Third Circuit Halts NESE Pipeline Over Flawed Environmental Review
The Third Circuit vacated NJDEP’s water quality permit for the NESE gas pipeline project.
Why it matters: The ruling sets a key precedent on environmental oversight, emphasizing regulatory rigor for energy infrastructure projects. Legal and compliance teams must note the increased scrutiny on environmental reviews to avoid approvals being overturned.
- The Third Circuit Court of Appeals vacated NJDEP’s water quality certification for the NESE pipeline on September 8, 2026.
- NJDEP had denied the permit twice before, in 2019 and 2020, due to environmental concerns but approved it in November 2025 without substantial changes.
- The court found NJDEP acted arbitrarily by deferring compliance details to plans that lacked further agency oversight and failed to justify dredging impacts on water quality.
- Environmental groups including NRDC and New York-New Jersey Baykeeper challenged the approval, leading to the court’s decision.
On September 8, 2026, the Third Circuit Court of Appeals vacated the New Jersey Department of Environmental Protection’s (NJDEP) water quality certification for the Northeast Supply Enhancement (NESE) pipeline, a major natural gas project proposed by Transcontinental Gas Pipe Line Company (Transco). The pipeline is designed to transport gas from Lancaster County, Pennsylvania, through New Jersey to New York City and the Hudson Valley.
The NJDEP originally denied Transco’s water quality certification applications in 2019 and 2020 citing insufficient environmental safeguards and lack of demonstrated public need. However, despite nearly identical applications, NJDEP reversed course and approved the permit in November 2025.
The court ruled this approval arbitrary and capricious, highlighting how NJDEP deferred critical compliance measures to plans that did not require further agency approval before construction. Specifically, the court found that NJDEP failed to properly explain how dredging activities—which risk disturbing toxic sediments in Raritan Bay—would meet state water quality standards.
Environmental organizations including the Natural Resources Defense Council (NRDC) and New York-New Jersey Baykeeper filed suits challenging the NJDEP’s approval. Jackson Garrity of NRDC called the ruling “a win for waterways, communities, and the rule of law.”
Conversely, proponents like Williams Companies acknowledged the project’s importance for regional energy reliability. Cherice Corley, their spokesperson, emphasized ongoing demand for the pipeline.
This ruling underscores the imperative for regulators to rigorously evaluate environmental impacts and maintain consistent oversight. Legal teams advising on infrastructure projects should closely monitor permitting processes to anticipate potential challenges.
By the numbers:
- 3 — Number of times NJDEP denied Transco’s water quality certification before 2025 approval
- September 8, 2026 — Date Third Circuit vacated NJDEP’s approval
- November 2025 — Month and year NJDEP approved the NESE pipeline permit despite prior denials
Yes, but: While the court emphasized regulatory lapses, the NESE project’s proponents maintain its critical role in meeting regional energy needs.
What's next: Next steps for Transco remain unclear; the company may seek reconsideration or modify its environmental plans to comply with court standards.