What to Make of President Trump's Pipeline Directives
President Trump signed both Presidential Memoranda and an Executive Order aimed, in part, at benefiting the transmission pipeline industry. As expected, President Trump signed Presidential Memoranda to expedite the review of the long-delayed Dakota Access Pipeline and approval of the Keystone XL pipeline. He also issued a Presidential Memorandum regarding an initiative to require pipelines constructed within the United States to use American-made steel. Perhaps most importantly, President Trump issued an Executive Order* to expedite the environmental review process for certain "high priority" infrastructure projects, to include oil and gas pipelines. So what's next?
Dakota Access
In his Presidential Memorandum regarding the Dakota Access pipeline, President Trump directs the Secretary of the Army to instruct the Army Corps of Engineers to take "all actions necessary and appropriate" to "review and approve in an expedited manner ... requests for approvals to construct and operate" the Dakota Access pipeline including, significantly, the approval of "easements or rights-of-way to cross Federal areas." In December, the then-serving Assistant Secretary of the Army for Civil Works, Jo-Ellen Darcy, issued a memorandum to the Corps, requiring it to withhold its delivery of an easement to build on federal land under Lake Oahe in North Dakota. The Assistant Secretary's decision was based on the need to explore alternate routes for the pipeline and directed the Corps to conduct an Environmental Impact Statement (EIS).
Today's Presidential Memorandum directs the Corps to consider, "to the extent permitted by law and as warranted" whether to rescind or modify Ms. Darcy's December 4th memorandum, and to withdraw the Corps' recent Federal Register notice of its intent to conduct the EIS. The Memorandum also directs the Corps to consider its prior "reviews and determinations" including its original Environmental Assessment, as satisfying all applicable requirements. Lastly, the Presidential Memorandum directs the Corps to issue "any approved easements or rights-of-way" immediately after making the required notice to the Congress required under the Mineral Leasing Act.
To date, the Corps has not yet taken any official action. However, shortly after the announcement, the Corps filed the Presidential Memorandum as an exhibit before the D.C. District Court, where litigation is still ongoing. In response, Judge Boasberg, the presiding judge, has set a status hearing for January 30 to discuss the impact of the Memorandum on motions currently pending before the court.
Keystone XL
President Trump's Presidential Memorandum regarding the Keystone XL Pipeline invited TransCanada Keystone Pipeline, L.P. to re-submit its application to the U.S. State Department, and directed the Secretary of State to conduct an "expeditious review" of TransCanada's renewed application, and to reach a final decision within 60 days of TransCanada's application.
The Presidential Memorandum provides for a "fast track" review process, directing that the original EIS conducted for TransCanada's initial application be considered as satisfying all applicable requirements, and directing the Corps of Engineers and other federal agencies to expeditiously conduct their various required reviews, and to issue any required approvals, as warranted. The Presidential Memorandum also waived various notification and delay requirements that would otherwise be applicable to the application. President Trump also directed that the Secretary of State issue a Presidential permit for any cross-border pipeline project that "would serve the national interest." While it's not clear how soon all of these these requirements could be met -- or even how quickly TransCanada could submit a renewed application -- it is evident that the Trump administration will work to approve a renewed application.
Nonetheless, other complicating factors, aside from whether shippers will commit to the project, remain for Keystone XL. For example, under Prime Minister Trudeau Canada has made an effort to reduce carbon emissions and manage its transition away from fossil fuels. In US courts, due to a routing law found to be unconstitutional, TransCanada must now submit an application for the route before the Nebraska Public Service Commission. The PSC can tell TransCanada to choose a different route or deny the application altogether. The Keystone XL proposed route also runs near the Rosebud and Pine Ridge Reservations and through their traditional territories. These Sioux reservations, like Standing Rock in North Dakota, may become involved.
Using American Made Steel to Construct Pipelines
President Trump also issued a Presidential Memorandum directing the Secretary of Commerce to develop a plan that would provide that the construction of pipelines, including retrofitted, repaired, or expanded pipelines, within the United States must use materials and equipment produced in the United States "to the maximum extent possible." The Secretary of Commerce must submit a plan to President Trump within the next six months. The Presidential Memorandum is aimed directly at iron and steel products, and provides that such products meet the Memorandum's requirements only if "all manufacturing processes ... from the initial melting stage through the application of coatings, occurred in the United States." Over the next six months, the Secretary of Commerce will have to wrestle with whether the Memorandum contravenes the WTO's (and its forerunner the General Agreement on Tariffs and Trade) most favored-nation provisions.
Environmental Reviews For "High Priority" Infrastructure Projects
Perhaps the most notable directive issued by President Trump was an Executive Order (EO) entitled "Executive Order Expediting Environmental Reviews and Approvals For High Priority Infrastructure Projects." This EO noted that infrastructure projects have been excessively delayed by federal agency processes and procedures to approve construction. Consequently, the EO stated that it is now "the policy of the executive branch to streamline and expedite ... environmental reviews and approvals for all infrastructure projects, especially projects that are a high priority for the Nation, such as improving the U.S. electric grid and telecommunications systems and repairing and upgrading critical port facilities, airports, pipelines, bridges, and highways."
The EO provides that the Chairman of the White House Council on Environmental Quality (CEQ) may designate infrastructure projects requiring a federal environmental review as a "high priority" on his own initiative, or at the request of a state's governor, or the head of a federal department or agency. The designation will be based on an evaluation of the project's importance to the general welfare, value to the nation, and its environmental benefits.
The EO does not provide for a specific time limit for the conduct of the environmental review. Rather, the EO calls for the CEQ Chairman to coordinate with the head of the relevant federal agency to set "expedited procedures and deadlines" for the completion of the environmental review and approval for "high priority" projects. The EO requires that such "agencies shall give highest priority to completing such reviews and approvals by the established deadlines using all necessary and appropriate means." In cases where the deadlines are not met, the head of the agency must provide a written explanation to the CEQ Chairman, explaining the delay and the corrective action taken ensure the timely completion of the environmental review and approval process.
This is not the first time these concerns have been addressed. Several bills (See Sittin' Here on Capitol Hill - Just Another Bill?) have been proposed in recent years in an effort to reduce the burden of environmental review and limit the the delays caused by environmental permitting of pipeline projects. In particular, Senator Murkowski's bill, which is remarkably similar, except that it required the head of the relevant agency to provide Congress (not CEQ) with a plan, nearly became law until her efforts were derailed following the election of President Trump.
The Executive Order, in combination with the Congressional failure to launch, suggests that Republicans intend to bring change to pipeline permitting on their own terms. Criticisms from both sides of the Senator Murkowski bill, which may resurface, included that the bill increased federal government involvement that would likely increase the complexity and timeframe of projects that the bill sought to mitigate. Relatedly, the Murkowski bill did not involve the review of all infrastructure projects in the United States, something the directive does.
*There is little practical difference between an Executive Order and a Presidential Memorandum, as both may be used by a president to order government actions. An Executive Order must be published in the Federal Register. The text of each of the Presidential Memoranda provides that they, too, will be published in the Federal Register. All of these directives are effective immediately, and may be acted on by the various relevant federal agencies and departments.
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