NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, and SIERRA CLUB v. FEDERAL ENERGY REGULATORY COMMISSION
Nos. 19-1610-ag (L), 19-1618-ag (Con)
United States Court of Appeals For the Second Circuit
Decided March 23, 2021
Argued October 29, 2020
August Term 2020; Petition for Review from the Federal Regulatory Energy Commission. Nos. CP 15-115-002, CP15-115-003, CP15-115-004
LIVINGSTON, Chief Judge, PARKER AND LYNCH, Circuit Judges.
Petitioners New York State Department of Environmental Conservation and Sierra Club request that we vacate two orders of the Federal Energy Regulation Commission. These orders determined that the DEC had waived its authority under Section 401 of the Clean Water Act to issue or deny a water quality certification for a natural gas pipeline project sponsored by Intervenors National Fuel Gas Supply Corporation and Empire Pipeline, Inc. Petitioners challenge these orders on the ground that FERC erroneously concluded that Section 401’s one-year deadline for state action may not be modified by an agreement between the parties. We agree with FERC’s interpretation of the statute and conclude that the DEC waived its certification authority by failing to act within the statutory time limit.
Accordingly, we DENY the petition for review.
BRIAN LUSIGNAN, Assistant Attorney General (Letitia James, Attorney General Barbara D. Underwood, Solicitor General, Andrea Oser, Deputy Solicitor General, Frederick A. Brodie, Assistant Solicitor General, Lisa M. Burianek, Deputy Bureau Chief, on the brief), for Petitioner New York State Department of Environmental Conservation
MONEEN NASMITH (Meagan Burton, on the brief), Earthjustice, New York, NY, for Petitioner Sierra Club
SUSANNA Y. CHU, Attorney (David L. Morenoff, Acting General Counsel, Robert H. Solomon, Solicitor, on the brief), Federal Energy Regulatory Commission, Washington, DC, for Respondent
EAMON P. JOYCE, Sidley Auston LLP, New York, NY (Tobias S. Loss-Eaton, James R. Wedeking, Daniel J. Hay, Sidley Auston LLP, Washington, DC, on the brief), for Intervenors
The New York State Department of Environmental Conservation (“DEC”) and the Sierra Club challenge two orders of the Federal Energy Regulatory Commission (“FERC”). These orders determined that the DEC waived its water quality certification authority under Section 401 of the Clean Water Act by failing to act within one year of receiving a certification request. See
FERC conditionally authorized the pipeline project. This authorization required National Fuel, as a condition for final approval, to demonstrate that it had received necessary state and federal permits (or waivers) including certification by the DEC under the Clean Water Act. The DEC denied certification, but FERC concluded that the denial came too late because, in violation of Section 401, it occurred more than one year after the DEC received National Fuel’s application. FERC reached this conclusion despite an agreement between National Fuel and the DEC to alter the receipt date of the application in order to extend the one-year deadline by 36 days. This finding of waiver meant that FERC effectively approved the pipeline without the water quality certification National Fuel was otherwise required to obtain from New York State.
This appeal followed. The DEC and the Sierra Club contend that the DEC’s denial of certification was timely and that FERC should have honored the parties’ agreement to alter the receipt date of the application. We disagree. We conclude that Section 401’s one-year time limit may not be extended by the type of agreement between a certifying agency and an applicant used here and, therefore, FERC properly concluded that the DEC waived its certification authority. Accordingly, we deny the petition for review.
BACKGROUND
National Fuel proposes to construct a 99-mile long natural gas pipeline from
Accordingly, in March 2015, National Fuel applied to FERC for a certificate and, the following year, applied to the DEC for water quality certification. Under Section 401 of the Clean Water Act, states must “act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request,” or their certification authority is waived.
After the DEC received National Fuel’s initial application on March 2, 2016, it requested additional information in August and October 2016 and, in response, National Fuel agreed to supplement its application. At some point after National Fuel was asked to supplement the second time, it became clear that the DEC would not be able to make a final determination within one year of the date of the initial application because it had not completed the notice-and-comment process required by the Clean Water Act and by state regulations.1 See
In an attempt to finesse the one-year deadline, the DEC and National Fuel entered into an agreement dated January 20, 2017, “revising the date . . . on which the Application was deemed received by [the DEC] to April 8, 2016.” J. App’x 96. The agreement had the effect of extending the deadline for the DEC to issue or deny water quality certification by 36 days.
