Wading into Navigable Waters? – Section 401 Water Quality Permit Impacts

Natural Gas Projects

While the Pennsylvania Department of Environmental Protection (PADEP) signed off on the Rover Pipeline’s Section 401 Water Quality Certification (WQC) on December 1, the New York State Department of Environmental Conservation (NYSDEC) has once again reared its ugly head. The Valley Lateral Project, a nearly eight mile-long Millennium Pipeline project, submitted its application to the NYSDEC for a Section 401 WQC in November of 2015, hoping to start construction in time to meet an April 1, 2017 in-service date to deliver gas to the $1B, 650-MW Valley Energy Center plant. Yet, the NYSDEC provided that they had until August 30, 2017 to approve or deny the permit under the “reasonable period of time (not to exceed one year)” specified in the Clean Water Act (CWA). How can this be? Well, in response, this week Millennium made a bold move this week, taking the NYSDEC to court.

Section 401 of the CWA delegates the authority to authorize “the construction or operation of facilities, which may result in any discharge into the navigable waters” to the states, and charges them with creating a system of review that includes public notice and comment at their discretion. Practically, this means that each state puts its own spin on the process. New York has exploited a particular loophole – the completeness of an application. After the submittal of an application, NYSDEC has 60 calendar days according to New York Code to notify an applicant about whether their request is complete or incomplete. Only when the application is deemed complete, does the one-year clock start. This is relatively long when compared with other states – Ohio gives its Environmental Protection Agency only 15 days to notify an applicant of the completeness of its application.

For Energy Transfer Partners’ Rover Project, receipt of the PADEP Section 401 was welcome news, although the ruling is conditioned upon Rover complying with 11 conditions, criteria, and programs. And of Rover’s required Section 401 permits, the PADEP sign-off is relatively less involved, primarily because it is only a 10.4 mile-long portion of the Burgettstown lateral, which is ~1.5% of the pipeline’s total mileage, and includes a fraction of the number of waterbody crossings when compared to other states. While the geographic footprint is small, the PADEP ruling can be appealed during the next 30 days, which has occurred with other projects.

In the case of Valley Lateral, which, like Rover, only involved a small lateral, the approval process before the NYSDEC has involved many more machinations. Millennium received a Notice of Incomplete Application because the NYSDEC required the Environmental Assessment (EA) be issued by the FERC. After submitting the EA in May, the 60-day clock started again. After reviewing the EA, NYSDEC issued a second Notice of Incomplete Application in June. As a result, the one-year clock did not start until Valley Lateral sent in additional information on August 30, 2016. So, although Millenium received its FERC certificate on November 9, 2016, the start of construction could be delayed until September 2017.

Valley Lateral’s situation illustrates an important nuance of the FERC Certificate review process, which is front and center before the D.C. Circuit Court of Appeals. Other agencies may and often do use the FERC environmental assessment as a data source, but they do not have to agree that the information is complete enough to issue the state permit. For example, the U.S. Fish and Wildlife Service required that Rover provide more extensive mitigation plans for the Indiana bat before issuing a final endangered species determination.  

As we discussed wrote about in our May 27, 2016 Weekly Insights, Herding Cats – FERC and Cooperating Agencies, FERC is the lead agency, but is certainly not the only or final authority on any given project.  FERC certificates are conditional, that is, contingent on many  environmental conditions, including receiving all applicable state and federal permits. For that reason, FERC routinely issues certificates before all state permits are obtained by the pipeline company.  However, before issuing a Notice to Proceed with Construction in a given project area the FERC must wait for all the applicable permits. And while many permits are delegated to state agencies they have proven to be a chore for pipelines and the FERC, alike.