Editor & Publisher, Marcellus Drilling News (MDN)
The NRDC gang has running New York DEC under Andrew Cuomo’s administration, denying fracking and several pipelines. Is it about to receive a comeuppance?
New York State has authority granted to it by the federal government to award stream crossing permits under Section 401 of the federal Clean Water Act. The New York Department of Environmental Conservation (DEC), for purely political reasons and under the direction of Gov. Andrew Cuomo, has refused to do so – not only for the Constitution, but also for a second major pipeline project in the western part of the state (NFG’s Northern Access Pipeline project).
According to an analyst from Height Securities, there is “political will” in Washington “to strip New York of its permitting authority.” Andrew Cuomo has gone rogue. He ignores federal law. Will Washington allow NY to continue thumbing its nose at the law? It looks like this is a battle royale between Donald Trump and Andrew Cuomo.
Before getting into what Height Securities has to say on the matter, here’s the background story leading up to it (from Bloomberg):
A year after New York rejected a key certificate for the $925 million Constitution natural gas pipeline, developer Williams Cos. is appealing to a higher authority: the White House.
Williams and labor unions are pressing President Donald Trump’s administration for a U.S. Army Corps of Engineers permit after the state refused to certify the project, Alan Armstrong, the Tulsa, Oklahoma-based company’s chief executive officer, said Wednesday in an interview at Bloomberg headquarters in New York. The pipeline would link supplies from the Marcellus shale basin, America’s biggest by volume, to markets in the Northeast.
Constitution’s approval would be a major win for Williams, which wants to reassure investors of its growth prospects after a failed $33 billion takeover attempt by Energy Transfer Equity LP and an aborted proxy fight with activist shareholder Corvex Management LP. Williams is doubling down on the Marcellus shale basin, where supplies have outpaced new pipeline capacity, as the company seeks to boost profits.
The Constitution delays “have not been a regulatory issue,” Armstrong said. “The issue has been purely political. That’s exactly when, for interstate commerce, the federal government should use their authority.” He declined to identify any Trump administration officials who are involved in the talks.
The White House declined to comment. Trump was instrumental in clearing the way for Energy Transfer Partners LP’s controversial Dakota Access oil pipeline to be finished. In March, TransCanada Corp.’s Keystone XL crude pipeline gained U.S. approval after Trump invited the pipeline builder to reapply for a presidential permit.
Although New York has not issued a water-quality certificate for the Constitution pipeline, the Army Corps can issue its own permit if the state doesn’t act within a “reasonable” time period, Armstrong said. Williams also supports a broader Trump administration effort to reduce the “regulatory morass” facing pipeline development, he said.
Williams may well have an “ace in the hole” with respect to the Constitution Pipeline. A roughly $900 million, 124-mile pipeline planned to run from Susquehanna County, Pennsylvania into Upstate New York, it was approved by the Federal Energy Regulatory Commission (FERC) in December 2014. After a year and a half of delays from the New York State DEC, an organization now corrupted by Gov. Andrew Cuomo, the agency capriciously denied the required water quality certification and the stream crossing permits for the project. Williams subsequently sued in federal court to force the state to issue the permits. The outcome of that lawsuit is due any month now.
However, Williams is now attempting another strategy, parallel to their lawsuit, that may grant them game, set and match. The permits withheld by the DEC are permits issued under Section 401 of the federal Clean Water Act. The DEC has the (delegated from the federal government) responsibility for issuing or denying Water Quality Certification under Section 401. What if the feds were to snatch back that responsibility for themselves?
Williams is asking the Trump White House to have the Army Corps of Engineers step in and grant the Water Quality Certification for the Constitution under Section 401 – as a replacement or substitute for the DEC. Such a move is allowed under the law – if a state refuses to act within a “reasonable” time period. If the Army Corps does step in and grant the Constitution its permits, it would, in a word, emasculate the DEC and strip them of a great deal of their power – something we’ve previously warned about. Will it work? Here’s more from Bloomberg:
In the past year, New York regulators have blocked two major natural gas pipelines — a $455 million proposal by National Fuel Gas Co. and a $925 million one from Williams Partners LP — on the grounds that they pose environmental risks. One bank’s saying investors have no choice but to assign “elevated risk premiums” to energy projects in the state, National Fuel Gas is threatening to take its money elsewhere and Williams’s chief executive officer said Wednesday that he’s in talks with the White House on how the administration can help.
