On June 23, 2017, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) held that Millennium Pipeline Company, L.L.C. (“Millennium”) lacked standing to challenge whether the New York State Department of Environmental Conservation (“Department”) had unlawfully delayed issuing a Clean Water Act (“CWA”) § 401 water quality certificate for Millennium’s pipeline project by failing to act on Millennium’s application within the one year statutory period.  In doing so, the D.C. Circuit stated that even if the Department had unlawfully delayed issuing the CWA § 401 certificate, the Department’s delay would operate as a waiver of the certification requirement.  As a result, the D.C. Circuit explained that Millennium could ask FERC to determine whether the Department waived the CWA § 401 certification requirement, and if so, whether FERC would authorize Millennium to begin construction of its pipeline project.

On November 9, 2016, FERC issued a certificate of public convenience and necessity under the Natural Gas Act (“NGA”) for Millennium’s proposed 7.8-mile extension of its interstate natural gas pipeline system in Orange County, New York.  In its certificate order, FERC clarified that it would not authorize Millennium to begin constructing the project until Millennium had received all necessary federal authorizations, including an applicable CWA § 401 water quality certification.  Under CWA § 401, states are required to grant or deny the water quality certificate within a reasonable period of time, not to exceed one year.  If the state fails to act within one year, the CWA provides that the § 401 certification requirement is deemed waived.

On November 23, 2015, prior to FERC’s certificate order, the Department received Millennium’s application for a CWA § 401 certificate.  The Department subsequently sent Millennium a notice of an incomplete application.  Over the course of a year, the Department sent Millennium several requests for supplemental information, to which Millennium responded.  In November 2016, the Department concluded that Millennium had fully responded to its requests.  However, the Department told Millennium that it would continue its review to determine whether Millennium’s application was valid and that it had until August 30, 2017, if not later, to approve or deny the application.  Thereafter, Millennium petitioned the D.C. Circuit for review, arguing that the Department failed to act within one year as required by the CWA and requesting that the D.C. Circuit compel the Department either to grant its application or take action within a specified schedule.  In response, the Department argued that it must only act within one year of receiving a complete or valid application, and that Millennium has not fulfilled that requirement.

In its opinion, the D.C. Circuit first noted that if an agency fails to act within the one year time period prescribed under CWA § 401, the agency’s inaction is deemed a waiver of the CWA’s certification requirement.  The D.C. Circuit continued that “if the Department has delayed for more than a year—as Millennium alleges—the delay cannot injure Millennium.  Instead, the delay triggers the [CWA’s] waiver provision, and Millennium then can present evidence of waiver directly to FERC to obtain the agency’s go-ahead to begin construction.”  The D.C. Circuit concluded that because Millennium had not suffered an injury-in-fact, Millennium lacked standing to challenge the Department’s inaction.

Going forward, Millennium will now likely request FERC to determine whether the Department did in fact waive the CWA’s certification requirement.  If FERC determines that the Department did waive the requirement, FERC may also authorize Millennium to begin construction of the project even without an affirmative approval or denial from the Department, thus representing a very unusual set of circumstances for a proposed interstate pipeline project.

A copy of the D.C. Circuit’s opinion is available here.