New York blocks expansion of Transco gas pipeline

New York regulators have blocked a 37-mile expansion of the Transcontinental Gas pipeline (Transco) that would bring natural gas from the Marcellus shale into New York City and Long Island.

The nearly $1bn pipeline is the latest to hit roadblocks from state regulators working under New York governor Andrew Cuomo (D), who has faced pressure to block fossil fuel infrastructure as a way to address climate change. But gas utilities say the 400mn cf/d (11mn m³/d) pipeline is key to expand service and allow customers to replace emissions-intensive fuel oil heating systems.

The pipeline veto came from the New York Department of Environmental Conservation, which late yesterday rejected a crucial water quality permit. The state raised concerns that construction in waters off Staten Island and Queens could kick up copper and mercury buried in the sediment, causing water pollution violations. The state said the water permit could be resubmitted.

US midstream operator Williams, which owns Transco and is developing the expansion project, said the permit denial was over a "minor technical issue" and that it would quickly submit a new application for a water quality permit. Construction has been scheduled to start this fall so it can begin servicing New York markets by winter 2020-21.

"We are confident that we can be responsive to this technical concern, meet our customer's in-service date and avoid a moratorium that would have a devastating impact on the regional economy and environment," the company said.

Environmentalists and local officials cheered the decision. New York City mayor Bill de Blasio on 13 May said he opposed the project and that fossil fuels should remain in the ground. Natural Resources Defense Council attorney Kimberly Ong said it would avoid further "locking in" the state's reliance on fossil fuels.

But the decision will raise fresh concerns from the natural gas industry about the ability of states such as New York to use water permits as a veto against pipelines that have already won federal approval.

The Cuomo administration has blocked two other major gas pipelines by denying them water permits, although some of those decisions face growing prospects of being overruled by federal regulators or need court-ordered revisions.

New York regulators in 2016, for example, denied Williams a water permit to build 628mn cf/d Constitution pipeline that would import shale gas from Pennsylvania. But that denial is drawing fresh scrutiny from the US Federal Energy Regulatory Commission (FERC) over whether the state exceeded a one-year deadline to act.

A federal appeals court in February ordered state regulators to further explain why it denied a water permit for National Fuel Gas to build the 550mn cf/d Northern Access gas pipeline. FERC last year separately ruled that the state waited too long to deny a water permit for the project.

President Donald Trump last month ordered his administration to put in more guardrails on state authority to reject water permits for energy infrastructure projects. But that effort could take more than a year for federal regulators to develop and would still offer a path for states to deny permits, according to industry officials.