Miracle on Docket 101 — Part II: NESE’s Return

Originally published for customers September 3, 2025.

What’s the issue?

FERC reissued the Northeast Supply Enhancement Project’s (NESE) certificate, but analyzed it like a new one. Key remaining permits will collide with NJ’s gubernatorial election.

Why does it matter?

The reissuance is a procedural first, and uncertain state politics in NY and NJ are the lynchpin to Clean Water Act (CWA) permits, which could make or break the project.

What’s our view?

FERC’s reissuance signaled support but opened procedural litigation risk, and if NY issues CWA permits, NJ may need to weigh public need during an election shaped by rising power prices.

FERC reissued the Northeast Supply Enhancement Project’s (NESE) certificate, but analyzed it like a new one. Key remaining permits will collide with New Jersey’s (NJ) gubernatorial election. The reissuance is a procedural first, and uncertain state politics in New York (NY) and NJ are the lynchpin to Clean Water Act (CWA) permits, which could make or break the project. FERC’s reissuance signaled support but opened procedural litigation risk, and if NY issues CWA permits, NJ may need to weigh public need during an election shaped by rising power prices.

FERC’s Procedural First and What’s Different This Time

When we first wrote Miracle on Docket 101 — Transco’s NESE Petition Tests the Limits of Pipeline Resurrection, we said FERC would not likely grant Transco’s petition to reinstate the NESE certificate because it would be a procedural novelty and because at the time, new precedent agreements had not been executed. Instead, we thought the Commission would find an alternative middle ground, perhaps requiring a new application while allowing Transco to rely on existing environmental and market analysis. We were almost right.

On paper, the Commission indeed reissued the Certificate on August 28, just a day before Transco’s requested date. But it wasn’t just a rubber stamp; the Commission found a middle ground. It reapplied the full §7(C) certificate policy statement framework (market need, rates, balancing impacts, and environmental conditions) as if it were starting fresh: a reissuance in name, a recertification in practice.

Both opposition and the Commission pointed to the Spire STL Pipeline, LLC (Spire) case as precedent, where the Commission reissued a certificate in response to a D.C. Circuit vacatur and remand. Opposition distinguished NESE’s posture: here, there was no court vacatur or remand directing further action. That distinction makes this a procedural first and a near-certain candidate for procedural challenges. But as FERC points out, in both Spire and NESE, it conducted new analysis to account for updated records. Additionally, the project has not materially changed, the environmental analysis is not stale, and there is administrative efficiency in keeping interested stakeholders aware of developments all in the same docket, so quantifying harm to interested parties might be an uphill battle.

On substance, NESE looks stronger than the last time around. The project is now 100% subscribed through two 15-year deals with National Grid subsidiaries, covering the full 400,000 Dth/d of capacity. Reliability has also moved to the foreground. The order discussed National Grid’s latest planning document, which projects a 13% supply boost from the project in a region that operates without excess capacity for emergencies. It also cited 14% natural gas price increases in NY’s zone 6, and winter resource adequacy risk increasing.

State Dynamics and the New Jersey Election

FERC authorization has never been the main impediment to projects in this region. The real obstacle has always been the states. Projects live or die by state permits, particularly Clean Water Act (CWA) Section 401 certifications, which is where things get interesting for NESE.

In 2020, the New Jersey Department of Environmental Protection denied the permits without wading into the analytical merits. Its regulations require a showing of “compelling public need,” and while it acknowledged potential in-state benefits like reliability, it noted that most of the capacity was bound for NY. Once the New York Department of Environmental Conservation (NYDEC) denied its 401 certificate, NJ treated the project as effectively moot, concluding that public need had not been demonstrated and that no further analysis was required.

That won’t work this time if NY moves differently. As we discussed in The Empire Strikes a Deal — What It Means for Constitution, there are rumors that the state may be more amendable to natural gas projects under the leadership of Governor Hochul, but she has yet to make any public commitments, and the NYDEC denied Transco’s request to expedite its permit in 25 days, so there has been no concrete indication of support or lack thereof. If NY grants the water permits, NJ would no longer have the cover of pointing to a NY denial, and would have to make its own determination under the “compelling public need” standard. Key dates are stacked close together, as shown in the timeline below:

New York has stated it will act on Transco’s new application within the Clean Water Act’s six-month “reasonable period of time,” toward the end of November. This could run headlong into New Jersey’s permitting process which has hearings and comment deadlines in September. It could also come just after the NJ gubernatorial election on November 4, 2025, in the middle of a state political climate where energy costs are front and center. As the chart below shows, NJ retail electricity prices have risen sharply since 2013, leading both candidates to claim the issue:

Mike Sherrill (D) has promised to freeze electric bills by emergency order while emphasizing solar, nuclear, and battery storage development, staying mostly silent with respect to new natural gas development. Jack Ciattarelli (R) has mirrored the Trump administration with pledges to ban offshore wind and put gas and nuclear back at the center of the state’s mix.

Conclusion

To wrap it all up, FERC’s August 28 order gives NESE momentum but also paints a procedural target on its back. Reissuing a certificate absent court direction has never been done, and the D.C. Circuit could be asked to decide whether FERC has that authority, with the outcome likely depending on the panel. A federal green light also might not prevent NESE from hitting a series of roadblocks around the corner. Regional opposition has not gone anywhere and even if Hochul shifts course, New Jersey still has to act with a new governor likely to decide the course.

None of this is inherently bad. It’s just uncertain. The market signals combined with state reliability and electricity pricing concerns pair nicely with Williams’s readiness to build. Whether it ever does will depend less on FERC’s procedural gamble than on how two states balance reliability, politics, and the future of gas in 2025.

If you would like help assessing how evolving regulatory and permitting developments could affect pipeline projects, please contact us.