Forget the climate warriors of California. The state best positioned to spoil Donald Trump’s plan to unleash America’s fossil-fuel resources may be New York.
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 Mr. Trump’s call for more energy infrastructure.
“States and cities are going to be expected to carry the load since it’s apparent the federal government has backed away from that responsibility” of protecting the environment and fighting global warming, Basil Seggos, who leads New York’s Department of Environmental Conservation, said by phone, acknowledging the growing rift between the state and those in Washington. “I would not dispute that New York and the federal government have different approaches on climate policy.”
While Mr. Trump is working to undo Obama-era regulations requiring power plants to cut greenhouse-gas emissions, New York is working on a plan to get half of its electricity from renewable energy sources. Its goal is to cut emissions 40 percent from 1990 levels.
“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 Gov. 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 rejected a water quality certificate last month for National Fuel Gas’s Northern Access pipeline expansion, which would’ve shuttled gas supplies from the Marcellus shale of the eastern U.S. to markets in New York, New England, Canada and the Midwest. Tanski told analysts in a call earlier this month that Cuomo didn’t respond to repeated requests from him. Armstrong said he had a similar experience.
Cuomo said in a statement Wednesday that New York will protect its natural resources and public health “in the absence of federal leadership on environmental protection.” The state is committed to “pushing forward progressive, nation-leading policies that create jobs and expand our clean energy economy,” he said.
While trade groups say New York’s resistance is costing the U.S. Northeast jobs and cheap energy, the environmental group Sierra Club sees it as necessary to protect the environment in areas where the federal government no longer is.
“The states will gain more and more power under Trump to stop these projects,” said Roger Downs, conservation director of Sierra Club’s Atlantic chapter. “A lot of states will finally wake up and take charge of some of their languishing environmental issues.”
New York has always led the way on environmental issues, said Seggos, the state’s environmental commissioner. “We believe that a strong economy and clean environment are inseparable.”