The legal troubles facing National Fuel Gas Co.’s (NFG) long-delayed Northern Access expansion project were compounded last week when a New York appeals court denied eminent domain for the project to cross land in the western part of the state.

Joseph and Theresa Schuckler of Allegany County took their case to the New York Supreme Court’s Appellate Division after a lower court granted NFG’s petition to acquire easements on their property in Clarksville. Writing for the Appellate Division’s Fourth Judicial Department, Judge Patrick NeMoyer said last week that Northern Access no longer has a valid federal certificate to take the land after the New York State Department of Environmental Conservation (DEC) denied a key permit.

The FERC certificate authorizing the project was conditioned on NFG receiving a water quality certificate (WQC) from the DEC, wrote NeMoyer. The agency denied the WQC last year, finding that the company’s plans to construct about 70 miles of the roughly 100-mile pipeline in the state failed to meet water quality standards and would negatively impact the environment.

“Thus, when the state denied the very permit upon which petitioners authority to construct the pipeline was conditioned, petitioner -- by definition -- lost its contingent right to construct the public project that undergirds its demand for eminent domain in this proceeding,” NeMoyer wrote.

The decision to reverse the lower court’s authorization also stands in contrast to the Federal Energy Regulatory Commission’s order in August that found New York waived its authority to issue the WQC for Northern Access by failing to act within the one-year timeframe required by federal law. The appeals court said, however, that FERC’s order is not final and subject to administrative rehearing and judicial review, and therefore not worth acknowledging for the time being.

NFG officials are not yet discouraged by the appeals court’s decision. “The litigation surrounding the Northern Access project has been significant over the last two years, involving federal, state and local jurisdictions,” spokesperson Karen Merkel said on Wednesday.

She said management believes that both FERC’s certificate and waiver order still stand, adding that NFG has secured easements from more than 500 landowners along the proposed route. The company remains committed to the project and is currently considering its legal options following last week’s ruling, Merkel said.

Indeed, legal and regulatory issues remain for Northern Access. NFG CEO Ronald Tanski acknowledged as much earlier this month on the fiscal fourth quarter earnings call, indicating battles are ahead, and the project isn’t likely to enter service until 2022.

New York has filed a request for rehearing of FERC’s waiver order. A petition filed by NFG is also pending before the U.S. Court of Appeals for the Second Circuit to review and vacate DEC’s WQC denial.

Northern Access would expand the Empire and National Fuel systems to move 490 MMcf/d from affiliate Seneca Resources Corp.’s wells in Pennsylvania to markets in New York, Canada, the Northeast and the Midwest. 

Given the legal and regulatory delays, Seneca has since secured more than 300 MMcf/d on Transcontinental Gas Pipe Line Co.’s recently announced Leidy South expansion, another Appalachian takeaway project to move more gas to the East Coast. That expansion is expected to be online by the end of 2021.