Deadline Extended for Constitution, Iroquois

FERC Gives Applicants Two More Years to Place in Service Proposed Natural Gas Pipeline Projects
Mark Reishus
November 7, 2018 at 08:09:28 ET
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On Nov. 5, 2018, the Federal Energy Regulatory Commission (FERC or the Commission) extended by two years the deadline for placing in service the previously approved Constitution Pipeline Project and Wright Interconnect Project in Pennsylvania and New York. In Constitution Pipeline Co. LLC, 149 FERC ¶61,199 (2014) (Certificate Order), FERC required Constitution Pipeline Co. LLC (Constitution) and Iroquois Gas Transmission System L.P. (Iroquois) to construct their natural gas pipeline projects and make them available for service by Dec. 2, 2016. Subsequently, upon requests from Constitution and Iroquois, FERC staff granted two-year extensions of time to Dec. 2, 2018. Pursuant to FERC’s new order, the in-service deadline is extended to Dec. 2, 2020.

Previous Extensions

According to FERC, the Constitution Pipeline Project “will be an approximately 124-mile-long pipeline extending from Susquehanna County, Pennsylvania, through Broome, Chenango, Delaware, and Schoharie Counties, New York. The Wright Interconnect Project will add new compression facilities and modify existing compression facilities at the Wright Compressor Station in Schoharie County, New York.”

Although the Certificate Order required the companies to complete construction and make them available by Dec. 2, 2016, it also prohibited them from commencing construction until they have obtained “all applicable authorizations required under federal law (or evidence of waiver thereof).”

In 2016, FERC staff extended the in-service deadline for Constitution’s project to Dec. 2, 2018, because the New York State Department of Environmental Conservation (New York DEC) had denied Constitution’s application for a water quality certification required under section 401 of the Clean Water Act and Constitution had appealed to the U.S. Court of Appeals for the Second Circuit (Second Circuit). FERC affirmed the extension in Constitution Pipeline Co. LLC, 157 FERC ¶61,145 (2016).

FERC staff also extended the in-service deadline for Iroquois’s project to Dec. 2, 2018, because New York DEC had not issued a final approval for a State Facility & Title V air permit under the Clean Air Act and Iroquois had initiated review in the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to compel action by New York DEC.

Relevant Procedural History

On Aug. 18, 2017, the Second Circuit upheld the New York DEC’s decision to deny Constitution’s application for a water quality certification and concluded that it lacked jurisdiction to determine if the state agency waived its authority through delay. Constitution then turned to FERC for resolution of the waiver question.

On Jan. 11, 2018, in Constitution Pipeline Co. LLC, 162 FERC ¶61,014 (2018), FERC determined that New York DEC had not waived its authority to issue the water quality certification through delay. On July 19, 2018, FERC affirmed this decision in Constitution Pipeline Co. LLC, 164 FERC ¶61,029 (2018).

On Sept. 14, 2018, Constitution filed a petition for review in the D.C. Circuit.

Second Extension Requests

On June 25, 2018, while rehearing was still pending before FERC, Constitution requested a second two-year extension of the in-service deadline, to Dec. 2, 2020.

On Aug. 1, 2018, Iroquois requested the same extended in-service deadline, i.e., Dec. 2, 2020, for its project.

The following entities opposed the second extension requests: affected landowner Capital Region Board of Cooperative Educational Services (Capital Region Board), a group of environmental organizations (collectively, Catskill Mountainkeeper), affected landowners Catherine Holleran and her family (Holleran Landowners), and the organization Stop the Pipeline.

Purpose of Deadlines and Extensions

FERC explained that its regulations “do not establish a particular time period to complete construction of an authorized natural gas facility. The Commission’s certificate orders include completion deadlines, in part, because the information supporting our public convenience and necessity determinations can go stale with the passage of time. The purpose of conditioning certificate authority with a deadline for completion of construction is to ‘diminish[] the potential that the public interest might be compromised by significant changes occurring between issuance of the certificate and commencement of the project.’ [Altamont Gas Transmission Co., 75 FERC ¶61,348, at 62,103 (1996).]”

However, FERC said, “construction deadlines may be extended for good cause. The completion date specified in a certificate order provides what the Commission believes — based on its assessment of circumstances relevant to the specific project — to be a reasonable period of time for the project sponsor to complete construction and make the project available for service. But if a certificate holder files for an extension of time within a timeframe during which the environmental and other public interest findings underlying the Commission’s authorization can be expected to remain valid, the Commission, or staff wielding delegated authority, generally will grant an extension of time if the movant demonstrates good cause.”

Good cause “can be shown by a project sponsor demonstrating that it made good faith efforts to meet its deadline but encountered unforeseeable circumstances. The Commission has previously found that providing more time for a project applicant to obtain necessary permits can be an appropriate basis for granting an extension of time.”

Ruling on Constitution's Request

FERC found that Constitution demonstrated good cause for the delay and granted its request for another two-year extension.

In its request, Constitution asserted that it is diligently pursuing all available legal remedies in response to New York DEC’s denial of certification, which is still in effect.

The opponents of the extension noted that FERC precedent holds that an extension which results in limitations in the use of a landowner’s property might not be warranted unless the company can demonstrate credible prospects for project completion. Although Constitution is pursuing judicial review, they asserted that this effort does not suffice as a credible prospect for completion.

