Third Circuit: Transco Pipeline Environmental Review Invalidated

• The Third Circuit Court of Appeals invalidated a water quality certification for Transco's Northeast Supply Enhancement pipeline project.
• The court found the New Jersey Department of Environmental Protection (NJDEP) acted arbitrarily and capriciously by deferring critical monitoring and adaptive management plans without requiring subsequent agency approval.
• The NJDEP also failed to adequately explain how the project's dredging in Raritan Bay would comply with state water quality standards, citing specific deficiencies in its environmental review.
• The pipeline project, which involves disturbing toxic sediments, is now in limbo, marking a win for environmental groups who challenged the certification.
• This ruling emphasizes the need for rigorous and thoroughly justified environmental reviews by regulatory agencies for large infrastructure projects.

The court concluded that because essential monitoring and response terms remained unresolved, and no subsequent NJDEP approval was mandated before dredging could start, the agency's issuance of the water quality certification was legally unsound.

A significant interstate gas pipeline expansion, known as the Northeast Supply Enhancement, has encountered a new hurdle following a recent Third Circuit ruling that invalidated its environmental certification. This project, spearheaded by the Transcontinental Gas Pipeline Company (Transco) as an extension of its extensive 10,000-mile network, aims to transport natural gas from Lancaster County, Pennsylvania, beneath Raritan Bay, and onward to New York City and the Hudson Valley. However, its proposed construction involves dredging a trench in Raritan Bay, installing the pipeline, and then backfilling the trench, a process environmental advocates warn would disturb sediments laden with toxic substances, including arsenic, mercury, and byproducts of the pesticide DDT, in addition to destroying wetlands across New Jersey.

The New Jersey Department of Environmental Protection (NJDEP) initially rejected Transco's applications for water quality certification in both 2019, citing insufficient details on environmental safeguards, and again in 2020, due to a perceived lack of public necessity. Remarkably, despite submitting largely identical information in a third application, the NJDEP issued the certification in November 2025. This approval, however, controversially stipulated that Transco merely needed to submit plans for monitoring and adaptive management before construction could commence, rather than requiring prior agency approval of these critical environmental safeguards. This decision prompted immediate legal action from environmental organizations, including the Natural Resources Defense Council (NRDC) and NY/NJ Baykeeper, who challenged the NJDEP's certification as arbitrary and capricious in the appeals court.

The Third Circuit panel ultimately sided with the environmental groups on two key grounds, effectively halting the project's progress. Central to the court's decision was the finding that the NJDEP acted arbitrarily and capriciously by deferring crucial project monitoring and adaptive management plans without requiring additional agency review or approval before construction began. Senior U.S. Circuit Judge Jane R. Roth, a George H.W. Bush appointee, emphasized the critical distinction between merely refining details within an approved process and leaving material compliance terms to plans that do not necessitate agency approval before work commences. The court concluded that because essential monitoring and response terms remained unresolved, and no subsequent NJDEP approval was mandated before dredging could start, the agency's issuance of the water quality certification was legally unsound.

This aspect of the ruling underscores the judiciary's expectation that regulatory agencies must ensure substantive environmental protections are firmly in place and adequately reviewed *before* project activities that could cause significant harm are permitted. The court's stance highlights that simply requiring future submission of plans, without a mechanism for agency oversight and approval, fails to meet the rigorous standards expected for environmental permits, particularly those governing interstate gas pipeline environmental permits.

Beyond the issue of deferred compliance, the Third Circuit also determined that the NJDEP failed to adequately explain its conclusion that Transco's dredging operations would comply with state water quality standards. The appeals panel identified several specific deficiencies in the agency's environmental review. These included a contaminant review that was inexplicably limited to areas within 500 feet of the proposed dredging sites, a failure to establish a clear connection between planned turbidity monitoring and the monitoring of toxic substances, and unsubstantiated assertions that local shellfish populations would remain unharmed by the project. The court reiterated that when an agency fails to provide a sufficient basis for its decisions, the standard judicial response is to vacate the approval and remand the matter, allowing the agency to properly exercise its delegated authority.

This finding serves as a critical reminder for agencies like the NJDEP that their environmental impact assessments must be robust, comprehensive, and transparently justified. The lack of a clear, scientifically supported explanation for how the project would meet water quality standards, especially concerning the potential disturbance of toxic sediments in Raritan Bay, was a significant factor in the court's decision to overturn the certification. This outcome reinforces the necessity for thorough and defensible analyses in all aspects of environmental permitting.

The Third Circuit's decision has placed the Transco pipeline project back in a state of uncertainty, underscoring the significant legal risks associated with environmental certifications that lack robust justification. For the waterways of New Jersey and the communities dependent on them, this ruling represents a crucial victory for environmental protection and the rule of law, as noted by Natural Resources Defense Council attorney Jackson Garrity. The court's findings send a clear message to regulatory bodies that environmental certifications, especially water quality certifications, must be thoroughly justified and cannot defer critical compliance details without subsequent agency review.

This outcome sets a precedent for more rigorous agency review and provides a strong basis for challenging approvals that are deemed arbitrary and capricious. It highlights the potential for project delays and increased litigation when agencies fail to adequately explain their environmental impact conclusions or defer essential compliance details. The ruling ensures that the NJDEP must now revisit its assessment, providing a more comprehensive and defensible explanation for its decisions regarding the Transco pipeline environmental review.

This ruling serves as a critical reminder for lawyers advising on large infrastructure projects that environmental certifications, particularly water quality certifications, must be robust and thoroughly justified by regulatory agencies. It highlights the risk of legal challenges and project delays if agencies defer critical compliance details or fail to adequately explain their environmental impact conclusions, setting a precedent for rigorous agency review and potential grounds for challenging approvals.

Source: Original reporting via Courthouse News