Category Archives: Federal Energy Regulatory Commission

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Federal court upholds state’s right to stop natural gas pipeline under the Clean Water Act

Pipes for the Constitution Pipeline are stacked at a pipe yard in Altamont, NY in 2014

Last Friday the Second Circuit Court of Appeals sided with the New York State Department of Environmental Conservation (“NYSDEC”) and their denial of a § 401 certificate under the U.S. Clean Water Act to Constitution Pipeline (a partnership among Cabot Oil & Gas Corp.; Oklahoma-based energy company Williams Cos.; Piedmont Natural Gas; and WGL).

Denying Constitution Pipeline’s application effectively vetoed a $750 million plan for a 124-mile pipeline stretching from the Marcellus shale deposits in Pennsylvania to the Iroquois pipeline in New York state, and eventually feeding the supply-choked Northeast region in  with natural gas.  Although Constitution obtained various permits from the Federal Energy Regulatory Commission (“FERC”) over the last five years in order to proceed with the project, they failed to satisfy NYSDEC’s requests for environmental impact accommodations on each of the 251 New York water bodies the pipeline would have traversed.

Pipeline developers ‘shot themselves in the foot’ by fumbling the state environmental review

The Second Circuit specifically noted in its decision that Constitution had failed to address water resource impacts despite the state’s repeated requests for more information.  Much of the Court’s decision hung on the company’s failure to consider alternative routes, less harmful stream crossing methods, and other information the state needed for its environmental review.

Constitution argued that it provided “sufficient” information since trenchless crossing methods for streams less than 30 feet wide was not “an industry recognized standard”.  The court rejected this argument, stating that, “[i]ndustry preferences do not circumscribe environmental relevance.”  The decision upheld NYSDEC’s denial based on Constitution’s failure to provide the extra water impact information requested.  The case clearly signaled that states have a right to halt pipeline projects over environmental concerns – even when the project has otherwise been given federal approval.

Wider impact on state control under Clean Water Act remains to be seen

Under the U.S. Natural Gas Act, FERC has authority to approve the construction of interstate natural gas pipelines.  However, Section 401 of the Clean Water Act requires that certain federally licensed projects gain state permits for environmental reasons.  Up to this point, FERC has been somewhat slow to accept that states have veto power of federal licenses.  Friday’s unanimous decision, while not binding on the rest of the country, is a strong indication of how other circuits might rule.

The Second Circuit specifically stated that the § 401 certification is:

… a statutory scheme whereby a single state agency effectively vetoes an energy pipeline that has secured approval from a host of other federal and state agencies … Through [the § 401 certification] requirement, Congress intended that the states would retain the power to block, for environmental reasons, local water projects that might otherwise win federal approval. 

Constitution also argued that NYSDEC’s delay constituted a waiver of the state’s right to deny the certification.  This argument was dismissed by the Circuit Court because jurisdiction over that decision falls to the U.S. Court of Appeals for the District of Columbia Circuit.  In June the DC Circuit decided a similar issue of waiver and told the pipeline developer that state agency delay of over a year can allow developers to bypass the state and go straight to FERC.

The Second Circuit’s decision comes as the state of Virginia is holding public hearings on § 401 certificates for the Atlantic Coast and Mountain Valley pipelines.  While state regulators have vowed to asses construction impacts and “ensure that water quality is maintained into the future,” many are now keeping a close watch on Capitol Hill as the energy bill moves through the U.S. Senate.  The decision could result in increased pressure on members of Congress to explicitly strip states of their newfound authority under federal law.

If you are involved in a legal dispute involving these or any other water law issue, contact  the experienced attorneys at Christensen & Jensen and avoid pitfalls both before, during, and after litigation.

Source: 2nd Circuit Decision May Not Mark the End of NY Pipeline Battle | New York Law Journal

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Lake Powell Pipeline Route

Lake Powell Pipeline Project applies for federal approval

Utah State officials have filed a licensing application with the Federal Energy Regulatory Commission (“FERC”) over the proposed Lake Powell Pipeline Project.  A copy of the licensing application materials (docket number P-12966) is or will be published shortly on FERC’s website.

Licensing Application Comes After Public Comment Period

The licensing application comes on the heels of a recent public comment period and review of the project proposal, which public comments were included in the licensing application documents.  The licensing application also contains thousands of pages of approximately two dozen studies detailing the pipeline and its potential impacts, including from how the fresh water supply might drive the local economy to whether the pipeline itself might affect the natural environment.

A preliminary licensing proposal (“PLP”) was filed with FERC in early December 2015. There was a 90 day public review of the PLP, followed by a 60 day window for revisions after the PLP was submitted.  The finalized PLP is now part of Exhibit E within the License Application.  The PLP and draft study reports were updated during this period based on new available information, feedback from federal, state and regional agencies and input from the public.

“We received a lot of feedback on the (preliminary proposal), and we recognize the time and effort a lot of people and organizations put into it,” said Eric Millis, director of the Division of Water Resources. “We feel the license application is stronger as a result.”

Lake Powell Pipeline Project Established by LPPDA

In 2006, the Utah State Legislature passed what is known as the Lake Powell Pipeline Development Act (“LPPDA”).  The LPPDA authorized the building of a pipeline from Lake Powell to southwestern Utah in order to meet growing water demands.  The Lake Powell Pipeline, when completed, would pump 86,000 acre feet of water some 140 miles through a 69-inch diameter pipe and then up 2,000 feet up an over the mountains into the Sand Hollow Reservoir, thirteen miles west of St. George, Utah.

Currently, water supplies from the Colorado River are divided between the “upper basin” states of Colorado, Wyoming, New Mexico and Utah and the “lower basin” of California, with Arizona and Nevada receiving portions of water from each basin.  Under the Lake Powell Pipeline proposal, some of the aforementioned states may have to concede certain portions of their water supplies.

Utah State and Local Officials Say Lake Powell Pipeline is Necessary

Utah state and local water managers have argued that the already limited supplies offered by the Virgin River and its tributaries are likely to only become more limited because of climate change, and when coupled with exploding population in Southern Utah, make the Lake Powell Pipeline necessary.

The state is already about 10 years and $28 million worth of studies in the Lake Powell Pipeline Project.  State officials say that the project will be paid for by the exploding population and economic growth in Southern Utah.  The Lake Powell Pipeline is estimated to cost between $1.5 billion and $3.2 billion.

FERC’s Decision on the Licensing Application Could Take More than Two Years

Now that the licensing application is in the hands of FERC it is anticipated that FERC will manage an Environmental Impact Statement (“EIS”) process according to regulations outlined in the National Environmental Policy Act (“NEPA”), which allows for public input.  Multiple alignment and route alternatives will be evaluated, which could have a significant impact on the size, scope and cost of the potential project.  The EIS is anticipated to take at least two years from the time it is initiated to complete.

In addition to the federal licensing application, the Lake Powell Pipeline Project got a much-needed shot in the arm via recently passed legislation in the Utah State Legislature.  The legislation, titled the “Infrastructure Funding Amendments,” diverted approximately $35 million from a State transportation fund to water development.  While not aimed specifically at the Lake Powell Pipeline Project, both proponents and opponents of the project believe a majority of the diverted funds will be spent on the project.

Follow for Updates

While there appears to be greater financial backing for the Lake Powell Pipeline Project as a result of the passage of the “Infrastructure Funding Amendments,” as noted, it may take more than two years to know if the federal government will approve the project.  That means it will likely be well past 2020 by the time any final designs are in place and construction can begin.  C&J’s water law team will continue to follow the Lake Powell Pipeline Project, and we will provide updates as they become available.

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