Trump said to seek limit on state power over pipelines

U.S. President Donald Trump speaks at the Pentagon in January 2019. Image: The White House

Developers have been trying for six years to build a 124-mile natural gas pipeline from Pennsylvania to New York. Despite winning a federal approval in 2014, the project 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 who asked for anonymity to discuss it before a formal announcement.

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.

Prime Location

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.”

© 2019 Bloomberg L.P