06-5764-ag
Islander East Pipeline C o. v. M cC arthy




                                            UNITED STATES COURT OF APPEALS

                                                    FOR THE SECOND CIRCUIT


                                                       August Term, 2006

(Argued: April 10, 2007                                                                 Decided: May 2, 2008)

                                                     Docket No. 06-5764-ag
                                                    ____________________

                                            ISLANDER EAST PIPELINE COMPANY , LLC,

                                                                                                   Petitioner,
                                                             —v.—

                                       GINA MCCARTHY ,
             COMMISSIONER OF CONNECTICUT DEPARTMENT OF ENVIRONMENTAL PROTECTION ,

                                                              and

                     STATE OF CONNECTICUT DEPARTMENT OF ENVIRONMENTAL PROTECTION ,

                                                                                                 Respondents.
                                                     ___________________

Before:

                                        KEARSE and RAGGI, Circuit Judges, and RESTANI, Judge.1

                                                    _____________________

             Islander East Pipeline Company, LLC, whose ability to secure federal approval to build a

natural gas pipeline across Long Island Sound depends, in part, on the procurement of a water quality



             1
         The Honorable Jane A. Restani, Chief Judge of the United States Court of International
Trade, sitting by designation.

                                                               1
certification from the State of Connecticut Department of Environmental Protection, petitions this

court for review of what Islander East contends is an arbitrary and capricious second denial of

certification.

        The petition for review is denied.

                                      ____________________

                 FREDERICK M. LOWTHER (Beth L. Webb, Janet M. Robins, on the brief), Dickstein
                 Shapiro LLP, Washington, D.C.; Anthony M. Fitzgerald, Carmody & Torrance, LLP,
                 New Haven, Connecticut; Thomas L. Stanton, Associate General Counsel, Spectra
                 Energy Islander East Pipeline Company, LLC, as Operator for Islander East Pipeline
                 Company, LLC, Waltham, Massachusetts, for Petitioner.

                 KIMBERLY P. MASSICOTTE, Assistant Attorney General (Richard M. Blumenthal,
                 Attorney General for the State of Connecticut; John M. Looney, David H. Wrinn,
                 Scott N. Koschwitz, George W. O’Connell, Assistant Attorneys General, on the
                 brief), Office of the Attorney General, Hartford, Connecticut, for Respondents.
                                        ____________________

REENA RAGGI, Circuit Judge:

        This case arises from the ongoing efforts of Islander East Pipeline Co., LLC (“Islander East”)

to secure a water quality certification from the Connecticut Department of Environmental Protection

(“CTDEP”) for a plan to build a natural gas pipeline from Connecticut to New York across Long

Island Sound. Such certification is a necessary prerequisite to Islander East securing final federal

approval for its pipeline project under the Natural Gas Act of 1938 (“NGA”), Pub. L. No. 75-688,

52 Stat. 831 (codified as amended at 15 U.S.C. §§ 717-717w). Pursuant to NGA § 19(d), 15 U.S.C.

§ 717r(d), Islander East petitions this court for review of the CTDEP’s December 19, 2006 denial

of certification, which Islander East challenges as arbitrary and capricious, see CTDEP, Water

Quality Certification Application No. 200300937-SJ, Islander East Pipeline Co., LLC (Dec. 19,

2006) (“2006 Denial”). The argument is familiar to us. In a published opinion filed October 5,


                                                  2
2006, a majority of this panel vacated the CTDEP’s initial February 5, 2004 denial of certification

to Islander East as arbitrary and capricious and remanded for further agency review of the pipeline

application. See Islander East Pipeline Co. v. Conn. Dep’t of Envtl. Prot. (“Islander East I”), 482

F.3d 79 (2d Cir. 2006).

        The CTDEP has now completed that review and persists in denying certification. Whatever

reservations might legitimately be voiced as to this latest decision, see infra at [ ] (Restani, J.,

dissenting in part), judicial review of the CTDEP’s denial is limited to the grounds set forth in the

Administrative Procedure Act (“APA”), specifically 5 U.S.C. § 706(2)(A), which provides that we

are to “hold unlawful and set aside agency action, findings, and conclusions found to be . . . arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law.” Because the CTDEP

supports its second denial with reasoned explanations tied to record evidence, this court can no

longer dismiss its conclusions as unlawful under the APA. Accordingly, we deny Islander East’s

petition for review.

I.      Background

        A.      The Regulatory Scheme

        Although we assume readers’ familiarity with our prior opinion in Islander East I, 482 F.3d

79, our discussion of the relevant facts as well as our assessment of the merits of Islander East’s

petition are facilitated by a preliminary review of the relevant regulatory scheme.

                1.      The Natural Gas Act

        The Natural Gas Act of 1938 comprehensively regulates the transportation and sale of natural

gas in interstate commerce. See id. at 84. Pursuant to NGA § 7, any party seeking to construct,

extend, acquire, or operate a facility for the transportation or sale of natural gas in interstate


                                                   3
commerce must secure “a certificate of public convenience and necessity” from the Federal Energy

Regulatory Commission (“FERC”). See 15 U.S.C. § 717f(c)(1)(A).2 Further, the FERC must ensure

that the proposed project complies with all requirements of federal law, including, but not limited

to, those established by the Clean Water Act, 33 U.S.C. §§ 1251-1387, and the Coastal Zone

Management Act, 16 U.S.C. §§ 1451-65. See Islander East I, 482 F.3d at 84 (citing Islander East

Pipeline Co., 102 F.E.R.C. ¶ 61,054, p. 61,130 (2003)).

       While the NGA generally preempts local permit and licensing requirements, see id. (citing

Islander East Pipeline Co., 102 F.E.R.C. ¶ 61,054, p. 61,130); National Fuel Gas Supply Corp. v.

Pub. Serv. Comm’n, 894 F.2d 571, 576-79 (2d Cir. 1990), the Clean Water and Coastal Zone

Management Acts are notable in effecting a federal-state partnership to ensure water quality and

coastal management around the country, so that state standards approved by the federal government

become the federal standard for that state. See Islander East I, 482 F.3d at 90 n.9 (explaining that,

under Clean Water Act, state water quality standard approved by federal Environmental Protection

Agency (“EPA”) “becomes ‘the water quality standard for the applicable waters of that State’”

(quoting 33 U.S.C. § 1313(c)(3))). Consistent with this scheme, the two Acts require applicants for

federal permits to provide federal licensing agencies such as the FERC with certifications from



       2
          By order dated September 19, 2002, the FERC concluded that Islander East’s proposed
pipeline was required by public convenience and necessity because it would provide the significant
public benefit of a second source of natural gas for Long Island in an environmentally acceptable
manner. See Islander East I, 482 F.3d at 86. In a Final Environmental Impact Statement (“FEIS”)
prepared preliminary to this order, the FERC had identified a preferable alternative pipeline route
that “had a shorter Long Island Sound crossing, avoided more shellfish leases, and would only have
air quality and noise impacts onshore in Connecticut.” Id. (citing FERC, Islander East Pipeline
Project, FEIS (2002)). Nevertheless, the FEIS concluded that, if Islander East employed certain
measures to mitigate environmental impacts along its proposed route, its plans for the pipeline would
also be environmentally acceptable. See id.

                                                 4
affected states confirming compliance with local standards. See id. at 84 & nn. 3-4 (citing 16 U.S.C.

§ 1456(c)(3)(A); 33 U.S.C. § 1341(a)(1)).

       Islander East’s dispute with the CTDEP regarding its compliance with the state’s coastal zone

management plan is the subject of a different appeal pending in this court, see State of Connecticut

v. United States Dep’t of Commerce, Nos. 07-4522-cv(L), 07-4593-cv(CON).3 Accordingly, on this

petition, we consider only Islander East’s challenge to the CTDEP’s denial of the water quality

certification that, being mandated by the Clean Water Act, is a necessary prerequisite to the FERC

granting final approval to commence construction of the proposed pipeline.

               2.      The Clean Water Act

       The Clean Water Act specifically protects “existing” and “designated” uses of navigable

waters. PUD No. 1 of Jefferson Cty. v. Washington Dep’t of Ecology, 511 U.S. 700, 704-05 (1994)

(citing 33 U.S.C. § 1313(c)(2)(A) & (d)(4)(B); 40 C.F.R. § 131.12). Thus, a state’s water quality

standards must identify existing and designated uses, such as drinking, recreation, wildlife support,

and shellfish cultivation, and must establish “‘water quality criteria for such waters based upon such

uses.’” Id. at 704 (quoting 33 U.S.C. § 1313(c)(2)(A)). Further, pursuant to the Clean Water Act’s

“antidegradation policy,” a state’s water quality standards must “be sufficient to maintain existing

beneficial uses of navigable waters, preventing their further degradation.” Id. at 705 (citing 33

U.S.C. § 1313(d)(4)(B)). The mandate’s broad reach is reflected in 40 C.F.R. § 131.12(a)(2), which

provides that states “shall assure water quality adequate to protect existing uses fully.” Thus, no

activity that would “‘partially or completely eliminate any existing use’” is permitted, even if it



       3
         On January 23, 2008, a different panel of this court dismissed the appeal for lack of subject
matter jurisdiction. Appellants filed a petition for rehearing on April 9, 2008.

                                                  5
would leave the majority of a given body of water undisturbed. PUD No. 1 of Jefferson Cty. v.

Washington Dep’t of Ecology, 511 U.S. at 718-19 (quoting EPA, Questions and Answers on

Antidegradation at 3 (Aug. 1985)).4

        To protect against water quality degradation, states may employ both quantitative and open-

ended standards. See id. at 715-17; see also 40 C.F.R. § 131.11 (providing for states to establish

numerical and narrative criteria). Open-ended standards serve to ensure against under-inclusiveness

in circumstances where it may be impossible to formulate a generalized quantitative standard

applicable to all cases. See PUD No. 1 of Jefferson Cty. v. Washington Dep’t of Ecology, 511 U.S.

at 716-18. In applying open-ended standards, however, a state is expected to translate its narrative

criteria into “specific limitations for individual projects.” Id. at 716.

                3.      Connecticut’s Water Quality Standards Pursuant to the Clean Water Act

        Two narrative water quality standards figure prominently in this case. Connecticut Surface

Water Quality Standard No. 1, as amended, states:

        It is the State’s goal to restore or maintain the chemical, physical, and biological
        integrity of surface waters. Where attainable, the level of water quality that provides
        for the protection and propagation of fish, shellfish, and wildlife and recreation in
        and on the water shall be achieved.

Connecticut Dep’t of Envtl. Prot., Water Quality Stds. at 1 (effective Dec. 17, 2002),

http://www.ct.gov/dep/lib/dep/water/water_quality_standardsl/wqs.pdf.


        4
          Because the CTDEP does not contend that any adverse impact on water quality, however
trivial or temporary, would constitute the elimination of an existing use, we need not consider that
possibility on this petition. We note, however, that the EPA, in revising its anti-degradation policy
in 1983, deleted a provision that disallowed any “further water quality degradation which would
interfere with or become injurious to existing instream uses.” Water Quality Standards Regulation,
48 Fed. Reg. 51,400, 51,402 (Nov. 8, 1983). The EPA made this change “because the terms
‘interfere’ and ‘injurious’ were subject to misinterpretation as precluding any activity which might
even momentarily add pollutants to the water.” Id. at 51,402-03.

                                                   6
       Connecticut Surface Water Quality Standard No. 2 states:

       Existing and designated uses such as propagation of fish, shellfish, and wildlife,
       recreation, public water supply, agriculture, industrial use and navigation, and the
       water necessary for their protection [are] to be maintained and protected.

Id.

       Pursuant to these standards, the CTDEP “Commissioner shall not issue any certificate or

permit for any regulated discharge, dredging activity or discharge of fill and dredged materials unless

the Commissioner finds that all existing and designated uses as defined in these water quality

standards will be protected fully.” Id., App. E-1; see also id. at 1 (Surface Water Quality Std. No.

