WMB Williams Companies Inc

By Erin Ailworth 

New York environmental regulators refused to issue a permit for an interstate natural gas pipeline meant to help move fuel from Pennsylvania into New York City, Boston and other parts of New England.

The proposed 124-mile long project, known as the Constitution Pipeline, doesn't comply with the state's water quality standards, state regulators said Friday.

Gov. Andrew Cuomo's administration chose to reject the pipeline on Earth Day, and environmentalists cheered the decision.

"Governor Andrew Cuomo's smart decision to reject Constitution Pipeline sends a clear message: New Yorkers' health and safety will not be sacrificed for fossil fuel industry profits," said Wenonah Hauter, executive director of Food & Water Watch.

Williams Cos. and several partners first proposed the pipeline in 2012 and it has been repeatedly delayed by local opposition and regulatory hurdles.

Williams may choose to submit a new water quality certification application addressing what regulators called the project's deficiencies, but the announcement from the New York State Department of Environmental Conservation is a significant blow for the project.

Chris Stockton, a spokesman for the Constitution Pipeline project, said the company is disappointed but exploring its options, which may include an appeal to the U.S. Circuit Court of Appeals.

"We remain absolutely committed to building this important energy infrastructure project," he said.

Constitution was initially expected to be in service by late 2015, but construction was held up as it awaited regulatory approvals, including from New York. The Federal Energy Regulatory Commission, which oversees the interstate transmission of natural gas, oil and electricity, greenlighted the pipeline project in December 2014 and reaffirmed its decision earlier this year.

Opposition to Constitution has recently been focused on preventing the clear-cutting of trees in the pipeline's proposed path.

That tree-cutting factored into the decision to reject the project, New York regulator said, as did a proposal to build nearly 100 miles of pipe outside of existing rights of way.

Cabot Oil & Gas Corp., a major U.S. shale producer and one of the project's main backers, declined to comment. The company, which drills for gas in Pennsylvania's Marcellus Shale, had hoped the pipeline would ease bottlenecks crimping the movement of gas out of the region.

Marty Durbin, executive director for market development at the American Petroleum Institute, said the decision by New York regulators will reach beyond the state's borders.

"This decision impacts not only the residents of New York, but also the families and businesses in the surrounding states whose consumers currently pay the highest energy costs in the country," he said.

Constitution's rejection in New York comes the same week that Kinder Morgan said it would scrap plans for another gas pipeline -- the Northeast Energy Direct project -- which aimed to deliver fuel from Pennsylvania to New York and New England.

Kinder Morgan said there weren't enough utilities and other customers that committed to the project.

Write to Erin Ailworth at Erin.Ailworth@wsj.com

(END) Dow Jones Newswires

April 22, 2016 19:27 ET (23:27 GMT)

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