On April 24, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied Petitioners’ (Citizens of the town of Myersville) review challenging FERC’s orders approving Dominion Transmission, Inc.’s (“Dominion”) “Allegheny Storage Project,” and specifically FERC’s approval of the construction of a new natural gas compressor station in Myersville, Maryland (the “Myersville Compressor”).   In denying the petition, the D.C. Circuit concluded that each of the Petitioners’ challenges lacked merit.

The Myersville Compressor is one component of the Allegheny Storage Project, which included the construction of two compressor stations and an additional pipeline that would, among other things, provide Dominion customers an additional 115,000 dekatherms per day of firm transportation in Maryland, Ohio, West Virginia, and Pennsylvania.  Previously, FERC conditionally approved the Allegheny Storage Project in December of 2012; the Myersville Compressor has since been placed into service in November of 2014.

In response to FERC’s approval, Petitioners asked that the D.C. Circuit vacate FERC’s order approving the project.  Petitioners argued that: 1) FERC lacked substantial evidence to conclude that there was a public need for the project; 2) FERC unlawfully interfered with Maryland’s rights under the Clean Air Act; 3) FERC’s completion of environmental review of the project was improper; and 4) FERC violated Petitioners’ due process rights by unlawfully withholding hydraulic flow diagrams.

Of particular interest, Petitioners claimed that, in its environmental review, FERC should have considered the Allegheny Storage Project in conjunction with Dominion’s Cove Point LNG terminal project (see October 3, 2014 edition of the WER), and therefore, should have conducted its environmental review considering the two projects as a combined, single project.  Instead, Petitioners claimed that FERC unlawfully segmented the two projects.  Petitioners also claimed that the Myersville Compressor was “overbuilt” as it would produce natural gas capacity that could at times be used to transport natural gas to Dominion’s Cove Point LNG export terminal.

The D.C. Circuit was unconvinced by the Petitioners’ arguments, noting that the project was fully subscribed, that FERC did not violate the Natural Gas Act or Clean Air Act by approving the project subject to its compliance with Maryland’s Clean Air Act permitting process, and that no prejudice resulted from any alleged procedural deficiency in the way the hydraulic flow diagrams, marked as Critical Energy Infrastructure Information, were produced to Petitioners.

With regard to segmentation, the D.C. Circuit differentiated the relationship of the Allegheny Storage Project and the Cove Point LNG export terminal from past cases involving connected pipelines.  There, the D.C. Circuit had required joint environmental consideration based on “the unquestionable connectedness of the projects, the fact that the projects all were under consideration by [FERC] at the same time, and the fact that the projects were financially interdependent.”  In contrast, here the D.C. Circuit noted that FERC “in this case made clear that the Allegheny Storage Project and the Cove Point LNG terminal are unrelated” and specifically that “neither depends on the other for its justification.”

A copy of the court’s order is available here.