2).

       The coastal waters at issue in this petition are denominated by Connecticut as either “SA”

or “SB/SA.” SA waters are designated for “habitat for marine fish, other aquatic life and wildlife;

shellfish harvesting for direct human consumption; recreation; industrial water supply; and

navigation.” Id. at 15 (Coastal Waters Classifications and Criteria). SB waters are designated for

“habitat for marine fish, other aquatic life and wildlife; commercial shellfish harvesting; recreation;

industrial water supply; and navigation.” Id. While waters in the intermediate SB/SA classification

may not currently support one or more of the uses designated for SA waters, e.g., “shellfish

harvesting for direct human consumption,” the state’s goal for such waters is the “achievement of

Class SA Criteria and attainment of Class SA designated uses.” Id. Indeed, SA classification is a

default classification for marine waters in Connecticut. See id. at 7. Thus, to the extent the impact

of the proposed pipeline on shellfish harvesting is at issue on this petition, we note that all marine

waters in Connecticut appear to be designated for shellfish harvesting unless the state has specifically




                                                   7
established a lesser water quality classification in a given area. See id. at 7, 15.5

          B.       The Proposed Pipeline

                   1.     The Pipeline Route from Connecticut to New York

          On June 15, 2001, Islander East filed an application under NGA § 7(c) with the FERC for

a certificate of public convenience and necessity to construct, own, and operate a natural gas pipeline

between Connecticut and New York. See Islander East Pipeline Co., 97 F.E.R.C. ¶ 61,363, p. 62,685

(2001).        Islander East proposed to construct 44.8 miles of 24-inch-wide pipeline from an

interconnection with an existing pipeline near North Haven, Connecticut, to Brookhaven, New York.

A further 5.6 miles of pipeline would be constructed from Islander East’s anticipated mainline near

Wading River, New York, to a power plant in Calverton, New York. Id. The petition before this

court focuses on the 22.6-mile section of pipeline that would cross Long Island Sound. See Islander

East Pipeline Co., 100 F.E.R.C. ¶ 61,276, p. 62,102 (2002).

                   2.     The Construction Techniques Relevant to the Challenged Denial

          Islander East proposed to employ three construction techniques in building the offshore

section of the pipeline — horizontal directional drilling, dredging, and plowing — which the CTDEP

concludes would adversely affect the existing and designated uses of the state’s coastal waters,

particularly as they pertain to shellfish harvesting. We briefly describe these techniques and some

of the concerns identified with respect to each.




          5
         This goal is consistent with Connecticut’s significant role in the nation’s production of hard
clams and oysters for human consumption. See 2006 Denial at 23-24 (reporting that, in 2001, state
ranked first in production of hard clams and second in its production of oysters among East Coast
states).

                                                   8
                       a.      Horizontal Directional Drilling

       To install a pipeline running from a natural gas connection site on land in Connecticut into

Long Island Sound, Islander East proposed to employ a horizontal directional drill to create a 4,200-

foot tunnel underneath nearshore waters off Branford, Connecticut. See Islander East Pipeline

Project, Permit Application for: 401 Water Quality Certificate (“Permit Application”), App. A,

Maritime Pipeline Installation Methodology at 1 (Mar. 14, 2003) (“Installation Methodology”); see

also 2006 Denial at 30 & App. B. The tunnel would start some 700 feet inland, where the drill

would burrow to a depth of 110 feet below sea level. See Permit Application, Attachment C. The

drill would then level off and proceed south for about 2,000 feet, after which it would drill

diagonally upwards until it emerged from the Sound’s seabed around milepost 10.9. See id.

       Once the horizontal directional drill bored a small-diameter “pilot hole” the length of the

tunnel, Islander East proposed to enlarge that hole by a process called “reaming.” See Permit

Application, Installation Methodology at 9-10. To effect this enlargement, a “drill string” would first

be driven through the pilot hole to the offshore exit point. There, workers on board a barge would

attach a reaming tool to the string, which would, in turn, be pulled back through the tunnel toward

the drilling rig on shore. On its way, the reaming tool would cut rock and soil until the tunnel was

enlarged to a diameter of 36 inches. See id. at 10. At that point, a mile-long segment of pipe would

be pulled into place near the exit hole, then pulled back through the tunnel toward the drilling rig,

thereby installing that underground segment of pipeline. See id. at 1, 10.

       “Drilling fluid,” a substance composed of 97 percent fresh water and 3 percent bentonite clay,

would be continuously pumped into the borehole throughout the drilling process. See Conn. Siting

Council, Finding of Facts, Dkt. No. 221 at 19 (Aug. 1, 2002); Permit Application, Installation


                                                  9
Methodology at 7. This fluid would travel from equipment on the surface, through the inside of the

drill pipe, out the end of the pipe, and back to the surface along the space between the drill pipe and

the interior wall of the tunnel. The circulation of drilling fluid would both supply hydraulic power

to the drill bit and transport soil and rock cuttings from the drill bit to the surface. See Permit

Application, Installation Methodology at 7, 9. Islander East proposed to recapture, filter, and recycle

most, but not all, of the drilling fluid. See id. at 7. Based on Islander East’s estimates, the FERC

concluded that, when the drill exited the seabed at milepost 10.9, approximately 455 barrels of

drilling fluid would necessarily be released from the borehole onto the sea floor, covering an area

approximately 444 feet in diameter to a depth of 5 millimeters. See FEIS 3-53. In addition to this

planned release, the CTDEP identified a risk that drilling fluid could escape into Sound waters

through geologic fissures in the bedrock, an unplanned release called a “frac-out.” See 2006 Denial

at 60 (citing FEIS 3-54).

                       b.      Dredging and Backfilling

       To install the next section of pipeline from milepost 10.9 to milepost 12, an area of shallow

waters between 13 and 20 feet deep, Islander East proposed to dredge a v-shaped trench 5 feet into

the seabed. See 2006 Denial at 32-33. To accommodate the pipeline’s transition from tunnel to

trench, Islander East would also dredge an acre-sized exit pit at milepost 10.9 approximately 18 feet

deep, 130 feet wide, and 301 feet long. See FEIS 3-53; 2006 Denial at 32. To create this exit pit and

trench, Islander East would remove approximately 24,000 cubic yards of sediment from

approximately 5.5 acres of seabed. See Islander East Pipeline Project, Offshore Dredge Disposal

Permit Amendment at 2 (July 29, 2003). Although Islander East originally proposed that, after

installation of the pipeline into the trench, it would backfill the dredged areas with the removed


                                                  10
sediment, in response to sedimentation concerns6 identified by the CTDEP about that process,

Islander East modified its proposal to provide for most of the dredged materials, or “spoil,” to be

placed on barges for open water disposal. See id. at 6-10. Islander East would then refill the trench

and exit pit with an “engineered backfill” composed of small non-native rocks and sand. This

backfill would be deposited into the trench with a “tremie tube,” a specialized funnel designed to

channel the backfill directly into the trench. See 2006 Denial at 36-37 (citing Haley & Aldrich, Inc.,

Report on Engineered Backfill Study (May 21, 2003)).

                       c.      Plowing

       To complete pipeline installation in waters beyond milepost 12, Islander East proposed to

continue excavation of the 5-foot-deep trench using a subsea plow, supplemented with hand-

excavation by divers in certain areas. See id. at 35; Permit Application, Installation Methodology

at 1. Plowing would require a barge to pass over the pipeline route three times: (1) to lay the pipe,

(2) to pull a “post-lay plow,” and (3) to pull a “backfill plow.” See Permit Application, Installation

Methodology at 1, 5-6. At the first step, crew on the barge would weld pipe pieces together to set

onto the sea floor. As each length of pipe was so laid, the barge would move ahead approximately

forty feet where the welding and laying process would begin anew. See id. at 2-3. At the second

step, a barge would make another pass over each area, this time to lower a post-lay plow over the

pipeline that had been laid on the sea floor. This plow would hydraulically close to encapsulate the

pipe, at which point the barge would move forward, excavating a trench into which the pipe could

be released when the plow was reopened. See id. at 5. At the third step, a barge equipped with a


       6
         Sedimentation is the term used to describe the process where loose sediment suspended in
the water column settles onto the sea floor. See infra at [30-35] (discussing CTDEP’s sedimentation
concerns in this case).

                                                 11
backfill plow would fill in the trench with dredged materials. See id. at 6.

       In each of these three passes, a barge would likely use an anchor-mooring system to move

the vessel along the pipeline path, pulling in bow anchor lines and releasing stern anchor lines. See

id. at 2, 5. Anchor-handling tugboats would move the bow anchors forward and pick up the stern

anchors. See id. at 5. Each time anchors were thus set, they would necessarily strike the sea floor,

dispersing sediment and leaving a depression several feet deep over areas of roughly 200 square feet

per strike. See 2006 Denial at 41 (citing TRC Envtl. Corp., Impacts Analysis Report at 30 (Feb. 12,

2002)); see also TRC Envtl. Corp., Impacts Analysis Report § 3.1.3 (May 2003) (updated version

of 2002 Report) (estimating that “[t]he total area impacted by the anchor drops from the plowing

operations would be about 7.3 acres”). Meanwhile, the cables attaching the anchors to a barge would

drag across the sea floor as the barge moved, resulting in “cable sweep,” causing shallow depressions

in the seabed and further dispersing sediment. 2006 Denial at 40-43 & n.60 (citing, inter alia, TRC

Envtl. Corp., Impacts Analysis Report 28, 30 (Feb. 12, 2002)).

       C.      Islander East’s Efforts to Secure Water Quality Certification

               1.      The CTDEP’s 2004 Denial of Certification

       Islander East first applied to the CTDEP for a water quality certification for its pipeline

project on February 13, 2002. See Islander East I, 482 F.3d at 87. The following year, on March 13,

2003, Islander East withdrew that application and substituted a new one incorporating modified

offshore construction techniques aimed at reducing the project’s environmental impacts. See id.

(detailing proposed modifications). The CTDEP nevertheless denied certification on February 5,

2004, concluding that the pipeline project was inconsistent with state water quality standards in at

least two respects: (1) the various processes associated with pipeline installation “would cause


                                                 12
temporary water quality disturbance, permanent change to the benthic substrate [(the sea floor)], and

negative impacts to the aquata biota,” inconsistent with the goal of Connecticut Surface Water

Quality Standard No. 1 “to restore or maintain the chemical, physical, and biological integrity of

surface waters,” id. at 95 (internal quotation marks and citations omitted); and (2) backfill discharge

would permanently degrade waters in the vicinity of the Thimble Islands, rendering the seabed

unsuitable for various shellfish and organisms presently inhabiting the area, which result would be

inconsistent with Connecticut Surface Water Quality Standard No. 2 and Connecticut’s anti-

degradation policy, which requires “the maintenance and protection of water quality in high quality

waters and protection and maintenance of existing uses in all cases,” id. at 100 (internal citations

omitted). Islander East challenged the CTDEP denial in a state action filed in the Connecticut

Superior Court, see Islander East Pipeline Co., LLC v. Envtl. Prot. Comm’r, No. HHD-CV-04-

4022253-S (Conn. Super. Ct., filed June 21, 2004), which it subsequently withdrew.

               2.       This Court’s 2006 Decision Vacating the CTDEP’s Initial Denial

       Islander East’s withdrawal of its state challenge and its initial petition for review by this court

were prompted by Congress’s enactment of the Energy Policy Act of 2005, Pub. L. No. 109-58 , 119

Stat. 594. Section 313(b) of the Act amended § 19 of the NGA to afford United States Courts of

Appeals “original and exclusive jurisdiction over any civil action for the review of an order or action

of a Federal agency . . . or State administrative agency acting pursuant to Federal law to issue,

condition, or deny any permit, license, concurrence, or approval . . . required under Federal law” for

the construction of a natural gas facility. 15 U.S.C. § 717r(d)(1); see also Islander East I, 482 F.3d

at 88 (noting that Islander East’s petition for judicial review was filed on same day NGA amendment

was signed into law).