On February 3, 2017, FERC conditionally approved the project provided that National Fuel fulfilled various conditions, including filing “documentation that it has received all applicable authorizations required under federal law (or evidence of waiver thereof).” Order Granting Abandonment and Issuing Certificates,
The DEC denied National Fuel’s application on April 7, 2017, and National Fuel petitioned this Court for review.4 While that petition was pending, National Fuel filed with FERC a “Motion for Expedited Action” on its March 3, 2017 rehearing request. Then, on December 5, 2017, National Fuel filed a “Renewed Motion for Expedited Action,” arguing, for the first time, that the Department waived its certification authority by not acting within Section 401’s one-year time limit. On August 6, 2018, FERC denied National Fuel’s request for rehearing, concluding that the DEC was not required to act by the 90-day regulatory deadline set by FERC because that deadline did not apply where, as in Section 401, “a schedule is otherwise established by Federal law.” Order on Reh’g and Mot. for Waiver Determination Under Section 401 of the Clean Water Act, 164 FERC ¶ 61,084, ¶¶ 37–38 (2018) (“Waiver Order”).5 Nonetheless, FERC
concluded that the DEC waived its authority under Section 401 by not acting in one year (i.e., by March 2, 2017), despite the parties’ agreement to extend that deadline to April 7. In doing so, FERC acknowledged that National Fuel did not raise the waiver argument under Section 401 until its December 2017 filing, nine months after the deadline had passed for submitting a rehearing request under the Natural Gas Act. But FERC treated the filing as a separate motion requesting a waiver determination, which, under its regulations, can be filed “at any time.” J. App’x 237 n.10. FERC then concluded that Section 401 established a deadline that could not be extended by private agreement.
The DEC moved for rehearing, arguing that its agreement with National Fuel was not barred by Section 401 and that FERC erred in treating National Fuel’s December 2017 filing as a motion for a waiver determination. Although FERC was required by Section 19(a) of the Natural Gas
rehearing requests were filed, FERC eventually denied those requests and reaffirmed its finding of waiver. On May 28, 2019, the DEC filed in this Court its petition for review of FERC’s August 6, 2018 and April 2, 2019 orders. National Fuel intervened in support of FERC, and the proceeding was consolidated with a proceeding commenced by Sierra Club seeking review of the same FERC orders.
We review de novo FERC’s interpretation of the Clean Water Act, a statute it does not administer. N.Y. State Dep’t of Env’t Conservation v. Fed. Energy Regul. Comm’n, 884 F.3d 450, 455 (2d Cir. 2018) (“New York I”). The DEC’s interpretation of the Clean Water Act also receives no deference. Id. FERC’s interpretation of the Natural Gas Act and its implementing regulations are entitled to Chevron deference because the Act is committed to FERC’s administration. Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984); see also New York v. Fed. Energy Regul. Comm’n, 783 F.3d 946, 953 (2d Cir. 2015).
DISCUSSION
I.
Before reaching the merits of the petitions, we first consider our jurisdiction because we have an independent obligation to ensure it even where,
as here, the parties do not contest it. See Franco v. Gunsalus, 972 F.3d 170, 174 (2d Cir. 2020); see also Henderson v. Shinseki, 562 U.S. 428, 434 (2011).
Under the Natural Gas Act, a party aggrieved by a FERC order must first seek rehearing from FERC within 30 days.
However, a complicating factor in this case is that FERC, somewhat ironically, granted itself an indefinite extension of time to act on Petitioners’ rehearing requests by issuing a tolling order. FERC eventually denied the rehearing requests more than seven months after it received them. This is relevant because the Natural Gas Act provides that a rehearing request “may be deemed to have been denied” if FERC fails to act within 30 days after it receives
such a request, allowing the aggrieved party to proceed to federal court.
