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New York State Department of Environmental Conservation v. Federal Energy Regulatory Commission

United States Court of Appeals, Second Circuit

March 12, 2018

New York State Department of Environmental Conservation, Petitioner,
v.
Federal Energy Regulatory Commission, Respondent, Sarah E. Burns, Amanda King, Melody Brunn, Brunn Living Trust, Pramilla Malick, Chair of Protect Orange County, Protect Orange County, (POC), an association, Intervenors, Millennium Pipeline Company, L.L.C. and CPV Valley, L.L.C., Intervenors.

          Argued: January 24, 2018

         Petition for Review from the Federal Energy Regulatory Commission. Nos. CP16-17-000, CP16-17-003.

         Petitioner New York State Department of Environmental Conservation requests that we vacate two orders of the Federal Energy Regulatory Commission. Together, these orders authorized Intervenor-Respondent Millennium Pipeline Company, L.L.C. to construct a natural gas pipeline in Orange County, New York, and determined that the Department had waived its authority to provide a water quality certification for the pipeline project under Section 401 of the Clean Water Act.

         We DENY the petition for review.

          Frederick A. Brodie, Assistant Solicitor General (Barbara D. Underwood, Solicitor General; Andrew D. Bing, Deputy Solicitor General Lisa M. Burianek, Deputy Bureau Chief; and Brian Lusignan, Assistant Attorney General, on the brief), for Eric T. Schneiderman, Attorney General, State of New York, Albany, NY, for Petitioner.

          Robert H. Solomon, Solicitor (James P. Danly, General Counsel; Holly E. Cafer, Senior Attorney; and Ross Fulton, Attorney, on the brief), Federal Energy Regulatory Commission, Washington, DC, for Respondent.

          Carolyn Elefant (Sarah A. Burns, New York University School of Law, New York NY; and David Wallace, David Wallace Law Offices, Montague, NJ, on the brief), Law Offices of Carolyn Elefant, PLLC, Washington, DC, for Intervenors Sarah E. Burns, Amanda King, Melody Brunn, Brunn Living Trust, Pramilla Malick, Chair of Protect Orange County, Protect Orange County, (POC) an association.

          Catherine E. Stetson (Sean Marotta, Hogan Lovells U.S. LLP, Washington, DC; and Paul Korman, Michael R. Pincus, and A. Gregory Junge, Van Ness Feldman LLP, on the brief), Hogan Lovells U.S. LLP, Washington, DC, for Intervenors Millennium Pipeline Company, L.L.C.

          Elizabeth W. Whittle, Nixon Peabody LLP, Washington, DC, for Intervenors CPV Valley, L.L.C.

          Before: Cabranes, Livingston, and Carney, Circuit Judges.

          JOSÉ A. CABRANES, Circuit Judge:

         The questions presented are: (1) whether the Federal Energy Regulatory Commission ("FERC") correctly determined that petitioner New York State Department of Environmental Conservation ("the Department") waived its authority to review the request of Intervenor Millennium Pipeline Company, L.L.C. ("Millennium") for a water quality certification under Section 401 of the Clean Water Act by failing to act on that request within one year; and (2) whether FERC has jurisdiction to regulate the pipeline at issue, and, if so, whether FERC appropriately accepted and reviewed the application pursuant to its exclusive jurisdiction over interstate natural gas transportation under the Natural Gas Act.

          The Department challenges two FERC orders. These orders effectively authorized Millennium to construct a natural gas pipeline to serve a power plant run by Intervenor CPV Valley, L.L.C. ("CPV") absent the water quality certification otherwise required to be procured from the Department under Section 401 of the Clean Water Act, 33 U.S.C. § 1341. In the orders under review, FERC determined that the Department waived its certification authority for the pipeline by failing to respond within one year of receiving Millennium's request for water quality certification, as required by statute. Additionally, the Protect Orange County Intervenors ("the Landover Intervenors") challenge FERC's jurisdiction over the pipeline at issue.

         We conclude that the Department waived its authority to review Millennium's request for a water quality certification under the Clean Water Act by failing to act on that request within one year. We also conclude that FERC does have jurisdiction over the pipeline. Accordingly, we DENY the petition for review.