                                                   13
        Following argument, this court, by majority decision, rejected the CTDEP’s constitutional

and retroactivity challenges to Islander East’s first petition. See Islander East I, 482 F.3d at 91, 93.

Turning to the merits, the court concluded that the CTDEP’s denial of certification was, as a whole,

arbitrary and capricious. See id. at 104-05. With respect to the CTDEP’s conclusion that the project

was inconsistent with Surface Water Quality Standard No. 1, the court observed that the CTDEP had

failed both to cite record evidence reasonably supporting its finding of permanent harm to natural

habitats and benthic substrate, see id. at 98-99 (noting that cited sources did not support conclusion

that sedimentation in pipeline area would result in permanent loss of shellfish habitat), and to address

contrary evidence on the point, see, e.g., id. at 97 (noting four reports projecting recovery of shellfish

habitat). As for the CTDEP’s conclusion that the project was inconsistent with Surface Water

Quality Standard No. 2, the court faulted the agency for failing to define the area affected, not

acknowledging evidence that engineered backfill could improve shellfish habitat, and relying on

negative past experiences with construction projects in the Sound without considering subsequent

advances in pipeline construction technology. See id. at 100-04.

        The court’s conclusion that the CTDEP’s denial of certification was arbitrary and capricious

was reinforced by two further facts: the surprising brevity of the agency’s analysis relative to the

voluminous and complex record, see id. at 105,7 and documentary evidence suggesting that the

agency had pre-determined to oppose the pipeline project under any circumstances, see id.8 While


        7
         In Islander East I, we contrasted lengthy reports by the FERC, such as its August 2002
FEIS, which spanned hundreds of pages, with the CTDEP report, which contained “a mere two-and-a
half pages of analysis, supported by five record citations, none of which . . . reasonably support the
broad conclusions reached.” 482 F.3d at 104.
        8
         The court noted that “some evidence indicates the CTDEP’s greater concern with mounting
a public relations campaign to preclude building the pipeline than with neutrally evaluating the

                                                   14
the court’s independent review of the voluminous administrative record identified some evidence

potentially supportive of the CTDEP’s conclusion, the majority declined “to mine the record for

evidence” not identified by the agency, id. at 100, noting principles of administrative review

instructing that a federal court “may not supply a rationale for agency action where the agency has

provided none” or “construct support for an agency’s conclusion when the agency has not pointed

to evidence on the record favoring its decision,” id. at 101 (citing Motor Vehicle Mfrs. Ass’n of the

U.S., Inc. v. State Farm Mut. Auto. Ins. Co. (“State Farm”), 463 U.S. 29, 42-43 (1983)).9

        Accordingly, being careful to “draw no conclusion” as to whether the record evidence

obligated the CTDEP to grant Islander East’s certification application, we remanded the case to the

agency with instructions that it “conduct the sort of complete and reasoned review required by law.”

Id. at 105.

               3.      The CTDEP’s 2006 Denial of Certification

        Following remand, the CTDEP reexamined the record and, on December 19, 2006, again

denied Islander East’s application for a water quality certification. See 2006 Denial. We do not here

attempt to outline the numerous findings made and conclusions reached in the agency’s 82-page

decision because we review many of these in the discussion section of this opinion. We note simply

that Islander East promptly petitioned for judicial review, arguing that this second denial was also


record evidence.” Islander East I, 482 F.3d at 105.
        9
         Judge Kearse, in her dissenting opinion in Islander East I, did mine the record for evidence
supporting the CTDEP’s denial decision. See 482 F.3d at 108-16 (stating “We are not to supply the
rationale for an agency decision; but where the agency has stated its rationale, or where its rationale
may reasonably be discerned, we are required to review the whole record, and to uphold the agency
decision if it is supported by substantial evidence on the record considered as a whole.” (internal
quotation marks and citations omitted)). Not surprisingly, much of that evidence is now relied on
by the CTDEP in support of its second denial of certification.

                                                  15
arbitrary and capricious.

II.    Discussion

       A.      Jurisdiction and Standard of Review

       Under the Energy Policy Act of 2005, this court has jurisdiction to remand the CTDEP denial

of certification if it is “inconsistent with the Federal law governing such [action] and would prevent

the construction, expansion, or operation of the facility subject to [the NGA].” 15 U.S.C.

§ 717r(d)(3). There is no dispute that the 2006 Denial would prevent the construction of the

proposed natural gas pipeline. This leaves only the question whether the denial is inconsistent with

federal law. In Islander East I, we concluded that this question is subject to two-step consideration.

See 482 F.3d at 94-95. At step one, we employ de novo review to determine whether the CTDEP

complied with the requirements of relevant federal law. See id. at 94. “If no illegality is uncovered

during such a review,” we proceed to step two to examine the CTDEP’s challenged findings and

conclusions “under the more deferential arbitrary-and-capricious standard of review usually accorded

state administrative bodies’ assessments of state law principles.” Id. (internal quotation marks and

citation omitted).

       As before, we easily conclude that the CTDEP complied with the procedural dictates of the

Clean Water Act in applying state water quality standards to Islander East’s permit application. See

33 U.S.C. §§ 1311(b)(1)(C), 1313, 1341(a)(1). This leaves only the second step of analysis: whether

the CTDEP’s determination that the project would violate Connecticut’s water quality standards is

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C.

§ 706(2)(A).

       Under the arbitrary-and-capricious standard, judicial review of agency action is necessarily


                                                 16
narrow. See State Farm, 463 U.S. at 43; Environmental Def. v. EPA, 369 F.3d 193, 201 (2d Cir.

2004). A reviewing court may not itself weigh the evidence or substitute its judgment for that of the

agency. See State Farm, 463 U.S. at 43. Rather, in deciding whether agency action is arbitrary and

capricious, a court considers whether the agency “relied on factors which Congress has not intended

it to consider, entirely failed to consider an important aspect of the problem, offered an explanation

for its decision that runs counter to the evidence before the agency, or is so implausible that it could

not be ascribed to a difference in view or the product of agency expertise.” Id.10

        This is not to suggest that judicial review of agency action is merely perfunctory. To the

contrary, within the prescribed narrow sphere, judicial inquiry must be “‘searching and careful.’”

National Audubon Soc’y v. Hoffman, 132 F.3d 7, 14 (2d Cir. 1997) (quoting Marsh v. Oregon

Natural Res. Council, 490 U.S. 360, 378 (1989)); see Ward v. Brown, 22 F.3d 516, 521 (2d Cir.

1994) (“Although narrow, appellate review of an administrative record must nonetheless be careful,

thorough and probing.”). Notably, a court must be satisfied from the record that “the agency . . .

examine[d] the relevant data and articulate[d] a satisfactory explanation for its action.” State Farm,

463 U.S. at 43. Further, the agency’s decision must reveal “a ‘rational connection between the facts

found and the choice made.’” Id. (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S.

156, 168 (1962)). A court will not lightly reach a conclusion that an agency has not examined all

relevant data or satisfactorily demonstrated a rational connection between the facts it has found and



        10
          The Clean Water Act reflects Congress’s intent that state environmental agencies consider
the factors enumerated in a state’s federally-approved water quality standards. See 33 U.S.C.
§ 1313(c)(2)(A) (providing that “[s]uch standards shall be established taking into consideration their
use and value for public water supplies, propagation of fish and wildlife, recreational purposes, and
agricultural, industrial, and other purposes, and also taking into consideration their use and value for
navigation”).

                                                  17
its final decision. See Patterson v. Caterpillar, Inc., 70 F.3d 503, 505 (7th Cir. 1995) (observing that

court “must be very confident that the decisionmaker overlooked something important or seriously

erred in appreciating the significance of the evidence” (internal citation omitted)). While a majority

of this panel did reach that conclusion in Islander East I, 482 F.3d at 97-100, largely because of the

paucity of findings made by the CTDEP, see United States v. Int’l Bhd. of Teamsters, 170 F.3d 136,

143 (2d Cir. 1999) (observing that court must “guard against an agency . . . drawing inferences that

are arbitrary in relation to the facts found, no matter how substantial may be the support for those

facts” (internal quotation marks and citations omitted)), we cannot do so here where the CTDEP’s

challenged decision is supported by more detailed findings and analysis.

        B.      The Challenged Denial of Certification Cannot Be Deemed Arbitrary and Capricious

        In its second denial of Islander East’s application for a water quality certification, the CTDEP

explained that its primary concern was the siting of the proposed pipeline in a Connecticut coastal

area that included “an extensive stretch of shallow water” that served as a natural habitat for a variety

of shellfish, including clams and oysters. 2006 Denial at 9. As we earlier noted, see supra [4 n.2],

the FERC had expressed similar concern in identifying an environmentally preferable alternative

route, but thought Islander East would be able to mitigate the adverse impacts of its plan. In

evaluating that question, the CTDEP determined that the dredging, plowing, and backfilling methods

that Islander East proposed to employ in installing a pipeline in shallow waters would adversely

affect shellfish habitat and cause the loss of an existing and designated use, i.e., shellfishing, over

an unacceptably large area. See 2006 Denial at 80. Because Islander East’s proposed means of

remediating these consequences were uncertain to be effective, the agency concluded that Islander

East had failed to demonstrate that the pipeline project would comply with state water quality


                                                   18
standards as necessary to secure certification. See Islander East I, 482 F.3d at 104 (noting “Islander

East’s burden to demonstrate its entitlement to favorable action on its [certification] application”);

see also Town of Newtown v. Keeney, 234 Conn. 312, 322 n.5 (Conn. 1995) (noting that applicant

in Connecticut administrative proceeding bears burdens of production and persuasion).

       In petitioning for review of the CTDEP denial, Islander East submits that two findings critical

to the challenged conclusion are unsupported by the record: (1) that the pipeline would pass through

existing or potential shellfish habitat, and (2) that the pipeline would have an adverse impact on that

habitat resulting in the loss of an existing or designated use. Islander East does not — and, indeed,

could not — argue that, if these findings are supported by the evidence, the denial of certification

should be deemed arbitrary and capricious. As we noted earlier, 40 C.F.R. § 131.12(a)(2) states that,

pursuant to the Clean Water Act, a “State shall assure water quality adequate to protect existing uses

fully.” Consistent with this obligation, Connecticut Surface Water Quality Standard No. 2 provides

that “[e]xisting and designated uses such as propagation of fish, shellfish, . . . and the water

necessary for their protection is to be maintained and protected.” In addressing Islander East’s

challenge, we reiterate that we do not ourselves weigh the evidence or choose among competing

inferences that might be drawn therefrom. We consider only whether there is sufficient evidence in

the record to provide rational support for the choice made by the agency in the exercise of its

discretion. See State Farm, 463 U.S. at 42-43. On this deferential standard of review of the record

in this case, we deny Islander East’s petition for review.

               1.      Shellfish Habitat Along the Proposed Pipeline Route

       In the challenged 2006 Denial, the CTDEP tracked the route of the proposed pipeline from

its entry point into Long Island Sound at a recessed section of Connecticut shoreline near Branford


                                                  19
across an expanse of relatively shallow waters through the Thimble Islands. See 2006 Denial at 8.

The CTDEP identified seabed conditions in this area as particularly hospitable to shellfish

cultivation. See id. at 12-13 (describing how seabed was product of glacier advances and retreats

that had left “[t]hick deposits of layered silt and clay” on seabed); id. at 24, 71 (analogizing such

seabed to prized topsoil that shellfishermen could stock with “juvenile seed shellfish” much as

farmers planted fields with crop seed). It identified a variety of commercially valuable shellfish

found in the area, including eastern oysters, hard and soft clams, blue mussels, and channel whelk.