FERC noted that Constitution’s judicial appeal is pending, and that New York DEC’s denial does not prohibit Constitution from reapplying for the certificate. “There is no reason for the Commission to believe that Constitution, if granted the requested two-year extension, will not construct its facilities and place them into service by December 2020, assuming a timely favorable decision from the court.”

In response to arguments that Constitution’s choice to pursue a determination of waiver rather than submitting a new application for certification undermines its claim of good cause for the extension, FERC said “Constitution is free to decide how to satisfy the Certificate Order’s prerequisites for construction. Constitution’s decision to argue that New York DEC waived its section 401 authority rather than to file a new application with New York DEC is informed by Constitution’s assessment of the relative probabilities of timely success. The chosen strategy does not show bad faith. Constitution’s loss in the Second Circuit and Constitution’s unsuccessful efforts to seek a declaratory order from the Commission finding waiver constitute new demonstrations of good cause for delay. The waiver question is now pending before the … D.C. Circuit. Given that our regulations allow an extension of time for good cause, we find no reason to terminate Constitution’s project by denying the extension before the court reaches its decision.”

FERC also rejected the argument that the evidence that supported the decision to authorize the project will be stale when compared to the changed circumstances in the ensuing six or more years to 2020. “We conclude that extending the deadline to construct the Constitution Pipeline Project and place it into service within six years will not undermine the Commission’s findings in the Certificate Order that the project is required by the public convenience and necessity and is an environmentally acceptable action. The Commission has frequently authorized infrastructure projects with initial deadlines of four, five, or six years without expressing concerns about the certificate order’s economic or environmental findings becoming stale. The Certificate Order found market need for the Constitution Pipeline Project based on Constitution’s long-term precedent agreements for 100 percent of the project’s capacity. The term of these agreements extends many years beyond December 2, 2020, and Catskill Mountainkeeper provides no evidence to suggest that this two-year extension would impact those agreements.”

Although recognizing that environmental impacts can change, and that the validity of its conclusions and environmental conditions “cannot be sustained indefinitely,” FERC concluded that supplemental environmental analysis of Constitution’s project is unnecessary. “New information must be sufficient to show that the remaining federal action will affect the environment in a significant manner or to a significant extent not already considered. Constitution requests to change only the timing of the Constitution Pipeline Project. The Commission is not aware of any new circumstances or information that were not already considered. … Moreover, Commission staff will review all environmental conditions before Constitution will receive any authorization to proceed with construction. This will help to ensure that no changes of fact or law are overlooked. The Commission may at any time impose additional environmental mitigation measures as necessary.”

FERC disagreed that an extension of time will violate the Clean Water Act’s prohibition on granting a license or permit when state certification has been denied. “Section 401(a)(1) does not prohibit all ‘license[s] or permit[s]’ issued without state certification, only those that allow the licensee or permittee ‘to conduct any activity … which may result in any discharge into the navigable waters.’ The Commission’s conditional certificate orders do not authorize any activity that could result in a discharge to New York waters. This is true for the Certificate Order including extensions of time.”

Stop the Pipeline cited section 19(b) of the Natural Gas Act to support its argument that FERC lost its ability to alter the Certificate Order’s in-service deadline when Stop the Pipeline filed its appeal with the Second Circuit in 2016. Section 19(b) provides, in part, that the appellate court’s jurisdiction “shall be exclusive, to affirm, modify, or set aside such order in whole or in part.” FERC disagreed with Stop the Pipeline. “The requested extension of time does not change the Certificate Order in a manner barred by section 19(b) of the NGA.” FERC cited judicial precedent allowing agencies to consider amendments or modifications during a pending appeal.

Finally, FERC rejected the argument that it is required to provide public notice and consider comments before reaching a decision on Constitution’s requested extension of time. “Nothing in the Commission’s regulations suggests that an opportunity for notice and comment is necessary.” The ability to seek rehearing provides sufficient due process. “The absence of a discrete opportunity to comment on Constitution’s extension request prior to the issuance of this Commission order granting the extension in no way adversely affects Catskill Mountainkeeper’s rights. Moreover, we have considered and addressed their concerns, and those from the other protestors, in this order.”

Ruling on Iroquois's Request

Iroquois asserted that there is good cause to grant its extension request because it has worked diligently and in good faith to obtain all approvals to construct its project and because the delay related to the pending State Facility and Title V air permit was unforeseeable and beyond its control.

“Iroquois explains that it executed a Stipulation of Settlement with New York DEC as part of the pending litigation in the … D.C. Circuit. Under this settlement, if Constitution prevails in any forum against New York DEC with respect to Constitution’s application for a water quality certification, then New York DEC has 15 business days to forward its draft State Facility and Title V air permit for the Wright Interconnect Project to the U.S. [Environmental Protection Agency] for its review and approval. If Constitution does not prevail, then Iroquois and New York DEC will confer within 30 days regarding the processing of Iroquois’s air permit application.”

FERC found that Iroquois has demonstrated good cause for the delay. Therefore, “we will grant the request for a two-year extension to complete construction of the Wright Interconnect Project and to make it available for service by December 2, 2020.”

For More Information

See ¶608-2: Certificate Proceedings for more information on construction deadline extensions.

Constitution Pipeline Co. LLC and Iroquois Gas Transmission System L.P., Order Granting Extension of Time, 165 FERC ¶61,081 (2018) [Docket Nos. CP13-499-000 and CP13-502-000].