Murray Energy Corp. v. F.E.R.C.

• Decision Date: 07 January 2011
• Docket Number: No. 09-1207,09-1207
• Citation: 629 F.3d 231,393 U.S.App.D.C. 433
• Parties: MURRAY ENERGY CORPORATION, et al., Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent Rockies Express Pipeline LLC, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

629 F.3d 231

393 U.S.App.D.C. 433

MURRAY ENERGY CORPORATION, et al., Petitioners

v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent

Rockies Express Pipeline LLC, et al., Intervenors.

No. 09-1207.

United States Court of Appeals,District of Columbia Circuit.

Argued Sept. 23, 2010.

Decided Jan. 7, 2011.

On Petition for Review of Orders of the Federal Energy Regulatory Commission.

R. Timothy McCrum argued the cause for petitioners. With him on the briefs were Jennifer N. Waters and J. Michael Klise.

Holly E. Cafer, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were Thomas R. Sheets, General Counsel, and Robert H. Solomon.

J. Curtis Moffatt argued the cause for intervenors. With him on the brief were Amy W. Beizer, Shippen Howe, William F. Demarest Jr., and Douglas F. John.

Before: SENTELLE, Chief Judge; GRIFFITH, Circuit Judge; and SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GRIFFITH.

GRIFFITH, Circuit Judge:

Rockies Express Pipeline LLC (REX) is a natural gas company that built and now operates the REX-East pipeline. The REX-East runs approximately 639 miles from Audrain County, Missouri, to Monroe County, Ohio, where it crosses land above the Century Mine, an underground longwall coal mine owned and operated by Murray Energy Corporation (Murray). Longwall mining causes the surface above to subside in a planned, controlled manner as coal seams are extracted. This subsidence places stress on pipelines that cross the mine area. Too much stress may rupture a pipeline and cause an explosion that would put at risk the safety of nearby persons and property. Concerned by the substantial hazard the REX-East pipeline poses to several hundred workers in the Century Mine, Murray petitions for review of two orders by the Federal Energy Regulatory Commission (FERC) authorizing its construction. For the reasons set forth below, we deny its petition.

I

The Natural Gas Act provides FERC with jurisdiction over the transportation and sale of natural gas in interstate commerce. See 15 U.S.C. § 717(b). Section 7(c) requires companies to obtain from FERC a "certificate of public convenience and necessity" before constructing or operating interstate natural gas facilities. Id. § 717f(c). FERC may "attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require." Id. § 717f(e).

REX filed an application for a section 7 certificate for the REX-East pipeline on April 30, 2007. In its submission, REX inaccurately stated that no active coal mines were located within one-half mile of the proposed route. FERC published notice of REX's application and issued a draft environmental impact statement (EIS). The draft EIS repeated REX's erroneous statement that the proposed route did not cross any active coal mines. Murray submitted late comments on the draft EIS, explaining that the pipeline would, in fact, cross approximately eight miles of coal deposits that Murray was either already mining or might mine in the future, and expressing concern that land subsidence might occur along these eight miles, placing dangerous levels of strain on the pipeline.

FERC granted REX's application on May 30, 2008, with a number of conditions (" Certificate Order"). Rockies Express Pipeline LLC, Order Issuing Certificate, 123 FERC ¶ 61,234 (2008). Most relevant to the current proceeding is condition 147:

Prior to the start of construction [over the Century Mine], Rockies Express shall file with the Secretary [of the Commission], for review and written approval by the Director of OEP [Office of Energy Projects], a construction and operations plan, developed in collaboration with the Murray companies, for the segment of the pipeline that traverses the coal mining reserves held by the Murray Companies. The plan shall address the primary concern of maintaining pipeline integrity and operation while not impeding the mining operation. If the collaboration does not culminate in a plan, Rockies Express shall file with the Secretary, for review and written approval by the Director of OEP, an alternative pipeline route that avoids the Murray Companies' coal reserves.

Id. app. E ¶ 147.

Over the next several months, REX and Murray exchanged numerous emails and telephone calls discussing the proposed pipeline. REX presented Murray with a draft construction and operations plan onNovember 25, 2008. Ten days later, REX met with Murray to review the draft plan. At the meeting, Murray expressed various concerns with the proposed pipeline, and REX made changes to the plan to address those concerns. Two weeks later, on December 23, REX filed its construction and operations plan with FERC. In the plan, REX explained that it would use thicker pipe, smaller pipeline depth, and a special trench design to mitigate subsidence effects, all in response to Murray's concerns. REX also indicated that it would develop a formal subsidence mitigation plan. REX included reports by Dr. D.J. Nyman and Dr. Syd Peng assessing the expected effect of mine subsidence on the proposed pipeline and a report by Robert Francini discussing options for mitigating mine subsidence.

