167 A.D.3d 128
N.Y. App. Div.2018Background
- National Fuel sought a FERC certificate to build a 97-mile interstate natural gas pipeline crossing the Schuecklers’ land in Allegany County, NY.
- FERC granted a certificate conditioned on compliance with environmental conditions, including obtaining New York State water quality certification (WQC) under the Clean Water Act (CWA).
- Before New York DEC decided the WQC, National Fuel filed an EDPL article 4 vesting petition to condemn easements, claiming an EDPL 206(A) exemption from article 2 because of its FERC certificate.
- The DEC denied the WQC, which (if upheld) would legally prevent construction under the NGA and CWA; respondents argued the denial voided the FERC certificate for EDPL 206(A) purposes.
- Supreme Court granted the vesting petition; the Appellate Division (majority) reversed, holding the company could not use EDPL 206(A) because its FERC certificate was conditioned on the WQC and thus not a qualifying federal authorization after the denial.
Issues
| Issue | Plaintiff's Argument (National Fuel) | Defendant's Argument (Schueckler) | Held |
|---|---|---|---|
| Whether a FERC certificate conditioned on state WQC qualifies for EDPL 206(A) exemption when the WQC is denied | FERC certificate exists; EDPL 206(A) exemption applies and permits bypass of EDPL article 2 despite WQC denial | The DEC denial nullifies the contingent federal authorization; no qualifying federal permit exists, so no EDPL 206(A) exemption | The court held the conditioned certificate did not qualify after WQC denial; petitioner not exempt from article 2 and petition dismissed |
| Whether commencement of eminent domain requires satisfaction of FERC conditions precedent (e.g., WQC) | Conditions relate to construction only; eminent domain may proceed once FERC issues a certificate | A certificate ‘‘subject to’’ conditions creates no vested right until conditions satisfied; eminent domain depends on a viable project | The court held eminent domain cannot proceed absent a valid federal authorization to construct (i.e., project must be legally viable) |
| Whether state WQC denial undermines federal scheme permitting pipeline construction | FERC approval means federal law governs and certificate-holder can condemn | State CWA authority can block federal license/permit by denying WQC, which prevents construction and negates conditional federal authorization | The court held state WQC denial can prevent construction and thus remove the predicate public project for eminent domain |
| Whether lack of present ability to construct is cured by potential compensation to landowner | Compensation makes forced sale acceptable; eminent domain can proceed regardless | Public-use requirement is independent of compensation; there must be a viable lawful public project before taking | The court held compensation is insufficient; without an implementable public project, eminent domain cannot be exercised |
Key Cases Cited
- Islander E. Pipeline Co., LLC v. Connecticut Dept. of Envtl. Protection, 482 F.3d 79 (2d Cir. 2006) (FERC must ensure projects comply with federal laws like the CWA; state WQC can block construction)
- Delaware Riverkeeper Network v. Federal Energy Regulatory Comm'n, 857 F.3d 388 (D.C. Cir. 2017) (FERC must condition certificates on state WQC where required; failure to do so risks certificate’s validity)
- S.D. Warren Co. v. Maine Bd. of Envtl. Protection, 547 U.S. 370 (2006) (Clean Water Act preserves states’ authority to deny certification and thereby prevent federal licenses/permits)
- City of Tacoma v. Federal Energy Regulatory Comm'n, 460 F.3d 53 (D.C. Cir. 2006) (states play primary role under CWA section 401; FERC must defer to final state decision)
- Moran v. Erk, 11 N.Y.3d 452 (2008) (contract/instrument language “subject to” postpones vesting of rights until condition occurs)
- Matter of City of New York (Grand Lafayette Props. LLC), 6 N.Y.3d 540 (2006) (EDPL two-step condemnation process; article 2 ensures public-purpose review)