On September 15, 2017, FERC issued an order determining that the New York State Department of Environmental Conservation’s (“NY DEC”) failure to act on Millennium Pipeline Co. LLC’s (“Millennium”) Clean Water Act (“CWA”) permit application before the statutory one-year deadline resulted in a waiver of its authority to issue the permit.  FERC’s decision has the effect of nullifying the NY DEC’s prior denial of Millennium’s permit application.  FERC’s order also allows Millennium to move forward with its “Valley Lateral Project” without the NY DEC’s water quality permit.  

On November 13, 2015, Millennium applied for a certificate of public convenience and necessity pursuant to section 7 of the Natural Gas Act (“NGA”) requesting authorization to construct and operate the Valley Lateral Project, a 7.8-mile pipeline project in Orange County, New York.  As part of the environmental review associated with the project, Millennium applied for, in accordance with the CWA, a section 401 water quality certification from the NY DEC, which the NY DEC received on November 23, 2015.  According to FERC’s order, the NY DEC made two requests for additional information from Millennium over the next seven months to complete Millennium’s application.  Millennium responded to the NY DEC’s requests on August 16 and 31, 2016, respectively.  Ultimately, on August 30, 2017, the NY DEC denied Millennium’s section 401 application.

During the NY DEC proceeding, in December 2016, Millennium petitioned the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”), arguing that the New York DEC’s delayed action on the permit resulted in a waiver of its authority under CWA section 401.  On June 23, 2017, the D.C. Circuit held that Millennium lacked standing to challenge the issue, (see June 26, 2017 edition of the WER) but could instead return to FERC to present evidence of the NY DEC’s waiver.

Meanwhile, FERC approved Millennium’s project on November 9, 2016, subject to the company receiving all remaining permits and authorizations, including the CWA section 401 permit.  On July 21, 2017, Millennium filed with FERC a request to begin constructing the Valley Lateral Project.  Millennium argued that the NY DEC waived its authority to issue a CWA section 401 certification by delaying any action beyond the one year deadline from the date that the NY DEC received Millennium’s application.  In this case, Millennium argued that the NY DEC had one-year to either grant or deny Millennium’s application, starting from November 23, 2015.  The NY DEC countered that the one-year period did not start until August 31, 2016, the date it received a “complete” application from Millennium.  Despite that the NY DEC did not define what constituted a “complete application,” FERC speculated in its order that the NY DEC considered Millennium’s application complete once it had received Millennium’s response on August 31, 2016.  Therefore, according to the NY DEC, it had until August 31, 2017 to act on the permit.

In rejecting the NY DEC’s argument, FERC looked to the plain statutory language from section 401 of the CWA to determine the applicable start date.  In its order, FERC explained that section 401 of the CWA states that when a state permitting agency “fails or refuses to act on a request for certification within a reasonable period of time (which shall not exceed one year) after receipt of such request, the certification requirements of [section 401] shall be waived with respect to such Federal application.”  FERC interpreted this language to mean that the one-year timeframe starts when a water quality permit application is received, whether or not that application is deemed complete.  According to FERC, to rule otherwise would enable state agencies to delay proceedings by finding applications incomplete.  Thus, FERC determined that the NY DEC’s failure to act on the application by November 23, 2016, resulted in a waiver of its authority to deny the permit application.

Moving forward, once Millennium demonstrates to FERC that it has obtained all other federally-required permits and authorizations associated with the Valley Lateral Project, FERC may issue a notice to proceed with construction.  A copy of FERC’s order is available here.