EPA Advances Proposal to Ease State Roadblocks to Pipelines, Infrastructure

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Researched by Industrial Info Resources (Sugar Land, Texas)--One thing is almost for sure: The Environmental Protection Agency's (EPA) proposed changes to Clean Water Act regulations are bound to stir up a court fight.

On August 9, the EPA issued a proposed rule that the agency says will streamline the state certification process for proposed pipelines and other infrastructure-related projects. The proposal comes after President Donald Trump issued an executive order in April directing the EPA to propose new rules modernizing implementation of Section 401 of the Clean Water Act. For related information, see April 12, 2019, article - How Much Will Trump's Executive Orders Affect Energy Projects?

Industrial Info is tracking more than $86.7 billion worth of oil and gas pipeline project activity in the U.S.

Click on the image at right for a graph showing U.S. pipeline project activity by market region.

"Under President Trump, the United States has become the number one oil and gas energy producer in the world, while at the same time continuing to improve our air quality," said EPA Administrator Andrew Wheeler in a press release. "Our proposal is intended to help ensure that states adhere to the statutory language and intent of the Clean Water Act. When implemented, this proposal will streamline the process for constructing new energy infrastructure projects that are good for American families, American workers, and the American economy."

Under Section 401, companies must obtain certifications from a state before building infrastructure, even if the project has been approved by the U.S. Federal Energy Regulatory Commission (FERC), which grants permission to construct pipelines and other energy projects.

Some states, such as New York, have used Section 401 to block big pipeline projects, citing water quality issues. This includes Williams Companies' (NYSE:WMB) (Tulsa, Oklahoma) Constitution Pipeline, which would have run 125 miles from the Marcellus Shale in Pennsylvania to around New York City. The pipeline would have carried 650 million cubic feet per day of natural gas. In 2018, the Supreme Court chose to leave standing a lower court's decision that upheld New York's denial of a water quality certification for the pipeline. For related information, see May 8, 2017, article - Williams Companies Committed in New York Fight Over Constitution Pipeline and August 12, 2019, article - Williams Moves on Transco Expansions Despite Headwinds.

In June, Wheeler made it clear that the proposed regulations would address such situations. "Many states implement Section 401 of the Clean Water Act faithfully; however, on occasion, inconsistent implementation and outdated guidance and regulations have caused delays in infrastructure projects with significant national benefits," he said in a press release.

Among other things, the proposal would limit states to considering only water quality issues in their certifications, and prevent the states from considering other issues such as air pollution or climate change.

The proposal also specifies the timeline in which a state can issue or deny a Section 401 certification. Under the Clean Water Act, a state has a "reasonable period of time (which shall not exceed one year) to act after receiving a certification request." Those states that fail to act within the timeframe waive their authority to issue or deny a certification.

In its rule proposal, the EPA said the law doesn't define the terms of "the reasonable period of time to begin upon receipt of a certification request," which has "resulted in inefficiencies in the certification process, individual certification decisions that have extended beyond the statutory reasonable period of time, and regulatory uncertainty and litigation."

The proposed rule specifies that the certification timeline would be triggered upon the state's receipt of the project developer's initial request. "Receipt means the date that a certification request is documented as received by a certifying authority in accordance with applicable submission procedures."

The proposal was welcomed by groups such as the Interstate Natural Gas Association of America. "While the statute recognizes the distinctive roles of the federal and state governments in the environmental review process, the balance between those roles has recently been disrupted and some states have viewed Section 401 as a means of determining which interstate pipeline projects are in the public interest and which are not," said Don Santa, president and chief executive officer of the association.

Other groups and officials blasted the proposed rule.

"We will not be deterred by the Trump administration from exercising our state's full authority to protect Washingtonians' right to clean water," said Washington Governor Jay Inslee and Attorney General Bob Ferguson in a joint statement. "The law is absolutely clear - states have both the right and the responsibility under the Clean Water Act to preserve our environment and protect public health...If the EPA finalizes this unlawful proposal, we'll have no choice but to explore all legal options to defend Washington's authority to protect our natural resources."

The EPA is accepting public comment on the proposed rule for 60 days following its publication in the Federal Register.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at https://www.industrialinfo.com.