Millennium Pipeline Co. v. Seggos

• Decision Date: 13 December 2017
• Docket Number: 1:17–CV–1197 (MAD/CFH)
• Parties: MILLENNIUM PIPELINE COMPANY, L.L.C., Plaintiff, v. Basil SEGGOS, in his official capacity as Commissioner of the New York State Department of Environmental Conservation, New York State Department of Environmental Conservation, Defendants.
• Court: U.S. District Court — Northern District of New York

288 F.Supp.3d 530

MILLENNIUM PIPELINE COMPANY, L.L.C., Plaintiff,

v.Basil SEGGOS, in his official capacity as Commissioner of the New York State Department of Environmental Conservation, New York State Department of Environmental Conservation, Defendants.

1:17–CV–1197 (MAD/CFH)

United States District Court, N.D. New York.

Signed December 13, 2017

ROBERT M. ROSENTHAL, ESQ., GREENBERG TRAURIG, LLP, 54 State Street, 6th Floor, Albany, New York 12207, Attorneys for Plaintiff

CATHERINE E. STETSON, ESQ., SEAN M. MAROTTA, ESQ., SUSAN M. COOK, ESQ., HOGAN, LOVELLS LAW FIRM, 555 Thirteenth Street, N.W., Columbia Square, Washington, DC 20004–1109, Attorneys for Plaintiff

BRIAN M. LUSIGNAN, AAG, NEW YORK STATE ATTORNEY GENERAL, The Capitol, Albany, New York 12224, Attorneys for Defendants

MEMORANDUM–DECISION AND ORDER

Mae A. D'Agostino, U.S. District Judge:

I. INTRODUCTION

On October 27, 2017, Plaintiff Millennium Pipeline Company, LLC ("Millennium"), filed the complaint in this action seeking declaratory and injunctive relief against Defendants New York State Department of Environmental Conservation ("NYSDEC") and Basil Seggos, the Commissioner of the NYSDEC. See Dkt. No. 1. This case arises out of a dispute between Millennium and the NYSDEC over state and federal permitting and certification related to the construction of a natural gas pipeline in Orange County, New York. See id. at ¶ 29. On November 15, 2017, Millennium filed a motion for a preliminary injunction. See Dkt. No. 18. Defendants opposed Millennium's motion and filed a cross-motion to dismiss. See Dkt. No. 24. For the following reasons, Millennium's motion is granted and Defendants' motion is denied.

II. BACKGROUND

A. Statutory Background

The Natural Gas Act ("NGA") of 1938 "provides comprehensive federal regulation for the transportation or sale of natural gas in interstate commerce." Islander E. Pipeline Co., LLC v. McCarthy , 482 F.3d 79, 84 (2d Cir. 2006). The NGA provides the Federal Energy Regulatory Commission ("FERC") with the authority to regulate natural gas companies. See id. Any natural gas company that seeks to engage in the construction, extension, or acquisition of facilities to transport or sell natural gas in interstate commerce must apply to the FERC for a Certificate of Public Convenience and Necessity. See 15 U.S.C. § 717f(c)(1)(A). "The FERC is required to issue such a certificate if it finds the company ‘is able and willing’ to comply with the federal regulatory scheme and the proposed project ‘is or will be required by the present or future public convenience and necessity ....’ " Islander E. Pipeline , 482 F.3d at 84 (quoting 15 U.S.C. § 717f(e) ). The FERC may, however, attach "to the issuance of the certificate ... such reasonable terms and conditions as the public convenience and necessity may require." 15 U.S.C. § 717f(e).

The NGA generally preempts state permitting and licensing requirements, see Islander E. Pipeline Co., LLC v. McCarthy , 525 F.3d 141, 143 (2d Cir. 2008), but the statute expressly carves out the rights of states in administering three federal regulatory statutes, one of which is the Clean Water Act ("CWA"), see 15 U.S.C. § 717b(d)(3). Under Section 401 of the CWA ("Section 401"), any applicant seeking a federal permit for an activity that "may result in any discharge into the navigable waters" must obtain "a certification from the State in which the discharge originates or will originate ... that any such discharge will comply with the applicable provisions" of the CWA. 33 U.S.C. § 1341(a)(1). No applicable federal license or permit will be granted unless the certification required by Section 401 has been obtained, or the reviewing body waives the requirement by failing to act on an application for certification within one year. See id. ; see also Keating v. FERC , 927 F.2d 616, 622 (D.C. Cir. 1991) ("Through [the Section 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").

In reviewing applications for Section 401 certification, states may apply their own EPA-approved state water quality standards. The CWA "preserves the states' authority to determine issues of a planned project's effect on water quality" by allowing "states to develop their own water quality standards and submit them to the EPA for approval." Constitution Pipeline Co., LLC v. N.Y. State Dep't of Envtl. Conservation , 868 F.3d 87, 100–01 (2d Cir. 2017). In New York, NYSDEC may "conduct its own review of [a pipeline's] likely effects on New York waterbodies and whether those effects would comply with the State's water quality standards." Id. at 101. Based on that review, NYSDEC may decide whether to grant or deny an application for certification under Section 401 of the CWA. See id.