See id. at 23. The CTDEP noted that the Connecticut Department of Agriculture had approved for

direct human consumption the shellfish procured from the “consistently excellent” nearshore waters

in which the pipeline would be installed. Id. at 21-25; see also CTDEP, Map: CT Waters Less Than

50 ft. Classified as SA or SA/SB, with Dep’t of Agric./Bureau of Aquaculture “Approved”

Shellfishing Designation (Jan. 2007). The CTDEP further noted that the sea floor beneath these

nearshore waters had been divided by state and local authorities into plots or beds, which are actively

leased to shellfishermen. See 2006 Denial at 26, 55, 59.

       In Islander East I, we faulted the CTDEP for failing, in its initial denial of certification, “to

point to even one specific lease” that would be affected by the proposed pipeline. 482 F.3d at 101.

The 2006 Denial remedied this defect by identifying four shellfish beds that lie directly above the

proposed path for the tunnel to be created by horizontal drilling. See 2006 Denial at 59. Further,

the CTDEP showed that dredging and plowing activities would affect five state shellfish bed leases

and an unidentified number of leases within the jurisdiction of the town of Branford. See id. at 44-

46 (identifying 347.54 acres of affected state leases and 240.38 acres of affected Branford shellfish




                                                  20
beds).11 From the totality of this evidence, the CTDEP could rationally conclude that the proposed

pipeline construction activities would adversely affect existing and designated shellfish habitat and

uses.

        In challenging this conclusion, Islander East submits that the CTDEP has mischaracterized

the record to create a false impression that the area in question is “critical” shellfish habitat.

Petitioner’s Br. at 23-25. Islander East asserts that the area actually supports few or no living

shellfish, such that construction of the pipeline cannot rationally be inconsistent with Connecticut’s

water quality standards. To support this argument, Islander East points to a study in which divers

found no oysters or hard clams at sites along the pipeline route, see Peter E. Pellegrino, Bottom

Characterization Surveys of Selected Subtidal and Nearshore Environments off Juniper Point

(Branford, CT) at 8, 11 (Jan. 2002), and to testimony from Dr. Roman Zajac that, while the pipeline

corridor could support shellfish, no oysters or hard clam populations were actually found there, see

Conn. Siting Council Hearing Tr. at 54-55, Apr. 12, 2002.

        Certainly, this evidence raises legitimate questions about the impact of the proposed pipeline

on existing and designated shellfish use. Significantly, the CTDEP did not ignore this evidence. Cf.

Islander East I, 482 F.3d at 98 (faulting agency for failing to address studies contradicting its

conclusions). Rather, it appears to have accorded it little weight in light of the cyclical nature of

commercial shellfishing, which could account for the reported failures to find shellfish at certain

sites on discrete occasions. See 2006 Denial at 24-27. As the CTDEP explained, oysters and clams


        11
          While Branford did not designate these shellfish beds until 2005, i.e., after Islander East
had filed its permit application, they may appropriately be considered in our determination of
whether the CTDEP’s conclusions are so lacking in evidentiary support as to be arbitrary and
capricious. See generally 5 U.S.C. § 706 (instructing courts to “review the whole record” in
determining whether agency action is arbitrary and capricious).

                                                 21
often spend the early part of their lives in hatcheries, only later being moved by fishermen to seabeds

to mature. See id. at 24-25. Further, because clams burrow, shellfishermen must use dredges to

harvest mature specimens, see id. at 25-26, and the CTDEP cited surveys noting “extensive trawl

marks” likely attributable to shellfish harvesting just past milepost 12, id. at 26-27. These facts,

together with the evidence of active shellfish leases to commercial fishermen, provided sufficient

record support for the CTDEP to conclude that waters in the pipeline corridor are an existing and

designated habitat for shellfish and that shellfishing is an existing and designated use of these waters.

Thus, we cannot conclude that this finding was arbitrary and capricious. See Universal Camera

Corp. v. NLRB, 340 U.S. 474, 488 (1951) (holding that reviewing court may not displace agency’s

choice between “two fairly conflicting views” of evidence).

                2.      Elimination of an Existing or Designated Use as a Consequence of the
                        Pipeline Construction

        In considering Islander East’s challenge to the second CTDEP finding — that installation of

the pipeline would result in the loss of commercial shellfish harvesting in the waters in the nearshore

pipeline corridor — we note at the outset that, in making this determination, the CTDEP discussed

in considerably more detail than we include in this opinion a voluminous record of evidence relevant

to (1) the geological development of the seabeds in question as valuable shellfish habitat, see 2006

Denial at 12-14; (2) the influence of tidal currents and marine conditions on this habitat, see id. at

14-16; (3) the sensitivity of the habitat to disturbances in the benthic substrate, see id. at 16-19; and

(4) the traditional means of shellfish cultivation and harvesting in Connecticut’s nearshore waters,

see id. at 23-27. The CTDEP further reviewed evidence of (5) the methods Islander East proposed

to use in installing the pipeline at issue, see id. at 27-39; and (6) the likely effects of such methods

both generally on water quality and benthic substrate and specifically on the established use of

                                                   22
shellfishing, see id. at 39-72. Thus, in contrast to Islander East I, the agency’s second consideration

of Islander East’s application was more careful and thorough. This is not to say that the extensive

evidence before the CTDEP pointed ineluctably in a single direction. To the contrary, the agency

was frequently presented with conflicting quantitative findings and expert opinions. It was, however,

the responsibility of the CTDEP, and not this court, to resolve record contradictions and to determine

which evidence was most persuasive and what weight it deserved. See Universal Camera Corp. v.

NLRB, 340 U.S. at 488. Mindful that it was Islander East’s burden to demonstrate to the CTDEP

that its pipeline project complied with state water quality standards, see Town of Newtown v.

Keeney, 234 Conn. at 322 n.5, we consider only whether the agency findings are sufficiently

grounded in record evidence rationally to support the challenged conclusion that the proposed

pipeline would result in a loss of existing and designated shellfishing use, see State Farm, 463 U.S.

at 43.

                       a.      The Effects of Anchor Strikes and Cable Sweeps

                               (1)     The CTDEP’s Findings

         The CTDEP found that the barges used to lay pipeline would generally be equipped with “an

array of 8 to 12 anchors,” each anchor weighing from 7 to 15 tons and held in place by cables. 2006

Denial at 34. As a barge moves forward either to lay, plow, or backfill the pipeline, anchors would

strike the seabed. Islander East’s own evidence indicated that each anchor footprint would likely be

1 to 3 feet deep, disturbing 200 square feet of sediment. See id. at 41 (citing TRC Impact Analysis

Report at 30 (Feb. 12, 2002) and the “Gulfstream Report” (surveying post-installation conditions in

the Gulf of Mexico)). Meanwhile, cables attached to each anchor would drag along the bottom of

the sea floor, cutting into the seabed — albeit considerably less deeply than anchors — and releasing


                                                  23
further sediment into the water column. In depths of less than 50 feet, the anchor cables would

extend 1,200 feet from each side of the barge, forming a corridor of construction activity

approximately 2,400 feet wide. See id. at 46. Although “midline buoys” would suspend part of the

anchor cable above the sea floor, as much as 600 feet of each cable line would still drag along the

sea floor, leaving incisions. See id. at 34. In waters suitable for shellfish harvesting, i.e., at depths

of less than 50 feet, the CTDEP concluded that the corridor affected by anchor strikes and cable

sweeps would be 3.85 miles long, occupying a total area of about 1,120 acres that would no longer

be available for shellfish harvesting. See id. at 40-41, 70, 80 (concluding that 588 acres of existing

shellfishing and 531 acres designated for shellfishing would be lost).

                                (2)     Islander East’s Challenges to the Findings

        Islander East argues that the CTDEP exaggerates both the area and impact of these strikes

and sweeps. It submits that the CTDEP erroneously included in its calculations of the anchor

corridor an area of seabed bordering the exit pit and dredge section from milepost 10.9 to milepost

12, thereby inflating the area affected by anchor strikes and cable sweep by 322 acres. Further, the

CTDEP erroneously assumed that the full 1,200 feet of anchor cable would sweep the sea floor.

Finally, Islander East asserts that, even within the identified corridor of strikes and sweeps, the actual

damage would be slight. While the first argument may have some merit, none persuades us that the

CTDEP’s 2006 Denial was arbitrary or capricious.

        First, the CTDEP’s finding that Islander East would utilize an anchor-propelled barge in the

relatively shallow waters above the exit pit and dredge section may have been erroneous in light of

evidence indicating that Islander East had modified its plans to avoid using an anchor array in that

area. See Letter from Arthur J. Rocque, Jr., Comm’r, CTDEP, to Gene H. Muhlherr, Jr., Islander


                                                   24
East (July 29, 2003); see also 2006 Denial, App. A at 2; Permit Application, Installation

Methodology at 1. Even assuming such error, however, the evidence of anchor strikes and cable

sweeps in waters between mileposts 12 and 20 was sufficient to support the CTDEP’s finding of a

significant loss of existing and designated shellfishing use.12

       Second, we identify no clear error in the CTDEP’s conclusion that an anchor corridor scarred

by anchor strikes and cable sweeps would be lost in its entirety to shellfishing. The CTDEP reached

this conclusion, not because it assumed that all 1,200 feet of anchor cable would sweep the sea floor,

as petitioner alleges, but because it found that the depressions left by plowing, anchor strikes, and

even reduced cable sweep would make it too difficult for harvesting equipment to operate throughout

the corridor. See 2006 Denial at 70 & n.84 (distinguishing between shellfish habitat and cultivable

shellfish beds). Evidence showed that shellfishermen would not venture into such scarred terrain

for fear of damaging their equipment. See id. at 70-71; Memorandum from John H. Volk, Conn.

Dep’t of Agric., to Sue Jacobson, CTDEP at 2 (Oct. 4, 2002) (noting that topographic irregularities

caused by dredging will render “area unsuitable for commercial fishing and shellfishing” and that

project “will result in a multitude of ‘scars’ and significant benthic irregularities caused by numerous

sets of anchors, spuds, and cable sweeps . . . .”). Larry Williams, a commercial shellfisherman, not

only testified that shellfish harvesting dredges could not operate in areas of topographical

irregularity, see Conn. Siting Council Hearing Tr. at 128, Apr. 17, 2002 (“[I]f you’re left with a



       12
          As described above, the CTDEP calculated the area of the anchor corridor supporting an
existing or designated use of shellfishing at 1,120 acres. See 2006 Denial at 70. Excluding the
seabed from mileposts 10.9 to 12, the projected anchor corridor over shellfishing area appears to be
reduced to 798 acres. See id. We note that none of these acres are within the jurisdiction of the
Town of Branford, as the boundary separating Branford shellfish beds from state shellfish leases lies
between mileposts 11 and 12. See Petitioner’s Br., Ex. B.

                                                  25
bottom topography that’s so upset and irregular and soft here and hard there . . . it basically becomes

undredgeable, the dredges don’t work, they’ll cut into a high spot, they’ll drop into a low spot . . .

it just doesn’t work.”), he stated that he had personally observed such irregularities in an area

damaged by a 1991 installation of a natural gas pipeline, the “Iroquois pipeline,” see 2006 Denial

at 43 (citing Conn. Siting Council Hearing Tr. at 93, 96, Apr. 17, 2002). While Williams testified

that it might be possible to navigate around anchor strikes and cable sweeps “if the holes were

mapped with GPS coordinate geometry” and “sonar mapping was furnished,” Conn. Siting Council

Hearing Tr. at 99, Apr. 17, 2002, nothing in the record demonstrated the availability of this

technology, much less the likelihood of its successful application or Islander East’s commitment to

supplying it. Cf. Letter from Gene Muhlherr, Jr., Islander East, to Charles H. Evans, CTDEP (May

27, 2003) (referencing Islander East’s commitment to provide an “‘as built’ survey of the coordinates

of the pipeline following construction,” with no mention of mapping individual anchor strikes or

cable sweeps (emphasis added)). On this record, the CTDEP’s failure to reference speculative and

extraordinary mitigation measures in its consideration of lost use hardly renders its conclusions

arbitrary or capricious.

