United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 23, 2010 Decided January 7, 2011
No. 09-1207
MURRAY ENERGY CORPORATION, ET AL.,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
ROCKIES EXPRESS PIPELINE LLC, ET AL.,
INTERVENORS
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.
2
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
3
“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
4
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 on November 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
5
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
6
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 Vehicles Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co.,
463 U.S. 29, 43 (1983) (quoting Burlington Truck Lines, Inc.
v. United States, 371 U.S. 156, 168 (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)
(quoting Butler 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
7
“‘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 one else”—authority to certify REX’s
compliance with Condition 147. Pet’rs’ Br. 41.
Whatever the merits of Murray’s arguments here, they
cannot succeed in light of a simple fact: the Commission
ratified the Construction Order. In the Rehearing Order, the
Commission expressly “affirm[ed] the practice of delegating
authority to Commission staff” and “adopt[ed] the Director’s
action, through his designee, as [its] own.” Rockies Express
Pipeline, LLC, 128 FERC ¶ 61,045, ¶ 23. Given that the
Commission had authority to issue the Construction Order,
the Commission’s subsequent ratification resolved any
potential delegation problems. See Dana Corp. v. ICC, 703
F.2d 1297, 1301 (D.C. Cir. 1983) (rejecting argument that
Acting Chairman lacked authority to issue stay order, because
“even if there were serious problems of authorization
involved, the full Commission, by upholding the Acting
Chairman’s stay, ratified his action and made it its own”).
8
B
Murray argues next that FERC should not have approved
construction of the pipeline because REX had not fulfilled
Condition 147, which requires REX to “develop[] in
collaboration with [Murray]” a construction plan that
maintains “pipeline integrity and operation” without impeding
Murray’s mining activities. Rockies Express Pipeline LLC,
123 FERC ¶ 61,234 app. E ¶ 147. Condition 147 further
provides that if the collaboration between REX and Murray
“does not culminate in a plan,” REX must file an alternative
route that avoids Murray’s coal reserves. Id. According to
Murray, REX did not collaborate. Rather, REX simply
pressed forward with its plan, rejecting all alternatives offered
by Murray. Under these circumstances, Murray argues,
Condition 147 required REX to file an alternative route that
avoided the Century Mine altogether.
But Murray conceded in its briefs and at oral argument
that Condition 147 did not require REX to obtain Murray’s
consent before construction could proceed. See Oral Arg. Tr.
at 7 (“[W]e have made it clear in our briefs that we have not
contended we have a veto . . . .”); Reply Br. 17
(“[T]hroughout these proceedings Murray has never stood
back and insisted on a simple veto power.”). And if Condition
147 did not require consensus, it seems clear to us that REX
satisfied whatever collaboration requirement existed.1
1
Murray’s concession also makes it unnecessary to consider the
import of FERC’s statement in the November 10, 2008,
Clarification Order, Rockies Express Pipeline LLC, Order Granting
and Denying Requests for Clarification and Denying Request for
Reconsideration, 125 FERC ¶ 61,160 (2008), that FERC might
require an alternative route if REX and Murray could not “agree”
on a suitable construction plan, id. ¶ 20.
9
The record reveals numerous communications between
REX and Murray between the date FERC issued the
Certificate Order and the date REX filed its construction plan.
As the Rehearing Order observes, REX and Murray had
numerous telephone calls and email exchanges during this
period, and the two parties met face-to-face on December 5,
2008, to discuss a draft construction plan. The plan REX
submitted addressed methods for maintaining pipeline
integrity while not impeding mining operations. Absent
evidence of bad faith on REX’s part, and Murray has shown
none, we are reluctant to read “collaboration” as requiring
anything more than what REX did. FERC reasonably
concluded on the basis of substantial evidence that REX
satisfied Condition 147’s requirement of collaboration.
C
Finally, Murray claims that REX’s construction plan
failed to ensure the safety of the pipeline for four reasons: (1)
REX’s experts lacked adequate qualifications; (2) REX’s
experts suggested the plan was unsafe; (3) the special trench
design was untested; and (4) the plan did not bind REX to any
actual protective measures. We take up each argument in turn
and conclude that each fails. FERC’s judgment that REX’s
proposed measures adequately ensure the pipeline’s safety is
supported by substantial record evidence, and FERC offered
satisfactory explanations for its conclusions.
