Nat'l Fuel Gas Supply Corp. v. Schueckler

• Citation: 127 N.Y.S.3d 427,150 N.E.3d 1192,35 N.Y.3d 297
• Decision Date: 25 June 2020
• Docket Number: No. 29,29
• Parties: In the Matter of NATIONAL FUEL GAS SUPPLY CORPORATION, Appellant, v. Joseph A. SCHUECKLER et al., Respondents, et al., Respondents.
• Court: New York Court of Appeals

35 N.Y.3d 297

150 N.E.3d 1192

127 N.Y.S.3d 427

In the Matter of NATIONAL FUEL GAS SUPPLY CORPORATION, Appellant,

v.Joseph A. SCHUECKLER et al., Respondents, et al., Respondents.

No. 29

Court of Appeals of New York.

June 25, 2020

OPINION OF THE COURT

STEIN, J.

In 2017, the Federal Energy Regulatory Commission issued a certificate of public convenience and necessity to petitioner National Fuel Gas Supply for its proposed construction of a 99–mile natural gas pipeline spanning from Pennsylvania to Western New York. We hold that this certificate of public convenience and necessity—which did not condition National Fuel's eminent domain power on receipt of a water quality certification and which remained valid and operative at all relevant times despite the New York State Department of Environmental Conservation's intervening denial of National Fuel's application for such a certification—exempted National Fuel from the public notice and hearing provisions of article 2 of the Eminent Domain Procedure Law (EDPL) in accordance with EDPL 206(A). We, therefore, reverse the order of the Appellate Division.

I.

The question before us distills to whether the certificate of public convenience and necessity issued by the Federal Energy Regulatory Commission (FERC) to National Fuel satisfies EDPL 206(A) so as to entitle National Fuel to exercise eminent domain over the land in dispute without undertaking additional review of the pipeline's public benefit. If satisfied, EDPL 206(A) excuses compliance with various provisions of EDPL article 2 where a proposed condemnor has successfully completed a review of the project's public benefit and use before a state, federal, or local agency. Thus, we begin our analysis with a review of FERC's authority to issue such certificates under the federal Natural Gas Act, as well as the requirements of the EDPL.

A. The Natural Gas Act

The Natural Gas Act (NGA) regulates the interstate sale and transport of natural gas (see 15 USC § 717 [b] ) and "confers upon FERC exclusive jurisdiction over the transportation and sale of natural gas in interstate commerce for resale" ( Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 300–301, 108 S.Ct. 1145, 99 L.Ed.2d 316 [1988] ). Prior to "the construction or extension of any facilities" for the transportation or sale of natural gas, a company must have "in force ... a certificate of public convenience and necessity issued by [FERC] authorizing such acts or operations" ( 15 USC § 717f [c][1][a]; see Schneidewind, 485 U.S. at 302–303, 108 S.Ct. 1145 ). FERC awards such a certificate when it determines that the applicant "is able and willing properly to do the acts and to perform the service proposed and to conform to ... [federal] regulations" and when "the proposed ... construction ... is or will be required by the present or future public convenience and necessity" ( 15 USC § 717f [e] ). In deciding whether to issue a certificate of public convenience and necessity, FERC considers "all factors bearing on the public interest" ( Atlantic Refining Co. v. Public Serv. Comm'n of N.Y., 360 U.S. 378, 391, 79 S.Ct. 1246, 3 L.Ed.2d 1312 [1959] ), including the applicant's financial resources; public demand; the expected impact on property values, community development, tax revenue, and employment; the environmental impacts of the project;¹ and any potential adverse effects (see Certification of New Interstate Natural Gas Pipeline Facilities, 88 FERC ¶ 61227 [Sept. 15, 1999], clarified 90 FERC ¶ 61128 [Feb. 9, 2000], further clarified 92 FERC ¶ 61094 [July 28, 2000] ; Minisink Residents for Envtl. Preserv. and Safety v. F.E.R.C., 762 F.3d 97, 102 [DC Cir.2014] ). FERC "will approve an application for a certificate only if the public benefits from the project outweigh any adverse effects" ( 88 FERC ¶ 61227, 61750 ).

FERC may "attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require" ( 15 USC § 717f [e] ). Furthermore, FERC "must ensure that the proposed pipeline complies with all applicable federal, state, and local regulations" ( Millennium Pipeline Co., L.L.C. v. Seggos, 860 F.3d 696, 698 [D.C. Cir.2017] ). As relevant here, the NGA does not abridge the rights of states to establish water quality standards under the Clean Water Act (see 15 USC § 717b [d][3]; 33 USC § 1313 ; Delaware Riverkeeper Network v. Secretary Pennsylvania Dept. of Envtl. Protection, 833 F.3d 360, 368 [3d Cir.2016] ). Thus, an applicant for a federal certificate of public convenience and necessity in connection with a project that "may result in any discharge into the navigable waters," must provide FERC with "a certification from the State in which the discharge ... will originate, ... [indicating] that any such discharge will comply with the applicable provisions" of the state water quality standards ( 33 USC § 1341 [a][1] ).

