FERC has offered new hope for National Fuel Gas Co.’s (NFG) beleaguered Northern Access expansion project, finding in an order late Monday that New York waived its authority to issue a Section 401 water quality certification (WQC) for the pipeline by failing to act within the one-year timeframe required under the U.S. Clean Water Act (CWA).
While the project still faces an uphill battle, the order clears a path toward construction, which had been on hold without the WQC. The New York Department of Environmental Conservation (DEC) denied the WQC early last year.
The DEC received the WQC application on March 2, 2016 and later agreed with the company to extend the receipt date to April 8, 2016. New York has staunchly resisted natural gas infrastructure, and aware of this, NFG pushed the Federal Energy Regulatory Commission early last year to reconsider its certificate approving the project before DEC issued its denial. The company later asked FERC to waive the state’s authority, suggesting the agreement was a veiled attempt to circumvent the statutory time limit.
Just before midnight on April 7, the DEC emailed NFG a 13-page letter denying Northern Access a WQC, noting the project’s plan to construct 71 miles of pipeline in New York failed to meet water quality standards and would negatively impact the environment.
In Monday’s order, FERC pointed to its decision last year that waived New York’s WQC authority over Millennium Pipeline Co. LLC’s Valley Lateral project. After a lengthy regulatory and legal battle, the lateral entered service last month to supply a gas-fired power plant nearing commercial operation in the state. (New York shut down the plant late last week by denying a key permit.) FERC said Monday the Millennium case clearly demonstrated its long-standing interpretation of the CWA.
“Our interpretation gives effect to the plain meaning of the words, ‘after receipt of such a request,’” the Commission said. “The execution of an agreement between an applicant and a certifying agency does not entail a ‘receipt’ by the agency.” FERC added that only if an applicant withdraws and refiles an application, “no matter how formulaic or perfunctory the process” of withdrawal and resubmission is, the refiling of an application restarts the one-year period under the CWA.
Earlier this year, FERC held to that interpretation when it denied Constitution Pipeline’s request that it waive New York authority to issue a WQC for failing to act within a reasonable period of time. The Commission refused because it found Constitution had withdrawn and resubmitted its application with the agency twice, resetting the statutory clock each time.
DEC spokesperson Erica Ringewald said the agency disagrees with “FERC’s decision that sides with the fossil fuel industry over protecting our environment.” She added that DEC would appeal and seek a rehearing and a stay. “If FERC fails to reverse its misguided decision, DEC will appeal to the Second Circuit and seek a stay of any construction and continue to vigorously use every legal avenue to protect our state's resources.”
FERC’s Richard Glick, one of two Democrats on the Commission, dissented with the majority’s finding that Northern Access is needed. He said more thought should be given to the project’s climate impacts.
Hurdles still remain for Northern Access. A petition is pending before the U.S. Court of Appeals for the Second Circuit to review and vacate DEC’s WQC. ClearView Energy Partners LLC said NFG is likely to go back to the appeals court seeking summary judgment.
“Given FERC’s ruling that DEC waived its review, we would expect the Second Circuit to second that Northern Access is free to seek authorization from FERC to begin construction,” ClearView analysts said.
The firm also noted that Northern Access is without other state permits that are likely to be needed before the project can move forward. NFG is also awaiting the outcome of a case in the New York State Supreme Court, where it has argued that the permits are preempted by federal law. ClearView said while the Commission briefly touched on the preemption argument in its Monday order, it didn’t provide the kind of clarity that NFG might have hoped for.
The 100-mile Northern Access project would expand the Empire and National Fuel systems to move gas from affiliate Seneca Resources Corp.-operated wells in northwest Pennsylvania to markets in New York, Canada, the Northeast and the Midwest.
New York-based NFG said Tuesday FERC’s order “removes a major barrier” for the expansion. “We remain committed to the project, and due to the significant delay caused by the actions of the state agency, our team is developing a revised timeline including reviewing the status of various other relevant permits.”
Seneca’s need for Northern Access was evident in May, when NFG said it was working with Transcontinental Gas Pipe Line Co. LLC (Transco) on a 300 MMcf/d expansion of the interstate system to help alleviate the bottlenecks that have formed. Management said it would target a 2021 in-service date for the Transco expansion, one not all that different from the 2020 in-service date the company had been forecasting for Northern Access given the regulatory issues that have set it back.