Interpreting the same provision, the D.C. Circuit, sitting en banc, recently held that FERC may not use a tolling order of the kind used in this case to forestall judicial review. Allegheny Def. Project, 964 F.3d at 13. There, the court held that the agency “acts upon the application” only by,
Here, the DEC and Sierra Club, unlike the petitioners in Allegheny, decided to wait until FERC actually denied the rehearing requests, and did not attempt to seek judicial review within 60 days of the expiration of FERC’s 30-day window to act upon their rehearing requests. Thus, the question for us is whether that decision was fatal to the DEC’s and Sierra Club’s ability to seek judicial review now. We think that it was not.
The text of Section 717r supports our conclusion. Subsection (a) provides that an application “may be deemed to have been denied” unless FERC acts upon it within 30 days.
Accordingly, we conclude that the DEC and Sierra Club were not required to seek judicial review within 60 days of the expiration of the 30-day time limit
for agency action and that we have appellate jurisdiction to review their petitions.
II.
Having confirmed our jurisdiction, we proceed to the merits. Petitioners urge us to vacate FERC’s waiver determination, contending that the agency erroneously concluded that Section 401’s one-year review period cannot be extended by an agreement between the parties to change the receipt date. They also argue that FERC should have honored the parties’ agreement, and that National Fuel should have been estopped from making, and FERC from reaching, the waiver argument FERC accepted. We address each argument in turn.
A.
We have previously held that “a statutory time period is not mandatory unless it both expressly requires an agency or public official to act within a particular time period and specifies a consequence for failure to comply with the provision.” St. Regis Mohawk Tribe v. Brock, 769 F.2d 37, 41 (2d Cir. 1985); see also
Barnhart v. Peabody Coal Co., 537 U.S. 149, 158–59 (2003).7 Section 401
That conclusion, however, does not get us far. The parties do not dispute that Section 401’s mandatory deadline would invalidate an untimely agency action. Rather, their central dispute is whether the DEC’s denial of National
Fuel’s certification request should be regarded as untimely because the agreement to change the receipt date must be deemed void. In order to determine whether Congress intended to permit such an arrangement, we look to the text and legislative background of Section 401. See Brock v. Pierce Cnty., 476 U.S. 253, 258 (1986) (examining the statutory language and legislative history to determine the scope agency authority); St. Regis Mohawk Tribe, 769 F.2d at 42–46 (looking at the legislative history to determine whether Congress meant to bar delayed agency action).
We have already had an occasion to examine the text of Section 401 in a recent case involving some of the same parties here. New York I, 884 F.3d 450. That case concerned whether Section 401 permits the DEC flexibility to decide the beginning of the one-year review period. Id. at 455. There, the DEC argued that its review process under Section 401 could begin only when it deemed an application “complete.” Id. Much as it had done in this case, the DEC had from time to time asked an applicant to supplement an original application, contending that it needed additional information to continue its review. Id. at 453. We concluded that Section 401 does not “specify that th[e] time limit applies only for ‘complete’ applications,” and that it cannot be interpreted to require a
“complete” application because that approach would allow a state agency not only to dictate when the review process can begin but also to delay it indefinitely. Id. at 455–56. We held that the “plain language of Section 401 outlines a bright-line rule regarding the beginning of the review: the timeline for a state’s action regarding a request for certification ‘shall not exceed one year’ after ‘receipt of such request.’” Id. at 455.
We apply that approach. Both here and in New York I, the DEC wished to change the receipt date to give itself more time to review an application. The only difference is that, rather than unilaterally altering the date of receipt as the date it considered the application “complete” as it did in New York I, the DEC in this case asked
The legislative background of Section 401 supports this conclusion, because it shows with a good deal of clarity that limiting a certifying state’s discretion and eliminating a potential source of regulatory abuse was what the one-year limit in Section 401 was intended to achieve. While the original version of the House Bill did not set any time limit for state action, see H.R. Rep. No. 91-127, at 42–43, it was later amended to require affirmative state action “within a reasonable period of time” in order to prevent delay due to a certifying state’s passive refusal or failure to act. 91 Cong. Rec. H2689 (daily ed. April 16, 1969); 91 Cong. Rec. H2608 (daily ed. April 15, 1969). Later, that provision was further refined, and the one-year time limit was included in the final version of the bill after the Senate bill was combined with the House bill. See Pub. L. No. 91-224, § 21(b)(1), 84 Stat. 91, 108 (1980); S. Rep. No. 91-351, at 113 (1969). When the Clean Water Act was reorganized and amended in 1972, the one-year time limit remained intact for the same reason. See H.R. Rep. No. 92-911, at 122 (1972)
(explaining that the one-year requirement was to ensure that “sheer inactivity by the State . . . will not frustrate the Federal application”).