Murray’s protest that none of REX’s proffered experts is
“a registered professional engineer in Ohio,” Pet’rs’ Br. 48, is
true, but beside the point. Dr. Nyman holds a Ph.D. in
structural engineering and has 35 years of experience in
structural engineering, stress analysis, and failure
investigations. His resume indicates extensive work on
pipeline safety. Dr. Peng is the Chair of the Mining
Engineering Department at West Virginia University, and was
10
in fact recommended to REX by Murray. Francini has twenty
years’ experience analyzing subsidence effects on pipelines.
FERC reasonably concluded that REX’s experts were
creditable.
Murray also contends that REX’s experts actually
undercut FERC’s conclusion that REX’s construction plan
ensures the pipeline’s safety. Although it is true that some of
the experts’ statements contradict discrete elements of
FERC’s position, on the whole their reports support FERC’s
conclusion. Murray’s argument here rests on three grounds.
First, in both his June 2007 and January 2009 reports, Dr.
Nyman stated that pipelines should be routed “where feasible”
to avoid longwall mining activity. D.J. Nyman & Assocs.,
Engineering Assessment of Coal Mining Subsidence Effects
on Rockies Express Pipeline 1 (June 26, 2007); D.J. Nyman
& Assocs., Engineering Assessment of Rockies Express
Pipeline Subjected to Expected Ground Subsidence Over
Long Wall Panels at Century Mine 1 (Jan. 15, 2009)
[hereinafter 2009 Nyman Report]. Second, Dr. Peng
concluded in his December 2008 report that certain portions
of the pipeline over the Century Mine “may be severely
overstressed and potentially damaged” during mine
subsidence. Syd S. Peng & Thomas Du, Assessment of
Subsidence Influence on Proposed Rockies Express Pipelines
Due to Longwall Mining 67 (Dec. 18, 2008). Third, Dr.
Nyman and Dr. Peng both warned that steep terrain carries a
higher risk of landslides. Much of the terrain over the Century
Mine is relatively steep.
As to Dr. Nyman’s recommendation that pipelines should
generally be routed to avoid longwall mining, he said nothing
about rerouting REX’s pipeline in particular. In fact, in his
2009 report, which examined “representative” subsidence
patterns in the Century Mine area, Dr. Nyman concluded that
the estimated “pipeline stresses resulting from subsidence
11
associated with longwall mining [were] well within
acceptance criteria.” 2009 Nyman Report, supra, at 15.
Notably, Dr. Nyman incorporated into his analysis REX’s
planned construction mitigation measures, including thicker
pipe, gentler bends, a special trench design with slanted rather
than vertical walls, and granular backfill.
As to Dr. Peng’s conclusion that subsidence would
overstress the pipeline, two points bear emphasis. First, Dr.
Peng’s analysis assumed a ruler-straight route over the mining
area rather than the actual undulating route REX proposed.
Second, the only construction mitigation measure that Dr.
Peng included in his analysis was the use of thicker pipe. Dr.
Peng did not consider the use of the other mitigation measures
REX adopted: gentler bends, REX’s special trench design,
and granular backfill. The failure to account for these
measures limits the predictive value of Dr. Peng’s study.
Regarding Dr. Nyman’s and Dr. Peng’s warnings that
steep terrain carries a higher risk of landslides, REX stated in
an explanatory filing that the pipeline route “generally follows
ridge tops” and that “[w]here the proposed route descends and
ascends into and out of stream valleys, it parallels the fall-line
of the valley slopes.” Rockies Express Pipeline LLC,
Explanatory Statement of Rockies Express Pipeline LLC
Regarding Its Construction and Operations Plan 5, Docket
No. CP07-208-000 et al. (Dec. 23, 2008). We find this
statement sufficient to allay concerns about steep terrain in
the pipeline area.