On March 19, 2009, the Chief of Gas Branch 2 in OEP authorized construction of the pipeline (" Construction Order"), Rockies Express Pipeline LLC, Letter Order, Docket No. CP07-208-000 et al. (Mar. 19, 2009), stating expressly that approval was "in accordance with" numerous conditions in the Certificate Order, including Condition 147, id. Eight days later, Murray filed a request for rehearing of the Construction Order, arguing that the Chief of Gas Branch 2 lacked authority to issue the order, that REX failed adequately to collaborate with Murray as Condition 147 required, and that REX's construction and operations plan was "deficient and unsafe" because it failed to protect Murray's mining operations.

On July 15, 2009, FERC granted rehearing in part (" Rehearing Order"). Rockies Express Pipeline, LLC, Order Granting and Denying Rehearing, 128 FERC ¶ 61,045 (2009). FERC affirmed the OEP Director's delegation of authority to the Chief of Gas Branch 2 and "adopt[ed] the Director's action, through his designee, as [FERC's] own." Id. ¶ 23. FERC also concluded that REX had satisfied Condition 147's collaboration requirement and was therefore not required to file an alternative route proposal. Finally, FERC determined that REX's construction and operations plan adequately protected the safety of the pipeline and Murray's mining operations. REX began construction of the pipeline over the Century Mine in May 2009 and completed construction in August 2009. Gas began flowing in November 2009.

Murray now petitions for review of the March 19, 2009, Construction Order and the July 15, 2009, Rehearing Order. We have jurisdiction under 15 U.S.C. § 717r(b), which permits any party to a proceeding under the Natural Gas Act "aggrieved by an order issued by the Commission in such proceeding" to obtain review of the order.

"We review FERC's orders under the arbitrary and capricious standard and uphold FERC's factual findings if supported by substantial evidence." Sacramento Mun. Util. Dist. v. FERC, 616 F.3d 520, 528 (D.C.Cir.2010) (quoting Am. Gas Ass'n v. FERC, 593 F.3d 14, 19 (D.C.Cir.2010)) (internal quotation marks omitted); see 5 U.S.C. § 706(2); 15 U.S.C. § 717r(b). For its order to survive review, FERC must have "examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a 'rational connection between the facts found and the choice made.' " Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983) (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962)). "Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Colo. Interstate Gas v. FERC, 599 F.3d 698, 704 (D.C.Cir.2010) (quotingButler v. Barnhart, 353 F.3d 992, 999 (D.C.Cir.2004)) (internal quotation marks omitted).

At the outset, we note that Murray's complaints that the Construction Order ignored Murray's previous objections and failed adequately to explain the reasons for authorizing construction are beside the point. The Construction Order is not the only order under review. We also have before us the July 2009 Rehearing Order, which considered each of Murray's objections in detail and explained the problems with Murray's preferred alternative route. We consider whether in light of both orders FERC's conduct was arbitrary and capricious and its findings unsupported by substantial evidence.

II

A

We begin with Murray's delegation argument. Murray contends that the Chief of Gas Branch 2 lacked authority to issue the Construction Order under both FERC regulations and the Certificate Order itself. According to Murray, FERC regulations, per 18 C.F.R. § 375.308, permit the OEP Director to delegate authority only on "small bore" matters such as " 'uncontested' applications and requests, extensions of time to file, ... reports for public information purposes that are of a noncontroversial nature, actions on routine requests, and the like." Pet'rs' Br. 42. The siting, construction, and operation of REX's pipeline, Murray argues, do not fit within this template. Murray further notes that even when the regulations permit the OEP Director to delegate authority to a "designee," the regulations specify that " designee shall mean the deputy of such official, the head of a division, or a comparable official as designated by the official to whom the direct delegation is made." 18 C.F.R. § 375.301(b). Murray asserts that the Chief of Gas Branch 2 is not "comparable to" the OEP Deputy Director or one of the division heads. Lastly, Murray says that the Certificate Order gives the OEP Director—"and no...