The White House on Jan. 9 released a proposed rule to speed federal reviews of pipeline and other infrastructure projects under the National Environmental Policy Act, delving into disputed areas of law and appearing to constrain federal agency consideration of climate change impact indirectly associated with oil and natural gas projects.
The proposal is potentially consequential for interstate natural gas pipelines reviewed by the Federal Energy Regulatory Commission, as well as oil pipelines, which are sited under state authority, but can require NEPA reviews as part of U.S. Army Corps of Engineers permitting.
It would set a one-year time limit for environmental assessments and a two-year limit for environmental impact statements, although those could be extended, according to a prepublication copy of the regulation that the White House Council on Environmental Quality, or CEQ, released.
The proposal comes amid raging debate at FERC and in the courts over the extent of greenhouse gas considerations needed in interstate gas project reviews — and whether FERC must consider indirect emissions of the downstream end use of the gas or upstream production.
The proposal narrows the definition of environmental effects to be considered. For example, references to "cumulative impacts" or "indirect" effects would be stripped out. Instead, a new definition would focus on effects that are "reasonably foreseeable and have a reasonably close causal relationship to a proposed action."
The limit on cumulative impact consideration could make it more difficult to weigh a project's incremental contribution to greenhouse gas emissions and could prevent an agency from rejecting a project on those grounds.
The CEQ also said it sought to clarify that an agency cannot weigh effects it has no authority to prevent or that would happen without agency action — an area that could impact whether FERC could weigh emissions from gas production or generation when reviewing gas pipelines.
Oil and gas industry groups widely applauded the proposal, expressing optimism that it would speed the approval process and cut back on litigation.
"The lack of clarity in the existing NEPA regulations has led courts to fill the gaps, spurring costly litigation, and has led to unclear expectations, which has caused significant and unnecessary delays for infrastructure projects across the country," said Don Santa, president and CEO of the Interstate Natural Gas Association of America.
Sierra Club contended the proposal would not require agencies to consider climate impacts, would limit chances for public participation, and would add the potential for conflicts of interest. Sierra Club attorney Nathaniel Shoaff asserted this would allow agencies to "stick their heads in the sand and pretend like impacts don't exist."
It remains unclear what impact the proposed NEPA reforms may have on existing oil pipeline projects, such as the long-delayed Keystone XL oil pipeline, but industry groups claimed it would expedite future projects.
In December 2019, the National Petroleum Council, an industry organization charged with advising the energy secretary on oil and gas issues, said that without reform of NEPA, permitting and construction of pipelines may be unable to keep pace with demand.
A July 2019 study from ClearView Energy Partners found that NEPA was the most frequent statutory basis for a legal challenge of oil and gas pipelines, with the most frequent argument being an insufficient analysis of the effect of greenhouse gas from a project, both upstream and downstream.
In 2018, the Trump administration's approval of a Keystone XL pipeline permit was rejected in a Montana district court for inadequately reviewing the climate impact of the project.
Maya Weber and Brian Scheid are reporters with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.