On August 28, 2019, FERC found on voluntary remand from the United States Court of Appeals for the D.C. Circuit (“D.C. Circuit”) that the New York State Department of Environmental Conservation (“New York DEC”) waived its authority under section 401 of the Clean Water Act (“CWA”) to either issue or deny Constitution Pipeline Company, LLC (“Constitution”) a water quality certificate for a proposed 125-mile pipeline project from that would stretch from Pennsylvania to New York (“Project”). Based on the D.C. Circuit’s decision in Hoopa Valley Tribe v. FERC (“Hoopa Valley”) (see April 24, 2019 edition of the WER), FERC concluded that Constitution’s agreement with the New York DEC to withdraw and resubmit CWA section 401 certification applications did not restart the one-year statutory deadline for the New York DEC to act on Constitution’s application.

Pursuant to CWA section 401, an applicant for a federal license or permit that may result in a discharge into the navigable waters of the United States must provide a water quality certification for the state in which the discharge originates. The statute also provides, however, that if the state “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,” then the state has waived its authority to act on the application. This means that Constitution needed approval from FERC (under the Natural Gas Act (“NGA”)) and either approval or waiver from the New York DEC (under the CWA), in addition to other applicable permits, to move forward with its Project.

In 2013, Constitution applied for a certificate of public convenience and necessity from FERC pursuant to NGA section 7 for its Project. FERC granted the certificate in 2014 but required Constitution to file documentation that it had received all applicable authorizations, including a section 401 water quality certification or evidence of waiver thereof, before beginning construction. The New York DEC ultimately denied Constitution’s application for water quality certification in 2016, after two letters to “simultaneously withdraw and resubmit” the application were filed by Constitution.

In 2017, Constitution filed a petition asking FERC to declare the New York DEC waived its CWA section 401 authority through delay, but FERC issued a declaratory order finding that each submission was an independent request (see January 16, 2018 edition of the WER). Constitution sought judicial review of that order before the D.C. Circuit, which subsequently found in Hoopa Valley—a separate case involving a hydropower project license—that an arrangement in Oregon and California to indefinitely postpone section 401 applications by a withdrawal and resubmission letter scheme circumvented FERC’s authority. On March 11, 2019, FERC asked the D.C. Circuit for voluntary remand on Constitution’s challenge to consider whether the Hoopa Valley decision called into question its decision regarding the Constitution pipeline project.

On remand, FERC reversed its determination in Constitution’s declaratory order and found that, as a general principle, the state has waived its section 401 authority when an applicant withdraws and resubmits a request for water quality certification for the purpose of avoiding section 401’s one-year time limit and the state does not act within one year. FERC rejected arguments that the instant case in which the parties agreed to the “coordinated withdrawal and resubmission scheme” is different from a state simply failing to act within the one-year statutory deadline, finding that the state’s reason for delay was immaterial when considering the plain language of the statute.

Neither FERC nor the D.C. Circuit has opined as to what kind of circumstances might constitute a new request that would restart the one-year statutory period (e.g., if changes were made to the resubmitted application). The applications re-submitted both in Hoopa Valley and by Constitution were identical to the previously filed requests with a letter purporting to withdraw and resubmit the same application.

A copy of the order is available here.