The U.S. Court of Appeals for the District of Columbia Circuit on Friday ruled that FERC "impermissibly segmented the environmental review" of Tennessee Gas Pipeline's (TGP) Northeast Upgrade Project and remanded the case to the Commission "for further consideration of segmentation and cumulative impacts."

The Federal Energy Regulatory Commission's environmental assessment (EA) "is deficient in its failure to include any meaningful analysis of the cumulative impacts” of what the court said was a series of projects that were interrelated and effectively constituted a major project that required a more extensive environmental review.

The decision comes two years after FERC issued a certificate for the Northeast Upgrade Project, designed to expand TGP's existing 300 Line system in Pennsylvania and New Jersey to provide additional Marcellus Shale gas to Northeast markets (see Shale Daily, May 31, 2012). FERC rejected arguments that an environmental impact statement (EIS), rather than an EA, should have been conducted on the project due to its potential impact on the human environment. "The EA concludes, and we agree, the Northeast Upgrade Project would not constitute a major federal action significantly affecting the quality of the human environment. Therefore, an EIS is not required," FERC said in its 2012 order.

Some also argued in 2012 that an EIS was warranted to take into consideration the prolific development in the Marcellus Shale basin, which the Tennessee expansion would serve. "The EA considers the general development of the Marcellus Shale in proximity to the project within the context of cumulative impacts in the project area," FERC said in its order. "The EA notes that the more detailed analysis of Marcellus Shale impacts sought by commenters is outside the scope of the project analysis because the exact location, scale and time of future facilities are unknown."

But environmental groups, led by Delaware Riverkeeper Network, argued that FERC violated the National Environmental Policy Act (NEPA) when it segmented its review of the project, giving no consideration to the project in conjunction with three other closely related Eastern Leg projects, and claimed FERC failed to provide a meaningful analysis of the cumulative impacts of the projects.

FERC argued since each project resulted in a measurable increase in the pipeline's overall capacity, the Commission was justified in completing the NEPA analysis of the Northeast Project separately from the others.

"But FERC's position cannot be squared with the record, which shows that by May 2012, when FERC issued the certificate for the Northeast Project, it was clear that the entire Eastern Leg was included in a complete overhaul and upgrade that was physically, functionally and financially connected and interdependent," the court said in its ruling. "...Given the self-evident interrelatedness of the projects as well was their temporal overlap, the Commission was obliged to consider the other three Tennessee Gas pipeline projects when it conducted its NEPA review of the Northeast Project."

TGP, a unit of Kinder Morgan Energy Partners LP, placed the fully subscribed Northeast Upgrade Project in service last year (see Shale Daily, Nov. 1, 2013). The $500 million project boosted capacity on TGP's 300 Line system in Pennsylvania and New Jersey by 636 MMcf/d.