412, 423 (4th Cir. 2013) (“the NGA gives

FERC jurisdiction over the siting of natural gas facilities”); see also, e.g., Guardian Pipeline, LLC v. 529.42

Acres of Land, 210 F. Supp. 2d 971, 975 (N.D. Ill. 2002)

(where “FERC has approved the route … [a]ny objections to the condemnation of public land for the construction of a natural gas pipeline [are] preempted”);

Skyview Acres Co-op., Inc. v. Pub. Serv. Comm’n, 558

N.Y.S.2d 972, 975 (N.Y. App. Div. 1990) (State’s “authority [was] preempted … to the extent that it purported to approve the route of an interstate gas pipeline”); cf. No Tanks, 697 A.2d at 1315 (“[State] review

of safety and environmental issues surrounding the

siting of the [natural gas] tank would be an attempt to

regulate matters within FERC’s exclusive jurisdiction”). Nor could it be otherwise. Determining an interstate pipeline’s route—including which States it

will cross, where it will do so, and how far it will travel

12

within their borders—is a task that must be completed

by a centralized body with the entire Nation’s public

interest in mind, not by local “agencies with only local

constituencies.” Id. at 1316. Otherwise, each State

would be free to say, “Not in my backyard,” thereby

depriving other States and the Nation of the pipeline’s

benefits and undermining the NGA’s purpose of “ensur[ing] that natural gas consumers have access to

an adequate supply of natural gas at ‘just and reasonable rates.’” Wash. Gas, 711 F.3d at 422–23.

Because FERC’s authority in this area is exclusive,

there is only one method for interested parties—including States—to attempt to influence a pipeline’s

route. First, they can participate in FERC’s environmental review or intervene in the FERC proceedings.

See Skyview Acres, 558 N.Y.S.2d at 975. Second, if they

are aggrieved by FERC’s ultimate determination, they

can seek rehearing and then judicial review under 15

U.S.C. § 717r. A party that fails to do so cannot later

challenge or second-guess FERC’s determinations

within its exclusive jurisdiction. City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, 336 (1958); see, e.g.,

Kern River Gas Transmission Co. v. Clark Cty., 757 F.

Supp. 1110, 1116 (D. Nev. 1990) (“once the location of

a route for the transportation of natural gas is approved by the FERC, an aggrieved party may seek [judicial] review”; a party that fails to do so is “estopped

from seeking a court-ordered new route for the gas

pipeline”).

B. FERC Has Primary Authority To Evaluate Environmental Impacts.

FERC also has primary authority to consider a pipeline project’s potential environmental impacts, which

includes consideration of the most environmentally

beneficial route. Under the NGA, FERC is “the lead

13

agency … for the purposes of complying with” the National Environmental Policy Act (NEPA). 15 U.S.C.

§ 717n(b)(1). Thus, “FERC undertakes its own environmental analysis pursuant to the requirements of”

NEPA, “which … FERC considers in reaching its ultimate routing determination.” Skyview Acres, 558

N.Y.S.2d at 975. This authority is likewise exclusive,

except as to the narrow question of water-quality compliance under Section 401. 15 U.S.C. § 717b(d)(3); see

infra p. 18. 2

1. NEPA requires federal agencies to prepare “a detailed statement,” known as an Environmental Impact

Statement or EIS, on “the environmental impact of”

any “major Federal action[] significantly affecting the

quality of the human environment.” 42 U.S.C.

§ 4332(C). An EIS must describe “(i) the environmental impact of the proposed action, (ii) any adverse environmental effects which cannot be avoided should

the proposal be implemented, [and] (iii) alternatives to

the proposed action.” Id. 3

The preparation of an EIS has three basic stages:

First, the agency must “determin[e] the scope of issues

to be addressed,” with the input of (among many others) “affected Federal, State, and local agencies.” 40

C.F.R. § 1501.7(a)(1). Second, the agency prepares a

2 The NGA also preserves States’ authority under the Coastal

Zone Management Act and the Clean Air Act, 15 U.S.C.

§ 717b(d)(1)–(2), which are not at issue here.

3 Agencies typically begin by preparing an Environmental Assessment, or EA, which must “provide sufficient evidence and

analysis for determining whether” the project will have a “significant impact.” 40 C.F.R. § 1508.9(a). If so, an EIS must be prepared. If not, the EA’s thorough assessment helps ensure NEPA

compliance. See id.

