On March 12, 2018, the U.S. Court of Appeals for the Second Circuit (“Second Circuit”) held that the New York Department of Environmental Conversation (“NY DEC”) waived its authority to act on Millennium Pipeline Company, L.L.C.’s (“Millennium”) application for a Clean Water Act (“CWA”) section 401 water quality certification by not acting on the application within one year of receipt. In doing so, the Second Circuit rejected the NY DEC’s argument that the one-year statutory deadline begins when a state agency deems the application complete, rather than when the application is received.

On November 13, 2015, Millennium applied for a certificate of public convenience and necessity requesting authorization to construct the Valley Lateral Project in New York. In connection with the environmental review of the project, Millennium applied for a CWA section 401 water quality certification from the NY DEC, which the NY DEC received on November 23, 2015. Subsequently, the NY DEC issued two notifications to Millennium that it considered its application incomplete, to which Millennium responded on August 16 and 31, 2016. Meanwhile, FERC approved Millennium’s Valley Lateral Project on November 9, 2016, but conditioned commencement of construction on the pipeline on Millennium obtaining all necessary authorizations, including the CWA section 401 permit.

After FERC approved the project, Millennium petitioned the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) to compel NY DEC to act on its CWA section 401 permit application. However, the D.C. Circuit held that Millennium lacked standing to challenge the issue, explaining that if the NY DEC unlawfully failed to act on the permit within the one-year deadline within the meaning of the CWA, such failure would result in a waiver of its authority under the CWA, and that such delay was therefore not a cognizable injury to Millennium. Rather, the D.C. Circuit stated that Millennium should return to FERC to present evidence of the NY DEC’s waiver. The NY DEC ultimately denied Millennium’s CWA section 401 application on August 30, 2017.

In response to the D.C. Circuit’s ruling, Millennium requested that FERC find that the NY DEC had waived its authority to issue a CWA section 401 certification by delaying action on the application beyond the statutory deadline of one year from receipt of the application. The NY DEC replied that the one-year period did not start until August 31, 2016, when it determined it had received a complete application. FERC agreed with Millennium, interpreting the CWA to mean that the one-year timeframe begins when the application is received, rather than when the agency deems it complete (see September 20, 2017 edition of the WER). Accordingly, FERC concluded that the NY DEC had waived its authority under the CWA by failing to act on the application by November 23, 2016—one year after receipt. After FERC denied its request for rehearing, the NY DEC petitioned the Second Circuit for review of FERC’s waiver determination.

In its opinion, the Second Circuit agreed that the one-year review commences when the state agency receives a CWA section 401 application. The Second Circuit found that the plain language of the CWA provided that an agency waives its authority to act on an application if it does not act within one year after “receipt of such request.” Moreover, the Second Circuit noted that if the statute required “complete” applications, states could turn the “complete” standard into a subjective determination, thereby delaying its determination indefinitely. With respect to the NY DEC’s concerns that a one-year timeframe could result in premature determinations, the Second Circuit responded that a state could deny the application without prejudice or request the applicant to withdraw and resubmit the application if the application is incomplete. Thus, the Second Circuit concluded that the NY DEC waived its authority under CWA section 401 by not acting on Millennium’s application within one year of receipt. As a result, Millennium is deemed to have received all requisite authority for the commencement of construction of its Valley Lateral Project

A copy of the opinion is available here.