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Trump effort to clear path for gas pipelines garners broad state-level objections

Washington — EPA rule aims to clarify scope, timing of state water reviews

States oppose federal veto over conditions, denials

A proposed US Environmental Protection Agency regulation intended to prevent states from using water quality reviews to block natural gas pipelines and other energy infrastructure is running into stiff opposition from states, tribal nations and environmental groups - in a sign of possible legal challenges ahead.

The Trump administration initiative responded in part to delays and denials of high-profile gas projects in New York, such as Williams' 124-mile project, 650 MMcf/d Constitution Pipeline, as well as complaints about obstacles and conditions expanding in other states.

Despite a measurable slowdown in northeastern US interstate gas project applications, a handful of projects with a combined capacity of about 2.4 Bcf/d that are currently under review at the Federal Energy Regulatory Commission will require state water quality certifications, including William's Leidy South expansion, National Fuel Gas Supply's FM-100 project and Mountain Valley Pipeline's proposed MVP Southgate extension. Some projects already approved by FERC -- such as PennEast Pipeline and Northeast Supply Enhancement -- are still struggling to gain the state signoffs.

The EPA regulation proposed in August attempts to clarify the scope and timing of state reviews and to cut back on what it casts as "confusion" leading to delays.

With a comment deadline last week, attorneys general from 22 states and the District of Columbia wrote to urge EPA to withdraw the proposal, saying every provision appears designed to curtail state powers.

"[C]alled to action by an executive order designed to promote energy infrastructure rather than protect water quality, EPA proposes an interpretation of Section 401 that is inconsistent with the Clean Water Act and would unlawfully usurp state authority to protect the quality of waters within their borders," they wrote.

FEDERAL VETO

Multiple state agencies objected to provisions that would allow lead federal agencies to determine whether the state conditions or denials are appropriate. Also proving contentious are provisions that would limit state reviews to one year, starting when an application is received, would confine state reviews to water quality impacts of discharges and would limit states' ability to require additional information from applicants.

The Western Governors' Association, National Conference of State Legislatures, Association of Clean Water Administrators and Association of State Wetland Managers were concerned their recommendations for potential process improvements were not addressed in the proposal. Those organizations had "numerous concerns about substantial effects the proposed rule would have on states' authority and autonomy to manage and protect water resources," they said.

The Environmental Council of the States cited potential conflicts between the proposed rule and diverse processes states have put in place with their own timeframes and public comment requirements. This could result in more project denials, the group said, because the conflict "could put states in the position of having to make inadequately informed" decisions or violating their own laws.

National Governors Association leaders also sought more state involvement in developing the regulation, worrying the rule would impact "vital authority that Congress preserved for the States under Section 401 of the Clean Water Act."

An EPA spokeswoman said Wednesday the agency values input from states and other stakeholders and had engaged in consultation to develop the proposal.

BUSINESS SUPPORT

The proposal, on the other hand, won support from pipeline developers, gas utilities, building unions, construction contractors, energy producers, coal and hydropower groups, and other business groups. There were mixed views, including objections, from regulators in energy producing areas such as Pennsylvania, Texas and South Dakota.

Still, legislators participating in the Energy Producing States Coalition welcomed the proposal, contending activists at permitting agencies, often in coastal states, have "wrongly inserted politics" into routine permitting decisions to thwart projects for "reasons entirely unrelated" to the plain language of federal statutes.

The Interstate Natural Gas Association of America backed EPA's efforts to clarify areas where ambiguity in Section 401 has, in INGAA's view, frustrated the federal-state framework and delayed projects. For instance, it said some states have sought information about alternative routes, despite FERC having exclusive routing authority.

INGAA pressed for some changes, however, such as clarifying that an applicant does not need a FERC certificate in order to begin the state review. It also supported early pre-filing coordination between states and applicants.

The Associated General Contractors of America also supported the changes allowing the lead federal agency to reject conditions outside of water quality concerns. States at times add conditions such as avoidance and mitigation unrelated to water quality, construction of wildlife crossings, considerations of natural beauty or construction of trails, the group said, as examples.

-- Maya Weber, maya.weber@spglobal.com

-- Eric Brooks, ebrooks@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com