Dive Brief:

• The Federal Energy Regulatory Commission (FERC) on Wednesday issued an order concluding the New York Department of Environmental Conservation (DEC) has waived its authority under the Clean Water Act "to issue or deny a water quality certification" for the proposed Constitution pipeline.
• The commission's 4-0 vote reversed its previous conclusion — that the state had not waived its authority — following a D.C. Circuit Court of Appeals decision that addressed similar issues. The DEC denied the project a water quality permit in 2016.
• The 124-mile line, which would move gas from Pennsylvania wells to New York consumers, is backed by Williams. Despite the win, construction is unlikely to begin any time soon — the company still needs a water quality certificate from the U.S. Army Corps of Engineers and approval from the the Pennsylvania Fish and Boat Commission, according to S&P Global.

Dive Insight:

Constitution Pipeline backers sounded cautiously optimistic following FERC's decision, issuing a statement that sponsors "are evaluating the next steps for advancing the project." 

The project "continues to represent much-needed energy infrastructure designed to bring natural gas to a region of the country confronting natural gas supply constraints," they said in a statement. The pipeline is designed to move 650,000 dekatherms per day.

New York utilities say the state's pipelines are essentially full, and more capacity is needed. Both Consolidated Edison and National Grid announced moratoriums on new gas connections in the New York City area, though Con Edison reached an agreement in April to add natural gas capacity.

The conservative Manhattan Institute concluded in a June paper that "homeowners and businesses in northeastern states face natural gas shortages, plus rising electricity and gas prices, thanks largely to repeated efforts by New York regulators to delay or deny the approvals necessary to build new pipelines." The DEC has also held up the Northern Access Pipeline and the Northeast Supply Enhancement projects, under different circumstances.

FERC in January 2018 concluded it could not overturn New York's decision to reject a water quality certificate for Constitution Pipeline, after determining the state acted on the application in an appropriate timeframe given changes to the application.

But now the commission says a recent circuit court decision, Hoopa Valley Tribe v. FERC, has forced it to reconsider.

The commission explained in its order that in January the court determined a state "waives its Section 401 authority [under the Clean Water Act] when, pursuant to an agreement between the state and applicant, an applicant repeatedly withdraws-and-resubmits its request for water quality certification over a period of time greater than one year."

While there was no formal agreement between Constitution and New York regulators, the commission said the record indicated "that the state encouraged Constitution’s withdrawal and resubmission of its application."

Along with Williams, the pipeline project is supported by Cabot Oil & Gas, Piedmont Natural Gas and WGL Holdings.