FERC Says New York State Played Games with Northern Access Pipeline

natural gas now - Tom Shepstone ReportsTom Shepstone
Shepstone Management Company, Inc.

FERC just told Gov. Corruptocrat and his DEC they lost their chance to deny a water quality certification to the Northern Access Pipeline by playing games.

Earlier this week FERC issued a 61-page decision striking another important blow to New York State’s illicit effort to halt pipeline development. The first blow was when Millennium Pipeline immediately went to war with Governor Corruptocrat the minute it became clear his DEC was merely playing games with its water quality certification request. The result was a circuit court decision indicating FERC had the clear authority to decide DEC had waived whatever authority it had when an application wasn’t acted upon with the statutory one-year period. That authority was subsequently exercised and DEP was slapped down. Now, it’s happened again with National Fuel’s Northern Access Pipeline.

norther access pipeline

The decision is complicated one involving numerous issues and challenges by the Allegheny Defense Front, the Sierra Club and others. The most important part, though, was clearly FERC’s sticking to its “a year means a year and no more” position on water quality certifications. A copy of the decision with these important elements highlighted may be found here. The following excerpts largely speak for themselves (emphasis added):

…the D.C. Circuit has indicated that project applicants who believe that a state certifying agency has waived its authority under CWA section 401 to act on an application for a water quality certification must present evidence of waiver to the Commission. We find that the companies, through their December 5, 2017 pleading, have presented evidence of waiver… and have effectively petitioned the Commission for a waiver determination…

Section 401 of the Clean Water Act requires that “[a]ny applicant for a Federal license or permit to conduct any activity . . . which may result in any discharge into the navigable waters” must obtain a water quality certification from the state in which the discharge will originate. If the state “fails or refuses to act on a request for certification within a reasonable period of time (not to exceed one year) after receipt of such request,” then the certification requirement is waived.

New York DEC received the companies’ application for a water quality certification on March 2, 2016. New York DEC and National Fuel agreed in a letter dated January 20, 2017, to extend the agency’s period for decision under section 401 by establishing April 8, 2016, as the date “on which the application was deemed received by [New York] DEC”. New York DEC denied the application on April 7, 2017

…section 401 of the Clean Water Act provides an “applicable schedule established by Federal law” when it requires that state or federal agencies act on a request for certification “within a reasonable period of time (which shall not exceed one year) after receipt of such request…

In their December 5, 2017 motion, the companies assert an alternative argument that New York DEC waived its authority under section 401 by failing to act on their application within one year of the initial date of receipt on March 2, 2016. The companies describe their written agreement with New York DEC as an invalid attempt by the parties to waive section 401’s jurisdiction-stripping time limit.

New York DEC counters that nowhere in the statute or in the Commission’s recent decision about section 401 waiver in Millennium Pipeline Co., L.L.C. is there an express prohibition against an applicant and a certifying agency agreeing to modify the receipt date from which the one-year period commences. New York DEC states that prohibiting negotiated receipt dates will obligate certifying agencies to deny an application and force the applicant to reapply and recommence the entire review process, even if the original application is very close to a final decision. Sierra Club similarly asserts that the mutual agreement between National Fuel and New York DEC in January 2017 produced a more expeditious decision than if the companies had withdrawn and  refiled their application.

The inefficiency of denial followed by refiling, they claim, would run counter to Congress’s intent in the NGA to move natural gas decisions along in a timely manner. In addition, Sierra Club argues that it would be “irrational” if the Commission concludes that the agreement between New York DEC and National Fuel is different than the long-accepted practice of certifying agencies encouraging applicants to withdraw and refile applications as a means to reset the one-year period for action.

We have recently affirmed our long-standing interpretation that a certifying agency waives the certification requirements of section 401 if the certifying agency does not act within one year after the date that the certifying agency receives a request for certification. Our interpretation gives effect to the plain meaning of the words “after receipt of such request.” The execution of an agreement between an applicant and a certifying agency does not entail a “receipt” by the agency. Only if an applicant withdraws and refiles an application, no matter how formulaic or perfunctory the process, does the certifying agency’s new “receipt” of the application restart the one-year waiver period under section 401(a)(1).

In this case, only one application was ever pending before New York DEC. The agency received the companies’ application on March 2, 2016, and was obligated to act on the application within one year. New York DEC failed to act by March 2, 2017, and so waived its authority under section 401 of the Clean Water Act.

Our decision is consistent with Central Vermont Public Service Corporation. There the state certifying agency and project sponsor agreed to delay the issuance of a water quality certification until a future condition would be satisfied. More than a year passed after the certifying agency received the last-filed application. We concluded that by the plain language of section 401 the certifying agency had failed to “act” on the application for a water quality certification within one year. We explained that:

Section 401 contains no provision authorizing either the Commission or the parties to extend the statutory deadline. To the extent that [the state certifying agency and the applicant] reached private agreements about when the agency would act, they cannot operate to amend the Clean Water Act, nor are they in any way binding on the Commission.

For the same reasons, the attempt by New York DEC and National Fuel to extend the statutory deadline by agreement must fail.

There is a material distinction between the invalid negotiation of a modified date of receipt and the valid withdrawal and refiling of an application. Aside from falling outside the plain meaning of “receipt,” noted above, an interpretation of section 401 allowing parties to negotiate the date of receipt would force the Commission to entertain, on a case-by-case basis, challenges to the validity of the agreement between the parties.

For example, National Fuel alleges that “it was clear [in January 2017] that unless National Fuel and Empire agreed to a NYSDEC-drafted letter agreement changing the date [of receipt], NYSDEC would deny the application (regardless of merit).” National Fuel offers no evidence of communications from New York DEC to this effect.

Allegations like this one about unequal negotiating power would be common and intractable. Instead, the bargaining power between the applicant and the certifying agency is brought closer to parity by a strict interpretation of section 401 that is consistent with the letter of the law.

We are not persuaded by New York DEC’s and Sierra Club’s policy arguments that a decision not to allow negotiated dates of receipt will leave only inefficient alternatives, to the detriment of both the applicant’s and the certifying agency’s interests. The certainty provided in our interpretation strikes the appropriate balance between the interests of the applicant and the certifying agency, to the benefit of both. An applicant is guaranteed an avenue for recourse after a year of inaction by filing a petition for a waiver determination before the Commission (as did the applicant in Millennium Pipeline Company, L.L.C.) or after a denial by filing a petition for review in the court of  appeals.

A state certifying agency remains free to deny the request for certification, with or without prejudice, within one year if the agency determines that an applicant has failed to fully comply with the state’s filing or informational requirements. These options do not impede a state’s ability to work with an applicant to refile in accordance with the state’s requirements, preclude a state from assisting applicants with revising their submissions, do not harm the process of public notice and comment, and do not increase an applicant’s incentive to litigate. While the Commission does not encourage this practice, if the parties mutually desire a longer period for the 401 evaluation, the applicant may withdraw and refile its application.

FERC, by insisting a year means a year has put an end to DEC blackmail and delay. If a pipeline company doesn’t get a decision on a water quality certification within a year it gets a waiver decision from FERC. If it gets a denial from DEC, it gets to go to court immediately on the merits. The game playing is over. Long live FERC!


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