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New York Urges Court to Vacate FERC OK for Valley Lateral

Regulators in New York have urged a federal appeals court to vacate a FERC order authorizing construction of the Valley Lateral Project, arguing that the Commission erred when it said the state had waived its right to issue a critical certification for the project.

In a brief filed Wednesday in U.S. District Court for the Second Circuit in New York City, the New York Department of Environmental Conservation (DEC) said it had "reasonably interpreted" guidelines for issuing a Section 401 water quality certification (WQC) for the project, which is currently under construction by Millennium Pipeline Co. LLC.

The DEC disputed an order issued last September by the Federal Energy Regulatory Commission, which said the state had waived its authority to issue the certification for failing to act on the WQC within a one-year timeframe as required under the Clean Water Act.

"If FERC's interpretation of Section 401 were to prevail, an applicant could submit a bare-bones application asking for a Section 401 certification, and then supplement that application materially at a much later date," the DEC said. "If the DEC denies the application as incomplete, the applicant could then sue in federal court and argue that the necessary information had been provided...

"Further, to avoid the risk of sandbagging by applicants, the DEC would not only need to deny an incomplete application without prejudice; it would also have to do so immediately, cutting off the applicant's ability to supplement the submission. Such a practice would be inimical to collaboration between the DEC and applicants, and would leave no room for public comment."

Millennium began building the 7.8-mile, 16-inch diameter Valley Lateral on Dec. 8, one day after the Second Circuit denied a motion by the DEC for a stay while the legal challenge with FERC played out [CP16-17]. The pipeline is designed to deliver about 130 MMcf/d from the Marcellus Shale to the Competitive Power Ventures (CPV) 680 MW Valley Energy Center plant under construction in Wawayanda, NY.

Disagreement over the Valley Lateral has degenerated into a regulatory turf war between FERC and the DEC. The Commission gave Millennium permission to begin construction of the pipeline last October, prompting the DEC to file petitions for a rehearing and a stay. FERC denied the DEC's requests in mid-November, at the same time that the Second Circuit agreed to hear arguments from both sides in the dispute.

CPV, which already has the necessary permits to begin operations, has said that without the lateral it would burn ultra-low sulfur diesel to generate electricity.

The Second Circuit has scheduled a hearing for 11 a.m. on Wednesday (Jan. 24), and is expected to hear oral arguments in the case, which is New York State DEC v. FERC, No. 17-3770.

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