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January 5, 2018

Legal Update
Dylan Sanders

Massachusetts town cannot use local wetlands ordinance to block natural gas compressor station, federal court rules

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A federal judge has ruled in favor of an energy company that seeks to build a natural-gas compressor station in Weymouth, Massachusetts as part of an interstate pipeline construction project. The ruling, in Algonquin Gas Transmission, LLC v. Weymouth Conservation Commission, concluded that a ruling by the Weymouth conservation commission blocking the station under a local wetlands-protection ordinance conflicted with the exclusive authority of the Federal Energy Regulatory Commission and was therefore preempted.

This ruling is an important development in an increasingly hard-fought area of litigation over expansion of natural-gas pipelines in the Northeast and nationally.

The Weymouth compressor station at issue in the case was proposed by Algonquin Gas Transmission, LLC, a recently acquired subsidiary of Enbridge, Inc., as part of its “Atlantic Bridge Project,” a plan to expand natural-gas pipelines and related facilities serving the Northeast and Canada. (Enbridge’s marketing page for the Atlantic Bridge Project is here.) The compressor station—which would boost and maintain pressures in the pipeline—would be located on land already owned by Algonquin, on the Fore River in Weymouth, where Algonquin already operates natural-gas facilities.

Algonquin and an affiliate first sought approval from FERC for the Atlantic Bridge Project, including the Weymouth compressor station, in 2015. After a favorable environmental assessment, including a review of environmental and safety issues for the new compressor station, Algonquin received FERC approval for construction of the station in January 2017.

Because the compressor station would be located in a “coastal zone,” as defined by the federal Coast Zone Management Act, the FERC approval certificate required Algonquin to obtain a “determination of consistency” from the Massachusetts Office of Coastal Zone Management, certifying that the project is consistent with the Massachusetts Coastal Zone Management Program.  Algonquin applied for the certificate of consistency, but the Massachusetts Office of Coastal Zone Management would not act on the application because its guidelines required Algonquin to first submit approval from all other Massachusetts environmental agencies, which Algonquin had not done because it had yet to obtain authorization to construct the compressor station under the state Wetlands Protection Act (“WPA”).

Like many Massachusetts cities and towns, Weymouth has adopted a local wetlands protection ordinance (“WPO”) with more stringent requirements for the town’s wetlands beyond the requirements of the state Wetlands Protection Act. Both the WPO and WPA are administered by the Weymouth conservation commission.

Algonquin filed a notice of intent with the town of Weymouth’s conservation commission, seeking permission to construct the compressor-station site in areas protected both by state wetlands-protection law and by a more-stringent wetlands ordinance enacted by the town. The conservation commission denied Algonquin’s application on the ground that the compressor station would threaten the wetlands areas and the interests protected by the state and local laws. The commission cited risks of explosions and hurricanes, and negative effects of odor and noise.  Algonquin appealed the WPA portion of the conservation commission’s decision to the Massachusetts Department of Environmental Protection (MassDEP), which issued a Superseding Order of Conditions (SOC) to Algonquin under the WPA. The Weymouth conservation commission then administratively appealed the SOC. That administrative appeal was stayed pending resolution of Algonquin’s claim that that the decision to deny an order of conditions under the local wetlands protection ordinance is preempted.

Algonquin then filed a complaint in federal court in Boston against both the Weymouth conservation commission and the town itself, seeking a declaration that Weymouth’s use of its local wetlands ordinance to block the compressor station was preempted by two federal statutes, the Natural Gas Act and the Pipeline Safety Act. Algonquin quickly moved for summary judgment on both claims.

Algonquin argued that the Natural Gas Act gives FERC exclusive authority to regulate the construction and operation of interstate natural-gas transportation facilities, subject only to a state’s regulatory power under three federal statutes: the Clean Air Act, the Coastal Zone Management Act, and the Clean Water Act. Weymouth’s use of its local wetlands law to deny the compressor station did not, Algonquin argued, fall within any of these arise areas of authority, conflicted with FERC’s authority, and was therefore preempted.

Weymouth’s chief response sought to put Algonquin in a sort of “Catch 22”: FERC’s certificate approving the compressor station, the town argued, could not become effective to preempt local law unless and until all of the certificate’s pre-conditions had been fulfilled. One of those pre-conditions was the certificate of consistency from the Massachusetts Office of Coastal Zone Management, and Algonquin had been unable to obtain that certificate without the order of conditions from the Weymouth conservation commission.

In ruling for Algonquin, the court rejected this contention by the town that the FERC certificate’s preemptive effect was conditional. The court reframed the issue, starting with the fact that the Weymouth wetlands ordinance was not enacted pursuant to the Clean Air Act, the Coastal Zone Management Act, or the Clean Water Act, which the court agreed were the only sources of authority, given the Natural Gas Act, for a state or local government’s regulation of natural-gas facilities.

Further, the court reasoned, the fact that the Massachusetts Office of Coastal Zone Management, which does act under authority of the federal Coastal Zone Management Act, required Algonquin as a matter of procedure to show that it had received an order of conditions from the Weymouth conservation commission, did not protect the commission’s application of the wetlands ordinance from pre-emption: the fact remained that the local wetlands ordinance was not enacted under the authority granted by the federal Coastal Zone Management law.

Finally, the court agreed with Algonquin that because FERC had conducted an environmental assessment and had considered the potential safety and environmental effects of the compressor station, the decisionmaking of the Weymouth conservation commission was actually in conflict with FERC’s decisionmaking.

Because it found that the Natural Gas Act preempted the conservation commission’s decision, the court did not need to decide, and therefore sidestepped, whether application of the Weymouth wetlands ordinance to block the station would also be preempted by the federal Pipeline Safety Act.

As of the writing of this post, the court has retained jurisdiction of the case for sixty days, and Weymouth has not taken steps to appeal, but that may still happen.  Technically, the Weymouth conservation commission still has its administrative appeal of MassDEP’s Superseding Order of Conditions, but the logic of the federal court ruling would seem to apply to Weymouth’s arguments in that proceeding, too.

The court’s ruling is, in light of the governing law, not unexpected. FERC’s statutory authority to regulate interstate natural-gas pipeline facilities is, indeed, expansive. At the same time, the case is an example—by no means likely to be the last—of serious and sophisticated local opposition to approval of natural-gas infrastructure, of a sort that once went relatively unchallenged and, indeed, largely unnoticed.

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