Special Report: Constitution Files for a Waiver and NYS Seeks Rehearing of Millennium Waiver

Last week, Williams' Constitution Pipeline submitted a petition for declaratory order, asking FERC to find that the New York State Department of Environmental Conservation (NYSDEC) had waived its right to issue a Clean Water Act, Section 401 Water Quality Certificate (WQC) by failing to act within a reasonable time on Constitution's application. Constitution's petition relies on a recent U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) decision involving Millennium Pipeline that held that FERC is the appropriate entity to determine whether such a waiver has occurred. Following that decision, FERC issued a declaratory order in the Millennium case finding that the NYSDEC had waived its right to issue a WQC for Millennium.


On Friday, Constitution announced that it could be in-service by the first half of 2019, pending regulatory approvals. Ironically, the same day, the NYSDEC asked FERC to reconsider its ruling that the NYSDEC had waived its right to issue a WQC for Millennium. By comparing Constitution to Millennium, one can see that the path forward for Constitution remains difficult and requires a number of favorable regulatory and litigation decisions, many of which have no time limit on when those decisions must be made.  

Hurdles to Constitution In-service Date

Based on historical construction analytics, the Constitution project should take about ten months to construct following issuance of a notice to proceed (NTP) with construction. To be in-service by June 30, 2019, all of the following events must be completed by August 30, 2018. The following table illustrates the most likely sequence of these critical events leading up to the commencement of construction.

Constitution's Position for Waiver

The catalyst for Constitution's petition is FERC's decision that the NYSDEC had waived its right to issue a WQC in the Millennium Valley Lateral Project, which followed a decision by the D.C. Circuit that the question of whether a waiver has occurred should be directed to FERC. On Friday, October 13, 2017, the NYSDEC asked FERC to reconsider its decision with respect to Millennium. The facts presented by Constitution are not nearly as clear-cut as those regarding the Millennium project.

As explained by Constitution, the D.C. Circuit held in the Millennium case that a state's right to issue a WQC is waived automatically if, after "a reasonable period of time (which shall not exceed one year)," an agency fails to act on an application or unreasonably delays such action.  Therefore, the timeline concerning the review of the WQC in these cases is critical and Constitution lays out a detailed timeline in its waiver request.
In its petition, Constitution asserts that FERC would be justified in finding a waiver at any of the following dates:
May 9, 2014, when NYSDEC threatened denial of the WQC and directed Constitution to withdraw and resubmit its application.

April 2015, when NYSDEC directed Constitution to re-submit its application for a second time. NYSDEC sought that arrangement so it could have "a couple additional months" to review the application.
May 9, 2015, one year after the first re-filing of Constitution's Section 401 application.
Sometime before April 22, 2016, because, even if FERC were to consider the second withdrawal and refiling as restarting the Section 401 time period for review, NYSDEC shut down all communications with Constitution for over eight months - despite repeated inquiries by Constitution to NYSDEC - and NYSDEC took no action on Constitution's application until issuing the denial on April 22, 2016.

As the timeline filed by Constitution makes clear, Constitution "voluntarily" withdrew and resubmitted its application for a WQC twice, both times within the one-year period for a decision by the NYSDEC. So, the final "decision" was made within the one-year period from the date "that" application had been received.

NYSDEC's Position in Millennium

Although we don't yet know how the NYSDEC will respond to Constitution's petition, we do know the position that they asserted on Friday in their request for rehearing of the Millennium waiver decision. On the key issue of the period governing when a waiver has occurred, the NYSDEC argued that the CWA does not make clear how complete the request for a WQC must be to trigger the one-year waiver period. In Millennium, the NYSDEC asserted that:
(1) FERC must defer to the state agency for determining when it has received a request;
(2) it had not received a request, which would trigger the one-year waiver period, until it had received all information that it deemed necessary to process the request; and
(3) this date did not occur until Millennium had responded to the last data request that the NYSDEC made of them, and that the NYSDEC then issued its decision within one year of that date.

For Constitution to Obtain a Waiver

The D.C. Circuit's decision made clear that the court would review any decisions by FERC either granting or denying a requested waiver, which means the newly minted FERC General Counsel, though engaged with other high-profile priorities, including DOE's pending grid reliability rulemaking, will likely review these decisions with an eye to being upheld on appeal, an event all administrative agencies strive to achieve.

To find a waiver under the timeline laid out by Constitution, Constitution is essentially asking FERC to rule either:

1. That "voluntary" resubmittals do not restart the clock
   To avoid being overturned on any appeal, FERC will not likely accept either this argument or the position put forward by the NYSDEC with respect to the Millennium rehearing request. Both Constitution and NYSDEC assert that if FERC were to adopt its position, the opposing party will be able to "game" the system through use of dilatory tactics. Both arguments seem to overstate the risk of "gaming," and FERC will likely seek a middle ground to avoid being overturned, which may, in fact, be the second finding offered by Constitution.
2. Eight months of inactivity between the final submittal of information to the NYSDEC in July of 2015 (its final response to NYSDEC's final request for information) and the decision in April 2016 was not "reasonable."

While this finding may be more defensible than the first, it too is problematic, for two primary reasons, when applied to the facts in Constitution. First, FERC would have to ignore Constitution's choice to appeal the decision to the Second Circuit primarily on substantive (i.e., not procedural issues, such as a waiver) and the court's finding that the NYSDEC's denial was appropriate, or risk rendering the entire appeal process meaningless. Second, although the D.C. Circuit in Millennium did not expressly address whether the one-year period could be shortened by the "reasonable" standard, it did indicate that the WQC requirement "automatically expires after one year of agency delay." To find in favor of Constitution, FERC would have to risk being overturned on appeal if it ruled that any time period less than one year was "unreasonable" and thus resulted in a waiver.