Credit: NBC News

Although it’s still talk, the talk is now white hot and all indications are that President Trump will soon issue an Executive Order (EO) that declares important pipeline projects–like Williams’ Constitution and Northeast Supply Enhancement projects–are critical for national security, and that states like New York trying to block those projects just because they’re fossil fuel projects will not stand.

Chatter has been going on for some time that Trump may issue an EO on pipelines, to overrule states like NY and California and others that are blocking pipelines because their political leaders irrationally hate fossil fuels.

Last October we first reported on rumors that President Trump may issue an EO (see Pipeline Relief Coming 2019? Trump Targeting States Like NY). The rumor popped up again in January (see Trump Considers Exec Order to Overrule NY Blocking Pipelines).

And now it’s back again. This time prognosticators believe an EO from Trump is imminent. The talk is that Trump will try and clean up abuses of the federal Clean Water Act, what’s known as Section 401–the section that delegates authority to the states to review pipeline (and other infrastructure) projects, giving states a say in where those projects can be located. States like NY have taken to using 401 to entirely block such projects, which was not the intent of the law. NY and other states have, over the past few years, bastardized the CWA. Trump has had enough.

There’s talk that Trump will direct the EPA to rework the “guidance” section of 401, the criteria states may and may not consider as part of their review process. Limit the criteria–narrow it. Don’t give states as much latitude to make mischief. Hey, Andy Cuomo has brought this on himself. He has no one to blame but himself that states will now have a much more limited role in siting new infrastructure projects deemed critical by the federal government.

With the White House close to releasing an executive order to facilitate energy infrastructure approvals, analysts and advocates differed over how far it can go to lift obstacles in some Northeast states and end other legal roadblocks.

A major natural gas pipeline buildout has been underway to move Appalachian shale gas to markets, but some Northeast projects have stalled over state permit denials, or amid environmental group challenges to multiple permits.

The White House order may frame that as a national security risk, pointing to coal and nuclear power plant retirements, and it may sweep together initiatives meant to promote prompt energy infrastructure reviews.

SCOPE OF STATE REVIEWS

One key target is water quality reviews delegated to states under Clean Water Act Section 401. State denials or delays under CWA authority have rankled gas pipeline developers and drawn repeated pushback from Energy Secretary Rick Perry and others in the administration.

The order could seek to trim the state review time from one year, or at least reign in efforts to stretch out that period.

The Environmental Protection Agency could be tasked with reworking guidance, now more than 10 years old, to constrain the scope of what states can consider in reviewing water quality impacts. The US Army Corps of Engineers could also revise guidance.

William Scherman, partner at Gibson, Dunn & Crutcher, said Monday that it could help even those projects with pending applications, because courts look to guidance as important parameters around which states can act lawfully.

Height Securities analysts said the new guidance “would give pipelines more ammunition to push back against states like New York and New Jersey, who’ve begun using the [Section] 410 authority to assert their own political goals.”

FATE OF PENDING PROJECTS

Some analysts saw limits on how far this can go within the existing legal framework.

“Practically speaking, though, this is … unlikely to change the fate of pipelines that are under threat of being denied permits by state officials,” Rob Rains and Gianna Kinsman of Washington Analysis said in a research note Friday.

They suggested that Williams’ Constitution Pipeline, if revived at the Federal Energy Regulatory Commission, could face further legal challenges in New York, which could also seek to revoke other permits. And they suggested odds lean against approval of Williams’ Northeast Supply Enhancement Project in a decision by New York regulators expected by May 15 — with potential hurdles in New Jersey as well. Both states will also be making Coastal Zone Management Act determinations.

ClearView Energy Partners does not expect the announcements to resolve delays faced by Mid-Atlantic natural gas projects, Atlantic Coast Pipeline and Mountain Valley Pipeline. “Both projects are currently experiencing court-driven delays related to inadequate Interior Department environmental reviews, and Atlantic Coast’s crossing of the Appalachian Trail has been vacated,” ClearView said in a note.

While there has been talk of an interagency rulemaking to resolve questions of Appalachian Trail oversight, one industry official cautioned that may not be included. “There is a much higher focus on the legal defensibility now” within the administration, he said.

The order could also seek to bolster interagency coordination on Department of Energy LNG export reviews, and shorten review and comment periods for crossborder oil pipeline reviews. Other areas might include parameters for consideration of greenhouse gas emissions, and more widespread use of cost-benefit analysis in regulation.

In the near term, the administration’s delay in nominating a third Republican at FERC could run counter to the infrastructure goals. Differences over GHG considerations have sometimes divided commissioners at FERC and added uncertainties for pipeline and LNG approvals.*

A quick note on the story above: This is the first outside confirmation (see mention of the Washington analyst note) of our own suspicion that NY will ultimately turn down Williams’ request for a permit to build the Northeast Supply Enhancement (NESE) project. NY has until May 15 to decide. Look for an announcement a day or two before that date rejecting Williams’ application. Maddening.

Hopefully an EO by Trump, although it’s sure to be challenged in the courts, will eventually prevail and result in both the Constitution and NESE projects getting built.

*S&P Global Platts (Apr 1, 2019) – Opinions differ on expected White House energy infrastructure order