       Third, the CTDEP did not act arbitrarily or capriciously in failing to embrace Dr. Zajac’s

opinion that the proposed pipeline would result in only minimal cable scarring. See Conn. Siting

Council Hearing Tr. at 55, Apr. 12, 2002 (testifying that “cable sweeping would probably disturb

[only] the upper . . . few centimeters of the sediment”). Evidence before the agency indicated that

the degree of cable scarring can vary widely even in a single body of water depending on the distance

of the cable from the anchor and the composition of the seabed. See 2006 Denial at 41 (noting that,




                                                  26
in pipeline installation in Gulf of Mexico, depth of cable scarring ranged from 4 to 12 inches);13 cf.

Power Auth. of New York v. FERC, 743 F.2d 93, 111 (2d Cir. 1984) (observing that, “although

reasonable minds could differ as to the inferences that might be drawn from the proof,” agency’s

finding supported by substantial evidence must be upheld). Further, it was not arbitrary or capricious

for the CTDEP to consider sediment dispersal caused by sweeps as well as strikes in assessing the

loss of waters available for shellfishing. The CTDEP’s finding relied on the FEIS, which referenced

anchor strikes and cable sweeps without differentiation in observing that, once sediment is released

from the sea floor, it loses density and cohesiveness and becomes more susceptible to erosion. See

2006 Denial at 47. The FEIS further indicated that long-lasting depressions associated with anchor

strikes and cable sweeps can act as “sediment traps,” which, in turn, can lead to “anoxic sediments

that develop considerably different communities from the original deposits” and “a long-term

conversion of benthic habitat.” Id. (quoting FEIS 3-65 (internal quotation marks omitted)).

        While the FERC concluded that remedial measures might be devised to minimize this effect,

there was record evidence before the CTDEP suggesting that depressions caused by strikes and

sweeps would, in fact, be long lasting. Shellfisherman Williams testified that, over a period of some

four years, he had observed the persistent scarring to the seabed caused by installation of the Iroquois

gas pipeline. See id. at 43. Islander East submits that, because the CTDEP approved the Iroquois

pipeline as consistent with Connecticut’s water quality standards, it cannot rationally conclude

otherwise with respect to Islander East’s pipeline proposal. This argument misses the essential point



        13
         The CTDEP was careful to note that differences in seabed composition and current velocity
precluded an assumption that the impacts experienced in the Gulf would translate to the Sound. See
2006 Denial at 43 n.58. Nevertheless, the report provided some evidentiary support for the CTDEP’s
skepticism as to Islander East’s prediction of minimal cable scarring.

                                                  27
that the CTDEP, with the benefit of hindsight, has now concluded that the Iroquois pipeline failed

to comply with the state’s water quality standards, and it is this realization that now informs its

denial of the Islander East proposal. It is well recognized that “an agency must be given ample

latitude to adapt [its] rules and policies to the demands of changing circumstances.” State Farm, 463

U.S. at 42 (internal quotation marks and citations omitted). Here the changed circumstances are the

observed adverse effects of the Iroquois pipeline despite the passage of time. In Islander East I, we

faulted the CTDEP for failing to acknowledge that Islander East proposed to employ more advanced

technology than had been available at the time of the Iroquois pipeline installation, see 482 F.3d at

103, or to “point to evidence indicating that [such improvements] would have been inadequate to

avoid the topographic irregularities caused by the Iroquois installation,” id. at 104. The CTDEP has

now acknowledged considerable technological advancements since the installation of the Iroquois

pipeline; nevertheless, it found that Islander East’s employment of improved techniques would, at

best, “minimize . . . but not eliminate” the anticipated effects of “anchor strike and cable sweep

impacts.” 2006 Denial at 43. Substantial evidence supports the CTDEP’s finding that the

technological and methodological advances that distinguish the Islander East pipeline proposal from

the Iroquois pipeline would not sufficiently reduce the risk of damage caused by anchor strikes and

cable sweep to avoid the loss of the existing and designated shellfishing use of a significant area.

In the face of scientific or technical uncertainty as to the scope of adverse effects from proposed

action, nothing in the APA prevents an agency from considering a “worst case” scenario. Cf. New

York v. Reilly, 969 F.2d 1147, 1152 (D.C. Cir. 1992) (“[E]ven if [agency’s] prediction did take into

account the worst case scenario, its action would be permissible.”). Thus, we cannot conclude that

the CTDEP’s consideration of the adverse consequences of the Iroquois pipeline installation in


                                                 28
issuing the 2006 Denial was arbitrary or capricious.

       Islander East further argues that it was arbitrary and capricious for the CTDEP to deny it

certification despite, in 2002, allowing the Cross Sound Cable Company to bury heavy power

transmission cables beneath Long Island Sound. The latter project is distinguishable in at least two

important respects. First, it does not appear to have presented significant problems of anchor strikes

and cable sweeps. The narrower trench needed to accommodate power cables was dug, not with a

mechanical plow towed by barges, but with a “Smartjet” rig, a remotely operated vessel that used

“pressurized water to fluidize sediments into which the . . . cables would settle.” Conn. Siting

Council, Finding of Facts, Dkt. No. 208 at 13 (Jan. 3, 2002); see also Task Force on Long Island

Sound, Comprehensive Assessment and Report, Part II, Environmental Resources and Energy

Infrastructure of Long Island Sound at 78 (June 3, 2003) (“Task Force Report”). The schematics

attached to the Cross Sound Cable Company’s permit application indicate a 100-foot “work

corridor,” with no mention of an “anchor corridor” or indication of anchor use. See CTDEP, Permit

No. 200102720-MG (Mar. 17, 2002). Second, while the Cross Sound Cable project traversed

shellfishing beds, the beds at issue were dormant with no evidence of foreseeable future use. The

record indicated that the cable path traveled 3.75 miles along an existing navigation route, the

Federal Navigation Channel, in order “to substantially avoid cultivated shellfish beds.” Task Force

Report at 78. To the extent shellfish beds were delineated within the Federal Navigation Channel,

they were “not now, and have not been actively cultivated for at least the previous five years.” Conn.

Siting Council, Findings of Fact at 21. Thus, in contrast to this case, where the CTDEP found that

Islander East’s pipeline project would cause a long-term loss of shellfishing beds in existing or

foreseeable future use, the Cross Sound Cable project implicated only dormant beds that were


                                                 29
expected to remain so. Where circumstances are thus distinguishable, the different CTDEP rulings

do not demonstrate arbitrary or capricious decision-making. See State Farm, 463 U.S. at 42.

        In sum, in light of the totality of the evidence supporting the CTDEP’s finding of lost use,

as well as its finding that Islander East had failed to demonstrate that it would (or even could) restore

the scarred seabed within a reasonable time to its pre-installation condition, we conclude that the

agency did not act arbitrarily or capriciously in denying a water quality certification to build the

pipeline.

                        b.      Engineered Backfill

        While the CTDEP’s findings as to the lost shellfishing use caused by anchor strikes and cable

sweeps, by itself, warrants our denial of Islander East’s petition, that conclusion is further supported

by the agency’s identified concerns regarding the ability of engineered backfill to restore 5.5 acres

of shellfish habitat that would be destroyed by dredging the exit pit and the adjoining mile-long

trench. See 2006 Denial at 65-69, 81.

        Once again, the CTDEP’s concern derives from the site of the proposed pipeline. The exit

pit and trench would be dredged in nearshore waters, 13 to 20 feet deep, that are used and designated

for shellfishing. Although Islander East had originally planned to mound dredged material adjacent

to the pit and trench for subsequent backfill, evidence indicated that waves and wind-generated

currents in the affected waters posed a serious risk of dispersing sidecast spoil into the water,

resulting in sedimentation. See id. at 36. Apparently, sediment deposits a few millimeters thick may

smother some benthic species, including “juvenile oysters.” Id. at 51-52 (citing Letter from John C.

Roberge, Roberge Associates Coastal Engineers, LLC, to John Opie, First Selectman, Town of

Branford at 2 (Feb. 4, 2004)). To alleviate these concerns, Islander East proposed to remove the


                                                   30
dredged sediment and to use an engineered material consisting of small rocks and sand to refill the

trench. In denying certification, the CTDEP noted “[d]iscrepancies in the record” regarding the

precise composition of this engineered material, which made it impossible to assess “the full extent

of resulting sedimentation” and the “scour resistance” of the backfill. Id. at 38-39. More important,

the CTDEP noted that no “reasonable prediction of benthic community establishment” could be

made without knowing “the exact sediment grain size difference between the existing native

substrate” that would be removed “and the new backfill” that would replace it. Id. at 39.

       Islander East concedes what the record confirms, i.e., that “[t]he composition of the backfill

is unresolved.” Petitioner’s Br. at 28; see 2006 Denial at 36-37 (comparing Islander East proposal

to use sand on top of rock or gravel less than 4 inches in diameter with Haley & Aldrich Report

recommending no more than 2-inch diameter gravel together with .187-inch coarse sand and small

percentage of fine sand). Nevertheless, it submits that it should not be denied a permit for its good

faith efforts to mitigate the CTDEP’s concerns about the sedimentation of dredged materials.

Islander East’s argument might be persuasive if the CTDEP had imposed a supplemental condition

on an otherwise meritorious certification application. But that is not the case. It is undisputed that

the usual practice of casting dredged spoil to the side of a trench for subsequent backfill raised

legitimate concerns about sedimentation along the proposed pipeline route. Thus, Islander East’s

application was not meritorious without the inclusion of a concrete proposal for adequate backfill

mitigation measures. In proposing alternative backfill materials to carry its certification burden,

Islander East introduced new concerns about the suitability of foreign backfill as shellfish habitat.

It was not arbitrary or capricious for the CTDEP to have noted those concerns or to have sought their

resolution preliminary to granting certification.


                                                    31
       In Islander East I, we faulted the CTDEP for failing both to cite record evidence supporting

its summary conclusion that engineered backfill would “permanently degrade the benthic substrate

along the pipeline route,” 482 F.3d at 102, and to acknowledge evidence suggesting likely recovery,

see id. at 102-03. The agency has now addressed both points at length, explaining why it gave “little

weight” to those studies predicting rapid restoration of shellfish habitat based on seabed recovery

from natural disturbances. 2006 Denial at 66. The CTDEP expressed

       no reason to doubt that, under perfect circumstances, in the native substrate, benthic
       organisms would eventually recover. The three to five year recovery predictions
       offered in the above-referenced scientific studies are generally based on observations
       of benthic community succession following dredging or other disturbances such as
       storm events which redeposit[] naturally-occurring sediment which is not the case
       with the activity proposed by Islander East. The habitat needs to recover before the
       benthic organisms can recolonize the area. . . . [T]he primary factor in recovery time
       is first obtaining habitat suitability.

Id. at 67 (emphasis in original). Moreover, the agency noted no available studies “that offer

predictions on benthic colonization in an entirely new, and very different material than the native

substrate.” Id. at 68. Observing that the native substrate to be displaced by Islander East’s proposed

pipeline consisted of compact, fine-grained sediments, see id. at 69, the CTDEP cited evidence

indicating that the replacement of such material with a predominantly rocky backfill would not only

deprive soft shellfish of a medium into which they could burrow, it would also attract shellfish

predators. See id. at 6, 68-69 (citing comments of John H. Volk, Connecticut Department of

Agriculture). Although Islander East submitted a report indicating that rocky backfill could actually

promote habitat diversity by “improv[ing] conditions for two valuable commercial species, oyster

and lobster,” TRC Envtl. Corp., Evaluation of Benthic Impacts Associated with Islander East’s

Modified Offshore Construction Techniques § 4 (Feb. 17, 2003), we cannot conclude that the

CTDEP acts arbitrarily or capriciously when it fails to view a potential increase in certain shellfish

                                                 32
species as an adequate offset for the decrease in other species, such as soft-sediment clams. This sort

of balancing falls squarely within the agency’s environmental expertise, and is consistent with the

federal anti-degradation mandate that “[s]pecies that are in the water body and which are consistent

with the designated use . . . must be protected, even if not prevalent in number or importance.”

