DLA Piper secured a significant victory in the US Court of Appeals for the Second Circuit for Inergy, L.P. and its subsidiary Central New York Oil And Gas Company, L.L.C. (CNYOG) in an important case that clears the way for the development of the company’s $257 million Marcellus Shale gas pipeline project.
The Second Circuit’s decision denied a petition challenging an order issued by the Federal Energy Regulatory Commission (FERC) that authorized CNYOG to build and operate a 39-mile interstate natural gas pipeline in north central Pennsylvania known as the MARC I Hub Line Project. Upon completion, the pipeline will transport natural gas produced in Pennsylvania’s Marcellus Shale, one of the nation’s largest known natural gas supply resources, to several major interstate pipelines, providing much-needed access to interstate markets.
On February 14, 2012, various environmental groups, led by the Sierra Club and its counsel, Earthjustice, filed a petition in the Second Circuit to overturn FERC’s approval of the MARC I pipeline. The petitioners alleged that FERC violated the National Environmental Policy Act (NEPA) by approving the pipeline without considering the environmental impacts of Marcellus Shale well drilling and associated infrastructure development in analyzing the project’s cumulative impacts. The petitioners’ attempt to use federal approval of interstate pipelines as a vehicle to force NEPA review of Marcellus Shale natural gas production utilizing hydraulic fracturing presented a direct threat to all future Marcellus Shale development in Pennsylvania, New York, West Virginia, Ohio, and Maryland.
The petitioners initially requested an emergency stay of construction and tree clearance activity for the MARC I pipeline pending further review by the court. That emergency stay was granted by the Second Circuit on February 17, 2012; with it, all construction work on the MARC I project was suspended.
After issuance of the emergency stay, DLA Piper partner Robert J. Alessi and of counsel Jeffrey D. Kuhnentered the case as counsel to CNYOG. Oral arguments on the petitioners’ motion for a stay pending appeal were held on February 28, 2012, during which Mr. Alessi argued on behalf of CNYOG. Later that same day, the Second Circuit denied the motion for a stay pending appeal and vacated its earlier emergency stay.
Following expedited briefing, oral arguments on the merits were held before a three-judge panel of the Second Circuit on May 31, 2012, during which Mr. Alessi again argued on behalf of CNYOG. CNYOG argued that the evaluation of Marcellus Shale well drilling included in the analysis of the MARC I pipeline’s cumulative impacts more than satisfied the requirements of NEPA, and NEPA did not require analysis of the environmental impacts related to Marcellus Shale well drilling in the first place because those activities are outside FERC’s jurisdiction.
In its June 12 decision denying the petition, the Second Circuit agreed with CNYOG’s arguments and held that “FERC’s analysis of the development of Marcellus Shale natural gas reserves was sufficient.” The court also stated that “the impacts of [Marcellus Shale] development are not sufficiently causally-related to the project to warrant a more in-depth analysis.”
As a result of DLA Piper’s efforts, CNYOG’s construction and operation of the MARC I pipeline will go forward. Husch Blackwell LLP served as co-counsel to CNYOG.
