Weaver's Cove Energy v. R.I. Coastal Resources

• Decision Date: 26 October 2009
• Docket Number: No. 08-2440.,08-2440.
• Citation: 589 F.3d 458
• Parties: WEAVER'S COVE ENERGY, LLC, Plaintiff, Appellee, v. RHODE ISLAND COASTAL RESOURCES MANAGEMENT COUNCIL; Michael M. Tikoian, in his capacity as Chairman of the Rhode Island Coastal Resources Management Council; Paul E. Lemont, in his capacity as Vice Chairman of the Rhode Island Coastal Resources Management Council; Thomas Ricci; David Abedon; Donald Gomez; K. Joseph Shekarchi; Neil Gray; W. Michael Sullivan; Raymond C. Coia; Gerald P. Zarrella; Bruce Dawson; in their capacities as Members of the Rhode Island Coastal Resources Management Council, Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

589 F.3d 458

WEAVER'S COVE ENERGY, LLC, Plaintiff, Appellee, v. RHODE ISLAND COASTAL RESOURCES MANAGEMENT COUNCIL; Michael M. Tikoian, in his capacity as Chairman of the Rhode Island Coastal Resources Management Council; Paul E. Lemont, in his capacity as Vice Chairman of the Rhode Island Coastal Resources Management Council; Thomas Ricci; David Abedon; Donald Gomez; K. Joseph Shekarchi; Neil Gray; W. Michael Sullivan; Raymond C. Coia; Gerald P. Zarrella; Bruce Dawson; in their capacities as Members of the Rhode Island Coastal Resources Management Council, Defendants, Appellants.

No. 08-2440.

United States Court of Appeals, First Circuit.

Heard September 10, 2009.

Decided October 26, 2009.

Michael Rubin, Assistant Attorney General, with whom Patrick C. Lynch, Attorney General of the State of Rhode Island, Paul J. Roberti, Assistant Attorney General, Brian A. Goldman, and the Goldman Law Offices were on brief for the appellants.

Carol Iancu, Assistant Attorney General, and Martha Coakley, Attorney General of Massachusetts, on brief for the Commonwealth of Massachusetts and the City of Fall River, amicus curiae.

Bruce F. Kiely, with whom Adam J. White, Baker Botts L.L.P., Gregory L. Benik, and Benik and Associates P.C. were on brief for the appellees.

Before LYNCH, Chief Judge, TORRUELLA and RIPPLE,^* Circuit Judges.

LYNCH, Chief Judge.

The Rhode Island Coastal Resources Management Council ("CRMC") challenges a decision by the federal district court, which has rejected two regulatory barriers CRMC imposed to plans to build a Liquified Natural Gas ("LNG") terminal in the City of Fall River with a berth in Massachusetts coastal waters of Mount Hope Bay. Weaver's Cove Energy, LLC ("Weaver's Cove") is the sponsor of the LNG terminal. Weaver's Cove Energy, LLC v. R.I. Coastal Res. Mgmt. Council, 583 F.Supp.2d 259 (D.R.I.2008). The barriers, which CRMC has attempted to impose, are to necessary dredging by Weaver's Cove in Rhode Island navigable waters, in a federal navigation channel. The Federal Energy Regulatory Commission ("FERC") generally approved the project in 2005, subject to certain conditions. Until those conditions are met, Weaver's Cove cannot start construction. The Commonwealth of Massachusetts, joined by the City of Fall River, has filed a brief as amicus curiae in support of CRMC.

We address three main issues. The first is whether we have Article III jurisdiction to decide these matters. The second is whether the district court erred in holding that CRMC's failure to respond within six months to Weaver's Cove's application for federal consistency review requires there be a presumption of concurrence in the project, pursuant to 16 U.S.C. § 1456(c)(3)(A) of the Coastal Zone Management Act of 1972 ("CZMA"). The third is whether CRMC's use of its state law licensing program for alterations to the coast, 04 000 010 R.I.Code R. §§ 100.1, 300.1, to block the project is preempted by the Natural Gas Act ("NGA").

For the reasons set forth below, we affirm the district court's decision.

I.

We first briefly explain the regulatory framework that governs this case.

Central to this dispute are two federal statutes, the NGA, 15 U.S.C. §§ 717-717z, and the CZMA, 16 U.S.C. §§ 1451-66. The NGA was originally passed in the 1930s to facilitate the growth of the energy-transportation industry and requires FERC authorization for the importing of natural gas. 15 U.S.C. § 717b(a). FERC's authority under the NGA to regulate facilities engaged in the import of natural gas has long been interpreted as "plenary and elastic," Distrigas Corp. v. Federal Power Comm'n, 495 F.2d 1057, 1064 (D.C.Cir.1974), and courts have interpreted the NGA to preempt state regulatory authority within the scope of FERC's jurisdiction, see, e.g., Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 108 S.Ct. 1145, 99 L.Ed.2d 316 (1988). Following a 2005 amendment, the NGA explicitly grants FERC "exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal." Id. § 717b(e)(1). Parties wishing to build an LNG terminal must file an extensive application with FERC, 18 C.F.R. § 157.6, which must then consult with states regarding safety and environmental questions, 15 U.S.C. § 717b-1(b).

