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Appeals Court Won't Force New York DEC to Issue Constitution Permit

A federal appeals court in Manhattan Friday said it won't force New York regulators to issue a crucial water permit for the embattled Constitution Pipeline, but its backers said the ruling merely clears up a jurisdictional issue to help the Marcellus Shale-focused natural gas project ultimately move forward.

Constitution Pipeline LLC, which would provide 650,000 Dth/d of takeaway capacity, is owned by subsidiaries of Williams Partners LP, Cabot Oil & Gas Corp., Piedmont Natural Gas Co. Inc. and WGL Holdings Inc. The 124-mile, 30-inch diameter pipeline would transport Marcellus Shale gas produced in northeastern Pennsylvania to Schoharie County, NY, where it would connect with existing interstate pipelines Iroquois Gas Transmission and Tennessee Gas Pipeline.

In the ruling, the three-judge panel of the U.S. Circuit Court of Appeals for the Second Circuit said it disagreed with Constitution’s contention that the New York Department of Environmental Conservation's (DEC) refusal to issue a Section 401 Water Quality Certification under the federal Clean Water Act was arbitrary and capricious. The appellate case is Constitution Pipeline Co. LLC v. DEC et al [No. 16-1568].

"Relevant federal statutes entitled DEC to conduct its own review of the Constitution project's likely effects on New York waterbodies and whether those effects would comply with the state's water quality standards," the court said. "We conclude that the denial of the Section 401 certification after Constitution refused to provide relevant information, despite repeated DEC requests, was not arbitrary or capricious."

However, the three judges, Christopher Droney, Amalya Kearse and Richard Wesley, said the panel lacked jurisdiction over Constitution's argument that the DEC had exceeded the statutory time limits for the state's review of the project.

"Such a failure-to-act claim is one over which the District of Columbia Circuit would have 'exclusive' jurisdiction," the panel said. "Accordingly, we dismiss Constitution's timeliness argument for lack of jurisdiction."

Following the ruling, New York Attorney General Eric Schneiderman characterized it as a win for the state. "New York must be able to do what's necessary to protect our environment, and we're glad that the court agreed," he said. "It would be unacceptable for a pipeline, or any project, to pollute our waters and undermine New Yorkers' health and water resources."

But Constitution sponsors also claimed victory. The company said the circuit court "recognized the jurisdiction of the DC Circuit,” which “recently acknowledged FERC’s authority to make the ultimate decision under the Natural Gas Act.

"While we would have preferred an immediate path to construction, we are pleased with the court's resolution of this jurisdictional issue."

Constitution initially was proposed in February 2012, and sponsors began the pre-filing process with the Federal Energy Regulatory Commission two months later. A formal application to FERC was filed in June 2013 and approved in December 2014.

Three months after winning FERC approval to begin construction, a federal court ruled the pipeline could proceed. The company then resubmitted a DEC application for the Section 401 permit in April 2015, but the agency denied the permit one year later. Constitution subsequently filed its appeal with the Second Circuit in May 2016.

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