The United States Court of Appeals for the Third Circuit denied petitions by several environmental groups challenging issuance of water-quality permits by state agencies pursuant to the Natural Gas Act.  Holding it had authority to hear the petitions, the Third Circuit rejected arguments that the Pennsylvania and New Jersey Departments of Environmental Protection ("PA DEP," "NJ DEP") acted arbitrarily and capriciously in issuing permits to Transcontinental Pipe Line Company, LLC also known as Transco.

Transco applied to the Federal Energy Regulatory Commission (“FERC”) for a certificate of public convenience and necessity for an expansion project of an existing interstate pipeline facility that runs from New York to Texas.  Portions of the project are located in Pennsylvania and New Jersey.  FERC issued the certificate of public convenience and necessity subject to Transco’s receipt of “all applicable authorizations under federal law” enumerated in the Environmental Assessment.  Upon issuance of certain water quality permits by the PA DEP and NJ DEP, the Petitioners filed challenges in the Third Circuit, arguing the issuance was arbitrary and capricious.  PA DEP and NJ DEP challenged the Court’s jurisdiction over the state-issued permits.  

Noting that the Natural Gas Act conferred original jurisdiction on the Courts of Appeals over certain state and federal permitting actions for interstate pipelines, the Court dismissed the challenges to its jurisdiction holding that the water quality permits at issue were granted “pursuant to Federal law.”  The FERC-required Water Quality Certification issued by PA DEP was found to be an integral element in the regulatory scheme established by the Clean Water Act.  The same holds true for NJ DEP for Water Quality Certification and certain wetlands permits.  As such, the permits were not only required by federal law, they were actions taken under federal law, conferring jurisdiction to hear the permit challenges on the Court of Appeals for the Third Circuit.