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New York Rebuts NFG Effort to Circumvent State Permits for Northern Access

The New York State Department of Environmental Conservation (NYSDEC) has responded to National Fuel Gas Co. (NFG) subsidiaries in a FERC filing, rejecting the companies' claim that the Northern Access expansion project does not need state permits to begin construction.

NYSDEC has urged the Federal Energy Regulatory Commission to deny National Fuel Gas Supply Corp. and Empire Pipeline Inc.'s request for reconsideration or rehearing of the Commission's Feb. 3 order approving Northern Access.

The companies argued earlier this month that FERC erred by not finding in its order that NYSDEC stream crossing, water withdrawal and wetlands permits, among other requirements, are preempted by the Natural Gas Act (NGA) and not required to begin construction. The companies also argued that the state waived its requirement for the project to obtain a water quality certification when it failed to issue one by Oct. 25, 2016 -- at the end of the federal authorization period under the scheduled environmental review.

The NYSDEC said the companies arguments are unsupported, meritless and ignore facts. The agency said FERC's order issuing a certificate of public convenience and necessity was conditioned on the applicants obtaining state permits and authorizations, noting that under the NGA the Commission has "wide discretion" to impose conditions that include requirements related to environmental impacts and the acquisition of state or local permits.

"Even if a particular regulatory field is occupied by the federal government," NYSDEC wrote in its motion, “federal regulations tolerate or authorize exercise of state authority, particularly with respect to federal statutory programs delegated to the states."

The agency added that FERC's environmental assessment (EA) under the National Environmental Policy Act was premised on the applicant's obtaining pending state permits and authorizations. The Commission has "well settled policy" requiring them, it said.

"Were the applicants to succeed in their efforts to exclude state review and permitting, either through clarification or rehearing, the FERC's environmental review would be undermined and its EA would no longer be valid," the NYSDEC said. "FERC would have no choice but to rescind the order and commence new environmental review of the project, excluding from its consideration the beneficial and mitigating effects of the pending state permits and authorizations."

The agency said it wouldn't waive its water quality certification, noting that the companies omitted from their request an agreement stipulating that NYSDEC would make a final determination on the permit by April 7.

"The FERC scheduling order deadline, however, does not apply to New York's [water certification] because the [Clean Water Act] establishes its own statutory deadline to which the FERC schedule must adhere," NYSDEC said. The agency added that the Clean Water Act gives it a reasonable period of time of up to one year to act on requests for water quality certifications.

New York has banned high-volume hydraulic fracturing and the NYSDEC is already fighting incourt over its regulatory handling of both the Constitution and Millennium pipeline projects. While NFG said earlier this year that it expects to receive the New York permits in April, management has expressed skepticism about the regulatory process in the state given some of the challenges other projects have faced.

"For more than 32 months, National Fuel has made all reasonable efforts to work cooperatively with the NYSDEC, and has applied for and strived to not only meet but exceed all permit standards at issue," said NFG spokesperson Karen Merkel. "However, based on recent NYSDEC actions relative to other state pipeline projects and ongoing litigation with those pipeline companies, it was necessary for National Fuel to raise certain issues during the FERC process to preserve our rights."

The more than 490,000 Dth/d Northern access project would expand the Empire and National Fuel systems to move gas from Seneca Resources Corp.-operated wells in Northwest Pennsylvania to markets in New York, Canada and the Northeast and Midwest. Seneca is the exploration and production subsidiary of NFG.

Merkel reiterated that the company "fully" expects the state to issue a decision on the requested permits and authorizations by no later than the "mutually agreed" upon date of April 7. She said Northern Access still has a projected in-service date of 1Q2018.

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