New York state lost a jurisdiction dispute with the Federal Energy Regulatory Commission Tuesday, after the U.S. Court of Appeals for the Second Circuit declined to review whether the federal energy regulator had big-footed the state when it gave the green light to a controversial natural gas pipeline project in Orange County.

The panel of U.S. Circuit Judges José Cabranes, Debra Ann Livingston and Susan Carney denied the petition for review of two orders by the FERC, made by the New York Department of Environmental Conservation, that authorized Millennium Pipeline Co. to begin construction of a natural gas pipeline to service a local power plant.

Millennium had sought approval of the project from both the FERC and DEC, since the federal Clean Water Act requires projects that potentially impact local waterways to have state water quality certification. The company began the process in mid-November 2015. After subsequent requests for more information to complete its incomplete application, the DEC said it would need until the end of August 2017 to review Millennium's application.

In an attempt to expedite the project, Millennium ultimately was directed in a separate legal action by the U.S. Court of Appeals for the District of Columbia to seek remedy for delay from the FERC, which had already preliminary approved the project.

In July 2017, Millennium requested the federal commission find that the state department had waived its authority under the Clean Water Act, which provides states with a one-year time frame to decide on certification requests. Despite DEC denial of Millennium's application on Aug. 30, 2017—nearly two years since the company's initial submission—the FERC agreed with Millennium a few weeks later, ultimately giving the company the go-ahead to begin construction in October.

Two issues in the dispute were presented to the Second Circuit panel. First, Millennium petitioned the court over the DEC's decision. Second, the DEC petitioned the appellate court for review of the FERC's waiver order.

The panel, then, looked at whether the FERC was correct in finding the DEC waived its right to act on Millennium's application, and whether FERC's jurisdiction under federal law—in this case, the Natural Gas Act—gave it the authority to accept and review Millennium's application.

The panel found that the FERC was right in both regards.

Reviewing the plain language of the Clean Water Act, the panel found the statue “outlines a bright-line rule regarding the beginning of review.” The state's argument that the time limit applies only to complete applications would “blur the bright-line rule into a subjective standard, dictating that applications are 'complete' only when state agencies decide that they have all the information they need,” the panel wrote.

Concerns that enforcing the one-year language would mean rendering premature decisions were “misplaced,” the panel said. It noted a number of options remained available to the department, like denying without prejudice or requesting withdrawal and resubmission.

The panel noted that the issue of jurisdiction was raised by the landowning intervenors, not the DEC, and decided to exercise discretion to “entertain a new argument.”

The Natural Gas Act gives the FERC “plenary authority” over natural gas in interstate commerce situations. The Orange County line, which is linked to interstate pipelines that both run in and out of New York, is just such a line. Despite being entirely inside the state, Millennium's pipeline then falls under FERC's jurisdiction.

A FERC spokesperson declined to comment, citing the commission's policy to not comment on court proceedings.

In a statement sent by a spokeswoman, the DEC said it was aware of the decision and was “reviewing our options to determine any appropriate next steps regarding this pipeline project.”

Private attorney Carolyn Elefant, who represented the landowner interveners, said her clients were disappointed by the decision.

“My clients expended substantial efforts to involve themselves in the [pipeline authorization] process and as a result of this decision, my clients' input will be ignored,” she said in a statement.