Questions and Answers on Antidegradation, in EPA, Water Quality Standards Handbook, App. G

at 3 (2d ed. 1994) (emphasis in original).

       Islander East submits that the CTDEP failed to note its alternative proposal to backfill the

trench with sand, a substance that would avoid the noted predator concern. See Letter from Joe

Reinemann, Islander East, to Joanne Wachholder, FERC, et al. (Apr. 17, 2003). While this evidence

may demonstrate Islander East’s good faith willingness to explore alternatives, absent a further

showing that a sand backfill would likely restore the affected 5.5 acres to shellfish habitat, we

identify no abuse of discretion in the CTDEP’s failure specifically to address this alternative. Cf.

2006 Denial at 66, 69 (noting that original substrate was plastic and cohesive, so that, while sand

would be a better backfill than rock, it would not be as good as silt in restoring shellfish habitat).

This is not to foreclose the possibility that some engineered backfill might be identified to provide

adequate assurance of habitat restoration along the proposed pipeline. But in the absence of such

a showing by Islander East, we conclude that the CTDEP did not act arbitrarily or capriciously in

relying on the lost use attributable to backfill concerns as well as the lost use attributable to anchor

strikes and cable sweeps in denying certification.

                       c.      Sedimentation and Drilling Fluid Release

       The CTDEP cited two additional reasons for denying Islander East a water quality

certification: (a) dredging and plowing (even with spoil removal) would cause sedimentation,


                                                  33
adversely affecting more than 80 acres of shellfish habitat, see id. at 50-55; and (b) planned and

unplanned releases of drilling fluid would destroy at least 3.55 acres of shellfish habitat, see id. at

56-65. While both concerns are legitimate, we identify some evidentiary issues with the CTDEP’s

conclusions that might warrant remand in the absence of the aforementioned grounds to deny the

petition.14

                               (1)     Sedimentation

        In its discussion of sedimentation, the CTDEP cited evidence that sediment deposits of 1

millimeter could cause 50 percent mortality in some benthic species while deposits of 2 millimeters

could cause 100 percent mortality in the same species. See id. at 51-52 (noting further that juvenile

oysters could be adversely affected by “as little as 3 millimeters of sediment”). While applauding

Islander East’s use of installation methods that would reduce sedimentation, the CTDEP concluded

that sedimentation associated with the project would still harm a sufficiently “significant area of both

natural habitat and prime shellfishing beds” to preclude certification. Id. at 50-51.

        In choosing among conflicting reports of the degree of sedimentation likely to result from

installation of the Islander East pipeline, the CTDEP found the study conducted by Roberge

Associates “most reliable in terms of predicted amount and extent of sediment dispersion.” Id. at

53.   That study estimated that a 3-millimeter layer of sediment would be deposited over

approximately 35 acres of sea floor stretching 131 feet from the centerline of the pipeline trench.

See id. at 53. Almost all of this acreage qualified as town or state shellfish beds. See id. at 55

(indicating that 3-millimeter sedimentation would affect 26.52 acres of Branford shellfish beds and


        14
          We discuss these concerns only to provide guidance in the event the parties should renew
their discussions about the possibility of installing the proposed pipeline consistent with the
requirements of federal and state law.

                                                  34
7.97 acres of state shellfish beds). The Roberge study estimated that dredging would also deposit

a 1-millimeter layer of sediment over approximately 70 acres. See Letter from John C. Roberge,

Roberge Associates Coastal Engineers, LLC, to John Opie, First Selectman, Town of Branford at

3-4 (Feb. 4, 2004).

        In its brief to this court, the CTDEP now concedes that the Roberge study is mathematically

flawed, resulting in a significant overstatement of the area affected by sedimentation. The agency

reduces its identification of the affected area to 6.2 acres covered by 3 millimeters of sediment and

12.3 acres covered by 1 millimeter of sediment. See Respondent’s Br. at 51 n.24. Islander East

asserts that this recalculation is itself flawed because it double counts certain acres. See Petitioner’s

Reply Br. at 23 n.27. We need not resolve this dispute because, even if were to assume the

correctness of the CTDEP’s recalculation, the agency does not explain how discrete sedimentation

exposure in this smaller area will cause more than a temporary loss of either benthic species or use

of the waters for shellfishing. Thus, were sedimentation the sole ground for denying certification,

we would remand to afford the agency the opportunity to address this question. See, e.g., Li Hua Lin

v. United States Dep’t of Justice, 453 F.3d 99, 111 (2d Cir. 2006) (remanding based on factual error

critical to agency conclusion). We do not do so because, for reasons already discussed, we conclude

that the denial of certification is rationally supported by other findings of lost use satisfactorily

grounded in record evidence. Cf. National Ass’n of Home Builders v. Defenders of Wildlife, 127

S. Ct. 2518, 2530 (2007) (“‘In administrative law, as in federal civil and criminal litigation, there

is a harmless error rule.’” (quoting PDK Labs., Inc. v. United States Drug Enforcement Admin., 362

F.3d 786, 799 (D.C. Cir. 2004))).




                                                   35
                                (2)     Drilling Fluid Release

        In its initial denial of certification, the CTDEP conclusorily found (1) that the use of

horizontal drilling technology at the first step of pipeline installation was inconsistent with state

water quality standards because 455 barrels of drilling fluid would be released when the drill exited

the sea floor at milepost 10.9; and (2) that unplanned releases of fluid, or “frac-outs,” would occur

in the course of drilling. In the absence of further findings as to the likelihood of frac-outs and the

adverse consequences of fluid releases to shellfish habitat, we held this rationale insufficient to

support denial. See Islander East I, 482 F.3d at 100 (noting that “we may not supply a reasoned basis

for the agency’s action that the agency itself has not given” (quoting State Farm, 463 U.S. at 43)).

In its 2006 Denial, the CTDEP addressed both points.

        As evidence of the likelihood of frac-outs in the Islander East project, the CTDEP cited

reports of such occurrences “in at least half of the [horizontal drilling] projects it ha[d] regulated.”

2006 Denial at 61. Further, noting that frac-outs are most likely to occur at substrate transitions, e.g.,

from a sedimentary to a rocky area, the CTDEP observed that the geological characteristics of the

Thimble Islands indicated many such transitions. See id. On this record, we cannot conclude that

the agency’s identified concern with likely frac-outs on the Islander East project was arbitrary or

capricious.

        To support its conclusions concerning the adverse effect of drilling fluid on shellfish habitat,

the CTDEP pointed to evidence supplied by Michael Ludwig, an employee of the National Marine

Fisheries Service. See id. at 57 & App. H. Mindful that drilling fluid is 97 percent fresh water and

3 percent bentonite clay, Ludwig explained that shellfish cannot live in fresh water. When exposed

to drilling fluid, they close their shells to “hold [their] breath.” Id. In doing so, the shellfish


                                                   36
inevitably pull in some clay, which would lodge in their gills. As they reopen to expel the clay, the

shellfish are exposed to fresh water, causing them to close again, trapping in more clay. As the cycle

repeats itself, the shellfish, unable to breath, suffocate. See id.

        The risk of such suffocation depends, in large part, on drilling fluid remaining fixed in place

rather than dispersing. The evidence on this point was conflicting. While certain studies suggested

rapid dissipation, see 2006 Denial, App. H at 3-4 (reprinting Larry Gedney, Drilling Mud Poses

Little Environmental Hazard, Alaska Science Forum (May 7, 1984) (noting that “after an

insubstantial amount of time, currents dissipated the [drilling] fluids to levels that were

innocuous”)); Garrett Group Ltd., Preliminary Report on the Anticipated Biological Impacts

Associated with the Proposed Islander East Pipeline Project at 10 (May 8, 2003) (stating that drilling

fluids “rapidly dissipate into any background concentrations”), other evidence indicated that drilling

fluid “tends to be resistant to dispersion when placed in saline waters,” Email from Michael Ludwig,

National Marine Fisheries Service, to Sue Jacobson, CTDEP at 1 (Sept. 29, 2003). The CTDEP

chose to rely on Michael Ludwig’s opinion and the FEIS prepared for the FERC for the conclusion

that, because “‘drilling fluids flocculate [lump together] and settle to the bottom,’” 2006 Denial at

57 (quoting FEIS 3-53) (modification in original), “[d]ispersion by dilution of this gel-like mud into

the water column is unlikely,” id. (citing FEIS 3-54). Where reasonable minds might thus differ on

a point, an agency’s resolution of competing evidence cannot be deemed arbitrary and capricious.

See Universal Camera Corp. v. NLRB, 340 U.S. at 488 (holding that reviewing court may not

displace agency’s choice between “two fairly conflicting views” of evidence).

        Recognizing the risks associated with the release of drilling fluid, Islander East advised the

CTDEP of its willingness to develop plans to contain and recover the substance. It submitted a


                                                  37
containment plan offering alternative proposals, deferring its final choice until after a horizontal

drilling contractor had been selected. The CTDEP found these proposals to be “vague and largely

inadequate.” 2006 Denial at 31; see also id. at 58. We cannot review this finding because Islander

East has not included its alternative proposals in the appendix on appeal and the CTDEP has not

filed a certified administrative record as required by Fed. R. App. P. 17(a). To the extent the CTDEP

disagreed with Islander East’s proposed definition of a “significant” release of drilling fluid into the

Sound, see id. at 57-58, however, we note a concern.

        Islander East’s proposed threshold for identifying a “significant” release warranting removal

action was based on several factors, including, inter alia, (1) “the ability to contain the release within

a 200 foot wide corridor centered on the HDD drill path,” and (2) whether such deposits “exceed 24

inches in depth.” 2006 Denial at 58. Referencing evidence that sedimentation deposits of as little

as 1-2 millimeters could adversely affect benthic organisms, the CTDEP concluded that the proposed

24-inch threshold was “too high” to satisfy state water quality standards. Id. The CTDEP does not

point to any evidence, however, supporting an analogy between the levels of sedimentation and

drilling fluid that would cause a loss of shellfishing use. While we might remand to afford the

agency an opportunity to clarify this point, because we have identified other reasons for agency

denial of certification that are supported by record evidence, we conclude that no such remand is

necessary. Cf. National Ass’n of Home Builders v. Defenders of Wildlife, 127 S. Ct. at 2530.

        Islander East points out that although the CTDEP rejected Islander East’s proposal to define

a significant release by reference to fluid deposits over 24 inches deep, it had approved a nearly

identical definition in connection with the Cross Sound Cable Company’s monitoring of its

horizontal drilling. See CTDEP, Permit No. 200102720-MG, App. B at 6 (Mar. 17, 2002) (including


                                                   38
within “conditions which constitute a significant impact” on water quality “[d]rilling fluid

depositional depths . . . exceed[ing] 24 inches at the interface with the containment fence”). In

contrast with the CTDEP’s adverse experience with aspects of the Iroquois pipeline, which, as we

have noted, provided a rational basis for the agency subsequently to reject similar aspects of the

Islander East proposal, the CTDEP found no adverse effects arising out of Cross Sound Cable’s

horizontal drilling to support its rejection of Islander East’s 24-inch threshold. Indeed, CTDEP

provided Islander East with Cross Sound Cable’s monitoring plan, including its definition of

“significant,” as a reference. See Letter from Charles H. Evans, CTDEP, to Gene Muhlherr, Jr.,

Islander East at 7 (May 5, 2003) (enclosing redacted copy of Cross Sound Cable monitoring plan and

stating “monitoring plan will be required. Please refer to the enclosed sample for reference”). While

Islander East may have understood this reference to signal that its proposed monitoring plan should

duplicate that of the Cross Sound Cable Company’s, in light of the fact that the latter project’s

horizontal directional drilling would affect only dormant shellfishing beds while Islander East’s

drilling would affect active beds, we cannot conclude that it was arbitrary or capricious for the

CTDEP to conclude that stricter release monitoring was necessary to assure water quality standards

in this case.

