President Trump visited Houston, Texas yesterday to sign a pair of Executive Orders to help spur more energy infrastructure development across the country. In particular, the orders were aimed at clearing away roadblocks some states (like New York) put up to try and block new pipelines. Was it a silver bullet that will mean projects like the Constitution Pipeline will now get built? Sadly, no. But it was, according to many in the oil and gas industry, “a step in the right direction.”
There were two EOs signed yesterday (we have full text for both below). The first was called “Executive Order on Promoting Energy Infrastructure and Economic Growth” and is the EO relevant to the Constitution Pipeline and other pipeline projects blocked by rogue states like NY.
The Promoting Energy Infrastructure EO, in Section 3, directs the Administrator of the federal Environmental Protection Agency (Andrew Wheeler) to work with the states in performing a top to bottom review of section 401 of the Clean Water Act–the section that grants states (and tribes) the right to have a say in pipeline projects. The review will take no more than 60 days, and at that time Administrator Wheeler will “issue new guidance to States and authorized tribes to supersede the Section 401 Interim Guidance.” In other words, the EPA is going to tighten up the rules around issuing 401 water crossing certificates. What form these new/revised/tighter rules will take is anybody’s guess at this point, but you can be sure Trump and the federal government have the snippers out and intend to neuter states like NY that have grossly overstepped their authority in blocking new pipeline projects–based purely on political motives.
The newly revised rules will go through a review process and will become federal “law” (actually new regulation, but with the force and effect of a law) within 13 months from yesterday. So, it’s going to take some time. But we’ll get there.
The second EO deals with infrastructure crossings into (or from) other countries. It transfers reviews of such crossings from the State Department, which loves to review things for years, directly to the President. This EO is aimed at helping projects like the Keystone XL oil pipeline from Canada.
There are a lot of articles published yesterday and today about the EOs. We’ve selected several to share with you. The first two are from normally liberal/biased sources, the New York Times and Bloomberg. We selected because they contain good information about the EOs along with reaction from radical antis and from our side.
First up, from the NYT:
President Trump signed two executive orders on Wednesday that he says will speed up construction of pipelines and other projects to enhance the production and transport of oil and natural gas between states and across international borders.
The actions are unlikely to have much of an immediate impact, and they will probably attract legal challenges by state governments seeking to preserve control over such projects. But the orders are symbolically important for a president who likes to take credit for a boom in energy production and exports. And he delivered the message in Texas, an oil-rich Republican state where Democrats recently made electoral gains.
One order directs the Environmental Protection Agency to review and tighten rules to make it more difficult for states to scuttle pipelines by invoking provisions of the Clean Water Act.
Gov. Andrew M. Cuomo of New York, an opponent of hydraulic fracturing, has blocked natural gas pipelines that would connect several Northeastern states to Pennsylvania’s Marcellus shale gas field. A shortage of natural-gas pipeline capacity prompted Consolidated Edison to impose a moratorium on new gas connections last month in parts of Westchester County.
The other executive order would transfer authority for approving the construction of international pipelines from the secretary of state to the president, eliminating a lengthy State Department review process. The goal is to speed up projects like the Keystone XL oil pipeline from Canada to refineries on the Gulf of Mexico.
Mr. Trump issued a new presidential permit last month to Keystone XL, which has been delayed since the early years of the Obama administration. But the pipeline is being contested in the courts by environmentalists, farmers and some Native American groups.
“Too often, badly needed energy infrastructure is being held back by special-interest groups, entrenched bureaucracies and radical activists,” Mr. Trump told an audience at the International Union of Operating Engineers training center in Crosby, Tex., near Houston. “This obstruction does not just hurt families and workers like you. It undermines our independence and national security.”
Environmentalists were quick to criticize the orders issued Wednesday, which they said would exacerbate climate change.
“President Trump is curtailing the public’s voice in an attempt to force dirty energy projects on communities across America,” said Joshua Axelrod, a lawyer for the Natural Resources Defense Council. “Pipelines like Keystone XL pose dangers to our water, our farms and our climate.”
But oil executives said the orders would give Washington greater flexibility as it tried to limit oil exports from Venezuela and Iran while keeping gasoline prices low.