14

draft EIS, which must “disclose and discuss … all major points of view on the environmental impacts of the

alternatives including the proposed action.” Id.

§ 1502.9(a). The agency must then obtain comments

from any other federal agency with relevant jurisdiction or expertise, “[a]ppropriate State and local agencies,” and the public. Id. § 1503.1(a). Finally, the

agency must prepare a final EIS that “respond[s] to

comments,” “discuss[es] … any responsible opposing

view,” and “indicate[s] the agency’s response to the issues raised.” Id. § 1502.9(b).

These “‘action-forcing’ procedures” serve to ensure

“that agencies take a ‘hard look’ at environmental consequences.” Robertson v. Methow Valley Citizens

Council, 490 U.S. 332, 350 (1989). Affected parties—

including States—can challenge the adequacy of an

agency’s NEPA review and its consideration of an EIS

by seeking judicial review of the final agency determination. See id. at 345–46. The courts carefully review

an agency’s NEPA compliance to ensure that its

“duty … to consider environmental factors not be

shunted aside in the bureaucratic shuffle.” Flint Ridge

Dev. Co. v. Scenic Rivers Ass’n of Okla., 426 U.S. 776,

787 (1976). “NEPA itself does not mandate particular

results,” however: “If the adverse environmental effects of the proposed action are adequately identified

and evaluated, the agency is not constrained by NEPA

from deciding that other values outweigh the environmental costs.” Robertson, 490 U.S. at 350.

2. In keeping with NEPA’s requirements, FERC’s

regulations require the preparation of an EIS for

“[m]ajor pipeline construction projects … using rightsof-way in which there is no existing natural gas pipeline.” 18 C.F.R. § 380.6(a)(3). A FERC EIS must comply with the NEPA regulations and also summarize

15

the project’s “significant environmental impacts”; any

“alternative … that would have a less severe environmental impact,” which includes alternative routes; any

potential “mitigation measures” and impacts that cannot be mitigated; and studies that might provide useful data. Id. § 380.7.

FERC’s “public convenience and necessity” analysis

carefully accounts for these environmental impacts, alternatives, and potential mitigation measures. Based

on this comprehensive process, FERC may deny approval, or it may require the adoption of alternatives

or mitigation measures. E.g., Midcoast Interstate, 198

F.3d at 966, 968. FERC’s “environmental assessment … is not subject to modification” by State agencies; instead, they must intervene in the FERC proceedings to offer their input and then, if necessary,

seek judicial review. Skyview Acres, 558 N.Y.S.2d at

975; see 15 U.S.C. § 717r(a). And with good reason:

“Allowing all the sites and all the specifics to be regulated by agencies with only local constituencies would

delay or prevent construction that has won approval

after federal consideration of environmental factors

and interstate needs.” No Tanks, 697 A.2d at 1316.

3. FERC’s approach in this case illustrates its thorough consideration of a pipeline project’s environmental impacts, including as to routing. FERC’s environmental review of the Interstate Project—in which DEC

was an active participant—began in April 2012. Constitution Pipeline Co., LLC Iroquois Gas Transmission

Sys., L.P., 149 FERC ¶ 61,199, 62,212 (2014). FERC

issued a notice of intent to prepare an EIS, which was

published in the Federal Register and “sent to more

than 2,100 interested entities … including federal,

state, and local agencies” and “environmental and pub-

16

lic interest groups.” Id. The notice described the project and announced three public meetings regarding

the scope of the environmental review. See id. Onehundred-and-one speakers provided comments at

those meetings, and FERC received 750 written submissions. Id. FERC repeated this process in late 2012,

see id., and again in 2013, see id. at 62,212–13.

FERC staff issued a draft EIS in February 2014. Notice was again published in the Federal Register, and

the draft EIS was again mailed to interested entities.

Four more public meetings were held in early 2014. “A

total of 246 speakers provided comments at the meetings, and more than 600 stakeholders submitted a total of 884 letters in response to the draft EIS.” Id. at

62,213. In response, FERC opened two more limited

comment periods for affected landowners. See id. DEC

submitted four comments on the draft EIS. Pet. 11.

