New York waived its right to permit gas pipeline. The New York State Department of Environmental Conservation (NYS DEC) waived its right to approve or deny Millennium Pipeline Company’s (Millennium) water quality certificate application for a 7.8 mile natural gas lateral pipeline (lateral) needed to supply the 650-MW Valley Energy Center in Orange County, New York.

Millennium faces both state and federal regulatory approvals before it can construct the lateral. Section 7 of the Natural Gas Act requires a natural gas company to obtain a certificate of public convenience and necessity from FERC. 15 U.S.C. § 717f(c). A condition precedent to receiving Section 7 approval is Millennium’s compliance under the Clean Water Act. 33 U.S.C. § 1341(a)(1).

Unlike the Natural Gas Act, the Clean Water Act is implemented by the states. Clean Water Act compliance requires Millennium to submit a water quality certificate application to the NYS DEC. NYS DEC jurisdiction is triggered if the pipeline has to cross any New York streams in order to reach its intended destination. Millennium’s proposed lateral, if approved, would cross several streams in southern New York.

As such, Millennium submitted a water quality certificate application to the NYS DEC. Over one year passed and the NYS DEC failed to approve or deny Millennium’s application. Section 401 of the Clean Water Act requires a State to approve or deny an applicant’s water quality certificate application “within a reasonable period of time (which shall not exceed one year) after receipt of request.” 33 U.S.C. § 1341(a)(1).

On November 9, 2016, FERC conditionally approved Millennium’s Section 7 certificate of public convenience and necessity, withholding its final approval for construction conditioned on Millennium receiving “all authorizations required under federal law,” including the water quality certificate. Millennium Pipeline Company, L.L.C. v. New York State Department of Environmental Conservation, United States Court of Appeals for the District of Columbia Circuit, *4 (2017), citing Millennium Pipeline Co., 157 FERC ¶ 61,096, 2016 WL 6662548, at *35 (2016).

Millennium first applied for the water quality certificate in November 2015, and by December 2016, the Company’s patience with the NY DEC wore thin causing it to petition the United States Court of Appeals for the District of Columbia pursuant to section 19(d)(2) of the Natural Gas Act for review. Such provision authorizes the Court with “original and exclusive jurisdiction” to review “an alleged failure to act by a…State administrative agency acting pursuant to Federal law to issue, condition, or deny any permit required under Federal law.” 15 U.S.C. § 717r(d)(2).

At oral argument, Millennium maintained that the NY DEC failed to comply with its obligations under the Clean Water Act, unnecessarily prolonging its decision to approve or deny the Company’s water quality certificate application for more than one year. As such, Millennium requested the Court compel the NY DEC to make a final determination on its application and take such action in accordance with a prescribed schedule. The NY DEC counter argued that Millennium submitted an incomplete application, thus never triggering the applicable one year review statutory limit.

The Court issued its decision on Friday, June 23, 2017, dismissing Millennium’s petition, finding that the Company did not have standing to sue. The Court walks through a clever line of reasoning in support of its determination, asserting that because the NY DEC failed to act within the statutory one year period, it waived its opportunity to approve or deny Millennium’s application, thus Millennium no longer requires NYDEC approval. As the Court found in Weaver’s Cove Energy, LLC v. R.I. dep’t of Envtl. Mgmt., 524 F.3d 1330, 1332 (D.C. Cir. 2008), and echoed here, “[i]f the Clean Water Act’s requirements are waived, there is nothing left for the [NY DEC] – and therefore for this Court – to do.” Millennium Pipeline Company, LLC. v. NYDEC, *7. Notably, because Millennium no longer requires NY DEC’s approval of its water quality certificate application, the Company suffers no injury, thus lacks standing before the court.

Even though the Court dismissed Millennium’s petition for want of standing, it did not leave the Company without direction or recourse to pursue its remedy. “Millennium can go directly to FERC and present evidence of the Department’s waiver.” Millennium Pipeline Company, LLC. v. NYDEC, *8. The practical effect of this directive is that Millennium can make a FERC filing in the context of its Section 7 certificate proceeding docket, and present the Commission with evidence of the NY DEC’s waiver and the D.C. Circuit’s opinion affirming such. If FERC accepts Millennium’s filing and finds the NY DEC waived its opportunity to approve or deny the company’s water quality certificate application, Millennium will satisfy the condition precedent to construction – compliance with the Clean Water Act and receive its final certificate of public convenience.

Despite dismissing the petition on standing grounds, Judge Srinivasan, kept the New York Department of Environmental Conservation after class for a full review of how the agency can comply with its cooperative federalism responsibilities under the Natural Gas Act and Clean Water Act in the future:

“In 2005, Congress amended section 19(d) of the Natural Gas Act to allow this Court to compel action from foot dragging agencies.” Id. at 9. Citing Energy Policy Act of 2005, Pub. L. 109-58, 119 Stat. 594, 690 (2005). “The Clean Water Act’s certification requirements, as explained, automatically expire after one year of agency delay.” Id. at 9. Citing 33 U.S.C. § 1341(a)(1). “Congress amended the Natural Gas Act to ensure that ‘sheer inactivity by the State’ could not frustrate ‘the Federal application’ process.” Id. at 9-10. Citing H.R. Rep. 91-940, at 55 (1970) (Conf. Rep.).

The next step is for Millennium to file at FERC. It would be foolhardy to assume that the NY DEC will waive its opportunity to respond.

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