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NatGas Industry Takes Battle for Northern Access to Court

Several natural gas industry and pro industry groups have filed amicus briefs supporting National Fuel Gas Co. (NFG) subsidiaries and their Northern Access project in a federal appeals court, where the companies are challenging New York's denial of a water quality certification for the pipeline expansion.

The groups are concerned about what they claim are the "inappropriate hurdles" that New York has created for gas infrastructure, which they say denies other states in the region economic growth and stronger energy supplies.

The Natural Gas Supply Association (NGSA), American Petroleum Institute, American Gas Association, Interstate Natural Gas Association of America, U.S. Chamber of Commerce and the Business Council of New York filed a joint amicus brief this month in the U.S. Court of Appeals for the Second Circuit. The Marcellus Shale Coalition and the American Exploration and Production Council filed a separate friend-of-the-court brief in support of Northern Access.

"NGSA member companies' concerns are growing as New York has once again denied water certification of a proposed pipeline through its state by holding the project applicant to considerations that are far outside of the state's purview," said NGSA CEO Dena Wiggins. "This undermines the careful balance between federal and state roles in reviewing pipelines that was established in the Natural Gas Act (NGA)."

The 490,000 Dth/d-plus Northern Access project would expand the Empire and National Fuel Supply systems to move gas from Seneca Resources Corp.-operated wells in northwestern Pennsylvania to markets in New York, Canada, the Northeast and the Midwest. Seneca, an NFG affiliate, is relying on the project to help alleviate capacity constraints.

Northern Access would consist of nearly 100 miles of new pipeline in McKean County, PA, and New York’s Allegheny, Cattaraugus, Niagara and Erie counties.

National Fuel Gas Supply Corp. and Empire Pipeline Inc. in April filed a petition for review in the Second Circuit after the New York State Department of Environmental Conservation (DEC) denied the water quality certification and other permits for Northern Access, following nearly three years of review. The DEC determined that construction would negatively affect the environment.

The decision seemed to reinforce the industry's perception that the state, under Democratic Gov. Andrew M. Cuomo, is against shale gas development and the infrastructure projects necessary for those volumes to reach more markets. Two years ago, New York banned high-volume hydraulic fracturing. The DEC also denied a water quality certification last year for the Constitution Pipeline, which was also appealed.

"Congress gave FERC primary authority for reviewing pipeline projects, so that one state could not unilaterally veto" federally approved projects and "deprive other states' natural gas consumers of a useful and valuable source of competitive natural gas transportation," Wiggins said.

On edge about the regulatory process in New York before the project was rejected, NFG filed a request for rehearing at the Federal Energy Regulatory Commission (FERC) asking the Commission to reconsider the order authorizing Northern Access. The company claimed the state's permit approvals are preempted by the NGA, but the DEC claimed FERC's certificate of public convenience and necessity was conditioned on the applicants obtaining state permits and authorizations.

A federal appeals court also recently declined a request by Millennium Pipeline Co. LLC to compel New York regulators to expedite the water quality certification for a pipeline expansion, suggesting the company could bypass the state agency and go directly to FERC, which has already approved the project. Millennium has said it would likely file with FERC requesting permission to begin construction, while the DEC has moved the application forward after nearly two years of review. A decision in the Constitution case is expected later this summer.

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