         BACKGROUND

         The Valley Energy Center, owned by CPV, is an electric power generation facility under construction in the Town of Wawayanda, in Orange County, New York.[1] CPV contracted with Millennium to build the pipeline as a means of connecting the plant to Millennium's existing interstate natural gas pipeline, which runs through Orange County.[2]

         On November 13, 2015, Millennium filed an application with FERC, pursuant to section 7(c) of the Natural Gas Act, 15 U.S.C. § 717f(c), requesting certificate authorization to construct and operate 7.8 miles of sixteen-inch-diameter lateral pipeline and related facilities.[3] The Natural Gas Act requires applicants to obtain "any permits, special use authorizations, certifications, opinions, or other approvals as may be required under Federal law."[4] Since the pipeline would cross several streams of water in southern New York, Millennium was also required to apply to New York's Department for a water quality certification under the Clean Water Act to confirm that the proposed pipeline project ("Project") would comply with the Act, state water quality standards, and other requirements of state law.[5]

         Section 401 of the Clean Water Act provides that "[i]f 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, the certification requirements . . . shall be waived with respect to such Federal application."[6]

         On forms dated November 18, 2015, Millennium submitted an application for a water quality certification to the Department.[7] The Department received the application on November 23, 2015.[8] On December 7, 2015, the Department notified Millennium that it deemed the application incomplete, pending FERC's environmental assessment.[9] FERC issued its assessment on May 9, 2016.[10] On June 17, 2016, the Department issued a second notification that it considered Millennium's application incomplete, requesting further information regarding the Project's potential environmental impact.[11] In August 2016, Millennium submitted responses conveying additional information to the Department.[12]

         On November 9, 2016, FERC issued a certificate under section 7(c) of the Natural Gas Act approving the Project ("Certificate Order").[13] The Certificate Order did not authorize Millennium to begin construction immediately, instead listing various conditions that the company would need to satisfy before starting work.[14] After FERC issued the Certificate Order, Millennium requested expedited review of its application for a water quality certification.[15] In response, the Department acknowledged that Millennium had fully responded to the second notice of incomplete application and stated that it would continue its review.[16] It contended that it had, "at a minimum, until August 30, 2017, " to either approve or deny the application.[17]

         Eager to begin construction, Millennium petitioned the United States Court of Appeals for the District of Columbia Circuit to compel the Department to act on its application for water quality certification, on the basis that the Department failed to act on Millennium's application for a water quality certification within the one-year time limit mandated by Section 401 of the Clean Water Act.[18] On June 23, 2017, that court dismissed Millennium's petition for lack of standing, holding that Millennium could seek a remedy for the delay only from FERC.[19]

         Accordingly, on July 21, 2017, Millennium requested that FERC determine that the Department had waived its authority under the Clean Water Act, and thus permit Millennium to proceed with construction.[20] While that request was pending, on August 30, 2017- nearly two years after Millennium's initial submission to the Department-the Department denied Millennium's application.[21] It determined that FERC's environmental assessment had failed to evaluate the downstream greenhouse gas emissions from the Project. The Department therefore considered the environmental assessment incomplete and rejected the water quality certification request.[22]Millennium petitioned this Court for review of the Department's decision.[23]

         On September 15, 2017, following the Department's decision, FERC found that the Department's delay constituted a waiver of the Department's authority under the Clean Water Act ("Waiver Order").[24] It held that under the plain language of Section 401-which states that the window for review opens upon "receipt of such request"-the relevant date for assessing waiver is the day the agency receives an application, in this case, November 23, 2015.[25]

         The Department, and, separately, the Landowner Intervenors sought rehearing of the Waiver Order.[26] FERC denied rehearing on November 15, 2017 ("Waiver Rehearing Order").[27] Two days after FERC's denial of rehearing, the Department filed this petition for review of the Waiver Order and the Waiver Rehearing Order.[28] On appeal, the Landowner Intervenors claim that FERC lacks jurisdiction under the Natural Gas Act to regulate the pipeline.

         DISCUSSION

         A. Standard of Review

         Two issues are presented by this proceeding: (1) whether FERC correctly interpreted Section 401 of the Clean Water Act when it held that the Department waived its right to act on Millennium's application; and (2) whether FERC appropriately accepted and reviewed the ...


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