The NGA creates a consolidated regulatory process for approving LNG facilities that maintains the role of federal agencies and, in circumscribed areas, state agencies. It does so by limiting FERC's exclusive authority in two ways relevant to this case. First, the NGA, except where expressly provided, does not affect "any Federal agency's authorities or responsibilities related to LNG terminals." Id. § 717b(e)(1) (emphasis added). In addition, the NGA explicitly states that, unless otherwise provided, it does not affect the rights of states under three federal regulatory statutes, of which only the CZMA is pertinent to this case. Id. § 717b(d)(1).

The CZMA establishes the relationship between state bodies, like the Rhode Island CRMC, and federal agencies during the permitting process for LNG terminal construction projects that impact coastal zones. It provides states with a limited opportunity to review applications to ensure they are consistent with state regulations, 16 U.S.C. § 1456(c)(3)(A), and, in doing so, grants states "a conditional veto over federally licensed or permitted projects," Weaver's Cove, 583 F.Supp.2d at 267. That conditional veto, however, is itself subject to review.

In order to conduct a consistency review, state agencies must first have obtained approval from the federal National Oceanic Atmospheric Administration ("NOAA"), a Department of Commerce agency, for the state agency's own coastal management plan. 16 U.S.C. §§ 1454, 1455(d)-(e), 1456(c)(3)(A). Coastal management plans set forth general state policies for developing and maintaining coastal areas and, as is the case in Rhode Island, may include not only the conditions for federal consistency review but also for state licensing programs.

Once a state coastal management plan has been approved, an applicant for a federal permit wishing to undertake any activity the state plan regulates must certify with the local agency that the proposed activity is consistent with the coastal management plan.¹ Id. § 1456(c)(3)(A). In support of the application, the applicant must submit all "necessary data and information" identified in the coastal management plan. 15 C.F.R. § 930.58(a)(2). Under federal law, the state agency has thirty days from the time the application was submitted to notify the applicant and the federal agency if it takes the position that the applicant has failed to submit all of the required information. Id. § 930.60(a)(2).

Importantly, the CZMA limits the time a state may conduct such a review, in order to prevent frustration of federal purposes. Whether CRMC failed to act within this limit is a key issue in this case. Once an applicant submits its consistency certification, the state agency has six months either to concur with the certification or to object if it concludes that the proposed activity is inconsistent with the coastal management plan. 16 U.S.C. § 1456(c)(3)(A). If the state agency fails to respond within six months, the state's concurrence will be "conclusively presumed." Id. If the application is incomplete and the state agency so informs the applicant within the required thirty-day time period, "the State agency's six-month review period will commence on the date of receipt of the missing necessary data and information." 15 C.F.R. § 930.60(a)(2). However, the state agency's review of whether the application is complete "is not a substantive review of the adequacy of the information received," and the agency's request for clarification of the information provided or its assertion that the information is "substantively deficient" does not toll the six-month review period. Id. § 930.60(c). These rules encourage states to act quickly when reviewing applications so that no one state can delay the federal approval process. Congress was sufficiently concerned about the ability of local state agencies to delay projects that it did not use a generalized standard, such as "a reasonable period of time" as it did, for instance, in the Telecommunications Act of 1996, 47 U.S.C. § 332(c)(3)(B), but capped the time at six months.

The CZMA also limits state authority to delay or prohibit projects subject to consistency review, by providing for federal review of state agency determinations. If the state agency objects to consistency certification, the applicant may appeal the decision to the Secretary of Commerce, who can override the objection on a finding "that the activity is consistent with the objectives of this chapter or is otherwise necessary in the interest of national security." 16 U.S.C. 1456(c)(3)(A). The Secretary's decision, in turn, may be reviewed in federal district court.² See, e.g., Millennium Pipeline Co., L.P. v. Gutierrez, 424 F.Supp.2d 168, 173-74 (D.D.C.2006).

One other federal statute relevant to this case is the Rivers and Harbors Act, at section 10. 33 U.S.C. § 403. It prohibits construction or other work, such as dredging, in navigable U.S. waters without congressional authorization or a recommendation by the Army Corps Chief of Engineers as well as the Secretary of the Army's authorization. Id. Because FERC's exclusive authority under the NGA does not disturb the Army Corps's authority under the Rivers and Harbors Act, 15 U.S.C. § 717b(e)(1), parties seeking FERC approval for LNG terminal proposals that include dredging in navigable waterways, like Weaver's Cove, must also apply for approval from the Army Corps.

In Rhode Island, the federally designated agency under the CZMA is the appellant, CRMC. CRMC is responsible for administering Rhode Island's coastal management plan, the Rhode Island Coastal Resources Management Program ("CRMP"). When a party wishes to conduct an...