A Trump administration overhaul of requirements that developers conduct environmental reviews for major infrastructure projects isn’t likely to help oil and gas pipelines if federal agencies continue to cut corners to try to speed construction, analysts say.
The Dakota Access and Atlantic Coast pipelines faced major setbacks in recent days because the Trump administration skirted environmental review requirements, leading to unfavorable court rulings that either blocked the projects or made them uneconomical. Those procedural missteps matter because the requirements to conduct environmental reviews would remain in place even with pending Trump administration changes to the National Environmental Policy Act, or NEPA, regulations seeking to shorten and streamline the process, analysts say.
In addition, the White House’s proposal, the first major update to NEPA regulations in decades, could increase uncertainty for the industry, as the plans will face fierce legal challenges and likely wouldn’t even be implemented if President Trump loses in November.
“If the Trump administration is looking for an answer for the problems that have come up under both of these pipelines, their regulations are not an answer,” said David Hayes, executive director of New York University’s State Energy and Environmental Impact Center. “The answer is to follow the statute and the regulations and do the job right the first time.”
This month, the White House and the oil and gas industry suffered two massive blows.
A Washington, D.C., federal district court judge on Monday ordered the Dakota Access pipeline to shut down and empty of oil by Aug. 5. The Trump administration’s environmental review for a key permit was too deficient for the pipeline to continue operating while the Army Corps of Engineers bolsters its analysis, Judge James Boasberg wrote.
Trump greenlit that pipeline shortly after he entered the White House. Now, it’s set to shut down for nearly a year, the time the Army Corps says it needs to conduct the environmental review — or potentially indefinitely if Joe Biden wins the White House.
And on Sunday, utilities Dominion Energy and Duke Energy announced they would abandon construction of the Atlantic Coast pipeline, even after a favorable Supreme Court ruling in June that lifted a legal barrier for the nearly 600-mile natural gas pipeline.
Legal challenges to that project led to yearslong construction delays and a more than $3 billion cost increase, according to the utilities.
The Trump administration “has skirted very basic procedural steps in the permitting process, and ironically resulted in long-term, court-imposed delays, the shutdown of an existing operational pipeline, and the cancellation of multi-billion dollar midstream projects,” said Sam Reynolds, an energy policy analyst with the Rapidan Energy Group.
Hayes, who served as deputy Interior secretary during the Obama administration, said both the Atlantic Coast and Dakota Access pipelines had a laundry list of problems, including skirting environmental reviews and cutting out input from the tribal and African American communities affected by the projects.
“No level of so-called NEPA reform can somehow magically shortcut a pipeline company’s obligation to work through these issues,” Hayes said.
Oil and gas industry groups, however, say the recent setbacks show permitting reform, including updates to the NEPA and other environmental statutes, is needed now more than ever.
Permitting procedures are “complicated” and “at times somewhat subjective,” said Robin Rorick, director of midstream and industry operations at the American Petroleum Institute, adding opponents to fossil fuels have manipulated the process.
That’s led to “death by 1,000 cuts for operators trying to build pipelines,” he added.
Oil and gas companies aren’t aiming to circumvent the permitting process, but they’re looking for clarity on timelines and consistency among the various federal and state requirements, Rorick said. Having a “moving target,” as the current landscape creates, makes it difficult for companies and investors to plan, he said.
The White House is nearing completion of its NEPA update. The final version of its changes finished interagency review June 30.
The proposed updates, unveiled in January, would limit environmental reviews to two years, set page limits, and allow agencies to consider fewer alternatives to a proposed project path when comparing the environmental effects of different options.
Nonetheless, analysts say pipeline developers should be hesitant to rely on Trump’s NEPA update for now, as it will face legal challenges just as fierce as those seeking to take down individual pipelines. In analysis following the proposal’s release, the Rapidan Energy Group predicted a “bumpy ride” in the courts, with odds favoring a D.C. Circuit Court of Appeals overturn.
“There’s over 50 years of court precedent that say environmental impact assessments of some kind are required when the federal government takes these significant actions,” Reynolds said. “We don’t expect the NEPA rule or Trump’s executive order on NEPA to change the status quo.”
If Biden were to win the White House in November, the NEPA updates would fall by the wayside. It’s likely, too, that a Biden administration would let the Dakota Access pipeline permanently shut down, by declining to pursue new authorizations for it, the Rapidan Energy Group said.
Biden has already said he would kill the Keystone XL pipeline, and he’s signaled he’d make it much harder for new pipelines to be built, amid growing pressure from his party’s left flank to clamp down on fossil fuel infrastructure.
“This is not the Obama era for energy policy,” said Leslie Hayward, Rapidan’s director of business and content development. “An incoming Biden administration is likely to get even more challenging for developers.”