“These are things that are good for our country and for the energy business to continue to help us be energy independent,” said Dale Redman, chief executive of ProPetro, a major Texas oil service company.
Delays in pipeline construction have long bedeviled oil and gas companies, constraining production growth in West Texas and elsewhere. But new pipelines crossing Texas will be completed at the end of this year and in 2020 without much federal intervention.
In some cases, oil field economics, not federal policy, have stood in the way of new pipelines. Many energy companies have been burning gas that bubbles up with crude oil — a process known as flaring — because gas prices are so low that it would not be profitable to build pipelines to bring all of it to market.
But several states have put up roadblocks to Mr. Trump’s efforts to champion fossil fuels like oil, gas and coal. Washington State has blocked the building of export terminals vital to the survival of the Western coal industry at a time when utilities are shutting down coal-fired power plants. And Michigan last month halted an underwater oil pipeline project proposed by Enbridge, a major Canadian energy company, to import oil from Canada.
Mr. Cuomo said in a statement on Wednesday, “President Trump’s executive order is a gross overreach of federal authority that undermines New York’s ability to protect our water quality and our environment.”
Wednesday’s orders direct federal officials to pursue policies designed to expedite projects. For example, the president is telling Labor Secretary Alexander Acosta to review barriers to financing energy projects, including decisions by universities and pension funds to divest from oil, gas and coal companies. And he is instructing the Transportation Department to allow freight railroads and tanker trucks to haul liquefied natural gas, a growing export commodity. (1)
From Bloomberg, written they day before the EOs were signed, but obviously the author had seen copies of the EOs. We like this article because it drives to the heart of why one of the EOs was issued–the Constitution Pipeline.
Despite winning a federal approval in 2014, a 124-mi natural gas pipeline project from Pa. to N.Y. is still no closer to reality.
Enter President Donald Trump, who on Wednesday is poised to issue an executive order to promote projects like the long-stalled Constitution Pipeline, according to people familiar with the matter.
The move seeks to short-circuit regulators in New York who have denied the planned pipeline a crucial permit, invoking their powers under the Clean Water Act to reject projects they deem a threat to water supplies and the environment. Other states and tribes have wielded the power to restrict a coal export terminal and hydropower project on the U.S. West Coast.
The Clean Water Act wasn’t “intended to give a state veto power,” said Dena Wiggins, president of the Natural Gas Supply Association. “The actions New York is taking not only impact New York, they are impacting the entire Northeast, because we can’t get a pipeline through the state in order to provide gas service to the Northeast.”
But New York Governor Andrew Cuomo has said that “no corporation should be allowed to endanger our natural resources,” and vowed the state “will not relent in our fight to protect our environment.”
Trump’s order, slated to be unveiled during a visit to the International Union of Operating Engineers International Training and Education Center in Crosby, Texas, comes as the president continues to chafe at regulatory barriers he says throttle the full potential of American “energy dominance,” while keeping the nation hooked on foreign gas imports.
Trump also is set to issue an executive order aimed at boosting cross-border energy infrastructure, following long delays on high-profile projects such as TransCanada Corp.’s Keystone XL oil pipeline, according to two people familiar with the matter.
The edict represents a reprise of earlier presidential memos and orders Trump issued in 2017 in a bid to hasten permitting of U.S. energy infrastructure. The order slated to be released Wednesday focuses on promoting projects with facilities or land transportation crossings at U.S. borders.
Trump’s action is unlikely to jump-start widespread construction, since it’s up to Congress — not the president — to restrict states’ authority under the Clean Water Act. And the initiative isn’t expected to solve legal problems thwarting several pipelines in the Mid-Atlantic U.S., which hinge on inadequate Interior Department reviews — not formal objections from states.
Still it marks a formal push by Trump to rein in states that have emerged as a major barrier to constructing pipelines.
Even if it’s not a “silver bullet,” the pipeline order “will be construed as opening the door to overcoming these hurdles that states are throwing up,” said Christi Tezak, managing director at ClearView Energy Partners.
Trump’s pipeline order is set to direct the Environmental Protection Agency to revise its handbook for how states can use their certification power to vet projects that cross wetlands, rivers and other bodies of water.