As a whole, the expert reports establish that substantial
evidence supports FERC’s conclusion that REX’s plan will
adequately ensure pipeline safety. Dr. Nyman concluded that
the pipeline would not suffer overstress, and Francini was
unable to identify a single instance of pipeline failure related
to subsidence where mitigation measures such as exposing
12
and monitoring the pipeline—measures REX intended to take
if needed—had been performed. Murray also submitted two
reports by WEIR International, Inc., a mining consulting firm,
contending that the proposed routing was unsafe. As REX
notes, however, WEIR has “no noted experience in the design
of pipelines, pipe stress analysis, or pipe structural safety,”
Interv’rs’ Br. 12, and the resumes of the authors of the WEIR
report contain no reference to any previous pipeline work
(although the resumes do identify previous subsidence work).
In any event, we defer to FERC’s “resolution of factual
disputes between expert witnesses.” Elec. Consumers Res.
Council v. FERC, 407 F.3d 1232, 1236 (D.C. Cir. 2005).
FERC chose to credit Dr. Nyman’s conclusions rather than
those of Dr. Peng and WEIR. That decision was a reasonable
one.
Murray additionally claims that REX’s special trench
design, which employs slanted rather than vertical walls, was
“novel” and “literally a work in progress” and “had never
been put to any prior use to mitigate mining subsidence.”
Pet’rs’ Br. 51-52. Murray’s argument fails for two reasons.
First, as REX noted to the Commission, “these types of
designs have been used for at least 25 years to enable
pipelines to withstand geotechnical displacements that are
much more severe than those predicted for the mine
subsidence area.” Rockies Express Pipeline LLC, Responses
to Commission Staff Questions from the February 17, 2009,
Technical Conference 7, Docket No. CP07-208-000 et al.
(Feb. 23, 2009). Second, and more importantly, Dr. Nyman
implicitly endorsed the design in his 2009 report, finding that
it carries benefits for horizontal bends that exceed twenty
degrees. FERC’s decision to approve REX’s trench design
was neither arbitrary nor capricious.
Finally, Murray faults FERC for approving a construction
plan that did not bind REX to any mandatory post-
13
construction mitigation measures. Murray’s argument here
has two prongs. First, Murray contends that REX’s
construction plan does not actually require REX to follow the
post-construction mitigation measures specifically identified
in the construction plan. Second, Murray contends that FERC
unlawfully disregarded the Department of Transportation
Pipeline and Hazardous Materials Safety Administration’s
(PHMSA’s) project-specific mitigation requirements in
violation of FERC’s duty to “respect” the views of an agency
“more directly responsible and more competent than this
Commission” in matters of pipeline safety. Pet’rs’ Br. 57; see
City of Pittsburgh v. Fed. Power Comm’n, 237 F.2d 741, 754
(D.C. Cir. 1956) (explaining that the Commission “would . . .
do well to respect the views of . . . other agencies as to those
problems” for which those other agencies “are more directly
responsible and more competent than this Commission”). A
review of the record, however, shows that FERC’s approval
of REX’s plan was not arbitrary and capricious.
Murray strains the language of the construction plan to
fashion its argument that REX is free to disregard the plan’s
post-construction mitigation measures. The plan provides that
Murray will “[d]evelop a formal mitigation plan” that “may
include,” among other things, “recommended steps to take
prior to the subsidence,”2 “[a] multi-level monitoring
criterion,” and “[r]ecommendations for post-subsidence
mitigation, if required.” Rockies Express Pipeline LLC,
Construction and Operations Plan of Rockies Express
Pipeline LLC Pursuant to Environmental Condition No. 147,
2
The construction plan further specifies that these steps “may
include”: monitoring subsidence without exposing the pipeline or
taking it out of service, exposing the pipeline during subsidence but
leaving it in service, decreasing the pipeline’s operating pressure
during subsidence, or taking the pipeline out of service during
subsidence.
14
at 16-17, Docket No. CP07-208-000 et al. (Dec. 23, 2008)
(emphasis omitted).
As Murray reads this language, REX is not bound to “any
actual mandatory protective measures.” Pet’rs’ Br. 52
(emphasis added). But no reasonable reading of this language
can overlook the obvious: the construction plan contemplates
a mitigation plan. To be sure, the precise contours of the
mitigation plan are to be worked out later when it becomes
apparent what measures are needed, but there will be a plan.