FERC issued the final, 450-page EIS in October

2014. The final EIS addressed comments on the draft

and discussed a wide range of issues. 149 FERC at

62,213. The EIS concluded “that if the projects are constructed and operated in accordance with applicable

laws and regulations, the projects will result in some

adverse environmental impacts. However, these impacts … will be reduced to less-than-significant levels

with the implementation of Constitution’s and Iroquois’ proposed mitigation and [FERC] staff’s recommendations ….” Id.

FERC took all of these factors into account in its December 2014 decision to approve the Interstate Project. It devoted significant attention to the “[m]ajor issues of concern addressed in the final EIS,” including

“the pipeline project’s route” and commenters’ (including DEC’s) desire “for additional analysis of alternatives, including a major route alternative, identified as

17

alternative M.” Id. at 62,213, 62,218. FERC explained

that “these alternatives do not convey significant environmental advantages compared to the proposed

route.” Id. at 62,219. FERC also noted that “Constitution evaluated 371 route realignments over the course

of the project development and incorporated many of

these into the proposed route …. Constitution changed

over 50 percent of its originally considered pipeline

route due to incorporation of alternatives and

smaller realignments ….” Id. at 62,218–19. Further,

Constitution continued to adjust its route during the

review process. Id. at 62,219.

After careful consideration of these issues, FERC

concluded “that the projects, if constructed and operated as described in the final EIS, are environmentally

acceptable.” Id. at 62,223. FERC also “accept[ed] the

environmental recommendations in the final EIS” and

included those recommendations “as conditions … to”

its approval. Id. at 62,223–24. In all, FERC imposed

43 separate conditions, including requirements that

“Constitution … adopt additional mitigation measures

or additional minor route variation[s].” See id. at

62,219, 62,225–30; see also id. at 62,221–24.

Based on this exhaustive environmental review and

its thorough consideration of other relevant factors,

FERC ultimately found that “the benefits that the

Constitution Pipeline Project will provide to the market outweigh any adverse effects on existing shippers,

other pipelines and their captive customers, and on

landowners and surrounding communities,” and that,

with the appropriate environmental conditions imposed, “the public convenience and necessity requires

approval of Constitution’s proposal.” Id. at 62,206–07.

FERC subsequently denied rehearing, again address-

18

ing in detail the EIS process, the environmental impacts, alternatives, and conditions. Constitution Pipeline Co., LLC, Iroquois Gas Transmission Sys., L.P.,

154 FERC ¶ 61,046 (2016).

In all, FERC’s review lasted two years and seven

months. FERC received hundreds of public comments

from stakeholders. DEC intervened in the FERC proceedings and was an active participant, submitting at

least nine detailed written comments regarding the

project’s potential environmental effects and possible

route alternatives. Pet. 12. DEC did not, however, seek

rehearing or judicial review.

C. The Clean Water Act Delegates To States

Only The Limited Authority To Certify A

Reasonable Assurance That The FERCApproved Project Will Not Violate EPAApproved State Water-Quality Standards.

Section 401 of the CWA creates a carefully cabined

exception to FERC’s exclusive authority in this area by

permitting States to certify whether a federally licensed project will comply with EPA-approved State

water-quality standards. Section 401 certification “is

not a sovereign state right.” Islander E. Pipeline Co. v.

Conn. Dep’t of Envtl. Prot., 482 F.3d 79, 93 (2d Cir.

2006). Rather, a State has “only such authority [over

such projects] as has been delegated by Congress”

through the CWA. Id. And because the certification

process allows a State to intrude into FERC’s otherwise-exclusive domain, courts have—until the decision

below—carefully cabined this authority to avoid permitting States to second-guess FERC’s judgment on

matters beyond strictly determining whether the pipeline project as approved by FERC satisfies the State’s

EPA-approved water-quality standards.

19

Section 401 provides that an “applicant for a Federal

license or permit” for (inter alia) “construction or operation of facilities, which may result in any discharge

into the navigable waters” must obtain “a certification

from the State in which the discharge originates …

that any such discharge will comply with the applicable provisions of” the CWA, 33 U.S.C. § 1341(a), including EPA-approved state water-quality standards

under 33 U.S.C. § 1313. Such a certification, or WQC,

determines “that there is a reasonable assurance that

the activity will be conducted in a manner which will

not violate applicable water quality standards.” 40

C.F.R. § 121.2(a)(3).

