FERC Decision provides a path for the Constitution Pipeline

On August 28, 2019, the Federal Energy Regulatory Commission (“FERC”) issued an Order on Voluntary Remand regarding the proposed Constitution Pipeline, putting the pipeline project back on track. Specifically, FERC determined that New York waived its right to grant or deny a water quality certification, relieving the pipeline of this obligation and nullifying New York’s denial of that certification.

The Constitution Pipeline is a proposed pipeline for carrying natural gas from Pennsylvania to Upstate New York. In 2013, the pipeline applied for a water quality certification from the New York State Department of Environmental Conservation (DEC). Interstate pipelines are subject to Federal regulation, and the Clean Water Act requires a pipeline obtain a water quality certification from the state. At issue in FERC’s recent decision, is the Clean Water Act provision that this requirement is waived if the state does not act on the application within 1 year. In 2015, the DEC requested that Constitution withdraw and re-submit its application for a water quality certification so that DEC could complete its review of the application materials and public comments on the pipeline, which Constitution did. In 2016, the DEC denied Constitution’s application for a water quality certification.

In 2017, the Second Circuit Court of Appeals upheld the DEC’s denial, but determined that FERC was the sole authority with jurisdiction to decide whether the DEC had waived its right under the Clean Water Act by failing to act within one year. Following the Second Circuit’s ruling, Constitution requested that FERC issue a declaratory order that the DEC had waived such authority. In January 2018, FERC determined that the DEC had not waived its authority. FERC denied Constitution’s request for rehearing and Constitution appealed to the Court of Appeals for the District of Columbia Circuit.

While that appeal was pending, the D.C. Circuit issued a separate decision in Hoopa Valley Tribe v. FERC, and FERC requested a voluntary remand of the Constitution Pipeline case to determine whether the ruling in Hoopa Valley Tribe impacted FERC’s January 2018 decision. In Hoopa Valley Tribe, the D.C. Circuit concluded that an agreement between the state and an applicant to have the applicant annually withdraw and re-submit its application for a water quality certification did not restart the one year period set forth in the Clean Water Act and, therefore, the state had waived its authority to deny such a certification. Prior to Hoopa Valley Tribe, agreements between applicants and states to have the application withdrawn and resubmitted so as to restart the one year clock were common.

On remand following Hoopa Valley Tribe, FERC determined that the DEC had in fact waived its authority to issue or deny a water quality certification under the Clean Water Act. The ruling essentially renders the DEC’s denial of a water quality certification meaningless and permits the Constitution Pipeline to move forward. FERC further denied the DEC’s request that the decision be stayed pending further legal challenges. FERC concluded the DEC did not establish likely harm in the absence of a stay and that Constitution would be prejudiced as a result of further delay.

On September 27, 2019, the DEC filed a request for rehearing with FERC, which is the statutorily required procedure for challenging a FERC decision. FERC has 30 days to grant or deny rehearing. If FERC denies rehearing or fails to grant or deny the request (in which case the request is deemed denied as a matter of law) the DEC would then be able to appeal FERC’s decision in Federal Court. FERC’s customary practice is to accept the rehearing request. However, there are no time frames in which a rehearing must be conducted with FERC and in the absence of a stay, Constitution will move forward with obtaining additional approvals and construction. The DEC’s request for rehearing included a stay request, but as noted, FERC denied the DEC’s prior request for a stay in its August 28, 2019, decision. It seems unlikely FERC will grant this request for a stay. If the stay is denied, the DEC will need to seek a stay from the Federal courts. Meanwhile, the Constitution Pipeline is moving forward on obtaining a Section 404 permit from the Army Corps of Engineers and less substantial permits.

Tooher & Barone, LLP