Those Section 401 certifications — named for a provision in the Clean Water Act — are supposed to be approved, denied or waived by states and tribes within a year of a project application. Yet federal regulators have said the one-year clock can be restarted whenever developers submit new or revised applications for state review.
Fights over state permits have led to years-long delays and protracted federal court battles, with some analysts urging investors to consider “ elevated risk premiums” in making decisions about projects designed to cross some particularly challenging states.
In addition to the Constitution pipeline, a joint venture between Cabot Oil & Gas Corp., Williams Cos., Duke Energy Corp. and AltaGas Ltd., New York also has denied water quality certifications for Millennium Pipeline Co. LLC’s CPV Valley lateral project in the state’s Orange County and National Fuel Gas Co.’s Northern Access project.
The denials have drawn scrutiny because of the state’s prime location, standing between a prolific shale gas formation and consumers throughout the Northeast U.S. that are hungry for it. Limited pipeline capacity and other legal constraints prompted the region to import natural gas from Russia last year.
“New York will continue to use all available means to vigorously oppose any efforts to reduce states’ ability to protect our water resources,” the state’s Department of Environmental Conservation said in an emailed statement.
Trump’s order can’t override provisions in the Clean Water Act that give states a powerful role vetting such projects, Tezak said.
“An executive order cannot take off the table the ability of a state to say no for reasons it believes are appropriate, and the venue for adjudicating that is not the White House” — it’s the courts, Tezak said. But “what states will be constrained from doing is meaningfully extending the process.”
Federal courts and regulators are already moving in the same direction. Even without Trump’s order, analysts say they expect the Federal Energy Regulatory Commission to soon overrule New York’s denial on the grounds it came too late.
Environmentalists have blasted the plan.
“This executive order is nothing but an attempt to trample people’s rights to protect their air, water, and climate from polluting oil and gas pipelines,” said Greenpeace USA Climate Campaigner Rachel Rye Butler.
The president’s effort also has rankled some Republicans — including governors in the Western U.S. — who say his initiative threatens to infringe states’ rights.
The Western Governors Association warned Trump in a Jan. 31 letter that curtailing “the vital role of states in maintaining water quality within their boundaries would inflict serious harm to the division of state and federal authorities established by Congress.” (2)
From S&P Global Platts, a balanced report from an industry source:
President Donald Trump signed executive orders Wednesday targeting a key point of friction for natural gas pipeline development, particularly in the Northeast, but details of changes will be left for the Environmental Protection Agency to sort out.
The first broad order addresses state water quality reviews, and combines other smaller steps, including a call for revamped LNG safety regulations. A second order seeks to shorten reviews of crossborder oil pipeline permits like the one needed by TransCanada to build the 830,000 b/d Keystone XL heavy oil pipeline.
Amid a major pipeline buildout to move Appalachian Shale gas to market, some 20.1 Bcf/d of Northeast natural gas production takeaway projects have entered service between 2015 and 2018, according to S&P Global Platts Analytics. But some Northeast projects have stalled over state permit denials or delays under Section 401 of the Clean Water Act, and other legal challenges from environmental groups.
“My action today will cut through destructive permitting delays and denials, where it takes you 20 years to get a permit.” Trump said at a signing ceremony in Crosby, Texas. “Those days are gone. You may not get it at all, but it’s going to be quick if you don’t.”
How far an executive order can go to alleviate hurdles under existing law remains to be seen.
“Outdated federal guidance and regulations issued by the Environmental Protection Agency have caused confusion and uncertainty, leading to project delays, lost jobs and reduced economic performance,” a senior administration official said Tuesday.
The first order tells EPA within 60 days to update 2010 interim guidance to address timing and scope of state CWA reviews. EPA would also update enabling regulations that predate CWA Section 401, with a final rule due within 13 months.
Natural gas interests have sought guidance to keep state reviews from dragging out, accusing states like New York of gaming the process. They also have sought guardrails around what states can consider in making water quality determinations — changes environmental groups worry could strip states of their statutory role.
While the order may not be a silver bullet for specific projects, it heightens the sense of priority for administration efforts to streamline permitting.
“These projects have become increasingly difficult to complete because of the multiple steps along the way,” said American Petroleum Institute CEO Mike Sommers. “If you can shorten one of those steps, it certainly helps in the development of this important priority for the industry.”