                3.     Good Faith

        In Islander East I, we cited some evidence raising concern that the CTDEP had pre-

determined to deny certification in this case, affording the pipeline proposal only perfunctory review.

See 482 F.3d at 105. On its latest petition, Islander East includes in the record several newspaper

articles reporting continued opposition in Connecticut to the pipeline, presumably to demonstrate

that the CTDEP has again denied it good faith review. It further points to CTDEP actions attempting


                                                  39
to block Islander East from conducting geological surveys as evidence of bad faith. We are not

persuaded.

       While the survey allegation raises some concern, the actions predate the first denial and, in

any event, are not fully developed. Moreover, the surveys relate to a ground for denial not relied on

in this decision. See supra at [36-39]. On this record, we deem the allegation insufficient to

establish bad faith with respect to the 2006 Denial.

       While there is no denying the continued strong opposition to the pipeline voiced by some

Connecticut residents and officials, where an agency’s analysis of a controversial application is

detailed and thorough, as is the case with the CTDEP’s 2006 Denial, we will not readily conclude

that it is infected by bad faith. While the CTDEP might have made more of an effort to resolve

seeming discrepancies in or omissions from Islander East’s proposal before issuing its challenged

denial, its failure to do so does not demonstrate bad faith or an arbitrary and capricious decision. As

we made plain in Islander East I, even as we ordered remand in that case, it was “Islander East’s

burden to demonstrate its entitlement to favorable action on its . . . application.” 482 F.3d at 104.

Because the CTDEP has now “adequately . . . consider[ed] important aspects of the issue,” id., and

supported its conclusion that Islander East did not carry this burden with record evidence, Islander

East must point to more than continued political opposition for us to find agency bad faith.

       In so holding, we express no view as to the wisdom of the challenged denial or of a statutory

scheme whereby a single state agency effectively vetoes an energy pipeline that has secured approval

from a host of other federal and state agencies. It is, after all, Congress that has “provide[d] states

with the option of being deputized regulators” of the Clean Water Act. Islander East I, 482 F.3d at

90. If Congress were to agree with Islander East that the public interests furthered by its proposed


                                                  40
pipeline outweigh Connecticut’s water quality concerns, Congress could consider whether to

dissolve the federal-state partnership it created. Until such time, however, this court is charged with

reviewing the state agency’s denial only to ensure that it is not arbitrary or capricious. Because we

conclude that it is not, we hereby deny the petition for review.

III.   Conclusion

       To summarize, Islander East’s proposed installation of a natural gas pipeline from

Connecticut to New York across Long Island Sound must comport with various statutes, including

the Clean Water Act. The Clean Water Act requires Islander East to procure from the CTDEP a

certification that the proposed pipeline will comply with state water quality standards. Record

evidence supports the CTDEP’s finding that various techniques to be employed by Islander East in

installing the proposed pipeline would violate state water quality standards by eliminating a

significant area of nearshore waters from their existing and designated use of shellfishing. On such

a record, we cannot conclude that the CTDEP’s decision to deny Islander East a certificate of

compliance was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with

law.” 5 U.S.C. § 706(2)(A). Islander East’s petition for review is DENIED .




                                                  41
JANE A. RESTANI, Judge, dissenting:

       I respectfully dissent from the majority’s conclusion that Connecticut Department of

Environmental Protection’s (“CTDEP”) second denial of certification for Islander East’s proposed

natural gas pipeline plan, see CTDEP, Water Quality Certification Application No. 200300937-SJ,

Islander East Pipeline Co., LLC (Dec. 19, 2006) (“2006 Denial”), was supported by reasoned

explanation based on record evidence and was not arbitrary or capricious. In particular, I note the

majority’s acknowledgment that CTDEP failed to explain properly its dismissal of an expert report

on sedimentation – especially in light of CTDEP’s admission that the report it relied upon was

mathematically flawed and significantly overstated the affected area – and that CTDEP improperly

rejected Islander East’s proposed drilling plan, despite the fact that CTDEP approved and provided

for reference a nearly identical plan from a prior project.         I disagree with the majority’s

characterization of these errors as harmless, and find that there is not reliable evidence to otherwise

support CTDEP’s decision.

I.     Review of the 2006 Denial

       The majority correctly states that the issue is whether CTDEP was arbitrary or capricious in

finding that the proposed pipeline would result in damage inconsistent with the Connecticut Water

Quality Standards. CTDEP, Water Quality Standards (effective Dec. 17, 2002) (“CTWQS”).

       Under CTWQS surface water quality standard number two, “[e]xisting and designated uses .

. . and the water necessary for their protection [are] to be maintained and protected.” CTWQS at 1.

As part of its antidegredation policy, the EPA requires states to publish Water Quality Standards

(“WQS”) that maintain a “level of water quality necessary to protect . . . existing uses.” 40 C.F.R.

§ 131.12(a)(1). The state has the responsibility to apply any quantitative criteria provided in the


                                                  42
WQS, as well as descriptive characteristics. PUD No. 1 of Jefferson County v. Wash. Dep’t of

Ecology, 511 U.S. 700, 714–15 (1994). The Clean Water Act envisions that a state’s WQS may list

non-quantitative criteria, such as use designations, which “must be translated into specific limitations

for individual projects.” Id. at 716. Thus, while a state is free to impose narrative or open-ended

criteria in its WQS, the use of such criteria does not free the state from its obligation to impose a

specific limitation within the context of a particular project proposal. The agency’s central task is

to give open-ended criteria meaning for a particular proposed project, providing parties with the

necessary guidance to participate in the regulatory process.

        In the 2006 Denial, however, CTDEP declined to quantify what specific limitations would

have to be met to find the proposed project consistent with the CTWQS. Rather than stating

minimum thresholds, CTDEP pointed to a series of likely or potential environmental impacts that

it contends would violate the CTWQS. As a court, we are powerless to set the specific limitations

on water quality impacts that would be inconsistent with the CTWQS. The majority correctly notes

that such a determination depends on scientific evidence and policy judgments best left to the expert

consideration of an agency. See Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto.

Ins. Co., 463 U.S. 29, 48 (1983). Although it is within the agency’s authority to determine a level

at which such harms are unacceptable, it must be reemphasized that “an agency’s action must be

upheld, if at all, on the basis articulated by the agency itself.” Islander East Pipeline Co. v. Conn.

Dep’t of Envtl. Prot., 482 F.3d 79, 95 (2d Cir. 2006) (“Islander East I”) (quotations omitted). Our

task is to hold CTDEP to its own reasoning and judgments.

II.     Review of CTDEP’s Conclusions

        A. CTDEP’s Claims Regarding Sedimentation in the Dredge Section


                                                  43
       CTDEP’s treatment of potential sedimentation impacts in the dredge section of the project

presents the most serious concern, particularly because sedimentation is cited as grounds for denial

in two of CTDEP’s four conclusions.1 In finding that “a significant area of both natural habitat and

prime shellfishing beds would be exposed to sedimentation exceeding normal levels and for

extended periods of time,” CTDEP relied heavily on expert studies on the record, finding the

Roberge Report, (John C. Roberge, P.E., LLC, Potential Sedimentation Impacts Which Could Result

from Dredging (2003) (“Roberge Report”)), “to be the most reliable in terms of predicted amount

and extent of sediment dispersion,” (2006 Denial at 53), and dismissing the ASA Report, (Applied

Science Associates, Inc., Results of SSFATE Model Simulations, Nearshore Connecticut, Long

Island Sound (2003) (“ASA Report”)), because it relied on tidal currents alone. (2006 Denial at

52–53.) On the basis of the Roberge Report, CTDEP provided a measurement of the area that would

be impacted by sedimentation.

       CTDEP now admits that the Roberge Report’s predictions are incorrect, overstating the

extent of sediment dispersion by more than a factor of four. According to Respondents’ brief, the

Roberge Report should have stated that the area of sediment dispersion would be 18.5 acres, not 86.

(Compare 2006 Denial at 53, with Resp’ts’ Br. 51 n.24.) This is far closer to the amount predicted

in the ASA Report, which estimated 14 acres of sediment dispersion. (See id.; ASA Report at 4.)



       Despite the fact that CTDEP should have considered a significantly reduced estimate of the



       1
       CTDEP cites an “unacceptable impact to benthic habitats . . . indirectly through
sedimentation,” and states that the project will cause the “biological integrity” of the area to be
“unacceptably reduced and changed as a result of the change in benthic substrate, including
sedimentation.” (2006 Denial at 80.)

                                                44
sedimented area, Respondents now contend that “[t]he error is one of degree,” and that any area of

sedimentation that interferes with shellfish harvesting is inconsistent with the CTWQS. (Resp’ts’

Br. 52.)     This is a surprising claim.     CTDEP’s reasoning refers to a “significant area” of

sedimentation, specifically, 86.23 acres. (2006 Denial at 50–51, 55.) Further, if any amount of

sedimentation would be inconsistent with the CTWQS, it would not have been necessary for CTDEP

to go to such lengths to dismiss the ASA Report’s conclusions. More importantly, there is no

indication in the record that CTDEP actually considered whether 18.5 acres of sedimentation would

be a significant impact resulting in a partial loss of an existing use. It is not the role of the court to

make such a determination on CTDEP’s behalf. See Ace Motor Freight, Inc. v. ICC, 557 F.2d 859,

864 (D.C. Cir. 1977). CTDEP’s admittedly erroneous finding of 86 acres remains the only finding

before us, along with Respondents’ assurances that the actual amount of sedimentation does not

matter. As we stated in Islander East I, we “‘may not accept appellate counsel’s post hoc

rationalizations for agency action. It is well established that an agency’s action must be upheld, if

at all, on the basis articulated by the agency itself.’” 482 F.3d at 95 (quoting State Farm, 463 U.S.

at 50).

          CTDEP’s strong reliance on the erroneous sedimentation findings as a basis for denial seems

far from harmless error, contrary to the assertion of the majority. Because CTDEP did not consider

the effects of sedimentation under the drastically reduced calculations or adequately explain its

rejection of the ASA Report in light of its similarity to the new calculations, the 2006 Denial’s

conclusions with respect to the effects of sedimentation in the dredged section were arbitrary and

capricious.

          B. CTDEP’s Conclusions Regarding the Use of Backfill


                                                   45
                1. Engineered Backfill

        The 2006 Denial also expressed concern over the placement of engineered backfill into the

dredge trench, finding that there were significant discrepancies in the record regarding the proposed

composition of the backfill, and that even if shellfish could return to a rocky backfill, shellfish

predators – particularly starfish – would also colonize the area. (2006 Denial at 37, 66–68.) With

respect to the backfill composition, the 2006 Denial specifically noted that an expert report called

for the use of “‘[r]ock or gravel of less than 4 inches in diameter,’” (id. at 37 (quoting TRC

Environmental Corporation, Evaluation of Benthic Impacts Associated with Islander East’s Modified

Offshore Construction Techniques at 6 (2003) (“2003 TRC Report”))), and that Islander East’s own

consultants recommended the use of backfill containing “mostly gravel, no more than 2 inches in

diameter and coarse sand,” (id. (citing Haley & Aldrich, Inc., Report on Engineered Backfill Study

at 4 (2003).) Because the nature or grain size of the materials were uncertain, CTDEP concluded

that it could not speculate as to what fauna might be able to inhabit the area. (2006 Denial at 38.)



