The legal battle over the Constitution Pipeline could represent a new tangent in environmentalist strategy or just a continued ramp-up of the conflict between developers and regulators in New York state, a report speculates.

Either way, repercussions could include putting billions of dollars in infrastructure investment at risk, gas and power price spikes in the Northeast, and a new round of regulatory uncertainty, according to a joint article by S&P Global Market Intelligence and S&P Global Platts.

With a 2014 consumption of 1.35 trillion cubic feet (Tcf), New York ranks fourth behind Texas, California and Louisiana, and just ahead of Florida in the U.S. Energy Information Administration’s (EIA) list of top gas-consuming states. New York also sits atop technically recoverable natural gas resources that could surpass 7 Tcf, but a law banning hydraulic fracturing that went into effect in June 2015 makes the state dependent on imports.

The 124-mile, $925 million Constitution Pipeline was designed to connect the Marcellus Shale in Pennsylvania to markets in New York and New England. It was approved by the Federal Energy Regulatory Commission (FERC) but denied a water quality permit by the New York State Department of Environmental Conservation in April.

The pipeline has come under considerable pressure from environmentalists, and its cancellation was demanded by U.S. Sen. Bernie Sanders (D-Vt.) during his unsuccessful bid for the Democratic presidential nomination. It has also been, oddly, referred to as a “fracking pipeline” by The Intercept, an online news outlet known for reporting documents released by Edward Snowden.

The article notes the strategic location of the statein the Appalachian Basin, where shale plays exist along with high-volume demand and premium priced markets in New England, positions it to host other pipelines as well, including Millennium Pipeline Co. LLC’s proposed Eastern System upgrade and Northern Access 2016, a National Fuel Gas Co. project. Combined, the projects could move up to 1.4 Bcf/d.

Without easy access to those markets, customers in the region will continue to experience price volatility and energy companies will be tempted to move that gas toward surging-demand areas in the Southeast and Gulf Coast, the article said.

The move to deny the water quality permit, despite FERC approval, also places the state in defiance of the federal government.

“If you allow a state to circumvent the Natural Gas Act, you have impermissibly amended the Natural Gas Act and that is contrary to the intent of Congress,” Marc Spitzer, a former FERC commissioner and now a partner with Steptoe & Johnson LLP, told S&P Global Intelligence.

The U.S. Court of Appeals, Second Circuit, is expected to rule this winter on the denial of the water permit. The Interstate Natural Gas Association of America, along with other industry groups, recently filed a friend of the court brief in support of Constitution’s lawsuit.

Bloomberg Intelligence recently concluded that Williams Partners LP and its partners in the Constitution project are likely to prevail in the case.

Joseph Markman can be reached at jmarkman@hartenergy.com or @JHMarkman.