The DEC argues that the time limit was intended to protect an applicant’s right to speedy resolution and, thus, an applicant should be able to waive or modify this right by agreeing to a different receipt date. But the legislative history shows that Congress was not primarily concerned with protecting the rights of individual applicants. Rather, it shows that Section 401’s time limit was meant to protect the regulatory structure, particularly in situations involving multiple states: in other words, to “guard[] against” one state “sit[ting] on its hands and do[ing] nothing” at the expense of other states that are also involved in a multi-state project. 91 Cong. Rec. H2690 (daily ed. April 16, 1969); H.R. Rep. No. 92-911, at 122. Thus, in specifying a deadline for state action, we believe Congress intended to limit one state’s ability to delay or otherwise upset multi-state licensing proceedings. In fact, Congress acknowledged during the debate leading up to the amendment adding the one-year limit that “there [we]re not any real safeguards in the bill to protect an applicant against arbitrary action by a State agency,” but assumed that an applicant’s interests would be sufficiently protected by “normal appeals procedures to the courts.” 91 Cong. Rec. H2691
(daily ed. April 16, 1969); see also H.R. Rep. No. 92-911, at 122. Thus, consistent with our approach in New York I, the legislative background of
Additional case law supports our conclusion that Section 401 was intended to curb conduct by certifying states that upsets the regulatory balance set by Congress. Hoopa Valley Tribe v. Federal Energy Regulatory Commission, 913 F.3d 1099 (D.C. Cir. 2019), involved coordinated activity under which the state certifying agencies and applicants agreed to repeatedly withdraw and resubmit certification requests for over a decade in order to avoid Section 401’s one-year time limitation. The D.C. Circuit held that the states’ “deliberate and contractual idleness” defied the clear statutory requirement and “serve[d] to circumvent a
congressionally granted authority over licensing, conditioning, and developing of a hydropower project.” Id. at 1103–04. This coordinated withdrawal-and-resubmission approach, the court held, could not be used to extend the “absolute maximum” period of time specified in the statute, because it “could be used to indefinitely delay federal licensing proceedings and undermine FERC’s jurisdiction to regulate such matters.” Id. at 1104.
Village of Morrisville, Vt., 173 FERC ¶ 61,156, ¶ 22 (Nov. 19, 2020), involved a different type of effort to avoid the statutory limitation. There, without coordinating with the state, the applicant repeatedly withdrew and resubmitted an application in order to avoid an unfavorable decision. Id. ¶¶ 3–7. FERC observed that even what it termed a “functional agreement” between the parties to withdraw and resubmit may be sufficient to find a waiver, but that the parties had not crossed the line. Id. ¶ 21. FERC found no coordinated agreement because it saw no indication that the state “requested or directed” the applicant to withdraw and resubmit “with the motivation to restart the one-year clock.” Id. ¶¶ 21–22. Rather, according to FERC, the applicant “acted unilaterally and in its own interest” when it withdrew and resubmitted its application and,
consequently, the one-year clock restarted with each resubmission.10 Id. ¶ 21; see also id. ¶¶ 15–19 (distinguishing the cases where FERC found a waiver based on an express or functional agreement or coordination between the parties to give a certifying state more time from the cases where an
While we see no indication that the DEC engaged in the kind of “deliberate and contractual idleness” found in Hoopa Valley Tribe, 913 F.3d at 1104, we conclude that Section 401’s bright-line rule also precludes the line-blurring arrangement under review in this case. We are sympathetic to Petitioners’ argument that states should be afforded flexibility given the complexity of the projects covered by Section 401 and the paramount interest of every state in protecting its water quality. However, we are bound by what we believe to be Congress’ intention expressed in the text of Section 401 and
reinforced in its legislative history to reduce flexibility in favor of protecting the overall federal licensing regime.11 Accordingly, we hold that Section 401 prohibits a certifying agency from entering into an agreement or otherwise coordinating with an applicant to alter the beginning of the review period, and that the DEC waived its certification authority by failing to act within one year of the actual receipt of the application.
