On January 11, 2018, FERC denied Constitution Pipeline Company, LLC’s (“Constitution”) request asking FERC to conclude that the New York State Department of Environmental Conservation (“New York DEC”) waived its authority to issue a water quality certification under Section 401 of the Clean Water Act (“CWA”). In so doing, FERC reiterated its authority to address such issues, as they relate to “setting and enforcing” Natural Gas Act (“NGA”)-imposed deadlines, and reaffirmed FERC’s long-standing position that state certifying agencies have up to one year to act on a CWA Section 401 application.

In June 2013, Constitution filed a certificate application with FERC to construct a 124-mile, 30-inch-diameter pipeline extending from Pennsylvania through Delaware and New York and capable of transporting 650,000 dekatherms of natural gas per day. FERC approved the pipeline project on November 9, 2016, but conditioned its approval on Constitution obtaining all “applicable authorization required under federal law,” including state-issued Section 401 CWA water quality certifications.

Meanwhile, Constitution sought a Section 401 CWA certificate for its proposed project from the New York DEC. Constitution’s first application for the certificate, filed in August 2013, was withdrawn and resubmitted on May 9, 2014, at New York DEC’s request. That second request was again withdrawn and resubmitted on April 27, 2015, again at New York DEC’s request. Eventually, New York DEC denied Constitution’s application on April 22, 2016 based on insufficient evidence, prompting Constitution to seek review of the denial before the U.S. Court of Appeals for the Second Circuit (“Second Circuit”). After the Second Circuit concluded that it lacked jurisdiction to determine whether New York DEC had waived its CWA Section 401 authority, Constitution filed its petition with FERC.

In its petition, Constitution requested that FERC declare that New York DEC waived its authority under CWA Section 401 by failing to act within the time required by the CWA. Under CWA Section 401, a state is deemed to have waived its authority to issue a water quality certification 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.” Constitution argued that New York DEC waived its authority because it failed act within a “reasonable period of time.”

At the outset of its discussion in the order, FERC affirmed that it was the correct venue to determine the issue—a position that the D.C. Circuit Court of Appeals recently held involving a similar waiver issue for a Millennium Pipeline Company (“Millennium”) project (see June 26, 2017 edition of the WER). In regard to Millennium’s waiver issue, FERC ultimately issued an order in September 2017 concluding that the state agency had waived its CWA Section 401 authority by failing to act within the CWA’s time requirements.

In contrast with its Millennium order, FERC determined that New York DEC had not waived its CWA Section 401 authority for Constitution’s pipeline project. FERC concluded that it saw no reason to alter its precedent, albeit largely in the hydroelectric context, that the “reasonable period of time” for acting on a CWA Section 401 application “is one year after the date the certifying agency receives a request for certification.” Because New York DEC had declined Constitution’s third application within one-year of when it was submitted, FERC concluded that no waiver occurred.

FERC also rejected Constitution’s argument that because its third application was substantially the same as its second, the effective triggering date for the waiver timeline should have been when the second application was submitted. FERC reiterated that under the plain terms of the CWA, once an application is withdrawn and resubmitted, no matter how formulaic or perfunctory such process is, “refiling of an application restarts the one-year waiver period under section 401(a)(1).”

Finally, FERC did note that state agencies requiring repeated withdrawal and refiling of applications may be acting contrary to the public interest and the spirit of the CWA by preventing expeditious decision-making. However, FERC ultimately concluded that Section 401 addresses only state action or inaction, not repeated application withdrawals and resubmissions.

A copy of FERC’s order can be found here.