Absent evidence to the contrary, we assume, as did FERC,
that REX will exercise good faith in developing this plan.
REX’s post-construction mitigation strategy is a reasonable
response to the commonsense notion that, as the Commission
explains, REX will be “better able to fully evaluate the site-
specific effects of subsidence on the pipeline” after “Murray
finalizes mining maps for its reserves.” Rockies Express
Pipeline, LLC, 128 FERC ¶ 61,045, ¶ 42.
On the second point, Murray is simply wrong that FERC
disregarded PHMSA’s project-specific mitigation
requirements. These “requirements” come from an email
PHMSA sent the Chief of Gas Branch 2 in response to the
Chief’s request for assistance in reviewing REX’s proposed
construction plan. Attached to the email was a document titled
“Operational Mining Plan Requirements for Mining
Subsidence Safety: Rockies Express Pipeline (REX).”
Rockies Express Pipeline LLC, Memorandum to Public File,
Docket No. CP07-208-000 et al. (June 3, 2009). The
document contained the following relevant language: “The
operational mining procedures must contain as a minimum the
following provisions: . . . 4.b. Excavate the pipeline prior to
longwall mining begins [sic]; . . . monitor during mining and
subsidence; and remediate during and after subsidence all
pipe segments in the longwall mining sections.” Id. It is true
that the Rehearing Order does not specifically require REX to
15
heed these provisions. Murray, however, overlooks REX’s
June 12, 2009, filing, which states: “[S]ince the issuance of
the [PHMSA email], various communications between [REX]
and PHMSA have confirmed Commission staff’s
understanding that the PHMSA Guidelines [in the email] are
in fact guidelines rather than absolute requirements.” Rockies
Express Pipeline LLC, Letter from J. Curtis Moffatt, Attorney
for Rockies Express Pipeline LLC, to Alisa M. Lykens, Chief
of Gas Branch 2, Office of Energy Projects, Docket No.
CP07-208-000 et al. (June 12, 2009). Murray neither disputes
the truth of this statement nor attempts to explain why FERC
should have required compliance with instructions that
PHMSA itself acknowledged were not mandatory.
In any event, Murray’s argument that FERC failed
sufficiently to “respect” PHMSA’s views is implausible in
light of the multiple times FERC says in the Rehearing Order
that REX must comply with any measures that PHMSA does
in fact require. See, e.g., Rockies Express Pipeline, LLC, 128
FERC ¶ 61,045, ¶ 12 (“[REX] must comply with any
provisions deemed necessary by PHMSA.”);3 id. ¶ 42
(“[REX] is required to comply with PHMSA regulations to
ensure the safety of the pipeline should subsidence of the
ground beneath the pipeline occur.”); id. ¶ 55 (“We again
emphasize that the requirements in the Construction and
Operations Plan are in addition to what PHMSA may
require.”). FERC’s repeated declarations that REX must
comply with PHMSA requirements indicate that FERC took
seriously—and addressed—the need for post-construction
3
This statement itself cures any defect from FERC’s failure
explicitly to require REX to follow PHMSA’s project-specific
“requirements.” If the project-specific “requirements” were in fact
requirements, then they were clearly “deemed necessary” by
PHMSA.
16
mitigation measures.4 FERC’s decision not to require specific
post-construction mitigation procedures was not arbitrary and
capricious.
III
For the foregoing reasons, the petition for review is
Denied.
4
Murray argues that FERC’s explicit command that REX comply
with PHMSA requirements is irrelevant because PHMSA does not
regulate Murray and therefore will not know when Murray is about
to subside the pipeline. This is a puzzling argument, however, for it
seems to presuppose that REX also will not know when Murray is
about to subside the pipeline. PHMSA may not regulate Murray,
but it does regulate REX. Thus, once Murray tells REX that Murray
is preparing to subside the pipeline, REX will be required to follow
PHMSA procedures. Only if Murray intends to subside the pipeline
without telling REX is the fact that REX must comply with
PHMSA requirements irrelevant. Presumably, however, Murray
will tell REX when it plans to subside the pipeline, at least so long
as Murray continues to fear that a pipeline rupture may impede its
mining operations.