Last week MDN brought you the news that a federal judge had dismissed a case brought by the Constitution Pipeline against the New York Dept. of Environmental Conservation (DEC) over the issue of denying water crossing permits for the project (see Federal Judge Rejects Constitution Pipe Request to Bypass NY DEC). What we have since come to understand is that this was one of two lawsuits filed by the Constitution against the NY DEC. In fact, it was the lesser of the two lawsuits. The “biggie” lawsuit is still not yet decided. That decision will come from the U.S. Court of Appeals for the Second Circuit–and is due to arrive within the next two months. The fate of the project hangs in the balance. Lawyers for the Constitution are confident that the court will find the DEC’s denial of permits is capricious and politically motivated, and will strip the DEC of its role in the project. If that happens, it is the equivalent of a 10.0 earthquake. The DEC will no longer play a role in federally regulated pipeline projects. Perhaps if the DEC wants to maintain a role in such projects, they ought to move forward and issue those permits now (i.e. “settle out of court”), before the ruling comes down…

The fate of the $925 million pipeline awaits a decision by the U.S. Court of Appeals for the Second Circuit, which heard arguments in November. The pipeline company says that the Federal Energy Regulatory Commission’s 2014 approval of the pipeline limits the state’s authority, and that New York’s denial of the permits was arbitrary, capricious, and politically motivated.

The court’s ruling, expected in the next few months, could have nationwide implications for interstate pipeline projects, which have become battlegrounds for climate-change activists seeking to slow the growth of fossil-fuel development.

Though the Constitution Pipeline was able to secure permits in Pennsylvania, where state policy has been more accommodating to the gas industry, it ran into stiff opposition in Albany, where fossil-fuel producers have less clout and anti-fracking interests have Gov. Andrew Cuomo’s ear.

Permits that the New York Department of Environmental Conservation denied would have allowed the pipeline to cross more than 250 streams and about 80 acres of wetlands. The pipeline company said New York state used its “narrowly circumscribed jurisdiction to, in effect, veto a federally approved interstate pipeline project.”

In its defense, New York state said the record supports its “detailed, substantive and well-reasoned” permit denials. “Constitution’s vague insinuations of political influence are insufficient to render the decision arbitrary and capricious,” state Attorney General Eric T. Schneiderman said in court filings.

The case has attracted attention from environmental groups such as the Natural Resources Defense Council, the Waterkeeper Alliance, Earthworks, and PennEnvironment, which urged the appeals court to uphold the permit denials “to ensure that states remain arbiters of their own water quality.”

They are opposed by trade associations representing the gas industry, business interests, and large energy customers, which say New York’s action interferes with the authority of the Federal Energy Regulatory Commission (FERC) and deprives markets in New York and New England of access to a new source of natural gas.

“You have five governors of five New England states who all expressed support for this project,” said Christopher Stockton, Constitutional Pipeline’s spokesman. “You have one governor that has essentially denied them access to Pennsylvania gas. You’re talking about interfering with interstate commerce.”

Constitution Pipeline, which would be supplied by the prolific Marcellus Shale fields in Susquehanna County, is designed primarily to displace gas imported from Canada and the Gulf Coast that now goes to the northeastern United States. The pipeline company is owned by Williams Partners LP, WGL Holdings Inc., and Cabot Oil & Gas Corp., the largest gas producer in the county.

But the pipeline also would serve some local customers, including industries and communities along its route through New York state north of the Catskills, where residents are desperate for any economic boost.

“There is no work here,” said Dick Downey, 82, an outspoken supporter of gas development and a board member of the Unatego Central School District in Otsego County, N.Y. “Our school district would save $80,000 a year in energy costs from natural gas at one school alone. That’s a teacher and an aide, when we’re bleeding jobs.”

“Without that job, I probably would have lost my home and my farm, because there was just no work,” he said.

The jurisdictional battle centers on interpretations of the Natural Gas Act, which designates FERC as the lead agency for coordinating federal authorizations for large interstate energy projects.

In 2014, FERC determined that the Constitution Pipeline’s benefits outweighed any adverse effects, including those on landowners and surrounding communities. It also found that the project would cause some adverse environmental impacts, but that the impacts would be reduced to “less-than-significant levels” with some mandated design modifications, including horizontal drilling beneath some streams to reduce disruptions to waterways.

A key part of Constitution’s claim that the decision was politically motivated cites a conversation said to have taken place in August 2015 between its contractor and a New York environmental official, Christopher Hogan, who indicated that “although NYSDEC was ready to issue the permits, the governor’s office was not.”

New York issued its denial eight months later, on April 22, 2016 – Earth Day. It dismissed the significance of the “hearsay” conversation with the state environmental official, saying he was not the decision-maker “authorized to reach a position and bind the agency.”

The pipeline company argues that New York state undermined its challenge about the pipeline’s design and route because it failed to seek a rehearing of the 2014 decision by FERC, which approved the pipeline plans.

In a separate federal court action filed in Albany, Constitution also unsuccessfully sought to forestall any efforts by the state to delay the pipeline through other regulatory actions. A federal judge dismissed that suit this month because it was premature – the pipeline company had not yet suffered any injury.*

*Philadelphia (PA) Inquirer (Mar 26, 2017) – Approved in Pa. and blocked in N.Y., a contentious shale project hangs in the balance

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