President Trump late Wednesday moved to accelerate approvals for natural gas and infrastructure through executive action, but opponents are already gearing for a lengthy challenge in the courts.
During a trip to the Houston area, the president signed a pair of executive orders (EO) to expedite approval across the country for a growing backlog of natural gas pipelines, liquefied natural gas (LNG) facilities, oil infrastructure and related projects.
The EOs will "dramatically accelerate energy infrastructure approvals," Trump said Wednesday.
"My first order will speed up the process for approving vital infrastructure on our nation's borders, such as oil pipelines, roads and railways. It will now take no more than 60 days. That's a vast improvement. And the president, not the bureaucracy, will have sole authority to make the final decision when we get caught up in problems...
"My second order will modernize regulations for LNG export terminals and encourage new infrastructure financing. It will improve access for workers and operators to maintain electrical lines. And finally, it will stop state-level abuse of water quality certifications."
In the first EO, Trump noted that the nation’s “robust energy supplies present the United States with tremendous economic opportunities. To fully realize this economic potential, however, the United States needs infrastructure capable of safely and efficiently transporting these plentiful resources to end users. Without it, energy costs will rise and the national energy market will be stifled, job growth will be hampered, and the manufacturing and geopolitical advantages of the United States will erode.”
The federal government “must promote efficient permitting processes and reduce regulatory uncertainties that currently make energy infrastructure projects expensive and that discourage new investment....By promoting the development of new energy infrastructure, the United States will make energy more affordable, while safeguarding the environment and advancing our Nation’s economic and geopolitical advantages.”
The EO spells out permitting processes and procedures “that employ a single point of accountability, avoid duplicative and redundant studies and reviews, and establish clear and reasonable timetables…”
Trump directed the Department of Transportation (DOT) to propose within 100 days and finalize a rule by May 2020 that would treat LNG “the same as other cryogenic liquids and permit LNG to be transported in approved rail tank cars.”
Several LNG export terminals “are in various stages of development, and these modern, large-scale liquefaction facilities bear little resemblance to the small peak shaving facilities common” that were regulated nearly 40 years ago, the EO noted.
“In the United States, LNG may be transported by truck and, with approval by the Federal Railroad Administration, by rail in United Nations portable tanks, but Department of Transportation regulations do not authorize LNG transport in rail tank cars.”
Trump also took aim at state authority over water quality certifications, which have stymied, among other things, natural gas infrastructure in New York.
Section 401 of the Clean Water Act (CWA) gives states and authorized tribes a direct role in federal permitting and licensing processes, but “outdated federal guidance and regulations...are causing confusion and uncertainty and are hindering the development of energy infrastructure.”
The Environmental Protection Agency (EPA) was tasked with determining whether any CWA provisions should be clarified, taking into account “federalism considerations” and the “appropriate scope” of water quality reviews. By mid-June, the EPA administrator is to issue guidance that would supersede current guidance, with final rules issued by May 2020.
The secretaries of the Interior, Agriculture and Commerce departments were also ordered to develop a “master agreement” for energy infrastructure rights-of-way reauthorizations through lands owned by/within the jurisdiction or control of the United States.
Energy infrastructure rights-of-way grants, leases, permits, and agreements routinely include sunset provisions, and operating facilities in expired areas often face legal and operational uncertainties, the EO noted.
Within six months, the DOT and Department of Energy (DOE) secretaries are required to report on the “economic and other effects caused by the inability to transport sufficient quantities of natural gas and other domestic energy resources to the states in New England,” and elsewhere.
DOT is also to report on the “economic and other effects caused by limitations on the export of coal, oil, natural gas and other domestic energy resources through the West Coast of the United States.”
In addition, DOE within six months is to “describe opportunities...to promote economic growth of the Appalachian region, including growth of petrochemical and other industries,” and “assess methods for diversifying the Appalachian economy and promoting workforce development.”
The first EO also requires the Labor Department to determine if activist investors that target energy companies are complying with the Employee Retirement Income Security Act.
In the second EO, the length of the permit process for cross-border energy projects would be reduced to 60 days. The power to confirm new cross-border pipelines would be within the president’s authority, rather than by the State Department. The move would also limit now-required environmental reviews.
Analysts with ClearView Energy Partners LLC said the EOs may “presage future Trump administration efforts to exert primacy over state-level energy regulation.” One EO would appear intended to “speed up future cross-border pipelines by foregoing permitting processes” required under the National Environmental Policy Act” and possibly redefine the State Department’s role “so that it becomes the gatekeeper, rather than the owner, of the permitting process.
“If it survives a legal challenge, we think the de-delegation EO could expedite future cross-border projects,” but would be unlikely to materially accelerate court-delayed infrastructure, such as TransCanada Corp.’s Keystone XL oil pipeline.
Tudor, Pickering Holt & Co. said not to look for the president’s orders to pass muster anytime soon.
“Given the implications for federal versus state authority, the first executive order is expected to be contested in the court system with any impact to outstanding projects likely long-dated.”
The Independent Petroleum Association of America (IPAA) welcomed the orders. Executive Vice President Lee Fuller said in particular that the industry group supports revamping the CWA guidance.
“This guidance, overdue for updating, has allowed for implementation of the CWA in a manner inconsistent with the statute and to inhibit projects that are clearly in interstate commerce.”
While the Western Governors’ Association said it had “concerns” about changing state certification within the CWA, it welcomed the opportunity “to work closely with federal partners on improved policies for water quality certification under Section 401.”
Bipartisan Policy Center President Jason Grumet said his group “supports bipartisan efforts in Congress and across administrations to speed the issuance of approvals for critical infrastructure. Though well intended, the Trump administration’s executive orders on critical infrastructure siting are unlikely to have a positive impact.”
Alaska Republican Sen. Lisa Murkowski, who chairs the Senate Committee on Energy and Natural Resources, and Ranking Member Sen. Joe Manchin (D-WV) were enthused by the EOs.
“We need fewer delays, greater predictability in our permitting process, and better coordination among government stakeholders to ensure needed projects can become reality,” Murkowski said. “These orders will help us to accomplish those goals so that we can create jobs, especially for skilled labor, strengthen economic growth, and provide affordable and reliable energy for American families and businesses.”
Manchin said he appreciated the acknowledgement of Appalachia as a key to U.S. energy dominance. He and other legislators have long pushed for a natural gas liquids (NGL) storage hub in the region.
The president’s order, Manchin said, “recognizes the importance of Appalachia to our nation’s energy future.” After speaking with DOE Secretary Rick Perry, and with Trump’s EO, “I am more confident than ever that the administration is serious about being a partner” to help officials develop an NGL hub.