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FERC puts Constitution Pipeline back on track, finding New York waived water authority

Highlights

FERC votes 4-0 to reverse prior finding

Project awaits permit from US Army Corps

Washington — The Federal Energy Regulatory Commission has found that New York waived its water quality authority for Williams' Constitution Pipeline, giving new life to a natural gas project stalled since April 2016 when state regulators denied a permit.

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The 124-mile project is designed to ship up to 650 MMcf/d of northeastern Pennsylvania gas production to interconnections with the Iroquois Gas Transmission and Tennessee Gas Pipeline in upstate New York.

The commission, by a 4-0 vote late Wednesday, reversed its earlier finding -- that the New York review could not be waived -- in light of a recent DC Circuit Court of Appeals ruling in Hoopa Valley v. FERC. The Hoopa case had involved a hydropower project for which states and PacifiCorp agreed to defer the Clean Water Act's one-year statutory deadline by annually withdrawing and resubmitting the water permit.

The commission interpreted the ruling to "stand for the general principal" that states waive their CWA Section 401 authority when a project application is withdrawn and resubmitted to avoid the act's one-year time limit for state decisions, and the state fails to act in that timeframe, the commission said.

FERC rejected arguments from New York and environmental groups that differing circumstances in the Constitution case weighed against granting a waiver.

"The record [for Constitution] indicates that the state encouraged Constitution's withdrawal and resubmission of its application for the purpose of avoiding the waiver period," FERC concluded.

NEXT STEPS

The start of construction is unlikely to be imminent.

Williams in a statement said Constitution sponsors "are evaluating next steps for advancing the project," and asserted the project represents much needed infrastructure for a region confronting natural gas supply constraints that have elevated prices for consumers.

According to Williams spokesman Christopher Stockton, the principal outstanding federal permit needed is the CWA 404 permit from the US Army Corps of Engineers. "For construction activities, we need to obtain a surface water withdrawal permit from the Susquehanna River Basin Commission in addition to a permit from Pennsylvania Fish and Boat Commission, and coordinate with state and local governments for permits like driveway and road crossing permits," he said in an email.

Rob Rains of Washington Analysis said the FERC decision is a "potential game-changer" for the project's future. But the process of obtaining a Section 404 permit from the Corps could drag on for a year or longer. Appeals from environmental groups are expected but unlikely to halt work absent an injunction, he said.

Gary Kruse of LawIQ suggested Constitution would be likely to file a complaint seeking an injunction preventing enforcement actions against the project by NYSDEC, likely following the pattern for Millennium Pipeline.

The project is a joint venture of Williams, Cabot Oil & Gas, WGL Holdings and Duke Energy's Piedmont Natural Gas.

-- Maya Weber, maya.weber@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com

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