A Tale of Two Pipelines

By: Emma Lagle

Proponents of natural gas pipelines have faced strong opposition to pipeline construction in New York State.[1]  Section 401 of the Clean Water Act (“CWA”) requires applicants requesting federal permits for activities that will cause any discharge to a navigable water to request the state where that discharge will occur to certify no CWA violation will transpire.[2]  The New York State Department of Environmental Conservation (“DEC”) has exercised its § 401 authority to deny Constitution Pipeline (“Constitution”) and Millennium Pipeline Valley Lateral Project (“Millennium”) water quality certification despite prior FERC approval.[3]

In New York, the Constitution Pipeline proposal includes 98-miles of a 121-mile interstate natural gas pipeline.[4]  The DEC denied Constitution’s § 401 permit on April 22, 2016 after Constitution failed to provide “sufficient detailed information including site specific project plans regarding stream crossings.”[5]  After Constitution filed for review of DEC’s denial, the Court of Appeals for the Second Circuit denied Constitution’s petition for review and upheld DEC’s action as not being arbitrary, capricious, or ultra vires.[6]  The Second Circuit further denied Constitution’s Petition for Rehearing on October 19, 2017.[7]  The holding in Constitution Pipeline seems to favor state authority and turned on the substantive determination that DEC possessed the authority to impose its requirements on a CWA § 401 applicant.[8]

Under CWA § 401(a)(1), “if a state fails or refuses to act on a request for [water quality certification] ‘within a reasonable period of time (which shall not exceed one year) after receipt of such request,’ CWA certification requirements are waived.”[9]  The Millennium Pipeline Valley Lateral Project (“V.L. Project”) is a proposed 7.8-mile extension line that would provide natural gas to the Valley Energy Center power plant in Wawayanda, New York.[10]  Millennium submitted an application for the V.L. Project on November 23, 2015, but the DEC only issued a Notice of Complete Application on July 5, 2017.[11]  The DEC denied Millennium a § 401 permit on August 30, 2017.[12]  However, on September 17, FERC issued a declaratory waiver of DEC’s permit denial on the grounds that the state DEC “waived its authority to issue a water quality certification under § 401 of the CWA by failing to act before the statutorily-imposed deadline.”[13]  Energy traders and natural gas pipeline companies hailed the move while the pipelines opponents deemed it aggressive and called for DEC to appeal the decision.[14]  DEC asserts that it did not waive its authority because the statute did not begin to toll until it received a complete application from Millennium in July 2017.[15]  On October 13, 2017, DEC filed a request for rehearing and urged FERC to correct what they consider egregious overreach into the state’s authority “to confirm or deny water quality certifications for fracking infrastructure.”[16]  Should FERC deny the request, New York will most likely be forced to seek review of the matter in federal court.[17]  In the meantime, opponents of the pipeline urge the state DEC to “seek a stay of construction on the Valley Lateral Pipeline.”[18]

Should FERC’s ruling on the V.L. Project stand, “pipeline companies will be able to submit inadequate applications and try to time out New York’s chance to decide for itself whether its waters will be affected by [a] pipeline.”[19]  Constitution raised the issue of waiver but the Second Circuit dismissed the claim because § 717r of the Natural Gas Act (“NGA”) grants the D.C. Circuit exclusive jurisdiction over actions to review a State agency’s alleged failure to act pursuant to Federal law in the denial of a required permit.[20]  In light of the recent decision regarding the Millennium Pipeline V.L. Project, Constitution now seeks reversal of DEC’s denial from FERC on the claim that DEC waived its § 401 authority.[21] Although the resultant appeals stand at two different points along the regulatory process, natural gas pipeline supporters, their opponents, and state governments are watching the outcome of both project proposals closely to see how their outcomes will effect a state’s authority to protect intrastate environmental features and local community interests from interstate pipeline development.[22]  Only time will tell whether FERC’s strict reading of § 401 of the CWA will stand as a limit to a state’s authority to protect its environmental interests from interstate pipeline projects.

 

 

 

[1] Jamison Cocklin, NY Part 4: New York’s Stand Against NatGas Throws Fate of Opposed Pipelines into Doubt, Natural Gas Intelligence (Sept. 12, 2017), http://www.naturalgasintel.com/articles/111704-ny-part-4-new-yorks-stand-against-natgas-throws-fate-of-opposed-pipelines-into-doubt.

