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D.C. Circuit Finds State Inaction May Constitute Waiver of Permitting Authority

On Friday, June 23, 2017, the D.C. Circuit held if a state agency fails to act on a federal permit application within the prescribed statutory review period, the statute’s permit requirements “are deemed waived” and the Federal Energy Regulatory Commission may authorize construction of natural gas transportation facilities. Accordingly, the decision may provide an avenue for a pipeline to expedite construction of a FERC-approved project in the face of state agency delays by going to straight to FERC instead of petitioning a court to force the state agency to act.

In Millennium v. Seggos, the court heard Millennium Pipeline Company’s petition regarding the New York State Department of Environmental Conservation’s lack of action on Millennium’s application for a water quality certificate under section 401 of the Clean Water Act. The court found that if a state agency fails to act within a year on a water quality certificate application, then the agency may have waived its authority. In such a case, the court found that the pipeline may request FERC to find that a waiver has occurred and allow the pipeline to commence construction. If a state agency acts on the application after the statutory timeframe has elapsed, the court stated such action “would be too late in coming and therefore null and void”. The court’s logic appears to extend to any federal permit required to construct a pipeline, including those required under the Clean Air Act, where the relevant statute includes a waiver provision similar to that of the Clean Water Act. The decision appears to vest FERC with the authority to determine if a state agency has waived (through inaction) its authority under the Clean Water Act, the Clean Air Act, or other similar statutes, thereby allowing FERC to grant the pipeline authorization to construct notwithstanding the absence of a state-issued permit.

A copy of the court’s decision is available here.