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Industry Groups Urge Appellate Court to Grant Water Permit to Constitution Pipeline

In a show of support for embattled Constitution Pipeline LLC, oil and natural gas organizations and others urged an appellate court to overrule regulators in New York State and issue a critical water permit for the project.

Last May, Constitution’s backers filed an appeal with the U.S. Circuit Court of Appeals for the Second Circuit over the New York Department of Environmental Conservation's (DEC) refusal to issue a Section 401 Water Quality Certification under the federal Clean Water Act (see Shale DailyMay 16). The DEC denied the permit despite approval from FERC and a federal court to begin construction (see Shale DailyMarch 20, 2015;Dec. 3, 2014).

In an amicus curiae brief filed Tuesday with the Second Circuit, the organizations supporting Constitution said the Federal Energy Regulatory Commission, not state regulatory agencies like the DEC, should be the ultimate arbiter over whether pipeline projects like Constitution proceed.

"Section 401 denials can...have effects beyond the specific project at hand by increasing the regulatory risk for pipeline investors, chilling new infrastructure development," Constitution's supporters said. "Obtaining FERC approval for a proposed pipeline is a long, thorough, and costly process.

"Denials like the decision under review are likely to make investors wary of risking the substantial time and money necessary to undertake that process, only to see a single state veto the project in the end -- perhaps on the very grounds FERC already considered. The resulting whiplash is particularly jarring where, as here, [DEC] actually participated fully in the FERC process."

The brief was filed by the Natural Gas Supply Association (NGSA), the American Petroleum Institute, the American Gas Association, the Interstate Natural Gas Association of America and the Process Gas Consumers Group. Other signatories included the National Association of Manufacturers, the U.S. Chamber of Commerce, the American Chemistry Council and the American Forest & Paper Association.

NGSA CEO Dena Wiggins called the DEC's actions "short-sighted" and said it would hamper the Empire State's economic growth potential. She added that NGSA's members saw "a clear need to speak up in opposition to New York's denial of [the] permit...

"Congress gave individual states a limited role in the approval process and gave FERC primary authority for reviewing pipeline projects, so that one state could not unilaterally veto FERC-approved projects and deprive others states' natural gas consumers of a useful and valuable source of competitive natural gas transportation."

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

The saga over the Constitution Pipeline has lasted more than four years. It was proposed in February 2012, and its backers began the pre-filing process with FERC two months later (see Shale DailyApril 27, 2012Feb. 22, 2012). A formal application to FERC was filed in June 2013 (see Shale DailyJune 17, 2013) and approved in December 2014. The project had an original in-service date of March 2015.

Last March, the company pushed the in-service date for the pipeline back to the second half of 2017 in order to comply with directives from FERC and the U.S. Fish and Wildlife Service to protect wildlife along the pipeline's route (see Shale DailyMarch 10).

The appellate case is Constitution Pipeline Co. LLC v. DEC et al (No. 16-1568).

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