December 2023 Vol. 78 No.11
Washington Watch
Pipelines unhappy with Clean Water Act final rule
by Stephan Barlas, Washington D.C. Editor
The new Clean Water Act (CWA) final rule from the Environmental Protection Agency (EPA) potentially complicates efforts by pipeline builders (and other infrastructure sectors) to get construction approval from states and tribes.
The final rule on CWA section 401 certification reverses some of the pipeline-friendly aspects of a 2020 Trump Administration rule, which then became the subject of a legal challenge. Section 401 says if its construction results in any discharge into “waters of the United States,” the pipeline must first get a permit from the state before the project can be authorized by a federal agency, such as the Federal Energy Regulatory Commission (FERC).
The final rule includes an example that singles out pipelines and explains how a state might use enhanced environmental requirements to either slow down or cancel a project.
“INGAA has serious concerns with the final Section 401 rule, many of which echo what we included in our 2022 comments,” explained a spokeswoman for the Interstate Natural Gas Association of America. The EPA proposed changes in 2022, almost all of which were finalized.
“The final rule effectively eliminates the improvements that the 2020 rule delivered, including regulatory clarity around timelines and legal requirements. The 2023 replacement expands the criteria states must use to evaluate applications, and unlawfully imposes new burdens on state regulators – effectively allowing certain states to veto all manner of important infrastructure projects.”
In the final rule, the Biden EPA criticizes many aspects of the Trump rule and states: “In this final rule, the Agency is returning to those important core interpretations and practices, such as an ‘activity’ approach to the scope of certification review, and greater deference to the role of states and tribes in the certification process, while retaining (and adding) elements that provide transparency and predictability for all stakeholders.”
In terms of the “added elements,” the final rule allows states and tribes to set their own certification requirement, which can either ignore federal requirements – EPA enumerates seven of those – or pile on additional requirements, in addition to the EPA “seven.” Those included type of discharge, proposed activity, a map of the activity site, documentation that a pre-filing meeting request was submitted to the certifying authority and more.
In the final rule, EPA dictates that a pre-filing meeting must take place and it must be requested 30 days prior to a certification application being filed with a state, tribe or federal agency. The Trump rule restricted that mandate only where the certifying authority was a federal agency.
Going further, EPA said it is “concerned that some, if not many, of the water quality-related impacts” would not be identified by the project applicant, if the scope of review was limited to “discharges only,” which was the case under the Trump rule. Hence, the new leeway allows states and tribes to look beyond “discharges” to “activities” allowing “for additional water quality protections compared to the 2020 Rule's approach.”
Then, the EPA provides this example of how the “activity” rubric might affect pipeline construction applications:
“As another example, when reviewing the construction of a pipeline project, the ‘activity’ scope allows a certifying authority to consider water-quality-related impacts beyond the discharge of dredge or fill material from the construction and placement of the pipeline and, depending on the activity specifics, can include water quality impacts from non-discharge related erosion or sedimentation from the pipeline construction, as well as later water quality impacts from erosion or sedimentation from the operation and maintenance of the pipeline.”
In an Aug. 5, 2022, letter to the EPA after the proposed rule was issued, Keegan Pieper, associate general counsel, Energy Transfer LP, which operates approximately 120,000 miles of pipelines in the U.S., blasted many technical aspects. Pieper asked it to be withdrawn because it cannot be justified and comes at “a particularly inappropriate juncture…given domestic and international energy and other infrastructure and supply problems.” The EPA ignored those comments.
NEPA proposal elevates GHGs as pipeline approval impediments
The EPA isn’t the only Biden administration office throwing up potential roadblocks to pipeline construction. Interstate pipeline builders weighed in on the Council on Environmental Quality’s (CEQ) proposed reversal of changes to the National Environmental Policy Act (NEPA) made by the Trump administration.
NEPA requires federal agencies, such as the Federal Energy Regulatory Commission (FERC) and the Army Corps of Engineers, to require companies to prove they meet regulatory standards like the Natural Gas Act and Clean Water Act.
Biden-proposed NEPA changes would give environmentalists a leg up to block new pipelines because of alleged greenhouse gas (GHG) emissions. NEPA covers a broad range of government actions, including permit application decisions, federal land management decisions and the construction of major public infrastructure projects, such as highways.
Specifically, NEPA requires federal agencies to prepare environmental impact statements for "major federal actions significantly affecting the quality of the human environment."
The pipeline industry, gas and oil, has objected to numerous aspects of the NEPA proposal, both on substantive and procedural grounds.
In a 40-page letter to the CEQ on Sept. 29, 2023, INGAA complained the Biden NEPA reform proposal gave agencies an incentive “to engage in wide-ranging and speculative analysis of GHG emissions and climate change… Moreover, CEQ’s Proposed Rule, if implemented as written, would slow down the NEPA process, mislead the public, and exacerbate the litigation risks that already create barriers to the construction of much-needed infrastructure.”
For pipelines, any expansion of NEPA could impact FERC consideration of pipeline construction applications. FERC is currently wrestling with consideration of downstream GHG emissions when determining whether a proposed project would create “significant” emissions. Those emissions have to rise to the level of being “reasonably foreseeable” before FERC is required to make a “significance” decision.
A majority of FERC commissioners seemed to reach an agreement on those matters at their September 2023 meeting, a decision that could be read as positive for upcoming pipeline construction applications. A majority of the five commissioners essentially affirmed what is called the Driftwood compromise established by the commission earlier in 2023.
That had to do with the April 2023 certificate order for Driftwood Pipeline LLC’s Line 200 and Line 300 Project. In a blog post, the law firm Vinson & Elkins LLP wrote the September approvals by FERC of six projects to “show that the Commission now has a path forward on GHGs for all of the types of projects currently pending before the Commission, including those delivering to LDCs, downstream pipeline interconnections, LNG exporters, and power generators.”
However, the Biden administration’s NEPA changes, if finalized, could force FERC to go back to the drawing board and revisit the Driftwood compromise. About the proposed NEPA changes, Williams Companies, Inc. told the CEQ:
“Williams does not want or expect ‘easy’ regulation; we seek a permitting process that is fair, consistently applied, and in compliance with NEPA and a federal agency’s enabling statutes (e.g., such as the Natural Gas Act for FERC). It is difficult to conclude that such a process exists now. Rather, existing permitting uncertainty and unpredictable timelines are jeopardizing significant investment in new infrastructure and weakening our nation’s energy system.”
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