Constitution Case Ensures NY More Winters of High Energy Prices

"Environmentalists" - MarkindDaniel B. Markind, Esq.
Weir and Partners, LLP

 

The Constitution Pipeline was denied in court, questioning how long will NY continue making pipelines a political issue and forcing energy prices higher?

The Second Circuit Court of Appeals on Friday denied Constitution Pipeline Company, LLC’s appeal of the refusal by the New York Department of Environmental Conservation to grant a Section 401 Clean Streams Permit on the Constitution Pipeline. On the two issues raised in the appeal, the Second Circuit ruled that it (a) did not have jurisdiction to rule whether the time period the DEC took to give its decision to CPC, a division of Williams Partners L.P., was excessive; and (b) that the record does not show that the DEC acted in a way that was “arbitrary, capricious and ultra vires” when it denied the permit.

energy prices

CPC will try to put a nice gloss on the result, but the decision was a complete defeat for the company and the pipeline. Along with it went the concept that there will be real federal control over the interstate pipeline system. Now, each pipeline that crosses state lines will be approved mostly on the basis of whether any state along the route has an environmental movement that is bellicose and powerful enough to block it. Pipeline planners should take note.

In one sense the Court ruling was narrow. The DEC never issued a ruling on the ultimate issue, whether or not the construction of the pipeline would adversely impact New York State waterways. Instead, the DEC rejected CPC’s request for the Section 401 Permit on the grounds that the Company had failed to provide the DEC with the necessary information.

The Court painstakingly went through a history of what it said was the DEC asking for information, but being rebuffed by the Company. Having not been part of the process, I don’t know if that characterization is fair. Given the DEC’s history with the fracking question in general and two other pipelines that it has rejected, it’s hard to give the DEC the benefit of any doubt. It will, however, be interesting to see what happens if any Court actually has to get to the ultimate issue. More likely, DEC equivalents in states with anti-pipeline administrations will keep demanding more and more information from pipeline companies, and then run the clock out when the information cannot be provided in time.

Regarding the issue of whether or not the DEC exceeded the one year time limit mandated by federal statute, the Court in effect stated that CPC filed in the wrong court to adjudicate this question. The timing part of the statute is exclusively under the province of the Court of Appeals for the DC Circuit, not the Second Circuit. CPC now is faced with the prospect of starting the entire judicial process over on this issue, and this time in the DC Circuit. Given the history of this matter, I doubt they’d succeed.

One thing the ruling does clearly is ensure that pipelines remain a political issue. In that realm the positon of New York and similar states is completely incoherent. New York City needs ever increasing amounts of natural gas. New York State does everything it can to block that. Something has to give.

energy prices

From a business development perspective, you have to wonder how New York State industries like fiber optic company Amphenol Aerospace will put up with the energy situation. Amphenol is an international company with a large facility in the Upstate town of Sydney, New York employing about 1,000 workers. It was about to leave New York State when Governor Andrew Cuomo came up with a $20,000,000 aid package and a promise that energy savings from new natural gas supplies would keep Amphenol’s overall costs competitive.

Obviously, this last promise has been broken. Has anyone in Pennsylvania been in touch or will anyone from Pennsylvania be in touch with Amphenol asking about potentially moving its operations to a State which takes a realistic view on energy?

Prior to Governor Cuomo’s move on Constitution, few thought of the Section 401 process as a weapon for States to block the interstate pipeline system and disrupt interstate commerce. However, on Friday the Natural Resources Defense Council posted:

“We hope that today’s decision will have effects beyond New York, and other states will be empowered to block future natural gas pipelines planned for construction within their borders”.

Summer is ending.   Will Winter 2018 be cold and snowy? If so, Andrew Cuomo and all of the New England Governors who have fought so hard against pipelines may have a difficult time explaining why their natural gas prices have spiked to levels far in excess of what others are paying.

The post Constitution Case Ensures NY More Winters of High Energy Prices appeared first on Natural Gas Now.

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