With regard to eminent domain, the NGA provides that, when a certificate of public convenience and necessity is granted by FERC and the "holder" thereof "cannot acquire by contract ... the necessary right-of-way to construct, operate, and maintain a pipe line ..., it may acquire the same by the exercise of the right of eminent domain" ( 15 USC § 717f [h] ). Under the NGA, a certificate holder may commence an eminent domain proceeding in either the applicable federal district court or a state court, with some limitations ( 15 USC § 717f [h] ).

B. The Eminent Domain Procedure Law

In New York State courts, the EDPL provides the "exclusive procedure by which property shall be acquired by exercise of the power of eminent domain" ( EDPL 101 ). "Generally, a two-step process is required under the [EDPL] before a condemnor obtains title to property for public use" ( Hargett v. Town of Ticonderoga, 13 N.Y.3d 325, 328, 890 N.Y.S.2d 421, 918 N.E.2d 933 [2009] ; see Matter of City of New York [Grand Lafayette Props. LLC], 6 N.Y.3d 540, 543, 814 N.Y.S.2d 592, 847 N.E.2d 1166 [2006] ). First, the condemnor "makes a determination to condemn the property after invoking the hearing and findings procedures" of EDPL article 2 ( Hargett, 13 N.Y.3d at 328, 890 N.Y.S.2d 421, 918 N.E.2d 933 ). This entails various public procedures, including a public hearing "to inform the public and to review the public use to be served by a proposed public project and the impact on the environment and residents of the locality" ( EDPL 201 ). The condemnor must then render findings regarding the project, including, its (1) public use, benefit, or purpose; (2) approximate location; (3) general effect on the environment and nearby residents; and (4) such other factors as the condemnor considers relevant (see EDPL 204[B] ). "The principal purpose of article 2 of the EDPL ... is to [e]nsure that [a condemnor] does not acquire property without having made a reasoned determination that the condemnation will serve a valid public purpose" ( Matter of Jackson v. New York State Urban Dev. Corp., 67 N.Y.2d 400, 417–418, 503 N.Y.S.2d 298, 494 N.E.2d 429 [1986] [emphasis added] ).

"A number of alternative procedures that a condemnor may undertake are outlined in EDPL 206, any one of which exempts the condemnor from compliance with article 2" ( Grand Lafayette Props. LLC, 6 N.Y.3d at 546–547, 814 N.Y.S.2d 592, 847 N.E.2d 1166 ). In particular, EDPL 206(A) provides that:

"[t]he condemnor shall be exempt from compliance with the provisions of ... article [2] when:

"(A) pursuant to other state, federal, or local law or regulation it considers and submits factors similar to those enumerated in [ EDPL 204(B) ], to a state, federal or local governmental agency, board or commission before proceeding with the acquisition and obtains a license, a permit, a certificate of public convenience or necessity or other similar approval from such agency, board, or commission" (emphasis added).

Thus, under this provision, a condemnor need not duplicate public benefit review undertaken by a governmental agency, so long as the review considers factors similar to those relevant to the EDPL eminent domain analysis and results in approval of the project.

Once the prerequisites of article 2 are satisfied by either compliance with the hearing procedures or the application of an exemption, "the condemnor must seek the transfer of title to the property by commencing a judicial proceeding known as a vesting proceeding pursuant to EDPL article 4" ( Hargett, 13 N.Y.3d at 328, 890 N.Y.S.2d 421, 918 N.E.2d 933 ). In conjunction with the vesting proceeding, the condemnor must file, among other things, "a statement providing either the compliance with the requirements of article [2] of th[e] [EDPL], ... or a statement providing the basis of exemption from article [2]" ( EDPL 402[B][3][a] ), an explanation of the public use, benefit or purpose for which the property is required, and a request that the court direct entry of an order authorizing the filing of an acquisition map, upon which title to the property shall vest in the condemnor (see EDPL 402[B][3][d], [B][3][e] ).

Meanwhile, if a condemnor issues public use findings and a determination under EDPL 204, an aggrieved party may seek judicial review in the relevant Appellate Division Department (see EDPL 207[a] ). Judicial review is limited to whether (1) the proceeding conformed with the federal and state constitutions; (2) the proposed acquisition is within the condemnor's statutory jurisdiction or authority; (3) the condemnor's determination and findings were made in accordance with the appropriate statutory procedures; (4) a public use, benefit or purpose will be served by the proposed condemnation (see EDPL 207[C] ). Furthermore, such judicial review must be completed "as expeditiously as possible and with lawful preference over other matters" ( EDPL 207[B] ).

II.

Turning to the appeal before us, in 2017, National Fuel commenced this EDPL vesting proceeding seeking to...