        The record demonstrates that the 2003 TRC Report was issued before Islander East had

finalized its backfill proposal, and therefore does not contradict the later descriptions of the intended

backfill as a layer of rock covered by a layer of sand. (See 2003 TRC Report (issued February 17,

2003).) Islander East provided a completed backfill plan on April 15, 2003, and subsequently

referenced the use of two layers in the backfill. (See Multi-Agency Meeting Notes (Apr. 15, 2003)

(“April Minutes”).) The 2006 Denial, however, continued to refer to concerns related to an all-rock

backfill. (See 2006 Denial at 70.) Similarly, the 2006 Denial repeatedly cited concerns that

predators would also colonize an area filled with a rocky backfill. (Id. at 66, 68.) Although the


                                                   46
record shows that the use of a two-layer sandy backfill would prevent predators from undermining

shellfish colonization, (see April Minutes at 1), CTDEP failed to explain why it did not consider the

evidence indicating negotiated changes in the composition of Islander East’s proposed backfill, and

the potential effects thereof.

                2. Proposed Use of Some Native Spoil

        In the 2006 Denial, CTDEP found that Islander East’s “suggestions regarding disposal

options . . . appear to retreat from the conclusion reached during the agency technical discussions”

by seeking to use some native spoil in the backfill area. (2006 Denial at 37.) CTDEP expressed

concern that the proposal to return excess spoil to the HDD exit area was contradicted by Islander

East’s prior statements to CTDEP, would be “inefficient and slow,” and would “increase

sedimentation.” (2006 Denial at 38 (quotations omitted).)

        CTDEP failed to acknowledge, however, that plans to use some native spoil to fill the HDD

exit pit had existed since the beginning of the process. (See Project Meeting Minutes at 2 (Mar. 4,

2003) (stating that Islander East intended to dispose of a maximum of 25,000 cubic yards of dredged

sediment, and that it was “possible to return spoil to the HDD exit hole or to use spoil as a top

dressing material to the engineered backfill”); April Minutes at 1 (stating that spoil could be placed

over rock laid in the HDD exit pit).) The fact that Islander East was prepared to use a limited

amount of dredged material is therefore not at odds with its contention that using dredged sediment

to the exclusion of engineered backfill would not be practical. Thus, in addition to its failure to

consider negotiated changes in the composition of engineered backfill, CTDEP neglected to consider

fully record evidence of the proposed options for use of some native spoil in the backfill area.

        C. CTDEP’s Claims Regarding the Plow Section


                                                 47
        The 2006 Denial found that anchor strikes, cable sweeps, and plow impacts resulting from

the use of a subsea plow after mile 12 would disrupt the sea floor, rendering it uneven. (2006 Denial

at 47.) In support of its conclusion that disturbed sediments would settle into surface irregularities,

CTDEP referenced two projects that have reportedly suffered long-term scarring: the Iroquois

Pipeline between Connecticut and Long Island and a series of electric cables installed on the floor

of the Hudson River. (Id. at 43, 47–48.) CTDEP failed to address, however, record evidence

regarding the installation of the Cross-Sound Cable, showing that it resulted in little or no impact

on shellfish habitat. (See Task Force on Long Island Sound, Comprehensive Assessment and

Report: Environmental Resources and Energy Infrastructure of Long Island Sound at 78–79 (2003).)

Although the Cross-Sound Cable is a comparable utility project in Long Island Sound, installed more

recently than either the Hudson River cables or the Iroquois Pipeline, CTDEP did not explain why

it discounted record evidence that the plowing resulted in little or no impact, or why the Cross-Sound

Cable’s trench construction was distinguishable from Islander East’s proposal.2 It is not our

responsibility to search the record for such distinctions. As we noted in Islander East I, “it was

Islander East’s burden to demonstrate its entitlement to favorable action on its WQC application,

[but] it was CTDEP’s burden adequately to consider important aspects of the issue.” 482 F.3d at

104.



        2
           The majority finds a distinction on the grounds that, “in contrast to this case, where the
CTDEP found that Islander East’s pipeline project would cause a long-term loss of shellfishing beds
in existing or foreseeable future use, the Cross Sound Cable project implicated only dormant beds
that were expected to remain so.” Maj. Op., ante at 30. Under the CTWQS, however, both
“[e]xisting and designated uses” are protected. CTWQS 1. In addition, it is not clear from the
record that the potentially affected areas in this case had been recently used for shellfish cultivation,
nor is it the responsibility of the court to draw such distinctions from the evidence where the agency
neglected to do so.

                                                   48
        D. CTDEP’s Conclusion Regarding Islander East’s Proposed Use of HDD

        Although CTDEP found that shellfish in the drilling exit pit, or in an area affected by a

frac-out, would die of exposure to drill fluid, the 2006 Denial did not cite record evidence indicating

that wave energy might disperse the fluid, or address other record evidence suggesting that

dispersion does occur. Although there is evidence on the record indicating that releases of drill fluid

would likely be “small and isolated, . . . or rapidly dissipate,” (Garrett Group, Ltd., Preliminary

Report on the Anticipated Biological Impacts Associated with the Proposed Islander East Pipeline

Project, through the Nearshore Area of Long Island Sound – Branford, CT at 10 (May 8, 2003)), the

2006 Denial does not explain why it assumed that drill fluid would not disperse before the

suffocation of the shellfish populations not removed prior to construction. While the majority

indicated that reasonable minds might differ on the implications of the evidence on the record, it is

not the responsibility of the court to comb the evidence to derive such implications where the agency

neglected to do so.

        In addition, even assuming that drill fluid would not disperse quickly enough to avoid

shellfish suffocation, CTDEP dismissed all of Islander East’s proposed mitigation and remediation

plans. (See, e.g., 2006 Denial at 31, 58.) CTDEP refused to consider Islander East’s containment

plan and claimed that Islander East’s proposed monitoring and operations plan failed to include an

appropriate definition of a “significant release” of drill fluid. As noted by the majority, however,

CTDEP approved a nearly identical definition used in a monitoring plan provided by the

Cross-Sound Cable Company. CTDEP also failed to identify reasons why the use of alternative

HDD technology was acceptable in the Cross-Sound Project, but not here. It was CTDEP’s

responsibility to identify reasons to justify its inconsistent treatment of the plans, and it failed to do


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so.3

       E. CTDEP’s Finding that the Anchor Corridor Would Include the Dredge Section

       The 2006 Denial also concluded that the project would create an anchor corridor of 4,045

acres, approximately 1,120 of which are in existing and potential shellfish lease areas, an acreage

characterized by CTDEP as “unacceptably large.” (2006 Denial at 41, 70, 80.) As noted by the

majority, CTDEP erroneously included in this calculation 322.4 acres in nearshore waters that were

incorrectly assumed to be subject to anchor strikes and cable sweeps, and failed to address Islander

East’s proposed alternative means of installing the pipeline in the dredged area.

       In its modified proposal, Islander East provided that a stationary barge could be used to

assemble the necessary pipeline between mileposts 10.9 and 12 instead of laying the pipe from a

barge directly into the dredged trench. (See Islander East Pipeline Project, Permit Application for:

401 Water Quality Certificate, Marine Pipeline Installation Methodology 1, 9.) Following this

method, “a winch mounted on a construction vessel at the HDD exit hole will be used to pull two

strings of pipe, each approximately one mile long, from the laybarge to near the exit hole.” (Id. at

1.) Thus, “[t]he HDD pipe string [could] be installed by the laybarge either by standard operations

or by remaining stationary and [using] a winch mounted on a separate vessel . . . to pull the pipeline

off the laybarge to the HDD exit hole.” (Id. at 9.) CTDEP did not address the possibility of using

this method to install the pipe, and therefore overestimated the impact by over twenty-five percent.4


        3
       Also as noted by the majority, these conclusions are particularly troubling because the
Cross-Sound monitoring plan was provided as a reference to Islander East.
       4
         CTDEP calculated that 4,045 acres would fall within the anchor corridor created by the
barges, but that only 1,120 acres of the corridor support an existing or designated use of shellfishing.
(See 2006 Denial at 70.) CTDEP found that the use of this area would be lost in its entirety due to
anchor strikes and cable sweeps. (Id.) Subtracting the 322.4 acres incorrectly assumed to be affected

                                                  50
CTDEP’s conclusions on the basis of these calculations5 are therefore unsupported.

       F. CTDEP’s Failure to Address Mitigation Measures

       Finally, CTDEP should have investigated the possibility of imposing conditions requiring

the remediation of impacted areas in the dredged and plowed sections. Record evidence makes

repeated references to the use of remediation plans as conditions to certificate approval. (See, e.g.,

Conn. Siting Council, Cross-Sound Cable Co., LLC, Application for a Certificate of Envtl.

Compatibility and Public Need, Findings of Fact at 22 (Jan. 3, 2002).) The record also contains

evidence indicating that proper remediation measures might encourage shellfishing interests to

harvest within the anchor corridor. (See, e.g., Williams Test., Hr’g Tr. 98:6–12, 19–20 (stating that

fishing around anchor holes would be possible with buoys and “a buffer zone near the holes”).)

Other mitigation measures include notification of impending construction, removal of shellfish from

the work area, reseeding of beds in the work area at Islander East’s expense, and provision of

pipeline surveys.   (See Islander East Pipeline Project, Response to Request for Additional

Information, Impacts Analysis Report at 36 (2003).) Although its failure to address possible

mitigation measures in itself does not render CTDEP’s conclusions arbitrary and capricious, based

on this record, CTDEP should have addressed the possibility of conditioning approval on

remediation of anchor strikes and topographical irregularities, and the possibility of providing

surveys to shellfishing interests that would allow for renewed harvesting within the anchor corridor.




leaves only 797.6 acres of negatively impacted shellfish habitat. We do not have CTDEP’s views
on that impact.
       5
       These figures are, according to Respondents, “[t]he only specific acreage impact mentioned
in [CTDEP’s] conclusion as a basis for denial.” (Resp’ts’ Br. 52.)

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III.   Conclusion

       While there may have been a reasoned approach that CTDEP could have taken to justify its

conclusion based on the evidence available on the record, CTDEP’s inconsistent treatment of the

evidence continues to suggest that its denial of certification for the proposed pipeline may have been

a foregone conclusion. As we indicated in Islander East I, “[a]ny effort by the CTDEP to pursue a

‘strategy’ to justify a foreordained opposition to the pipeline would be incompatible with a reviewing

agency’s mandate to use its expertise to come to a reasoned decision supported by substantial

evidence.” 482 F.3d at 105. The fact that the agency’s decision would have been the same

regardless of the errors on the record is insufficient to show that the 2006 Denial was not arbitrary

and capricious, or that the errors noted by the majority were harmless.

       In addition, the majority gives significant credit to CTDEP for its inclusion of more

“voluminous” information in the 2006 Denial, stating that the panel reached its decision in Islander

East I “largely because of the paucity of findings made by the CTDEP” in the original determination.

Maj. Op., ante at 18. Our review is not relative with respect to the CTDEP’s prior findings reviewed

in Islander East I, and the majority’s determination that CTDEP issued more detailed analysis in the

2006 Denial does not indicate that the agency’s conclusion is not still arbitrary and capricious.

Although a lack of record evidence may certainly indicate a lack of support for an agency’s findings,

the converse is not necessarily true. It is insufficient for an agency to provide “voluminous”

information in support of its conclusion where such information is erroneous, dismissed by the

agency without adequate explanation, or fails to fully explain the agency’s decision. I do not wish

to provide such an incentive here. While the 2006 Denial provides a lengthy explanation of the

reasoning that led CTDEP to deny Islander East’s WQC, the inconsistencies in the reasoning,


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CTDEP’s failure to consider relevant evidence on the record, and the manifest errors in the evidence

relied upon by CTDEP, leave me with no choice but to conclude that the 2006 Denial is arbitrary and

capricious.




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