Pipes for the Constitution Pipeline are stacked at a pipe yard in Altamont, NY in 2014
Pipes for the Constitution Pipeline are stacked at a pipe yard in Altamont, NY in 2014 (Constitution Pipeline)

The U.S. Court of Appeals for the Second Circuit decision issued Friday to reject a lawsuit by the Constitution Pipeline challenging New York state’s decision not to grant the necessary water permit to build the 121-mile natural gas pipeline doesn’t mark the end of the project, the builders said.

In an emailed response to the New York Law Journal Monday, Constitution Pipeline, a partnership among Cabot Oil & Gas Corp.; Oklahoma-based energy company Williams Cos.; Piedmont Natural Gas and WGL Holdings, said the company was “weighing all options” on how to proceed with the project.

In a statement, Tulsa-based energy company Williams said the Second Circuit’s decision recognized the federal Natural Gas Act, which would allow the Constitution Pipeline to seek final approval by the federal government. In October 2014, the Washington-based Federal Energy Regulatory Commission (FERC), which oversees pipeline projects, published its final environmental review of the Constitution Pipeline, giving the project a construction certificate, though it still needed state permits to begin construction.

“The Second Circuit recognized the jurisdiction of the D.C. Circuit, and the D.C. Circuit has recently acknowledged FERC’s authority to make the ultimate decision under the Natural Gas Act. While we would have preferred an immediate path to construction, we are pleased with the court’s resolution of this jurisdictional issue,” Constitution Pipeline said in a statement.

The lawyers for Constitution Pipeline, Elizabeth Witmer of Philadelphia-based Saul Ewing and Yvonne Hennessey of Barclay Damon in Albany, did not immediately respond to a request for comment asking how the company was going to proceed or referred comments to Constitution Pipeline.

Environmental Advocates of New York, which has been opposed to pipeline projects in the state, did not immediately respond to requests for comment. On Friday, New York Attorney General Eric Schneiderman issued a statement hailing the appeals panel’s decision.

A spokesman for the Department of Environmental Conservation said the state “will continue to apply the state’s strict water quality standards to all proposed projects, including natural gas pipelines, in order to ensure that the state’s water bodies are protected.”

As natural gas production in the Marcellus Shale continues to grow, pipeline projects are petitioning FERC for approval, but states still hold considerable power.

The Constitution Pipeline sued New York in May 2016 seeking to overturn a decision by the state DEC to deny the company a water permit. But on Friday, the federal appeals court in New York sided with the state, arguing that the agency had the right to approve or reject the permit.

In Constitution Pipeline v. New York State Department of Environmental Conservation, No. 16-1568, Judge Amalya Kearse wrote the department was responsible for evaluating the impact of the proposed pipeline, which was slated to run from Pennsylvania into New York’s Southern Tier, which lies on top of the Marcellus Shale and has had a floundering economy for decades, ending in Schoharie County, roughly 80 miles southwest of Albany. The panel’s 27-page decision was unanimous.

In June, the U.S. Court of Appeals for the District of Columbia Circuit declined a request by the Millennium Pipeline Co. to compel New York to expedite water quality permits for the nearly eight-mile pipeline extension in Orange County. Despite the unanimous decision in Millennium Pipeline v. Seggos and the New York State Department of Environmental Conservation, No. 16-1415, a lawyer who represented Millennium told a trade publication that the decision wasn’t bad news for the project. Cate Stetson, a partner at Hogan Lovells’ Washington office, told the Natural Gas Intel that the decision, written by Circuit Court Judge Sri Srinivasan, says Millennium can bypass the state and go straight to FERC.

“So what can Millennium do in the face of the Department’s continued inaction? Millennium can go directly to FERC and present evidence of the Department’s waiver. To be sure, FERC could ultimately decline to find waiver. But in that event, FERC — not the Department — would be blocking the construction,” Srinivasan wrote in the June decision.