Until now, courts—including the New York State

courts—have consistently and correctly construed this

limited delegation as “[r]elinquish[ing] only one element of the otherwise exclusive jurisdiction granted

[to FERC] …. It authorizes States to determine and

certify only the narrow question whether there is ‘reasonable assurance’ that the construction and operation

of a proposed project ‘will not violate applicable water

quality standards.’” Niagara Mohawk Power Corp. v.

DEC, 624 N.E.2d 146, 149 (N.Y. 1993). “Congress did

not empower the States to reconsider matters”—such

as routing—“unrelated to their water quality standards, which [FERC] has within its exclusive jurisdiction ….” Power Auth. v. Williams, 60 N.Y.2d 315, 325

(N.Y. 1983). Such second-guessing would “countermand the carefully worded authority of section

401(a)(1)” and “usurp the authority that Congress reserved for FERC.” Niagara Mohawk, 624 N.E.2d at

150. Thus, Section 401 does not empower a State to

20

deny a WQC because it might prefer another route to

the one FERC approved. 4

III. THE DECISION BELOW DISTORTS THE

CONGRESSIONAL DESIGN AND THREATENS TO DEPRIVE THE NATION AND

OTHER STATES OF SIGNIFICANT BENEFITS.

The decision below seriously undermines the federal-State balance Congress created by permitting

states to deny WQCs—and thus to block construction

of FERC-approved interstate pipelines—based on considerations beyond the narrow scope of Section 401.

The Second Circuit held 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.” Pet. App. 29a. But that holding

contradicts every other decision to consider the question, supra pp. 10–12, and renders FERC’s routing decision superfluous. More significantly, it allows one

State to deprive other States and the Nation of the

many benefits that natural gas pipelines bring.

This Court has repeatedly explained, in a closely related context, that giving States an unfettered “veto

power” over federally licensed projects would “subordinate to the control of the State the ‘comprehensive’

planning which [federal law] provides shall depend

upon the judgment of” the federal regulator. First

Iowa, 328 U.S. at 164 (discussing hydro-power projects

4 DEC has elsewhere argued that PUD No. 1 v. Wash. Dep’t of

Ecology, 511 U.S. 700 (1994), construed Section 401 more broadly.

Not so—that case dealt only with the power to conditionally grant

a WQC under Section 401(d), not to deny it outright under Section

401(a). See id. at 711 (arguments based on Section 401(a)’s narrower scope have “considerable force”).

21

under the Federal Power Act); see also California v.

FERC, 495 U.S. 490, 506–07 (1990) (“[A]llowing California to impose the challenged [environmental] requirements would be contrary to congressional intent regarding the Commission’s licensing authority

and would ‘constitute a veto of the project that was approved and licensed by FERC.’”). Indeed, “[s]uch a veto

power easily could destroy the effectiveness of the federal act.” First Iowa, 328 U.S. at 164.

That reasoning applies fully here. FERC is “the lead

agency” with respect to natural gas pipelines, 15

U.S.C. § 717n(b)(1), with exclusive authority over all

matters not explicitly carved out by federal law, supra

pp. 10–18. FERC thus considers every issue touching

on the public interest, including environmental questions. “The detailed provisions of the [NGA] providing

for the federal plan of regulation leave no room or need

for conflicting state controls.” First Iowa, 328 U.S. at

181. “It is [FERC] rather than [DEC] that … must pass

upon these issues on behalf of the people of [New York]

as well as on behalf of all others.” Id. at 182.

Section 401 should not be construed as a broad grant

of authority to the States to thwart this comprehensive

federal regime. See id. at 175–76 (rejecting a broad

construction of the Federal Power Act’s savings clause

that would result in “duplication of federal and state

jurisdictions”). Although the States play a legitimate

role in the pipeline approval process under Section

401, the decision below vastly expands that role by permitting a single State to veto a federally approved interstate pipeline based on its disagreement with FERC

over a matter within FERC’s exclusive authority. That

is not the congressional design. “Review by State agencies that would overlap or duplicate the Federal purview and prerogatives was not contemplated and

22

would infringe on and potentially conflict with an area

of the law dominated by the nationally uniform Federal statutory scheme.” Niagara Mohawk, 624 N.E.2d

at 148; see First Iowa, 328 U.S. at 181. New York’s role

is limited to determining, on a yes-or-no basis only,

whether the applicant has demonstrated a reasonable

assurance that a project, as approved by FERC, will

not violate EPA-approved State water-quality standards. New York is not empowered at the eleventh hour,

following robust analysis and public comment, to send

FERC and the project sponsors back to the drawing

board to determine whether some alternative routes

might be “better” for waterways.

