The Federal Energy Regulatory Commission (FERC) officially announced that it is going to review its policy framework for certification of new interstate natural gas and LNG pipelines in the U.S. and issued a Notice of Inquiry (Notice or NOI). This is the first time in nearly twenty years that FERC will examine its pipeline review and approval policy, last issued in 1999. Kevin McIntyre, the current FERC Chairman, said review of the policy is intended to determine ‘whether, and if so, how’ any changes should be made in the evaluation of new pipeline projects. The NOI establishes a 60-day public comment period, beginning with publication in the Federal Register, thus the deadline for comments is June 25, 2018.
The U.S. DOT and 10 other federal agencies signed a Memorandum of Understanding (MOU) on April 9, 2018, which became effective on April 10, 2018. The MOU is intended to implement Executive Order 13807 (Aug. 15, 2017), which established a “One Federal Decision” policy for infrastructure projects that require authorizations by multiple federal agencies. Under the MOU, a lead federal agency must be designated to be responsible for addressing compliance with the National Environmental Policy Act (NEPA), and the preparation of a single Environmental Impact Statement (EIS). The lead agency will establish a single Permitting Timetable that all federal agencies must follow. The MOU mandates that all federal authorizations must be resolved within 90 days of issuance of the lead agency’s Record of Decision (ROD) on the EIS, with limited exceptions.
There have been problems on large pipeline construction projects in recent years getting all federal agencies to agree on an approach to permitting review and timetables. The MOU addresses that by requiring all agencies to work on a single approach and timeline, and to develop the policies necessary to do so. It also requires all environmental review to be complete no later than two years from issuance of a Notice of Intent (NOI) to prepare an EIS for a new project. Additionally, the MOU specifies three “concurrence points” at which all involved agencies are requested to reach consensus on NEPA project review and approval: (1) Purpose and Need; (2) identification of Alternatives; and (3) selection of the Preferred Alternative.
For new natural gas pipeline construction projects, FERC will continue to be the lead agency preparing an EIS, but any cooperating agencies must now comply with a uniform schedule for review and input. Although not required by the MOU, state, local and tribal agencies will be invited to voluntarily participate in the single permitting timetable process.
The MOU was welcomed by many as a means to achieve permit streamlining, a concept that Congress has attempted to address over the years, as noted in our prior posts regarding both House and Senate efforts [see prior pipelaws posts, August 4, 2017, July 5, 2017]. It also harkens to President Trump’s January 2017 Presidential Memorandum addressing permit streamlining for domestic manufacturing. As a representative of the U.S. Chamber of Commerce said of this new MOU, “It shouldn’t take longer to approve a project than to build it.” Opponents of new infrastructure projects, including pipelines, note that the courts are still deliberating on whether and to what extent large projects need to consider climate change impacts under NEPA. Challenges such as that are not addressed directly by the MOU, but in theory the MOU will foster a consolidated position by all federal agencies involved.
While the MOU stands to improve the coordination and timing among federal agencies, it is only aspirational, speaking in terms of “goals” and “milestones” that are ultimately non-binding. It may also place more burdens on project applicants, to ensure that all agencies are, in fact, coordinating and adhering to the timetable, etc., and that any disputes are identified and resolved in a timely manner.
In addition, challenges to permits and approvals at the local and state level will be unaffected by this MOU. New infrastructure projects continue to face opposition by environmental or citizen groups, and increasingly states too have posed challenges to large scale projects. For example, as noted in our prior post of July 5, 2017, projects such as Millennium Pipeline Company that received prior FERC approval have found themselves in the U.S. Courts of Appeals addressing state challenges. The Second Circuit recently issued a favorable decision in the Mellennium appeal , however, holding firm to the plain language in the Clean Water Act that the timeline for a state’s action in response to a request for a water quality certification is one year from receipt of the request.
