On November 16, 2017, FERC denied requests for rehearing by various parties (“Petitioners”) and a request for rehearing and stay by the New York State Department of Environmental Conservation (“NYSDEC”) of FERC’s approval of Millennium Pipeline Company, L.L.C.’s (“Millennium”) Valley Lateral Project. In doing so, FERC rejected Petitioners’ claims that (1) FERC’s National Environmental Policy Act (“NEPA”) analysis was inadequate, (2) Millennium had not demonstrated need for the project, and (3) FERC lacked jurisdiction to approve the project. FERC also dismissed NYSDEC’s argument that FERC failed to consider the downstream greenhouse gas (“GHG”) emissions resulting from the Valley Lateral Project, holding that NYSDEC’s request was untimely.

The Valley Lateral Project is designed to deliver 130,000 Dekatherms per day of natural gas from Millennium’s mainline in the Town of Minisink, New York to CPV Valley, LLC’s (“CPV”) Valley Energy Center in the Town of Wawayanda, New York. To transport fuel to the Valley Energy Center’s natural gas-fired power plant, CPV and Millennium previously executed a precedent agreement for most of the Valley Lateral Project’s capacity. On November 9, 2016, FERC approved the Valley Lateral Project.

On December 9, 2016, Petitioners filed their requests for rehearing. In particular, some Petitioners argued that there was no public need for the Valley Lateral Project because, among other reasons, there was an existing pipeline in the area and approval of the project demonstrates FERC’s bias for the industry. Various petitioners also argued that FERC violated NEPA by failing to examine certain environmental impacts of the Valley Lateral Project and the Valley Energy Center. In addition, certain impacted landowners argued that FERC lacked jurisdiction to approve the Valley Lateral Project because the pipeline is located entirely within New York and because siting and construction of the project does not involve the flow of interstate natural gas.

Furthermore, on August 31, 2017, NYSDEC filed a request to reopen the record and stay or, in the alternative, a request for rehearing and stay. Notably, NYSDEC argued that FERC failed to quantify and consider the downstream GHG emissions that will result from the Valley Energy Center’s natural gas-fired power plant in contravention of the recent U.S. Court of Appeals for the D.C. Circuit decision in Sierra Club v. FERC (see October 2, 2017 edition of the WER).

In its order on rehearing and stay, FERC first dismissed NYSDEC’s requests, concluding that FERC is jurisdictionally barred from considering requests for rehearing that are filed more than 30 days after the issuance of a final order. Moreover, FERC found that NYSDEC’s request to reopen the record was essentially a request for rehearing, and FERC thus could not consider that request. Lastly, FERC noted that, when it approved the project, it had already included an estimate of the annual carbon dioxide emission rate from the proposed Valley Energy Center.

With respect to the argument that there was no public need for the Valley Lateral Project, FERC stated that need was demonstrated by the precedent agreement in place between Millennium and CPV and that a federal court has already rejected claims of industry bias (see March 27, 2017 edition of the WER). FERC also explained that it has jurisdiction over the certificate application because, although the pipeline will be located entirely within New York, it will receive gas transported in interstate commerce, and that FERC has authority to issue certificates for projects that will transport natural gas within FERC’s jurisdiction. Finally, with regard to various environmental impact arguments raised, FERC concluded, among other things, that it: (1) did not segment the Valley Later Project with any separate pipeline project; (2) fully addressed the risks of horizontal directional drilling and mitigation to those impacts; (3) properly examined the risk of seismic activity; (4) considered the impacts to threatened and endangered species; (5) properly analyzed impacts on environmental justice communities; (6) examined impacts on cropland; (7) properly analyzed cumulative impacts; and (8) fully considered all feasible alternatives and correctly decided that the Valley Lateral Project was environmentally preferable to meet the project’s stated purpose.

FERC’s order can be found in Docket No. CP16-17. A copy of the order is available here.