Matter of National Fuel Gas Supply Corporation v. Schueckler et al.

Court:	Appellate Division, Fourth Department
Citation:	2018 NY Slip Op 07550

Overview: A condemnation attempt to build an interstate gas pipeline failed because the condemnor failed to obtain a required certificate of public convenience and necessity from the Department of Environmental Conservation.

Facts: National Fuel Gas Supply (NFGS) brought this case to condemn an easement across Schueckler’s land to build an interstate gas pipeline. While the case was pending, the FERC granted NFGS a certificate of public convenience and necessity for the project. However, the certificate was conditioned on NFGS’s receipt of all federally-authorized authorizations, including a water quality certificate (WQC) from the state. The state Department of Environmental Conservation (DEC) denied the WQC. Later, however, the DEC waived its WQC certification authority. The Supreme Court granted the condemnation, and Schueckler appealed.

Holding: The Appellate Division reversed the order, and two judges dissented.

Analysis: The federal Natural Gas Act requires the applicant for an interstate gas pipeline to obtain a certificate of public convenience and necessity from the Federal Energy Regulatory Commission. To get the certificate, the applicant must comply with the Clean Water Act (CWA). The CWA, in turn, requires the applicant to get a federal license for a facility whose construction may result in a discharge into navigable waters and obtain a water quality certificate (WQC) from each affected state. Furthermore, the CWA provides that a permit or license may not be granted if the WQC has been denied.

Under EDPL 206(A), NFGS was deemed exempt from compliance, with the provisions of EDPL Article 2 if, pursuant to federal law or regulation, it considers and submits factors similar to those set out in EDPL 204(B) and obtains a license, permit, certificate of public convenience or necessity or other similar approvals from the federal agency, board, or commission. (Emphasis added.)

In this case, NFGS did get a certificate of public convenience or necessity, but the certificate had a condition— NFGS had to file documentation that it had received all applicable authorizations required by federal law. One such authorization was the WQC, which DEC had denied. Therefore, NFGS did not have a valid and operative FERC certificate exempting it from demonstrating the project’s public purpose. As the Appellate Division summed up the case thusly: “[NFGS] is trying to expropriate [Schueckler’s] land in furtherance of a pipeline project that, as things currently stand, cannot legally be built.”

The dissent argued that the FERC’s denial of the WQC was no longer an impediment to construction of the pipeline, since it had waived the certification on August 6, 2018 (which appears to be after DEC’s denial of the WQC). The dissent also argued that the issuance of a WQC is not a condition precedent to starting the eminent domain proceeding, and that the majority cited no authority for its argument to the contrary.

Submitted by: Philip Sanchez, Esq.(www.spnylaw.com)

Precis:Davida S. Scher