In re N.Y. State Dep't of Envtl. Conserv. v. FERC

17‐3770‐ag
In re N.Y. State Dep’t of Envtl. Conserv. v. FERC
In the
United States Court of Appeals
For the Second Circuit
________
AUGUST TERM 2017
No. 17‐3770‐ag
NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION,
Petitioner,
SARAH E. BURNS, AMANDA KING, MELODY BRUNN, BRUNN LIVING
TRUST, PRAMILLA MALICK, CHAIR OF PROTECT ORANGE COUNTY,
PROTECT ORANGE COUNTY, (POC), AN ASSOCIATION,
Intervenors,
v.
FEDERAL ENERGY REGULATORY COMMISSION,
Respondent,
MILLENNIUM PIPELINE COMPANY, L.L.C. and CPV VALLEY, L.L.C.,
Intervenors.
________
Petition for Review from the Federal Energy Regulatory
Commission.
Nos. CP16‐17‐000, CP16‐17‐003.
________
ARGUED: JANUARY 24, 2018
DECIDED: MARCH 12, 2018
________
2                             No. 17‐3770‐ag
Before: CABRANES, LIVINGSTON, and CARNEY, Circuit Judges.
________
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,
3                             No. 17‐3770‐ag
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  US  LLP,  Washington,  DC;  and  Paul
Korman, Michael R. Pincus, and A. Gregory Junge,
Van  Ness  Feldman  LLP,  on  the  brief),  Hogan
Lovells  US  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.
________
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.
4                             No. 17‐3770‐ag
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
1
J.A. 539.
2
Id.
5                             No. 17‐3770‐ag
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
3
J.A. 1-28
4
15 U.S.C. §§ 717n(a)(1), (2).
5
33 U.S.C. § 1341(a)(1).
6
Id.
7
J.A. 29-127.
8
Id. at 128.
9
Id.
10
Id. at 217.
11
Id. at 401.
6                             No. 17‐3770‐ag
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
12
Id. at 407, 441, 472.
13
Id. at 538; see generally Millennium Pipeline Co., 157 FERC ¶ 61096 (Nov. 9, 2016).
14
J.A. at 590-95.
15
Id. at 597.
16
Id. at 618.
17
Id.
18
See Millennium Pipeline Co. v. Seggos, 860 F.3d 696 (D.C. Cir. 2017).
19
Id. at 701.
7                             No. 17‐3770‐ag
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
20
J.A. 646.
21
Id. at 736-37.
22
Id.
23
That case has been held in abeyance pending the outcome of the instant appeal. See Millennium
Pipeline Co. v. N.Y. State Dep’t of Envtl. Conserv., No. 17-3465 (2d Cir., filed Oct. 26, 2017).
24
Millennium Pipeline Co., 160 FERC ¶ 61,065 (Sept. 15, 2017); J.A. 753.
25
J.A. 757-58.
26
J.A. 763. On October 27, 2017, following entry of the Waiver Order, FERC issued a “Notice to
Proceed with Construction” authorizing Millennium to begin construction without receiving a
Section 401 certification from the Department. J.A. 783. To prevent Millennium from
commencing construction until FERC acted on the Department’s motion for rehearing, on October
30, 2017, the Department brought an emergency petition for a writ of prohibition to this Court. See
In re N.Y. State Dep’t of Envtl. Conserv. v. Millennium Pipeline Co., No. 17-3503 (2d Cir. Oct. 30,
2017). We issued an administrative stay regarding the Notice to Proceed. We dissolved that stay
after FERC issued the Waiver Rehearing Order.
8                             No. 17‐3770‐ag
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 application as subject to its exclusive jurisdiction under
the Natural Gas Act.
We review FERC’s interpretation of the Clean Water Act, a
statute that it does not administer, de novo.29 The Department
contends that we should grant Chevron deference to a state agency’s
interpretation of a federal statute. It claims that since Section 401
contemplates a joint federal‐state program in which the Department
is responsible for determining whether a proposal complies with the
Clean Water Act, we should afford deference to its interpretation.30
27
Millennium Pipeline Co., 161 FERC ¶ 61,186 (Nov. 15, 2017); J.A. 793.
28
As part of its petition, the Department filed an emergency motion for stay of construction
pending review of the Waiver Orders. On December 7, 2017, following briefing and oral
argument, this Court denied the Department’s emergency motion for a stay, dismissed the
Department’s earlier petition (No. 17-3503) as moot, and dissolved the administrative stay it had
previously issued. The Landowner Intervenors subsequently requested a similar stay in this case
and in the separate appeal of FERC’s Certificate Orders (17-3966). We denied those requests on
December 15, 2017. N.Y. Dep’t of Envtl. Conserv., No. 17-3770 (2d Cir. Dec. 15, 2017); Protect
Orange Cty. v. FERC, No. 17-3966 (2d Cir. Dec. 15, 2017).
29
Constitution Pipeline Co. v. N.Y. State Dep’t of Envtl. Conserv., 868 F.3d 87, 100 (2d Cir.
2017).
30
Pet’r’s Br. 26-27.
9                             No. 17‐3770‐ag
The Department argues that we have afforded Chevron deference to
a state agency’s interpretation of a federal statute in the case of
Medicaid, another joint federal‐state program.31
Our precedents, however, foreclose extending such deference.
A state agency’s interpretation of a federal statute does not receive
deference unless the federal agency charged with administering that
statute has expressly approved the state’s interpretation and
implementation.32 Although the Department has a role in
determining compliance with Section 401 of the Clean Water Act,
the federal agency charged with administering the Clean Water Act
(the Environmental Protection Agency) is not involved in reviewing
or approving the Department’s interpretation of the waiver period.33
We therefore construe Section 401 de novo, according no
deference to the interpretations of FERC or the Department.
