November 2023, Vol. 250, No. 11


Biden Wants to Count Emissions Downstream of Pipeline Projects

(P&GJ) — The Biden administration announced its latest effort to throw a wrench in pipeline construction. The Biden Council on Environmental Quality (CEQ) wants to roll back Trump administration pro-pipeline changes to the National Environmental Policy Act (NEPA). 

The NEPA changes sought by the CEQ would negatively affect construction of electricity transmission lines, as well as other power distribution projects. But in its recently proposed Phase 2 reform proposal, the CEQ said it wants to make it more likely that a federal agency performs an environmental impact statement (EIS), and it cites the natural gas industry specifically. 

“For example, leases for oil and gas extraction or natural gas pipelines have local effects but also have reasonably foreseeable global, indirect and cumulative effects related to GHG emissions,” the CEQ said, arguing that those emissions can be significant and have neither been accounted for in the past nor triggered EISes. 

The Federal Energy Regulatory Commission (FERC) does not consider global and cumulative GHG emissions when considering new project applications. 

Chad Teply, senior vice president, transmission and Gulf of Mexico, The Williams Companies, explained to the Senate Committee on Energy and Natural Resources on July 26 how New York State refused to issue a permit under Section 401 of the Clean Water Act, wearing down the company’s will to build the 124-mile Constitution Pipeline, which the FERC had approved. 

“Although, FERC later ruled that New York’s denial came too late and New York’s authority had been waived, the time spent litigating the denial ultimately doomed the project,” Teply said. The NEPA often requires states to issue 401 permits when pipelines cross bodies of water. 

The Senate hearing was called by the committee chairman, Sen. Joe Manchin (D-WV), to explore potential energy permitting regulatory improvements beyond those the Congress passed in the 2023 Fiscal Responsibility Act (FRA). That bill included mostly procedural changes to the NEPA, which Teply, echoing the Interstate Natural Gas Association of America’s (INGAA) position, called a first step.  

Manchin’s hearings were meant to generate bipartisan support for easing of the NEPA regulations, beyond what was approved in the FRA. But as if it were rebuffing Manchin’s efforts, the CEQ, on July 31, said it was going in the opposite direction. It issued its proposed Phase 2 NEPA rule, which followed its Phase 1 rule in in April 2022, when it reversed three specific provisions in the prior Trump-era 2020 rulemaking. 

“In stark contrast to the measures aimed at promoting efficiency, the proposed Phase 2 rule includes numerous features that are more about imposing substantive requirements in what is intended to be a procedural statute,” wrote the law firm Vinson & Elkins. 

Many of the changes are highly technical. One major change has to do with whether a proposed project is deemed “significant” or not. The decision on that — made by a federal agency, such as the FERC — determines whether the agency does a limited “environmental assessment” or a full-blown EIS. An EIS can take years and serves as a moving target for environmental groups that often file lawsuits to delay a project. 

In its Phase 2 proposal, the CEQ wants to make it easier for an agency to come to a “significance” decision. It argues that the Trump changes here narrowed the potentially affected environment in determining significance, stating that the Trump changes focus significance on physical, ecological and socio-economic aspects of the environment, “usually” in the “local” area. 

The CEQ throws the Trump narrowing of “significance” out the window, calling it “overly limiting.” Instead, it says agencies must look at the “affected environment,” which can include the global, national, regional and local environment. It then cites the natural gas industry, whose project GHG emissions should be measured and accounted for on a much broader scale than is currently the case. 

Teply told the Senate Committee that permitting challenges must be decreased, not increased. He did not address the Phase 2 proposal, which had not been issued yet. He did, however, say Williams — and this is true for most if not all of the interstate pipeline industry — supported Sen. John Barrasso’s (R-Wy) Spur Permitting of Underdeveloped Resources (SPUR) Act. Barrasso is the top Republican on the energy committee. 

To address state agencies’ legal attempts to block pipelines like Constitution and Mountain Valley, the bill requires a reviewing court, to remand any federal or state agency denial of a permit for an interstate pipeline project, if the permit denial is not supported by clear and convincing evidence.  

With regard specifically to refusals to approve Section 401 Clean Water permits, the bill brings state reviews of interstate natural gas projects into the FERC-led NEPA environmental review process and removes them from the Section 401 process. Other intrastate activities that require federal permits and authorities remain subject to Section 401. 

Again, while the NEPA changes had not been announced when the Senate hearings took place, testimony at those hearings, from representatives of the electric power and alternative energy industries, seemed to downplay their concern about permitting lawsuits.  

If their opposition to the Biden NEPA changes is something less than energetic, that will leave the pipeline industry to carry water by itself, which will be a heavy political lift — especially given a unified environmental industry support for the Biden-proposed changes. 

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