President Trump’s two executive orders yesterday, aimed at streamlining permitting of oil and gas pipelines, are winning industry support. But they will likely face legal pushback from affected states and environmental groups. The New York Times wrote, “The actions are unlikely to have much of an immediate impact, but they will probably attract legal challenges by state governments seeking to preserve control over such projects.”
The more significant of the two orders, “Executive Order on Promoting Energy Infrastructure and Economic Growth,” would make changes to the Environmental Protection Agency’s implementation of the Clean Water Act, greatly trimming the role that states and Indian tribes play in siting oil and gas pipelines. The order would also change Department of Transportation safety rules, allowing rail and truck hauling of LNG.
The other executive order, “Order on the Issuance of Permits with Respect to Facilities and Land Transportation Crossings at the International Boundaries of the United States,” would transfer approval of energy projects, such as the controversial Keystone XL crude oil pipeline, from the State Department to the White House. Neither executive order touches the key authority of the Federal Energy Regulatory Commission in reviewing pipelines.
Don Santa, CEO of the Interstate Natural Gas Association of America, the gas pipeline industry’s Washington lobbying group, said, “Currently, the process for reviewing and approving new or expanded natural gas pipelines is robust and transparent – two things that we continue to believe are essential – but procedural inefficiencies can delay a process that already spans several years. Streamling the process to ensure it is safe, comprehensive and predictable is a top priority, along with EPA clarifying Clean Water Act section 401 water quality certification requirements so that one state cannot interfere with interstate commerce.”
The American Council for Capital Formation, a Washington-based think tank that works closely with industry on taxes, particularly capital gains taxes, praised the Trump action. George David Banks, executive vice president, said, “For years, state and local government opposition has hindered development of much-needed infrastructure that would allow all Americans to benefit from affordable, abundant, and reliable energy.”
Fred Jauss, a partner at the law firm of Dorsey & Whitney and a former FERC attorney, cautioned that the Trump orders collide directly with the underlying law, as “the executive order cannot change the role of the states in the Clean Water Act. The Clean Water Act is built in part on cooperative federalism between the states and the federal government. Section 401 of the Clean Water Act requires applicants for a federal permit to obtain certification from a state that the proposed project complies with state water quality standards. This gives the states the ability to ‘veto’ a proposed project or impose conditions upon the issuance of the permit. This state certification process has been a critical battleground in the development of new infrastructure. The executive order cannot change this requirement for state certification, such a change would require an act of Congress.”
The Trump order, Jauss noted, “is designed to amplify pressure on state governments that are not providing certifications. Implementation of this order will undoubtedly end up in the courts.”
Moving approval for cross-border infrastructure “could speed the issuance of a presidential permit,” but it “does not impact the timing or the issuance of the multitudes of state and federal permits and authorizations that are required to construct a major piece of cross-border infrastructure.”
In the end, Jauss says that “it is unclear how much impact these executive orders will have on the development of infrastructure.”
— Kennedy Maize