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Williams CEO foresees feds helping Constitution Pipeline battle in New York

New York is close to overplaying its hand and losing for all states the authority to issue Clean Water Act permits after the state blocked the Williams Partners LP-backed Constitution natural gas pipeline project, Williams Cos. Inc. President and CEO Alan Armstrong said.

Environmental groups will probably fight harder under President Donald Trump, and New York Gov. Andrew Cuomo will have more opportunity to respond to these constituents, Armstrong observed on Jan. 24 after a keynote presentation at the Hart Energy Marcellus-Utica Midstream Conference in Pittsburgh.

But the Clean Water Act certificate denied to Constitution Pipeline Co. LLC in April 2016 is a federal permit. "The [U.S. Army] Corps of Engineers has the ability to take back the authority over that," Armstrong told S&P Global Market Intelligence. "If New York pushes its hand too hard there, I think that is exactly what will happen."

If the corps does this, Armstrong said, it will be a broad blow to the ability of pipeline opponents to rely on federal permits issued by states to block pipeline projects. "I think it will be an interesting turn of events," he said.

If New York was concerned about water quality, Constitution Pipeline could have worked out the issues, Armstrong said. This was a "political issue" that is now under review by the U.S. Court of Appeals for the 2nd Circuit, he said.

"When I first started in this industry, the last thing we wanted to do was to be under FERC jurisdiction," Armstrong said. "It was bureaucratic and it took a long time. Now, it's the only way to get something done a lot of the time."

But there is still a breakdown in cooperation between the federal government and some states, Armstrong said. "The federal administration is going to have to take back authorities that they do have on pushing ahead on projects like that, and I think they will," he said.

Federal agencies also need to reduce significant overlap among their authorities. Armstrong said it was ridiculous that the corps, formed to oversee navigable waters, is now asked to make permit decisions on wetlands along with the U.S. EPA and FERC.

"We are not against good, solid, firm, understandable regulation," he said. "But we are opposed to multiple jurisdictions thinking they are in charge of the same thing."

Armstrong said a Williams' deepwater project in 8,000 feet of water will probably end up costing only a third of what the Constitution pipeline does on a per mile basis because of the latter project's extensive permitting requirements and delays.

In his presentation, Armstrong told the audience at the Marcellus-Utica Midstream Conference that much of the gas to feed new U.S. demand will come from those shales — "it's all going to come from right here" — but bottlenecks, especially between Pennsylvania and New England, mean the country needs more pipeline infrastructure.

"I think a lot of people are starting to appreciate that and understand that," Armstrong said, "and I think we are going to see support turn our way in that regard."