New Jersey Conservation Foundation v. Federal Energy Regulatory Commission

Transcontinental Gas Pipe Line Company (Transco) applied to the Federal Energy Regulatory Commission (FERC) (defendant) for a certificate allowing Transco to construct and operate a pipeline running through several northeastern states, including New Jersey. Transco submitted a market study suggesting there was market need for the pipeline. The New Jersey Conservation Foundation and others (collectively, the foundation) (plaintiffs) intervened in the FERC proceeding to contest the Transco project on two grounds. First, they argued that there was no market need for the pipeline because (1) a recent state study concluded that existing infrastructure had sufficient capacity to supply New Jersey’s current and projected natural-gas needs through 2030 and (2) New Jersey law mandated ongoing reductions in natural-gas consumption. Second, the foundation argued that the project would impose unnecessary costs on New Jersey taxpayers and have negative climate impacts. FERC granted Transco’s certificate, authorizing the project to proceed. FERC’s only stated reason for discrediting the state study was that the study assumed ongoing contracts to import gas during peak periods when (1) extreme weather events might limit access to such gas and (2) there was a possibility that companies would not be willing to offer similar short-term supply contracts in the future. FERC acknowledged the state law about reductions in gas consumption but concluded that it was merely suggestive. FERC also concluded, without explanation, that any climate impacts were environmentally acceptable. The foundation sued FERC, seeking review of FERC’s certificate decision on the basis that it was arbitrary and capricious.