Donald Trump has issued executive orders to try and circumvent state-level decisions regarding energy infrastructure permits. But what will be the practical effect? Other than to ignite a discussion, states still have the right to deny the development of oil and gas pipelines as well as coal export terminals.
The president’s goal is to literally give coal, oil and natural gas a lift — to not just increase production but to also expand the framework to transport them. Opposition groups are concerned that unfettered development would prolong the use of carbon-heavy fuels that lead to global warming and that the infrastructure expansion must be strategic. The states, in fact, are empowered to control what happens inside of their borders.
The germane executive order “doesn’t necessarily help several current projects, but it could have an impact over time” by accelerating approvals and reducing energy prices, says Christine Tezak, an analyst with ClearView Energy Partners.
At issue is section 401 of the Clean Water Act, which says that energy companies must get state certification before they can develop deals. Washington State has blocked a coal export terminal that would send coal from six western states to Asia while New York State has prevented natural gas pipelines from being built, saying that the construction would pollute water resources.
Issued last Wednesday, the order asks the Environmental Protection Agency to step in and to work with the various stakeholders so that projects can comply with the Clean Water Act. EPA Chief Andrew Wheeler said his agency would issue guidance in a few weeks.
The ultimate responsibility for approving pipeline projects falls onto the Federal Energy Regulatory Commission, or FERC, a non-partisan five-member body. To win permission, companies must show the economic need for pipelines and that they have worked in advance with stakeholders that include communities and environmentalists.
There is a need to build modern pipelines — ones that don’t leak or explode. Moreover, natural gas is replacing coal as a fuel for electric generation, which is reducing CO2 levels. With that, the Interstate Natural Gas Association of America says that the United States and Canada need an annual investment of $44 billion per year through 2035 to build out the oil and gas infrastructure.
“(P)rocedural inefficiencies can delay a process that already spans several years,” says Don Santa, chief executive officer of the gas association. “Streamlining 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.”
FERC’s position, generally, is that its role is to facilitate the expansion of infrastructure to get natural gas to where it is needed. What the FERC can do is to decide that the state has taken too long and if it has, the state waives its review. What it can’t do is to override any state’s decision if it has said “no” in a timely manner. The agency relies on the Natural Gas Act of 1938 for guidance, which says that it must approve projects of “public necessity.”
To that end, FERC facilitated the building permit for the TransCanada, DTE Energy and National Grid Millennium Pipeline, saying that New York State failed to act within a year of the companies’ initial 2015 application and that its subsequent denial was moot; the court deferred to FERC. Now two other developers, Williams and National Fuel, are asking for similar rulings and arguing that fuel supplies to the Northeast are at risk.
According to the Center for Public Integrity and StateImpact Pennsylvania, FERC has rejected only two pipelines over the last 30 years — out of hundreds of proposed lines: “It’s hard to see where FERC ends and industry begins. Dozens of agency staff members have had to recuse themselves in recent years while negotiating jobs at energy firms. Most commissioners leave FERC to work for industry as well, in some cases lobbying their successors.”
The activists are citing precedence: The DC Court of Appeals denied permission in 2017 to build three pipelines in Florida, saying that the projects did not properly assess their impact on climate change. The court said that FERC should require developers to quantify the projected level of greenhouse gases as a result of the increased natural gas flow and consumption.
And the activists have also won a key victory in Washington State, where a federal court has upheld the state’s right to deny a water quality permit to the Longview coal export terminal. The judge said that the state’s 2017 rejection of the permit does not violate interstate commerce laws. The terminal would have been the biggest one on the West Coast, giving coal produced in the Rocky Mountains a clear pathway to Asia.
The country has long tried to reconcile its ever-changing energy demand with the need for more infrastructure. Climate hawks understand, for example, the need for more long-distance transmission for new wind and solar plants built in rural areas. And likewise, many know that more pipelines are required to fuel the growth of combined-cycle natural gas plants that are displacing coal units. Those are discussions to be had amongst the American public, however, and not ones to be directed by executive order.