The second executive order weakens the role of the State Department in reviewing crossborder permits and says decisions to approve or deny those permits will be made solely by the president. It takes aim at the Keystone XL stalemate, but may not represent a quick fix for the project, which remains locked in a court battle in Montana.
To speed crossborder reviews, the secretary of state would adopt procedures to receive complete information from participating agencies within 60 days of an application. FERC gas project reviews and DOE transmission reviews would be exempted from the order, which extends to water and transportation projects.
LNG SAFETY RULES
Under the first order, Department of Transportation is tasked with updating LNG safety rules to reflect modern technology, and best industry practices on the ground that existing rules developed for small-peak shaving facilities 40 years ago are not well suited for large-scale export or import facilities.
DOT would also be tasked with proposing a rule to treat LNG the same as other cryogenic liquids to allow permitting in approved rail tank cars. That may address interest in such shipments to move gas to New England or from Permian association gas production.
To better address sunset provisions for electric transmission right-of-ways, the order would call for development of a master agreement for right-of-way renewals and reauthorizations to expedite the renewal process and facilitate vegetation management.
Also targeted are growing environment, social and governance investor initiatives. The order would require a Labor Department study of whether ESG initiatives are having discernable impacts on energy investments, along with a related review of existing guidance on fiduciary responsibilities for proxy voting.
DOT and DOE are further tasked with studying economic effects of the inability to ship natural gas and other energy resources to New England, as well as effects of limitations on moving coal, gas, oil and other resources through the US West Coast.
The administration’s record in speeding natural gas permitting so far is mixed, amid periods in which FERC vacancies have affected timing. According to LawIQ, the median time for interstate natural gas pipelines was 440 days in the first two years of the Trump administration versus 365 days during the last two years of the Obama administration. (3)
The Marcellus Shale Coalition teamed up with labor to issue the following statement about the EOs:
President Trump’s executive order is a major step in the right direction to ensure the energy infrastructure is in place connecting American families, small businesses and manufacturers to abundant, affordable and clean natural gas, the president of the Appalachian Basin’s leading natural gas industry trade group and a top union building trades leader said today regarding the President’s announcement.
“President Trump’s executive order will help ensure the energy infrastructure that delivers clean, abundant American natural gas is there when consumers, small businesses, hospitals, and manufacturers need it,” Marcellus Shale Coalition president David Spigelmyer said. “We thank the President for taking action directly aimed at lifting the Cuomo’s administration’s energy blockade that has left the northeast starved for natural gas.”
“In blocking critical energy infrastructure, Gov. Cuomo has made certain that New York families will pay more for energy and have less access to affordable, clean-burning American natural gas,” Spigelmyer continued. “Pennsylvania’s abundant natural gas resources can provide a boost to families and small businesses, many whom are struggling to make ends meet.”
Even though Pennsylvania, Ohio and West Virginia lead the nation in combined total natural gas production, the New England region, which suffers from a lack of energy pipeline capacity, has been forced to important Russian natural gas to meet spikes in winter demand.
“The executive order announced today is a win for natural gas, the bridge fuel that will get our nation to a renewable energy future. Too often the regulatory process at the state level is manipulated by zealots who are waging a project-by-project war against natural gas, throwing thousands of laborers out of work in the process,” Dennis L. Martire, Vice President and Regional Manager of the Laborers’ International Union of North America (LIUNA) Mid-Atlantic Region said.
“No one is more concerned about the safety of our natural gas energy infrastructure than the workers who build it,” Martire continued. “This executive order is a step in the right direction – towards rational regulation that protects our environment and secures good family-supporting jobs.” (4)
A copy of the EO that directly affects projects like the Constitution Pipeline:
The second EO, meant for projects like Keystone XL:
(1) New York (NY) Times (Apr 10, 2019) – Trump Signs Orders to Speed Up Oil and Gas Pipeline Construction
(2) Bloomberg/World Oil (Apr 9, 2019) – Trump eyes limit on U.S. state power over pipelines
(3) S&P Global Platts (Apr 10, 2019) – Trump signs executive orders aimed at boosting energy infrastructure
(4) Marcellus Shale Coalition (Apr 10, 2019) – Executive Order Helps Connect Americans to Clean, Affordable Natural Gas
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