06/02/2015 12:13 EDT | Updated 06/02/2015 12:59 EDT

New York State Blocks Oilsands-By-Rail Facility In Albany

New York Gov. Andrew Cuomo speaks at the New York State Minority and Women-owned Business Enterprises Forum on Wednesday, Oct. 1, 2014, in Albany, N.Y. (AP Photo/Mike Groll)

The state of New York has thrown a bureaucratic roadblock into plans to build an oilsands facility in the state capital, reversing a decision that would have allowed the project, after criticism from the Obama administration.

The state’s Department of Environmental Conservation (DEC) in 2013 gave initial approval to energy supply company Global Partners to retrofit an existing facility at the Port of Albany to handle bitumen from Canada’s oilsands shipped in by rail. The department said at the time the project would not have “a significant environmental impact.”

But after months of vocal public opposition to the project, the DEC has now rescinded that initial approval, ordering it to undergo a full environmental review.

The Natural Resources Defense Council, which has campaigned heavily against oilsands imports to the U.S., called it “a stunning and laudable reversal.”

“The DEC's decision to conduct a full environmental review of the facility's proposed retrofit marks a major milestone in the ongoing public debate surrounding the environmental impacts of tar sands,” the group said in a blog post.

The NRDC notes that the reversal comes shortly after the federal Environmental Protection Agency (EPA) rebuked the DEC’s handling of the permit, saying the state hadn’t verified Global Partners’ emissions claims.

The EPA suggested emissions from the facility could be three times higher than the state’s estimates.

For the oil and gas industry, New York’s move marks another sign the state is becoming hostile to the oil and gas business under Democratic Gov. Andrew Cuomo.

“The oil and gas industry does not view the state of New York as being open for business as advertised,” Brad Gill, executive director of the Independent Oil & Gas Association of New York, told the Financial Post.

There is a “hostile political climate coming out of Albany mostly from the Democratic-controlled assembly” he added. Gill says the state has lost some $1 billion in oil and gas investments as a result.

Under Cuomo, New York turned a moratorium on fracking into a permanent ban. That ban has been praised by environmental activists but criticized by the energy industry, which says New York is missing out on tens of thousands of jobs.

For its part, Global Partners stresses the project hasn’t been killed.

“The permit modification application has not been denied, but the DEC has requested additional information in connection with the submission,” Global Partners executive VP Edward Faneuil said in a statement.

“The notice of intent does not affect Global’s day-to-day operations or activities at the Albany facility.”

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