The Pennsylvania Environmental Hearing Board (the “Board”) recently stirred up some controversy. Last month, in Lancaster Against Pipelines v. DEP, EHB Docket No. 2016-075-L (May 10, 2017), the Board held that it has jurisdiction to review actions taken by the Pennsylvania Department of Environmental Protection (“PADEP”) involving interstate natural gas pipelines, despite a 2013 decision issued by the U.S. District Court for the Middle District of Pennsylvania that held precisely the opposite.

The Natural Gas Act, 15 U.S.C. §§ 717-717z, gives the Federal Energy Regulatory Commission (“FERC”) the primary role in regulating interstate natural gas pipelines. States retain certain rights, one of which is to issue Water Quality Certifications under Section 401 of the Clean Water Act, 33 U.S.C. § 1341(a) (“401 certification”), in which the state certifies that the construction, operation, and maintenance of a natural gas facility, such a pipeline, complies with the state’s water quality standards, provided that the facility operator obtains and complies with certain state permits.  Ordinarily the Board has jurisdiction to review PADEP’s issuance of a 401 certification.  However, in the case of interstate natural gas facilities, Section 19(d)(1) of the Natural Gas Act, 15 U.S.C. § 717r(d)(1), provides that the U.S. Courts of Appeals “have original and exclusive jurisdiction over any civil action for the review of an order or action of a . . . State administrative agency acting pursuant to Federal law to issue, condition, or deny any permit, license, concurrence, or approval . . . required under Federal law, other than the Coastal Zone Management Act of 1972.”

At issue before the Board in Lancaster Against Pipelines was a 401 certification issued by PADEP to Transcontinental Gas Pipe Line Company, LLC (“Transco”) for Transco’s Atlantic Sunrise Pipeline Project.  Environmentalists filed appeals of PADEP’s issuance of the 401 certification to both the Board and the U.S. Court of Appeals for the Third Circuit.  After the Third Circuit, in an unrelated case, issued two decisions which assumed that the Third Circuit, not the Board, had jurisdiction to review the 401 certification, see Delaware Riverkeeper Network v. Secretary, Pennsylvania Department of Environmental Protection, 833 F.3d 360 (3d Cir. 2016); Delaware Riverkeeper Network v. Secretary, Pennsylvania Department of Environmental Protection, No. 15-2122 (3d Cir. Mar. 31, 2017), Transco requested that the Board dismiss the consolidated appeal pending before it. 

In rejecting Transco’s bid for dismissal, the Board first distinguished the Delaware Riverkeeper Network opinions, noting that the Third Circuit “was not faced with and did not address whether the state’s action needed to be final” prior to appeal to the Circuit Court and “whether the Department’s issuance of the certification was final.”  Then, the Board adopted the reasoning of Berkshire Envtl. Action Team, Inc. v. Tenn. Gas Pipeline, LLC, 851 F.3d 105 (1st Cir. 2017), in which the First Circuit rejected as in error the Middle District of Pennsylvania’s decision in Tennessee Gas Pipeline LLC v. Del. Riverkeeper Network, 921 F.Supp. 2d 381 (M.D. Pa. 2013), which had held that the Board lacked jurisdiction to review state permits issued to interstate gas pipeline operators.

In Berkshire, the First Circuit was asked to review a 401 certification issued by the Massachusetts Department of Environmental Protection (“MassDEP”).  The MassDEP 401 certification contained a condition that prohibited the operator from conducting any work subject to the 401 certification until the expiration of an administrative appeal period.  The First Circuit stated that “[a]n agency action is ‘final’ only where it ‘represents the culmination of the agency’s decisionmaking process and conclusively determines the rights and obligations of the parties with respect to the matters at issue.’”  Against that backdrop, the First Circuit found that the MassDEP’s process “bears the hallmarks of decision-making by expert administrative agencies rather than those of judicial review,” and therefore held that, because the MassDEP 401 certification had been appealed, there was no order or action of MassDEP for the First Circuit to review.

The administrative appeals process in Pennsylvania is slightly different. Under Pennsylvania law, “no action of [PADEP] adversely affecting a person shall be final as to that person until the person has had an opportunity to appeal the action to the [Board] . . . .”  35 P.S. § 7514(c).  Unlike the MassDEP 401 certification in Berkshire that prohibited the pipeline operator from conducting any work until the administrative appeal period expired, an appeal to the Board does not necessarily affect the validity or effectiveness of the PADEP action being appealed.  Transco thus argued that PADEP actions with respect to Natural Gas Act projects determine the “rights and obligations of the parties,” which makes ripe an appeal to, and only to, the Third Circuit.

Despite the differences between MassDEP’s and PADEP’s administrative procedures, the Board disagreed, opining that “Pennsylvania’s procedures are nearly identical in substance to the Massachusetts procedures” and called Berkshire “a highly persuasive decision that respects the state’s administrative process.”  The Board found that a final action is required before the Third Circuit can act on a petition for review but that no final action had yet taken place in this case given the pending appeal.[1]  The Board noted that “Pennsylvania law is very clear” that PADEP’s “certification of Transco’s project was not a final action.”  The Board concluded that “[u]nless the Third Circuit holds that no final action is required, or that the one that is required by Pennsylvania law may simply be disregarded, the appeal before us may proceed.”

On May 25, 2017, the Third Circuit issued an order stating that it will rule on jurisdiction at the same time it rules on the merits. The parties are still awaiting a briefing schedule, so it could be quite some time before this issue is resolved.  In the meantime, interstate natural gas pipeline operators confronted with legal challenges to PADEP actions face uncertainty over whether they should prepare for legal challenges before the Board that are subject to de novo review or legal challenges before the Third Circuit that are subject to record review.

[1] Although not addressed by the Board, the Appellant Environmentalists raised an important consideration in their brief which may have been persuasive to the Board.   Generally, the record for a PADEP action is developed before the Board, which conducts an evidentiary hearing and de novo review.  Although PADEP accepts written comments during the application review process, it is through an evidentiary hearing before the Board that the record is fully developed.  In contrast, federal courts limit their review to the record that exists as of the time the agency took the action.  If the Board lacked jurisdiction to review the 401 certification, the Third Circuit would be left with reviewing a potentially incomplete record.

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