FinLogic FinLogic Quantitative Think Tank Center|New York Rejects a Natural Gas Pipeline, and Federal Regulators Say That’s OK

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In a setback for the fossil fuel industry, federal energy regulators rejected a petition from the Constitution Pipeline Company to overturn New York State’s denial of a water permit for a proposed natural gas pipeline. Without the permit, the pipeline can’t be built.

In a decision on Jan. 11, the Federal Energy Regulatory Commission (FERC) denied the request from the company to revive the proposed 125-mile Constitution Pipeline from the Marcellus Shale in Pennsylvania to Upstate New York.

The decision comes during one of the largest expansions of natural gas infrastructure in U.S. history, a buildout that critics say is driven more by the financial interests of gas and electric companies than market demand.

Officials with New York’s Department of Environmental Conservation (DEC) rejected the water quality permit for the pipeline in April 2016 stating, in part, that it failed to meet the state’s water quality standards. Constitution challenged the decision on the grounds that the state agency did not act within a reasonable time.

The federal commission, in rejecting the company’s challenge, wrote: “The record does not show that New York DEC in any instance failed to act on an application that was before it for more than the outer time limit of one year.” 

The company first filed for a water quality permit with New York DEC in August 2013, then withdrew and resubmitted its application in 2014 and again in 2015 at the DEC’s request.

“States and project sponsors that engage in repeated withdrawal and refiling of applications for water quality certifications are acting, in many cases, contrary to the public interest and to the spirit of the Clean Water Act by failing to provide reasonably expeditious state decisions,” the federal commission wrote. “Even so, we do not conclude that the practice violates the letter of the statute.”

In September, FERC overruled New York’s decision to deny a water quality permit for a different natural gas pipeline. In that case, the federal commission—whose makeup has since changed, with two new members appointed by President Donald Trump—ruled that the state, which took nearly two years to make a decision, had not acted in a reasonable amount of time.

New York Gov. Andrew Cuomo praised FERC’s latest decision.

“No corporation should be allowed to endanger our natural resources, and the Constitution Pipeline represented a threat to our water quality and our environment,” Cuomo said in a statement. “I commend the Federal Energy Regulatory Commission for ruling in favor of New York’s efforts to prevent this project from moving forward.”

Williams Companies, one of the companies behind the pipeline project, said it will appeal FERC’s decision. 

“We are planning to seek rehearing and, if necessary, appeal of this decision in order to continue to develop this much-needed infrastructure project,” Chris Stockton, a spokesman for the company said in a statement. The companies behind the Constitution Pipeline had also sued over the water permit, but a federal appeals court panel sided with the state in August.