 The MOU was signed by the heads of the Department of Transportation; the Federal Energy Regulatory Commission; the Environmental Protection Agency; Department of Energy; U.S. Army Corps of Engineers; Department of the Interior; Department of Agriculture; Department of Commerce; Department of Housing and Urban Development; the Advisory Council on Historic Preservation and the Federal Permitting Improvement Steering Council.
Building off of President Trump’s “Made in America” campaign commitment, the Trump Administration issued a tariff on steel imports on March 8, 2018. The proclamation finds that the imposition of duties on steel articles is necessary to ensure that steel imports will not threaten national security and, effective March 23, 2018, steel imports will be subject to a twenty-five (25) percent ad valorem tariff, except for imports from Canada and Mexico. The proclamation also authorizes the Commerce Department to grant exclusions from the tariffs of affected parties (1) if the steel at issue is determined not to be produced in the U.S. in a sufficient and reasonably available amount or of a satisfactory quality; or (2) based upon specific national security considerations. The President directed the Commerce Department to promulgate regulations as necessary to set forth the procedures for an exclusion process.
Prior to the effective date of the tariff, the Department of Commerce issued an interim final rule (IFR) to outline exclusions and the exclusion application process (set forth as a supplement to 15 C.F.R. Part 705). The IFR was issued without notice and comment and became immediately effective when published on March 19, 2018. While the IFR tracks the limited exclusions in the proclamation, much remains unclear with regard to the process and the likelihood of success for industry applicants. An exclusion will only be granted on a case by case basis where an article is not produced in the U.S. in a “sufficient and reasonably available amount,” is not produced in the U.S. in a “satisfactory quality,” or for a “specific national security consideration.” The IFR does not clarify the meaning of these terms or provide the industry with illustrative examples. The form for filing an exclusion request requires information such as the average annual consumption of the product at issue for the past two years, time involved in delivery, manufacture, and shipment of the product from a foreign suppliers, specifics about the physical properties of the product, and detailed U.S. product availability information (including attempts to qualify a US steel manufacturer or procure the steel from a US manufacturer).
The rule also establishes limits on who can request an exclusion and the scope of any exclusion. Exclusions are limited to individuals or organizations using steel articles in business activities (e.g., construction, manufacturing, or supplying steel to users). Approvals of exclusions will be specific to the individual or entity who submitted the request, unless Commerce approves a broader application of the exclusion to apply to other importers. Objections may be filed by any individual or organization, but Commerce will only consider information directly related to the submitted exclusion request.
The IFR states that “follow-on” requesters to exclusions that are approved will be taken into consideration, but signals that approval will depend on the strength of a requester’s application which may potentially set the stage for inconsistent results. Exclusion requests, objections and comments on the IFR will be public and located in the federal register docket. The rule establishes a 30 day period for individuals or organizations to file objections (from posting of the exclusion request) and a 90 day period for the Department to review and adjudicate any objections to an exclusion request. Responses approving exclusion requests will be effective within 5 days and will generally be approved for one year. Commerce estimates that it will receive tariff exclusion requests from 4,500 applicants. To date, no requests have been posted to the federal docket associated with steel import exclusions.
The Administration’s January 2017 Executive Memorandum requiring that all new and repaired pipe be made in the U.S. and the issue of steel tariffs have been the subject of much comment by the pipeline industry. Industry operators and trade groups have argued that such requirements will result in construction delays, project cancellations, higher costs and consumer impacts if they are implemented. There are major constraints on the procurement of adequate quantities of line pipe materials and equipment in the U.S., due to the unavailability of U.S. made pipe at necessary technical specifications and in time to meet market demands and/or regulatory requirements. It remains uncertain whether the Commerce Department’s IFR will resolve any of these concerns, if it will be subject to judicial challenge or whether the exclusion process will prove to be workable for industry.
