The Natural Gas Act, State Environmental Policy, and the Jurisdiction of the Federal Circuit Courts

Channing Jones

Market pressures will likely drive a continued push for the build-out of natural gas infrastructure in the form of pipelines, compressor stations, storage facilities, and liquefied natural gas (“LNG”) terminals (collectively, “natural gas facilities”).  Where these facilities would transport natural gas in interstate or foreign commerce, their siting, construction, and operation are generally governed by the Natural Gas Act (“NGA” or the “Act”) and fall within the regulatory jurisdiction of the Federal Energy Regulatory Commission (“FERC” or the “Commission”).

Natural gas project proposals commonly encounter controversy and resistance, indicating a considerable amount of future litigation as proposals to construct or expand natural gas facilities grow with supply and demand pressures.  One area this litigation may center around is the limited but sometimes decisive range of authority states hold to regulate natural gas facilities with respect to certain environmental matters, chiefly in certifying state water quality standards compliance under section 401 of the Clean Water Act (“CWA”).

Yet a threshold jurisdictional question remains largely unanswered by the federal courts, except superficially.  During the 109th Congress, the NGA was amended by the Energy Policy Act of 2005 (“EPAct”), including through the addition of section 19(d) to the NGA.  This section vests the federal circuit courts with “original and exclusive jurisdiction” over most challenges to orders, actions, or alleged failures to act by state agencies “acting pursuant to Federal law to issue, condition, or deny any permit, license, concurrence, or approval . . . required under Federal law” for natural gas facilities under FERC’s jurisdiction.  The precise scope of this conferral is ambiguous.  Specifically, which state actions are undertaken “pursuant to” and “required under” federal law?  How is this bounded by the “arising under” jurisdiction of the federal courts?  And how do possible jurisdictional scenarios affect the range of challenges to state water quality certification for natural gas projects that should go to federal circuit court under section 19(d)?

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