The D.C. Circuit shows the way through the red tape in pipeline permitting dispute

by Hogan Lovells

Hogan Lovells

On June 23, 2017, the United States Court of Appeals for the District of Columbia Circuit held that Millennium Pipeline Company LLC lacked standing to bring a claim against the New York State Department of Environmental Conservation for the state agency’s unreasonable delay in issuing a required permit.  Despite that (or perhaps because of) that dismissal, however, the D.C. Circuit’s decision provides useful guidance to pipelines on how best to obtain a certificate of public convenience from the Federal Energy Regulatory Commission (FERC) when confronted with a recalcitrant State. 
Millennium filed a petition against the New York DEC in the D.C. Circuit, pursuant to a federal statute permitting recourse in that court for state agency permitting delays, citing the DEC’s failure to issue a water quality certification under the Clean Water Act within the time prescribed by the statute.  Section 401 of that Act requires a State to grant or deny a certificate “within a reasonable period of time (which shall not exceed one year) after receipt of [a] request.”[1]  If the State fails to act within the one year period, the state certification requirements under the Clean Water Act are waived, which means that a pipeline does not need a State-issued water quality certificate to proceed with obtaining its certificate from FERC.[2] 
Millennium contended in the D.C. Circuit that the DEC had held its permit application for well over a year – and thus beyond even the outermost bounds of the Clean Water Act’s statutory time limit.  But as the D.C. Circuit observed, that in turn would mean that the DEC had waived any entitlement to impose certification requirements on Millennium, enabling Millennium to turn to FERC for its certificate.  Following the D.C. Circuit’s decision, then, the proper action for a pipeline to take when a state agency fails to issue a decision within one year on a water-quality certificate application under the Clean Water Act is to present evidence of the state’s waiver of its delegated certification to FERC and to request that FERC grant its certificate of public convenience.  In this way, the court provided clear and succinct guidance on the limits of a state’s ability to delay the federal statutory process.
The court also emphasized that section 19(d) of the Natural Gas Act, which allows the D.C. Circuit to compel action from agencies that frustrate the federal permitting process by failing to act in a timely manner, is not toothless following its ruling.  Applicants may (and should) seek remedial action from FERC directly, and not the court, where the governing statute contains a time-based waiver for State inaction, such as that found in the Clean Water Act.  But the statute conferring jurisdiction on the D.C. Circuit for agency delay still applies with full force when applicable federal or state regulations do not include a time-based waiver provision.[3]  In such circumstances, the court can require an agency, among other things, to complete the permitting process within a reasonable timeframe.[4]
The decision in this case thus provides useful guidance to pipelines caught up in laggardly state permitting processes that drag on; pipelines may be able to avoid time-consuming litigation and instead present evidence of a state’s waiver under the Clean Water Act directly to FERC.



[1] Alcoa Power Generating Inc. v. FERC, 643 F.3d 963, 972 (D.C. Cir. 2011) (quoting 33 U.S.C. § 1341(a)(1)).

[2] Millennium Pipeline Co. LLC v. Seggos et al., Case No. 16-1415 at 4, 6 (D.C. Circuit) (issued June 23, 2017) .

[3] Id. at 9-11.

[4] Id. at 10 (discussing Dominion Transmission v. Summers, 723 F.3d 238, 243 (D.C. Cir. 2013) where the court required a state agency to complete the Clean Air Act permitting process under within a reasonable timeframe).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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