The EPA and the Army Corps of Engineers (Corps) announced a series of public teleconferences for stakeholder input on recommendations to revise the definition of “Waters of the United States” under the Clean Water Act. This definition is critical to the determination of whether wetlands or water discharge permits are required for construction projects or operations across all industries. In total, there will be ten teleconferences beginning on September 19, 2017, nine of which will be tailored to a specific industry sector and one of which will be open to the public at large (see summary below). The session specific to the energy, chemical and oil and gas industries is scheduled for October 24, 2017. The teleconferences will run throughout the fall on Tuesdays from 1 to 3 pm eastern. Continue Reading Stakeholder Meetings Scheduled for Revised Waters of the U.S. Rule
On August 3, 2017, the Senate confirmed both Neil Chatterjee (R) and Robert Powelson (R) as FERC Commissioners, returning FERC to a quorum after six months. FERC has been unable to issue major decisions without a quorum, although staff work has continued to work on a variety of fronts, including issuing environmental reviews for various pipeline construction and other energy projects. The Senate confirmations should be a relief for the energy industry, which has been subject to prolonged uncertainty as major project approvals have been at a standstill since February.
The quorum will be restored as soon as Chatterjee and Powelson are sworn in, which historically has taken from one to three weeks. The confirmation of the nominations of Chatterjee, a former aide to Senate Majority Leader McConnell and Powelson, a Pennsylvania regulator, brings the Commission to 3 members of what is typically a 5 member Commission. Trump previously announced nominations of Kevin McIntyre (R), an energy lawyer in private practice, and Richard Glick (D), a Senate aide, for the two remaining vacancies weeks ago, but only nominated them formally this week. The Senate Energy and Natural Resources Committee has scheduled a hearing on those nominations for September 7, 2017.
On July 19, 2017, the U.S. House voted to give lead authority for authorizing cross border oil and gas pipelines to FERC, and to the Secretary of Energy for cross border electric transmission lines. HR 2883, entitled Promoting Cross-Border Energy Infrastructure Act, removes the requirement for such cross border energy infrastructure to obtain Presidential Permits and instead establishes a 120 day review process under the National Environmental Policy Act (NEPA) and the Natural Gas Act to obtain a “Certificate of Crossing.”
President Trump plans to nominate Kevin McIntyre to serve as chair of the Federal Energy Regulatory Commission (FERC). McIntyre currently works in private practice in the energy regulatory sector and has for 30 years. With McIntyre’s nomination, there will be four commissioner candidates in various stages of the nomination and confirmation process.
EPA and the Army Corps of Engineers (the Corps) issued a prepublication version of a proposed rule that will rescind prior 2015 revisions to the definition of “waters of the U.S.” under the Clean Water Act (CWA), pending the issuance of a more substantive rulemaking that reevaluates the definition. The prior revisions expanded federal jurisdiction over certain waters and prompted numerous judicial challenges and a subsequent nationwide stay of the rule.
The U.S. Department of Transportation (DOT) recently published a notice inviting public comment to identify statutes, rules, regulations, and interpretations in policy statements or guidance that “unjustifiably delay or prevent completion of surface, maritime, and aviation transportation infrastructure projects.” As stated in the notice [attached], in keeping with President Trump’s regulatory reform agenda, DOT and other federal agencies are in the process of reviewing existing policy statements, guidance documents, and regulations that might pose impediments to transportation infrastructure projects. The upcoming deadline to provide input on that review is July 24, 2017. We encourage industry to consider submitting comments, particularly given DOT’s statement that comments are not restricted to burdensome regulations, but also extend to policy statements, interpretations and guidance.
Oil and gas discoveries in various shale plays around the U.S. over the past decade have led to an increased rise in the number of transfers and acquisitions of pipeline assets, including pipelines serving processing plants, producers, storage facilities, and those associated with power plants and other industrial users. Changes in global and domestic energy markets have continued that trend. Prudent operators routinely request and review documentation as part of their due diligence in making acquisitions, but it is becoming increasingly important that certain records be located during due diligence or factored into the transaction if such records are lacking and must be recreated. Decision makers involved in pipeline acquisitions should involve pipeline safety managers or counsel early on in the process to allow sufficient time to include pipeline safety records review as part of the transaction; to do otherwise can be a costly mistake that carries significant liability risk.