Trump Executive Orders Likely Fast-Track Pipelines, Lawsuits

Wednesday, January 25, 2017 - 1:45pm

Work on pipeline projects across the country—not just the Keystone XL and Dakota Access Pipeline—should lurch forward after executive orders signed by President Donald Trump on Jan. 24.

Lawsuits are almost certain to follow as well.

On Jan. 24, Trump also signed orders to: expedite and simplify approval of the Dakota Access Pipeline approval; invite a TransCanada Corp. (NYSE: TRP) subsidiary to reapply for a presidential permit for the Keystone XL Pipeline using streamlined procedures; and call for a plan from the Department of Commerce to use, to the maximum extent possible, domestically produced materials and equipment in pipeline projects.

RELATED: Trump Signs Orders To Revive Dakota Access, Keystone Pipelines

Greg Haas, director of integrated oil and gas for Stratas Advisors, said Trump’s executive orders reverse years of opposition to the Keystone that will create jobs.

Oil and gas “upstream, midstream and downstream [sectors] across North America should see this as a shot in the arm,” he said. “President Trump called for an expedited review within 60 days of any renewed application by TransCanada Corp.”

TransCanada’s website says it is “currently preparing our application for a presidential permit.”

In North Dakota, the contentious and drawn out Dakota Access fight will likely be reignited in court, said Ethan Bellamy, senior research analyst at Baird Equity Research.

“We expect environmental organizations, the Standing Rock Sioux, and/or other organizations to attempt to enjoin the Army from backtracking on the” U.S. Army’s environmental impact statement (EIS) that denied an easement to the pipeline company in December, Bellamy said.

“Overall, however, we view the legal framework and Dakota Access position as superior,” he said.

James Rubin, an attorney at Dorsey & Whitney, said the orders issued on Keystone and Dakota Access focus on different processes but seek the same result of expediting those processes, including by relying on existing environmental review.

“Significantly, neither mandate a particular result, though the president has said he supports both projects,” said Rubin, a former U.S. Department of Justice attorney in the Environment and Natural Resources Division.

Rubin said that a challenge to the Dakota Access is accessible to legal challenges under various statutes including the National Environmental Policy Act.

The 1,179-mile Keystone XL is a different story.

“It will be harder to challenge a presidential permit decision since it is based on executive authority and not statutory law,” Rubin said.

Rob Barnett, senior policy analyst at Bloomberg Intelligence, said on Jan. 24 that Trump’s executive orders aside, pipelines still face a stringent regulatory process, including local requirements and legal challenges.

“It’s not as if tomorrow … you could go out and begin construction,” he said. “This is not something you can wave a wand and simply resolve by executive order or fiat.”

Trump’s order also decrees that as much U.S. steel as possible should be used for pipelines.

Trump told reporters that “we are going to renegotiate some of the terms” of the Keystone XL project. “And if they like, we will see if we can get that pipeline built—a lot of jobs—28,000 jobs, great construction jobs.”

He said the Dakota Access Pipeline would be “subject to terms and conditions negotiated by us.”

Trump said his order on pipelines “will put a lot of steelworkers back to work.”

In another executive order, Trump directed agencies to expedite environmental reviews and approvals for high priority infrastructure projects, including pipelines.

The order “specifically highlights the significance of projects to improve the electric grid and telecommunications systems, as well as projects to repair and upgrade port facilities, airports, pipelines, bridges and highways,” law firm Baker Botts said.

Jay Ryan, a partner in Baker Botts’ Washington D.C. office, said Trump is making good on a campaign promise to reduce regulatory burdens for development and commercialization of infrastructure. The aim is to have investment capital “deployed efficiently,” he said.

The administration appears intent on incentivizing capital investment in major infrastructure projects across a number of industry sectors, Ryan said.

The order tasks the chairman of the White House Council on Environmental Quality (CEQ) with designating “high-priority” infrastructure projects as well as in response to requests from state governors or federal agencies.

Once a project has received a high-priority designation, the CEQ chairman will coordinate with the appropriate agency heads to establish “expedited procedures and deadlines” for completion of environmental reviews and approvals. Agencies must then give “highest priority” to meeting these deadlines, Baker Botts said.

Agencies that fail to meet expedited milestones must provide to the CEQ with an explanation for the failure and an accounting of actions taken by the agency.

This article contains information from Reuters.

Darren Barbee can be reached at dbarbee@hartenergy.com.


Darren Barbee

Darren Barbee is senior editor for Hart Energy’s Digital News Group. He serves as the point person for A&D transactions and as a writer for Oil and Gas Investor magazine.

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