B.
Having reached this conclusion, we turn to Petitioners’ claim that equitable principles should have prevented FERC from reaching the waiver question. The DEC argues that National Fuel waived in the agreement its right to challenge the agreed-upon receipt date, that it is estopped from doing so, and that FERC should have honored that agreement. Sierra Club similarly argues that
the parties to the agreement at issue were both sophisticated and well-represented, and that upholding FERC’s waiver determination, despite such an agreement, would result in substantial injustice.
We are not without sympathy for these arguments. The DEC was, after all, flimflammed by National Fuel which made a commitment, later thought better of it, and walked away. But in the end, Petitioners’ argument fails for the simple reason that FERC could not have been estopped from reaching the waiver issue because it could have addressed it on its own or at the behest of a third-party. As was the case in Hoopa Valley Tribe, a third-party, which was not a party to the agreement to change the receipt date, could have petitioned FERC for a waiver determination. 913 F.3d at 1102; see also
finding or order
Thus, because FERC could have reached the waiver question irrespective of National Fuel’s ability to raise it, the equitable considerations that Petitioners urge us to consider do not change the outcome.
III.
Finally, the DEC argues that National Fuel’s December 5, 2017 request for expedited action was untimely because it was not filed within the 30-day window to file a rehearing request under Section 19 of the Natural Gas Act, and that FERC’s disregard of this deadline was arbitrary and capricious. We disagree. While the filing may not have been properly labeled, we conclude that FERC’s treatment of the filing as a separate motion for a waiver determination was reasonable given FERC’s broad discretion in fashioning its own procedures. See Vt. Yankee Nuclear Power Corp. v. Nat. Res. Def. Council, Inc., 435 U.S. 519, 543
(1978); see also Forest Watch v. U.S. Forest Serv., 410 F.3d 115, 117–18 (2d Cir. 2005) (federal agency’s “interpretation of its own rules (including which rule applies when) is entitled to deference”).
The Natural Gas Act requires that a rehearing request be made within 30 days of the issuance of a FERC order, but this requirement applies only to parties “aggrieved by” a FERC order.
(simplified); see also 164 FERC ¶ 61,084, ¶ 6 n.10 (2018); 167 FERC ¶ 61,007, ¶ 27 & n.69 (2019).
Given the Natural Gas Act’s silence on the matter, we find FERC’s interpretation of the statute and its own regulation, though certainly not pellucid, to be at least “reasonable” and to represents the agency’s legitimate policy choice which we have a duty to respect. Chevron, 467 U.S. at 843–44. Although the DEC contends that accepting FERC’s position that waiver motions can be brought “at any time” means that, effectively, no time limit exists on when an applicant may present such arguments and forces the states to chase a moving target, we are obliged to defer to policy choices such as these. See Nutritional Health All. v. Food & Drug Admin., 318 F.3d 92, 97 (2d Cir. 2003) (“[T]he responsibilities for assessing the wisdom of such policy choices and resolving the struggle between competing views of the public interest are not judicial ones . . . .” (quoting Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000))); see also Florez v. Holder, 779 F.3d 207, 212 (2d Cir. 2015) (“[W]e are not looking for the best interpretation, or the majority interpretation—only a reasonable one.”). Our task here is limited to determining “whether the agency’s
answer is based on a permissible construction of the statute,” Chevron, 467 U.S. at 843, and we conclude that it is.12
For these reasons, we hold that FERC reasonably concluded that the Natural Gas Act’s rehearing provision did not bar National Fuel from seeking a waiver determination outside of the 30-day window to file a rehearing request, and that FERC acted within its discretion in treating National Fuel’s December 2017 filing as a timely motion for a waiver determination.
CONCLUSION
For the foregoing reasons, we DENY the petition for review.