FERC has rejected a request to reconsider a decision it made last year waiving New York’s authority to issue or deny a water quality certification (WQC) under section 401 of the Clean Water Act (CWA) for the natural gas expansion project by National Fuel Gas Co. (NFG), Northern Access.

The Federal Energy Regulatory Commission denied the request for rehearing and stay of the waiver order, which found the state had relinquished its regulatory authority by failing to act on the WQC application within the one-year timeframe required.

The New York State Department of Environmental Conservation (DEC) received the application on March 2, 2016 and later agreed with the company to extend the receipt date to April 8, 2016. Before regulators there made a decision, NFG asked FERC to waive the state’s authority, suggesting the agreement was a veiled attempt to circumvent the statutory time limit. The DEC ultimately denied the WQC in April 2017, finding that the pipeline expansion would negatively impact the environment.

The project has been on hold since then as other regulatory and legal hurdles remain, but FERC’s decision to waive the state’s authority was considered a victory for Northern Access. The Commission’s decision to deny the state’s rehearing request leaned heavily on an unrelated hydropower case that was recently decided by the U.S. Court of Appeals for the District of Columbia (DC), Hoopa Valley Tribe v. FERC et al, No. 14-1271.

Hoopa Valley involved a 2004 proposal by electric utility PacifiCorp to build a series of dams along the Klamath River in California and Oregon. A three-judge panel ruled that when an applicant and a state explicitly agree to delay a WQC, states defy the CWA’s requirement for action within a reasonable period of time.

“Hoopa Valley Tribe determined that a ”deliberate and contractual idleness’ not only usurps the Commission’s ”control over whether and when a federal [authorization] will issue,’ but would contravene section 401’s intended purpose, i.e., to prevent a state’s ”dalliance or unreasonable delay,’” FERC said in the order denying rehearing.

FERC also said other aspects of the Hoopa Valley case apply to Northern Access. Based on the DC Circuit’s ruling, FERC also has indicated that it plans to reconsider a decision it made last year not to waive New York’s CWA review of the Constitution Pipeline. DEC warned earlier this week that if the Commission reverses its decision and waives the state’s authority in that case, FERC should expect a rigorous challenge in court.

It wasn’t clear if DEC planned to file an appeal regarding the rehearing, but the agency is considering all of its options.

“DEC vehemently disagrees with FERC’s decision,” a spokesperson said. “DEC’s focus is on protecting our environment and water quality for all New Yorkers. While DEC is reviewing FERC’s misguided decision, the agency is considering all options and will continue to vigorously defend our decision and our authority to protect New York state’s water quality resources.”

The U.S. Court of Appeals for the Second Circuit recently vacated the state’s denial of Northern Access’ WQC as well. Despite gains before FERC and in the courts, construction has yet to start on the project. NFG is working to secure other federal authorizations, including Section 404 permits, while a number of legal matters are pending in different venues.

Northern Access would expand the Empire and NFG 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. About 70 miles of the 100-mile system would be in New York.