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Constitution Takes Fight to FERC, Wants New York Authority Waived

Constitution Pipeline Co. LLC is petitioning FERC for a declaratory order that New York’s Department of Environmental Conservation (DEC) waived its authority to issue a decision on the project’s water quality certification (WQC) because it exceeded the one-year period required under the federal Clean Water Act (CWA).

The filing is Constitution’s latest move in an ongoing fight with DEC, which denied the pipeline project’s WQC in 2016. DEC rejected Constitution’s application, claiming it was incomplete primarily because it did not have enough information about trenchless crossings to determine potential environmental impacts.

Constitution’s petition cites the Federal Energy Regulatory Commission’s order last month that waived DEC’s authority to issue a decision on Millennium Pipeline Co. LLC’s WQC for the Valley Lateral Project. In a strict reading of Section 401 of the CWA, following DEC’s decision to deny Millennium’s application after nearly two years of review, FERC found that the agency waived its authority by failing to act within the one-year period. FERC found that the one-year review period begins once an applicant initially files for a WQC.

Constitution received a FERC certificate in December 2014. It initially filed for a WQC in August 2013, but was forced to resubmit the application twice at DEC’s request. DEC has argued that the one-year review period begins again each time an application is resubmitted.

The 124-mile pipeline would provide 650,000 Dth/d of takeaway capacity from northeast Pennsylvania, with about 100 miles crossing New York, which has been less than hospitable to the gas industry. In addition to denying WQC’s for Millennium and Constitution, DEC has also denied a permit for National Fuel Gas Co.’s (NFG) Northern Access expansion project.

Project sponsors have argued in court and before FERC that DEC denials were “arbitrary and capricious,” far exceeded the scope of New York’s authority under the CWA, were politically motivated and eclipsed the statutory timeframe in which a decision should have been made.

The U.S. Court of Appeals for the Second Circuit recently denied Constitution’s challenge to reverse DEC’s decision, ruling that the agency is entitled to a WQC review under relevant federal laws. But the three-judge panel also found that it lacked jurisdiction over Constitution’s argument that the DEC exceeded the statutory timeframe.

Constitution has since petitioned for a rehearing of the case en banc, arguing that the panel’s decision could have far-reaching impacts for the natural gas industry.

Things have changed at FERC, too. In August, the Commission restored its quorum and two other nominees are soon expected to join, giving it a full five members and a Republican majority. The industry has a renewed hope that the federal government might help its plight in New York, which has staunchly resisted gas and banned high volume hydraulic fracturing.

NFG is still fighting in the Second Circuit. The company has already filed at FERC for reconsideration of the certificate order authorizing the project and has also filed a motion to expedite its rehearing request. The company has acknowledged outcomes for both Millennium and Constitution, but maintains that its case is different because DEC found that Northern Access would adversely impact the environment. Constitution indicated at the time FERC waived DEC’s authority in the Millennium case that it would file for a similar action.

NGI’s special report, “Empire State Showdown: The NatGas Battle for New York,” takes an in-depth look at the challenges the industry faces in the state and how decisions are affecting other Appalachian pipeline projects.

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