[2] CWA § 401, 33 U.S.C. § 1341(a)(1) (2006).

[3] Constitution Pipeline Co., LLC v. NYS Dep’t of Envtl. Conservation, 868 F.3d 87, 90 (2d Cir. 2017); Letter from Thomas Berkman, Deputy Comm’r and Gen. Couns., NYS DEC, to Georgia Carter, V.P. and Gen. Couns., Millennium Pipeline Co. LLC (Aug. 30, 2017) (on file with NYS DEC) (hereafter “Millennium Denial”).

[4] Constitution Pipeline Co., LLC, 868 F.3d at 91.

[5] Id. at 96-98.

[6] Id. at 103.

[7] Order Denying Petition for Rehearing (2d Cir. Oct. 19, 2017) (No. 61-1658).

[8] Constitution Pipeline Co., LLC, 868 F.3d at 103.

[9] Joan M. Darby et al., The Role of FERC and the States in Approving and Siting Interstate Natural Gas Facilities and Lng Terminals After the Energy Policy Act of 2005 – Consultation, Preemption and Cooperative Federalism, 6 Tex. J. Oil Gas & Energy L 335, 366 (2011).

[10] Scott DiSavino, Natgas Pipeline Builders Hail U.S. Okay of Blocked New York Project, Reuters (Sept. 20, 2017), https://www.reuters.com/article/legal-us-natgas-millennium-ferc/natgas-pipeline-builders-hail-u-s-okay-of-blocked-new-york-project-idUSKCN1BQ2ZK.

[11] Millennium Denial, supra note 3; Letter from Karen Gaidasz, Project Mgr., NYS DEC, to John Zimmer, Pipeline/LNG Market Director (July 5, 2017) (on file with NYS DEC).

[12] See Millennium Denial, supra note 3 (DEC based its denial pursuant to 6 NYCRR § 621.10(f) and the decision in Sierra Club, et l. v. FERC, –F.3d–, 2017 WL 3597014 (D.C. Cir., Aug. 22, 2017)).

[13] Declaratory Order Finding Waiver Under Section 401 of the Clean Water Act, 160 FERC ¶ 61,065 (Sept. 15, 2017) (No. CP16-17-000).

[14] DiSavino, supra note 10; Mark Hand, In ‘Aggressive Move,’ Federal Agency Overrules New York on Pipeline Permit, Think Progress (Sep. 18, 2017, at 3:39 PM), https://thinkprogress.org/federal-agency-overrules-environmental-regulators-2f773c9bacb7/; Richard Webster, Don’t Let NY Get FERCed!, Riverkeeper Blog (Sept. 26, 2017), https://www.riverkeeper.org/blogs/take-action-blogs/dont-let-new-york-get-ferced/.

[15] Request for Rehearing and Stay (Oct. 13, 2017) (No. CF16-17-000).

[16] Id.; Webster, supra note 14.

[17] Jeremy Cherson, You Spoke, NYS Listened. DEC challenges Federal Overreach on Pipelines, Riverkeeper Blog (Oct. 16, 2017), https://www.riverkeeper.org/blogs/dont-frack-with-new-york/environmental-groups-call-governor-cuomo-lead-fight-federal-overreach-pipelines/.

[18] Id.

[19] Webster, supra note 14.

[20] Natural Gas Act § 717r(d)(2), 15 U.S.C. § 717r(d)(2); Constitution Pipeline, 868 F.3d at 100.

[21] Petition for Declaratory Order, re Constitution Pipeline LLC (Oct. 11, 2017) (No. CP17 -); Statement from Constitution Pipeline, Constitution Pipeline (Aug. 18, 2017), http://constitutionpipeline.com/statement-from-constitution-pipeline-2/; Carl Surran, Constitution Says Gas Pipeline Could Enter Service by H1 2019, Seeking Alpha (Oct. 16, 2017 at 11:55 AM), https://seekingalpha.com/news/3301202-constitution-says-gas-pipeline-enter-service-h1-2019.

[22] Webster, supra note 14; Hand, supra note 14.

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