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New York Shuts Down Millennium NatGas Project, Blames FERC

The New York State Department of Environmental Conservation (DEC) has denied Millennium Pipeline Co. LLC a water quality certification (WQC) and other permits for its Valley Lateral Project, sending another clear signal of the challenges natural gas projects face in the state.

After nearly two years of review, DEC sent Millennium a two-page denial letter at the deadline late Wednesday, writing that applicable federal law changed during the course of its review, and as a result, FERC failed to conduct a complete environmental review for the project. The lateral would deliver about 130 MMcf/d to Competitive Power Ventures’ (CPV) Valley Energy Center plant, which is under construction.

The agency cited an Aug. 22 opinion by the U.S. Court of Appeals for the District of Columbia. The court narrowly agreed with the Sierra Club that the Federal Energy Regulatory Commission’s environmental impact statement for the Southeast Market Pipelines Project failed to adequately consider the impact of greenhouse gas (GHG) emissions. The appellate case was Sierra Club et al v. FERC [No. 16-1329].

“Here, just as in Sierra Club, FERC failed to consider or quantify the indirect effects of downstream GHG emissions in its environmental review of the project that will result from burning the natural gas that the project will transport to CPV Valley Energy Center,” the DEC said in its letter.

The agency also filed a motion at FERC on Wednesday requesting a rehearing and stay of the Commission’s November 2016 order authorizing the Valley Lateral [CP16-17]. DEC said FERC erred in “not quantifying downstream GHG emissions in its environmental review of the project.” It has asked the Commission to either reopen the record to take more evidence or grant a rehearing to prepare a supplemental environmental review. 

“It does not appear to be a clear-cut decision and our lawyers are reviewing it to determine how to proceed,” Millennium spokesperson Michelle Hook said of the denial letter. “What is clear is that the DEC did not deny our WQC based on any environmental impacts we would have on water or wetlands. We have addressed every request they have made of us related to water crossings...The agency’s issue is with the power plant’s GHG emissions and not any direct environmental impact of our pipeline.”

The project calls for constructing a 16-inch diameter pipeline that would run about eight miles in Orange County, NY, to the CPV facility that’s being built in Wawayanda. The Valley Energy Center is designed to generate 680 MW of electricity. According to CPV’s website, the plant would use state-of-the-art emissions controls and be “the cleanest generation facility” in the state.

The plant already has the necessary permits to begin operations in February as scheduled. The facility is designed to burn ultra low sulfur diesel as a backup. CPV CEO Gary Lambert said the company would commission and operate the plant on the diesel fuel if it can’t get natural gas to the site. However, he expects the lateral to ultimately be built.

“The DEC’s regulatory responsibility was to rule on a WQC,” Lambert said. “Instead, it issued a confusing denial based on air emission considerations, which have been exhaustively studied and are part of the record which the DEC itself used to issue the required permits for the CPV valley plant several years ago.” He also pointed out that carbon emissions have been reduced by 43% since 2000, during a time when natural gas generation increased from 28% to more than 40% of New York’s electricity supply.

The DEC said it subjects all applications to an “extensive and transparent” review and said it came to its conclusion after also considering nearly 6,000 public comments. The agency said it would “continue to thoroughly evaluate all applications to ensure they do not adversely impact the environment.”

Millennium battled New York in court over what it claimed were unnecessary permitting delays. The DC Circuit in June declined Millennium’s request to force state regulators to expedite its WQC review, suggesting the pipeline could bypass the agency and go directly to FERC. The company asked FERC in July to proceed with construction activities, arguing that the state waived its right to issue a Section 401 WQC under the federal clean water act after nearly two years of review. Millennium is owned by subsidiaries of Transcanada Corp., National Grid plc and DTE Energy Co.

New York has taken a hard line against natural gas. In addition to banning high-volume hydraulic fracturing in 2015, it has denied WQCs for both the Northern Access expansion project and the Constitution Pipeline. More than 1 Bcf/d of takeaway capacity is stuck in regulatory limbo and mired in litigation as a result. Under Gov. Andrew Cuomo’s Reforming the Energy Vision program, the state would generate 50% of its electricity from renewable energy sources by 2030.

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