Breaking: Stays Issued for Atlantic Sunrise and Millennium Projects
Two federal appellate courts just issued stays for Williams' Atlantic Sunrise Project and Millennium's Valley Lateral Project. The duration of the stays will likely be limited. But the rulings inject newfound uncertainty around projected in-service dates for these projects as well as for Williams' Constitution Pipeline and National Fuel's Northern Access 2016 projects. For the industry, the stay against Millennium raises doubts around whether FERC's approval of a notice to proceed with construction (NTP) is actually the final step necessary to begin construction.
Atlantic Sunrise
The stay issued yesterday in the Atlantic Sunrise proceeding is the most disruptive of the two. As Transco noted today in a response seeking clarification, a stay of the entire certificate would require Transco to stop operating portions of the project that have already been placed into service -- and not just ongoing construction activities. We would expect the court to promptly clarify the extent of its stay in response to Transco's request and either release the stay or promptly schedule an oral argument in the matter. As the court explained, the administrative stay is not "a ruling on the merits" of the motion, but remains, for the time being, a significant risk for the project.
Valley Lateral
Despite FERC declaring that the NYSDEC had waived its right to issue a WQC, and then last week issuing Millennium a NTP, the briefing schedule recently issued by the U.S. Court of Appeals for the Second Circuit (Second Circuit) on the stay of the NTP combined with an action filed by Millennium in the U.S. District Court for the Northern District of New York (District Court), indicates that the Valley Lateral Project is at least several months from beginning construction.
On the same day that Millennium received its NTP, it filed an action in the District Court seeking a declaratory order ruling by January 31, 2018, providing that federal law preempted two remaining NYS permits. Three days later, the NYSDEC filed a petition with the Second Circuit, seeking a stay of FERC's NTP. On November 2, the court issued a temporary stay of construction until the Second Circuit can consider the merits of NYSDEC's petition. The court's briefing schedule, however, provides that the final brief is due on November 28. So, the stay will likely remain in place until after the court considers the parties' briefs, sometime in December. Given Millennium's statement in the District Court proceeding, they may also decide to not commence full construction until the District Court rules, which won't likely be before Millennium's requested date of January 31, 2018.
Constitution and Northern Access
Based on Millennium's process to date, the likelihood of Constitution or Northern Access 2016 beginning construction in mid to late 2018 is even more uncertain, especially given that neither project has received a declaratory order from the FERC finding a waiver by the NYSDEC. In a brief recently filed by Millennium with FERC, Millennium noted that those two cases were very different, in that the NYSDEC had used a process to extend the one-year deadline from receipt of the application, which NYSDEC did not do in Millennium's case. Even if both projects receive a declaratory order from FERC, construction would not likely begin immediately after the declaratory order is issued, or even after the issuance of an NTP, given the likely litigation uncertainties experienced.
What to watch? Looking ahead, in addition to watching the process play out for Millennium, the comment period for Constitution's petition with FERC to receive a waiver, closes this Friday at 5 pm. As explained in our prior analysis, there is no statutory timeline for FERC to rule on the petition. FERC may also defer ruling at the same time a similar issue is pending before the Second Circuit to ensure its ruling is upheld on appeal. For National Fuel, next week's oral argument before the Second Circuit may offer insight into the judges' leanings.