On April 10, 2019 President Trump issued an “Executive Order on Promoting Energy Infrastructure and Economic Growth”. The Executive Order seeks to promote private investment in the country’s oil and gas infrastructure, most prominently oil and gas pipelines, by abbreviating various permitting processes and updating regulations. The EO is broad in scope, ordering that:
1. EPA shall reissue guidance and rewrite regulations associated with Section 401 of the Clean Water Act (“CWA”).
Under the Clean Water Act, entities seeking to build an oil and gas pipeline must acquire a Section 401 permit for “the construction or operation of facilities which may result in any discharge into the navigable waters” of the United States. Section 401 of the Act also requires them to acquire from the State or tribe into whose waters the pipeline may discharge pollutants a certification that they will meet pollution control requirements delegated to the states under Sections 301-307 of the Act. Section 401 permits have previously been used to halt various infrastructure projects, notably pipelines.
The new EO instructs EPA to rewrite Obama era guidanceand regulations on Section 401 implementation, including shortening deadlines, and reviewing the “types of [state or tribal] conditions that may be appropriate to include in a certification”. The EPA must issue new guidance by June 9, and publish a proposed rule revising the regulations by August 8. It remains to be seen whether the EPA will be able to significantly decrease the burden created by the Section 401 process, given the substantive requirements of the Act.
2. Department of Transportation (“DOT”) shall initiate rulemaking to update the safety regulations for liquefied natural gas (“LNG”) facilities as well as propose a rule to permit LNG to be transported in rail cars.
The new EO states that safety regulations for LNG facilities, promulgated in 1980 (see 49 C.F.R. Part 193) are “outdated and out of synch with relevant industry standards”. As the demand for natural gas has rapidly increased in the past few years, there has been a heightened interest in building or converting new LNG plants to expand growth in domestic LNG exports. The EO orders the DOT to finalize new regulations by May 2020, a deadline that has been notedas being “extremely difficult”. The EO also directs the DOT to issue a proposed rule to allow the transport of LNG in rail cars, potentially increasing the risk of fiery train accidents. (See the SciPol summary on High Hazard Flammable Trains, for more information.)
3. The Secretary of Labor shall complete a review of the data of retirement plants subject to the Employee Retire Income Security Act of 1974 (“ERISA”) to identify trends in investments in the energy sector, as well as consider revising agency guidance.
ERISA requires the fiduciaries and persons who exercise control over retirement funds to act “solely in the interest of a plan’s participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses”. Certain funds that they may invest in, known as “ESG funds,” use environmental, social and governance (“ESG”) criteria to screen potential investments. Because these look at criteria such as how a company “performs as a steward of nature”, and ESG funds may shy away from investment in oil and gas.
The EO orders the Department of Labor to review the trendlines for retirement fund investment in the energy sector, and consider issuing guidance that “promote[s] long-term growth and maximize[s] return on ERISA plan assets”. This suggests that there may be amplified scrutinyof whether it is appropriate for retirement funds to invest in ESG funds, if such investments mean a smaller return on investment. Many observers expect, however, that ESG funds will be found to match or out-perform other investment funds.
4. Secretaries of Interior, Agriculture, and Commerce shall develop a master agreement for energy infrastructure rights-of-way renewals or reauthorizations to address sunset provisions found in prior grants, leases and permits that allow for the presence of energy infrastructure on federal lands.
The new EO orders these three departments to begin to grant reauthorization for all expired energy right-of-way grants, leases, and agreements within one year of the date of the order, preventing “legal and operational uncertainties for owners and operators of energy infrastructure”.
The Executive Order also asks several agencies to submit reports to the President, on topics including the barriers of transporting natural gas and energy resources to New England, a report on how the Office of Management and Budget (OMB) can provide intergovernmental assistance to State and local governments related to transporting energy resources, and a report on promoting economic growth in Appalachia.