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Utilities concerned after New York denies permit for Transco expansion

New York's decision to deny a permit application for a Transcontinental Gas Pipe Line Co. LLC system expansion in the New York City area showed the state's continued resistance to new pipelines, and New York utilities are concerned about their ability to get natural gas.

"Time and time again we are seeing politics overrule pragmatism," American Gas Association President and CEO Karen Harbert said in a statement. "Lack of natural gas infrastructure in the Northeast means people are expected to rely on other sources of energy, driving costs and emissions up and denying New York families and businesses, and others across the region, access to the benefits American natural gas can provide."

In a May 15 decision, the New York State Department of Environmental Conservation rejected "without prejudice" an application for a Clean Water Act Section 401 certificate submitted by Transco, a subsidiary of Williams Cos. Inc. The agency said Transco failed to show how its 400-MMcf/d Northeast Supply Enhancement project would comply with applicable water quality standards. The agency said estimates showed construction activities would push mercury and copper past environmental standards in waters around the project.

The state decision was a win for environmental groups, residents and elected officials who oppose the pipeline project. Groups such as 350.org and the Stop the Williams Pipeline coalition have pushed the state to stop the project and focus on the "green new deal" proposed by New York Gov. Andrew Cuomo, who has called for a carbon-free power grid by 2040.

"New York has the potential to be a national model for real climate leadership, and this decision will reverberate across the U.S. and around the world," 350.org member Cata Romo said in a May 16 statement following the decision. "To build a transformative Green New Deal that science and justice deem necessary, Governor Cuomo must stop the Williams pipeline permanently and implement a sweeping ban on fossil fuel projects across New York."

Because New York turned down the permit application without prejudice, Williams can appeal the decision. The company said New York rejected Transco's application based on a "minor technical issue," and the company plans to quickly address the issue and resubmit its application.

Rob Rains, an energy industry legal and policy analyst with Washington Analysis LLC, said the New York decision "further reduces our odds that the project ever goes forward, and more denials in New Jersey and by the New York State Department may follow."

The New Jersey Department of Environmental Protection has found issues with the project's Coastal Zone Management Act application, water quality application, and land use permits, Rains said. New Jersey's deadline for a decision on the project is June 20.

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National Grid USA, which owns utilities that are customers of the Northeast Supply Enhancement project, said it is "cautiously optimistic" that Transco will be able to complete the project on schedule to supply customers in Brooklyn, Queens and Long Island, N.Y., by winter 2020-2021.

"Until we have greater certainty around the project's application approval timeline, we will continue to advise all new commercial and residential applicants that our ability to provide firm gas service is contingent on the timely construction of[Northeast Supply Enhancement]," National Grid said in a statement.

National Grid has said it will not be able to provide some new gas services to businesses and residents if the state stops the project.

The project, designed to bring additional gas to New York markets, received approval from the Federal Energy Regulatory Commission on May 3. The $927 million expansion would involve a new compressor station in Somerset County, N.J.; 23.5 miles of offshore pipeline between New Jersey and New York; over 3 miles of pipeline in Middlesex County, N.J.; and 10 miles of pipeline in Lancaster County, Pa.; and modifications to an existing compressor station in Chester County, Pa.