The Nickel Report

In a closely watched case, the United States Court of Appeals for the D.C. Circuit last week dismissed an interstate natural gas pipeline company’s challenge to the State of New York’s delay in issuing a water quality certification under section 401 of the federal Clean Water Act (CWA) for the Millennium pipeline project. While the company requested a ruling that the state had waived its right to make a decision on water quality certification for the project, the court decided to dismiss the action – holding that even if the state agency’s lengthy delays did constitute a waiver under CWA section 401, there was no cognizable injury to the company that would give it standing to challenge the delays in court. Rather, according to the court, the remedy is for the company to present evidence of waiver directly to the Federal Energy Regulatory Commission (FERC) to seek authorization to begin construction of the project. The case is one of several pending across the country that involve a state’s authority to issue, deny, or waive a CWA water quality certification for interstate natural gas pipeline projects.

See, e.g., Delaware Riverkeeper Network, et al. v. Sec’y Pa. Dep’t of Envtl. Prot., et al., Case No. 17-1456 (3d Cir.); Delaware Riverkeeper Network, et al. v. Sec’y Pa. Dep’t of Envtl. Prot., et al., Case No. 17-1533 (3d Cir.); FERC Docket No. CP15-115, National Fuel Gas Supply Corp. and Empire Pipeline, Inc., Northern Access 2016 Project.

The Millennium Pipeline Company sought review of lengthy delays by the New York Department of Environmental Conservation (NYDEC) in processing its application for CWA section 401 water quality certification for its Valley Lateral Project. The project is under the exclusive jurisdiction of FERC under the Natural Gas Act (NGA) but is also subject to the requirement in CWA section 401 to obtain a certification from NYDEC that project construction will not violate state water quality standards. 33 U.S.C. § 1341(a)(1). Under the CWA, the certification requirement is waived if the state agency fails to act on a request within a reasonable period of time, not to exceed one year. Id. CWA section 401 does not specify, however, when the waiver period begins – and states have in the past taken advantage of this ambiguity by crafting state-specific standards for what constitutes a “request” for certification sufficient to start the one-year statutory period.

Millennium submitted its original application for section 401 certification to the NYDEC in November 2015. Over the next year, the state agency sent several requests for supplemental information, and Millennium complied with the requests each time. In November 2016, Millennium received authorization from FERC for construction of the project, conditioned upon receipt of the state water quality certification. That same month, NYDEC informed Millennium that it would continue to review the application to determine if a valid request had been submitted. Frustrated by this delay, Millennium filed its petition with the D.C. Circuit, arguing that NYDEC exceeded the one-year deadline set by the CWA and had thus waived section 401 certification. Millennium sought a court order to expedite the timeline for a NYDEC decision or to mandate that the agency grant the certification.

In finding that Millennium had not suffered a cognizable injury sufficient to confer standing in the action, the court reasoned that if NYDEC had waived the CWA requirements, as Millennium contended, then there was “nothing left for . . . the court to do.” FERC, and not the court, had the authority to lift the condition on its earlier authorization and provide a green light for construction. If, on the other hand, FERC determined that the CWA requirements had not been waived, then Millennium could challenge FERC’s determination under NGA section 19(b), which affords judicial review to parties aggrieved by FERC’s orders. Either way, the company had yet to suffer a cognizable injury.

Importantly, the D.C. Circuit’s order indicates that applicants have an avenue for relief through FERC, and FERC has the authority to decide whether a state has waived the CWA requirements. Assuming FERC finds waiver, the burden is on the state to challenge FERC’s determination under the NGA in federal court.

To learn more about pipeline law, visit The Nickel Report’s sister site, PipelineLaw.com.