Regarding the Landowner Intervenors’ challenge to FERC’s
authority over the Project, we must first determine whether the
Intervenors have standing before addressing whether the Natural
Gas Act provides FERC with jurisdiction.
B. Whether the Department Waived Its Authority Under the
Clean Water Act
The Department contends that the review process under
Section 401 begins only once it, a state agency, deems an application
“complete.” FERC, on the other hand, argues that the one‐year
31
See Perry v. Dowling, 95 F.3d 231, 236 (2d Cir. 1996).
32
See id. (“When the federal-statute interpretation is that of a state agency and ‘no federal agency
is involved,’ deference is not appropriate.” (quoting Turner v. Perales, 869 F.2d 140, 141 (2d Cir.
1989)); see also Constitution Pipeline, 868 F.3d at 100 (reviewing de novo interpretation of same
statutory provision).
33
See Alabama Rivers All. v. F.E.R.C., 325 F.3d 290, 296–97 (D.C. Cir. 2003) (noting federal
Environmental Protection Agency is charged with administering Clean Water Act).
10                             No. 17‐3770‐ag
review period commences when the Department receives a request
for water quality certification. We agree with FERC.
The plain language of Section 401 outlines a bright‐line rule
regarding the beginning of review: the timeline for a state’s action
regarding a request for certification “shall not exceed one year” after
“receipt of such request.”34 It does not specify that this time limit
applies only for “complete” applications. If the statute required
“complete” applications, states could blur this bright‐line rule into a
subjective standard, dictating that applications are “complete” only
when state agencies decide that they have all the information they
need. The state agencies could thus theoretically request
supplemental information indefinitely.
The Department warns that requiring state agencies to act on
a request within one year will force it to render premature decisions.
Among other harms, the Department notes, such a requirement may
undermine public notice and comment, impede a state from
working with the applicant to refile in accordance with its
requirements, and prompt applicants to flood the courts with
appeals.
These concerns are misplaced. If a state deems an application
incomplete, it can simply deny the application without prejudice—
which would constitute “acting” on the request under the language
of Section 401. It could also request that the applicant withdraw and
resubmit the application.35 Such a denial does not preclude a state
from assisting applicants with revising their submissions.36 Nor does
34
Id.
35
Constitution Pipeline, 868 F.3d at 94 (noting that an applicant for a Section 401 certification had
withdrawn its application and resubmitted at the Department’s request—thereby restarting the
one-year review period).
36
In fact, Millennium met with the Department on August 10, 2015, before submitting its
application, to “avail[] itself of [the Department’s] pre-application process,” which included the
Department providing comments on Millennium’s plans. Crouse Decl. Ex. G at 2, Dkt. 7.
11                             No. 17‐3770‐ag
it harm the process of public notice and comment, which would
simply begin once a state decided that it did not need to deny an
application for incompleteness. And what the Department calls
“premature” denials of applications are not likely to prompt a
deluge of litigation. The Department itself notes that this litigation
incentive already exists; applicants can argue before FERC that their
applications are complete under New York regulations.37
Accordingly, we conclude that the Department waived its
authority under Section 401 and that FERC properly issued a waiver
order permitting Millennium to proceed with construction without a
water quality certification.
C. FERC’s Jurisdiction over the Project
The petitioner (the Department) in this instance did not raise
the issue of whether FERC has jurisdiction over Millennium’s
application regarding the Project. Generally, “intervenors may only
argue issues that have been raised by the principal parties; they
simply lack standing to expand the scope of the case to matters not
addressed by petitioners in their request for review.”38 Nonetheless,
courts may exercise discretion to entertain a new argument raised by
an intervenor.39 We choose to do so here.
The Natural Gas Act provides that FERC has plenary
authority over the transportation of natural gas in interstate
commerce.40 Natural “gas crossing a state line at any stage of its
movement to the ultimate consumer is in interstate commerce
37
Reply Br. Pet. 23.
38
Petro Star Inc. v. FERC, 835 F.3d 97, 110 (D.C. Cir. 2016) (brackets omitted) (quoting Nat’l
Ass’n of Regulatory Util. Comm’rs v. ICC, 41 F.3d 721, 729 (D.C. Cir. 1994)).
39
See New York v. Atl. States Marine Fisheries Comm’n, 609 F.3d 524, 529 n.4 (2d Cir. 2010).
40
15 U.S.C. § 717(b).
12                             No. 17‐3770‐ag
during the entire journey.”41 If a pipeline is an integrated part of an
interstate system, FERC has jurisdiction over it even if that pipeline
is a “lateral” line off a company’s mainline and that lateral line is
solely located in one state, and the transporting gas never leaves that
state.42
The pipeline at issue here will transport gas that is in
interstate commerce as part of an integrated system. Millennium’s
mainline system is linked to interstate pipelines that run both in and
out of the state of New York.43 Although the pipeline at issue here is
located entirely within New York and will deliver gas only to the
Valley Energy Center, it will receive out‐of‐state gas from the
Millennium mainline.44 FERC therefore has jurisdiction.
CONCLUSION
For the foregoing reasons, we DENY the petition for review.
41
Mich. Consol. Gas Co. v. Panhandle E. Pipe Line Co., 887 F.2d 1295, 1299 (6th Cir. 1989)
(quoting Maryland v. Louisiana, 451 U.S. 725, 755 (1981)).
42
See Okla. Nat. Gas Co. v. FERC, 28 F.3d 1281, 1287 (D.C. Cir. 1994).
43
J.A. 544, 546.
44
Id. at 544.