B. Factual Background

Millennium is a natural gas transportation company that owns and operates an interstate natural gas pipeline system extending across southern New York. See Dkt. No. 1 at ¶ 9. Several years ago, Millennium was contracted to build a 7.8–mile pipeline (the "Pipeline Project") connecting its interstate system with an electric power generation facility (the "Valley Energy Center") that is currently under construction in Orange County, New York. See id. at ¶¶ 28–29. The Valley Energy Center, which is being built by CPV Valley, LLC ("CPV"), is expected to generate enough electricity to power more than 650,000 homes, while reducing New York electricity costs by more than $400 million per year and reducing greenhouse gas emissions by nearly a half-million tons per year. See id. at ¶¶ 28–29.

In November 2015, Millennium submitted an application to the FERC for a Certificate of Public Convenience and Necessity, which was required in order to begin construction of the Pipeline Project. See Dkt. No. 18–3. Later that month, Millennium submitted a Joint Application to NYSDEC for certification under Section 401 of the CWA, as well as two permits under New York State Environmental Conservation Law ("ECL"): a stream disturbance permit and a freshwater wetlands permit. See Dkt. No. 18–4. In December 2015 and June 2016, NYSDEC sent notices to Millennium requesting additional information related to its Joint Application. See Dkt. No. 1 at ¶¶ 34, 38. In November 2016, the FERC provisionally granted Millennium's application for a Certificate of Public Convenience and Necessity so long as certain conditions were met, including approval of the Section 401 certification by NYSDEC.

See Dkt. No. 18–7 at 56. The FERC conditions did not require that Millennium receive stream disturbance or freshwater wetlands permits from NYSDEC. See id. at 53–58.

After receiving FERC's provisional approval for the Pipeline Project, Millennium wrote to NYSDEC requesting a decision on its Joint Application. See Dkt. No. 1 at ¶ 43. According to Millennium, NYSDEC had one year to make a decision on the Joint Application from the time it was first submitted in November 2015. See id. at ¶ 44. But NYSDEC argued that it had one year from the date that Millennium's Joint Application was fully submitted—according to NYSDEC, it was not fully submitted until August 2016, when Millennium responded to NYSDEC's final request for additional information. See Dkt. No. 24–1 at 8. Millennium disagreed and petitioned the Court of Appeals for the D.C. Circuit seeking a declaration either requiring NYSDEC to render a decision or stating that NYSDEC had waived its right to make a decision. See id. at ¶ 44. The D.C. Circuit dismissed the petition, stating that Millennium should first have sought a declaration from the FERC, and that any adverse FERC decision could then be appealed to the D.C. Circuit. See Millennium Pipeline Co., L.L.C. v. Seggos , 860 F.3d 696, 701 (D.C. Cir. 2017). In July 2017, Millennium followed the D.C. Circuit's suggestion and asked the FERC to declare that the NYSDEC had waived its section 401 authority because it failed to render a decision on Millennium's Joint Application within one year. See Dkt. No. 1 at ¶ 45.

In August 2017, the NYSDEC denied Millennium's Joint Application for the Section 401 certificate, as well as the stream disturbance and freshwater wetlands permits. See Dkt. No. 18–10. NYSDEC also sent the FERC a motion to reopen the review of Millennium's application for a Certificate of Public Convenience and Necessity. See Dkt. No. 19–9. FERC did not reopen the application; instead, on September 17, 2017, FERC issued an order declaring NYSDEC waived its authority to deny Millennium's Section 401 certification by failing to render a decision within one year. See Dkt. No. 1 at ¶ 45. In response, NYSDEC petitioned the Second Circuit for a writ of prohibition, arguing that it did not waive its Section 401 authority. See In re N.Y. State Dep't of Envtl. Conservation , No. 17–3503 (2d Cir.). Meanwhile, Millennium petitioned the Second Circuit to review NYSDEC's denial of the Section 401 certification. See Millennium Pipeline Co., L.L.C. v. N.Y. State Dep't of Envtl. Conserv. , No. 17–3465 (2d Cir.). Both of those petitions are currently pending before the Second Circuit.

On October 27, 2017, the FERC issued a Notice to Proceed with Construction, which authorized Millennium to begin construction on the Pipeline Project without a Section 401 certificate from NYSDEC. See Dkt. No. 18–17. After FERC refused to stay the Notice to Proceed, NYSDEC petitioned the Second Circuit for an emergency stay. See In re N.Y. State Dep't of Envtl. Conservation , No. 17–3503 (2d Cir.). On November 2, 2017, the Second Circuit granted an administrative stay pending consideration of the petition. See id. , Dkt. No. 35 (2d Cir. Nov. 2, 2017). On December 7, 2017, after expedited briefing and oral argument, the Second Circuit denied NYSDEC's request for an emergency stay and dissolved the administrative stay preventing Millennium from beginning construction of the Pipeline...