This issue has broad importance. Virtually any interstate pipeline construction project could result in a

“discharge” within the scope of Section 401, see generally Rapanos v. United States, 547 U.S. 715 (2006)

(plurality opinion), giving each State along the route

an unconstrained veto under the Second Circuit’s reasoning. Likewise, oil pipeline and electric-transmission construction projects (although regulated differently by FERC) typically require WQCs; the decision

below would allow a State to use Section 401 to block

such a project even if it would not cause a water-quality violation.

Moreover, the decision below threatens to impose

significant harm on the Nation’s energy infrastructure

by depriving other States and the Nation as a whole of

the important benefits of natural gas infrastructure

projects. As described above, natural gas infrastructure development—which is much needed, and will

only become more so in future years—can offer a

wealth of economic and other benefits. These include

the direct and indirect benefits of pipeline construction, operation, and maintenance (in particular, job

23

creation in a variety of sectors) as well as the many

upsides of lower natural gas prices. Further, some policies rely on the growth of natural gas energy production to pursue climate-change-mitigation goals. E.g.,

PSC Order, 2016 WL 3386590, at *39. And increased

natural gas supplies strengthen the Nation’s strategic

position abroad. Supra pp. 6–10. FERC considers

these benefits during the pipeline approval process.

State agencies concerned only with local environmental issues—or parochial political concerns—do not.

An expansive reading of Section 401 also will have

harmful effects beyond the specific project at hand by

increasing the regulatory risk for pipeline investors,

chilling new infrastructure development. Obtaining

FERC approval for a proposed pipeline is a long, thorough, and costly process. Denials like the decision under review will deter investors.

In short, the many benefits of natural gas projects,

which span State borders and sectors of the economy,

are precisely why Congress made FERC the key decisionmaker. FERC is ideally situated to take into account these broader benefits and the local impacts that

may concern a State regulator. Permitting an individual State to second-guess FERC’s determinations

within its exclusive jurisdiction—as the decision below

does—upends this statutory regime and has significant detrimental impacts on the economy, the environment, and the national interest.

24

CONCLUSION

For the foregoing reasons and those stated in the Petition, the Court should grant certiorari.

Respectfully submitted,

LINDA E. KELLY

PETER C. TOLSDORF

NATIONAL ASSOCIATION

OF MANUFACTURERS

733 10th St. NW, Ste. 700

Washington, D.C. 20001

Counsel for National

Association of

Manufacturers

STACY R. LINDEN

ANDREA S. MILES

MARA E. ZIMMERMAN

AMERICAN PETROLEUM

INSTITUTE

1220 L St. NW

Washington, D.C. 20005

Counsel for American

Petroleum Institute

CARTER G. PHILLIPS*

RYAN C. MORRIS

TOBIAS S. LOSS-EATON

SIDLEY AUSTIN LLP

1501 K St. NW

Washington, D.C. 20005

(202) 736-8000

cphillips@sidley.com

Counsel for Amici Curiae

JOAN DRESKIN

VICE PRESIDENT AND

GENERAL COUNSEL

INTERSTATE NATURAL

GAS ASSOCIATION OF

AMERICA

20 F St. NW, Ste. 450

Washington, D.C. 20001

Counsel for Interstate

Natural Gas Association

of America

25

DENA E. WIGGINS

NATURAL GAS SUPPLY

ASSOCIATION

1620 I St. NW, Ste. 700

Washington, D.C. 20006

Counsel for Natural Gas

Supply Association

MICHAEL L. MURRAY

GENERAL COUNSEL

AMERICAN GAS

ASSOCIATION

400 N. Capitol St. NW

Washington, D.C. 20001

RICHARD MOSKOWITZ

GENERAL COUNSEL

TAYLOR HOVERMAN

AMERICAN FUEL &

PETROCHEMICAL

MANUFACTURERS

1667 K St. NW, Ste. 700

Washington, D.C. 20006

Counsel for American

Fuel & Petrochemical

Manufacturers

Counsel for American Gas

Association

February 20, 2018

* Counsel of Record