Project Finance Blog

FERC finds that New York waited too long to deny the Millennium Pipeline's water quality certificate | Norton Rose Fulbright

October 27, 2017

Posted in Blog article

On September 15, 2017 the Federal Energy Regulatory Commission (FERC) held that the New York State Department of Environmental Conservation (NYSDEC) waived its authority to deny (or issue) a water quality certification under Section 401 of the Clean Water Act for the approximate 7.8-mile long Millennium Pipeline project in Orange County, New York. 
FERC issued its approval of the pipeline on November 6, 2016 pursuant to Section 7 of the Natural Gas Act; however, in order to receive a notice to proceed, Millennium needed to show FERC that it had obtained, or there was a waiver of, federal approvals, including the NYSDEC water quality certification pursuant to Section 401 of the Clean Water Act. This section of the Clean Water Act requires applicants for an activity that may result in discharges into navigable waters of the United States to obtain a certification that such discharges will comply with the applicable state's water quality standards.
Millennium Pipeline filed its application for a water quality certification with the NYSDEC on November 23, 2015.  The NYSDEC issued two notices – the first on December 7, 2015 stating that the request was incomplete pending issuance of an Environmental Assessment, and the second on June 17, 2016 requesting additional information and clarification. The Environmental Assessment was issued by FERC on May 9, 2016 and Millennium provided additional information to NYSDEC on August 16 and 31, 2016 in response to the second notice. The NYSDEC denied Millennium Pipeline's water quality certification on August 30, 2017. 
FERC focused on the following language in Section 401 of the Clean Water Act: If the State, interstate agency, or Administrator, as the case may be, 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 of this subsection shall be waived. According to FERC, the one-year clock started on the date that Millennium Pipeline's request for a water quality certification was received, as opposed to when the request was deemed complete. As a result, FERC held that the one-year clock for the NYSDEC started on November 23, 2015 and since the NYSDEC failed to issue a decision on the request within one year of that time, it had waived its authority to do so.
The NYSDEC filed a request for rehearing with FERC on October 13, 2017 and also asked FERC for a stay of construction on October 30, 2017 following FERC’s approval of Millennium Pipeline’s  notice to proceed with construction.Millennium Pipeline also faces the NYSDEC's motion for FERC to reopen its Section 7 approval of the project that was filed on August 30, 2017, the same day that the NYSDEC denied the water quality certification.  In the motion, the NYSDEC provides its discussion for the denial of the certification. 

The NYSDEC pointed out that under New York law, a state permit application can be denied if the application does not meet any of the criteria required under law.  In New York, certain approvals trigger the State Environmental Quality Review Act, which requires an environmental review of the project. Although FERC's preparation of an Environmental Assessment to comply with its obligation for an environmental review pursuant to the National Environmental Policy Act (NEPA) can satisfy the state requirement, the NYSDEC pointed to the recent Southwest Market Pipelines court decision faulting FERC's NEPA review that the court concluded should have discussed the combustion of natural gas from the pipeline. The United States Court of Appeals for the District of Columbia decided that case on August 22, 2017.  


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