What makes New York so pivotal in the fight against fossil fuels is its location, next-door to the nation’s most-prolific shale gas formation. That’s turned it into a crucial link in the vast U.S. network of oil and gas pipelines and a major consumer of the heating and power-plant fuel. By blocking projects, New York is testing the limits of states’ rights by running head-on against Trump’s call for more energy infrastructure…
“New York’s recalcitrance to new pipeline infrastructure is unique versus other regions because the state has a real need for cheap natural gas and acts as a gateway to other similarly-situated areas like the Northeast,” said Brandon Barnes, an analyst at Bloomberg Intelligence.
Even before the election, New York Governor Andrew Cuomo was taking great pains to distance himself from Trump and “carve out an image as a particularly progressive and environmentally focused leader,” said Katie Bays, an analyst at Height Securities LLC.
Arguably now more than ever, she said, there’s “political will” in Washington “to strip New York of its permitting authority.”
Williams CEO Alan Armstrong said in an interview at Bloomberg’s headquarters in New York on Wednesday that the pipeline giant is talking to several people within the Trump administration about moving its Constitution gas line forward after it was denied a water certificate from New York. The White House’s Council on Environmental Quality has taken “serious interest” in the effort and labor unions have voiced support because of the potential for thousands of jobs, he said.
“People really want jobs there and they don’t like being denied good-paying jobs,” Armstrong said. New York’s decision was “purely political,” he said, adding that he didn’t know of a “more difficult place” to build a pipeline than the state.
Armstrong said he believes the U.S. Army Corps of Engineers could issue a permit without a certificate from New York. The White House declined to comment.
Jefferies Group LLC meanwhile described New York’s regulatory environment as “ill defined, impossible to meet, and more onerous for private enterprise” than the regulations for public works projects. Investors have no choice but to assign “risk premiums” to all potential lines there, analysts at the investment bank including Christopher Sighinolfi said in a May 4 note.
It’s the kind of criticism that energy companies have typically reserved for California’s environmental regulations. So it’s perhaps telling that New York-based National Fuel Gas said the company’s now considering stepping up investments in California. At least in the Golden State, Chief Executive Officer Ronald Tanski said, it knows what to expect.
New York has always led the way on environmental issues, said [Basil] Seggos, the state’s environmental commissioner. “We believe that a strong economy and clean environment are inseparable.”
Editor’s Note: The above is a compilation of two MDN posts. Together, they provide the bigger picture of the battle taking place. The arrogance of DEC and Basil Seggos, the cocky little tyrant that runs it at the behest of the NRDC gang, is astounding. Read the whole story at Bloomberg to get a better sense of it. Originally assigned to the Governor’s office as a hatchet man, he’s a political lackey, just like his predecessor Joe Martens who originally came directly from employment by the NRDC gang and then was rewarded with a cushy return job after killing fracking “at this time” while running DEC.
Now, the NRDC gang is using DEC, through its relationships with Seggos and control of Cuomo, to conduct a war against pipelines . And, it’s not just the Constitution Pipeline or National Fuel’s project, but also the Millennium Pipeline’s seven mile extension to serve the new gas plant under construction in Orange County. That’s three denials or obstructions of water quality certifications; three bright lines crossed in an attempt to initiate a war with FERC and the industry.
Trump’s appointments to FERC can and should end this nonsense regardless what the Army Corps of Engineers does, but I like the latter approach because it’s immediate, there’s no question of Trump’s authority to direct the Corps and it would send a powerful message to the NRDC gang and the Governor with a bull ring in his nose that the time for these stupid political tricks are over. If Trump really wants to strike a blow for the little guy against the crony elitists in the NRDC gang he can do it with the Corps. Moreover, while he’s at it he should similarly instruct the Corps representative at the DRBC to grow up, act like a man and take a real leadership there to end the decade of political corruption at that agency as well.