Border-crossing pipelines need easier review process, trade group says

WASHINGTON — Congress needs to modernize the byzantine process for vetting proposed natural gas pipelines that would cross U.S. borders with Mexico or Canada, an industry trade group told lawmakers on Monday.

In a letter to the Republican and Democratic leaders of the  House Energy and Commerce subcommittee, the Interstate Natural Gas Association of America endorsed legislation that would streamline approval of cross-border pipelines.

“The laws governing the approval of cross-border energy infrastructure should be updated to reflect the free-trade arrangement we have shared with these nations since 1994,” the group said. “The current process for the approval of cross-border natural gas pipelines is complex and needs reform.”

Such border-crossing pipelines must withstand scrutiny from the Energy Department and the Federal Energy Regulatory Commission, a process not applied to other, purely domestic projects.

120-day deadline

Legislation pending in the House aims to streamline the process. A House Energy and Commerce subcommittee is set to hold a hearing on the bill Tuesday.

The bill introduced by Rep. Gene Green, D-Houston, and Rep. Fred Upton, R-Mich., aims to write new rules for the federal government’s review of future border-crossing energy infrastructure projects that have yet to be proposed, effectively replacing an ad hoc presidential permit process created by a smattering of executive orders. It would apply to both oil and gas pipelines, as well as electric transmission infrastructure, meant to pass into Canada or Mexico.

Under the bill, all proposed border-crossing energy projects would have to be approved within 120 days, unless they are deemed to be against the national security interest of the United States.

In the public interest

Currently, a 60-year-old presidential directive gives the Federal Energy Regulatory Commission the responsibility for approving natural gas import and export facilities. The agency also is tasked with deciding whether to issue a certificate of public convenience and necessity authorizing construction of border-crossing natural gas pipelines.

Separately, under existing law known as the Natural Gas Act, the Energy Department is responsible for reviewing whether proposed natural gas imports and exports are in the public interest. But the same statute explicitly affirms that exports of the fossil fuel to free-trade partners are consistent with the public interest, and says applications involving natural gas trade with those countries should be “granted without modification or delay.”

That brings into question the role of the Energy Department, INGAA said, since the required “determination of public interest, in these cases, is made by operation of law.”

“A governmental entity need not make such a determination, since Congress already has spoken on the question,” the group said. As a result, the Energy Department’s review of natural gas imports and exports with Canada and Mexico is “a largely irrelevant exercise.”

“There seems little justification for a Department of Energy process that is perfunctory at best,” INGAA said.

Cutting the Energy Department

The Upton-Green bill would effectively put cross-border gas pipelines in the Federal Energy Regulatory Commission’s domain, making it subject to two special approvals, instead of three. The projects would still require a certificate of public convenience and necessity from the Federal Energy Regulatory Commission. The commission also would decide whether to grant export and import approval for the projects.

But the Energy Department would no longer be required to approve the import and export of natural gas to and from Canada and Mexico, under the legislation.

Oil pipelines would be vetted by the Department of Commerce, under the legislation and electric transmission lines would fall under the Energy Department.

The bill also would make clear that changes to existing border-crossing energy infrastructure — such as a plan to reverse the flow of oil and gas in pipelines — do not need new or revised presidential permits. Under the current approach, companies have sought new and revised presidential permits for changing the flow of pipelines and ownership changes.

Rubber stamp

The bill has an effective date of July 1, 2015, in a bid by Upton and Green to quell criticism that it could pare the review of currently pending projects, including TransCanada Corp.’s Keystone XL pipeline that would send oil from Alberta to the Gulf Coast. But some lawmakers may want to make the provision more explicit.

Some environmental groups also have raised concerns with the legislation. The National Wildlife Federation said it would create “a meaningless review process” that would effectively “rubber stamp” oil and gas projects.

Green insisted that valuable environmental reviews surrounding pipelines and power lines would be preserved.

“This bill strikes the right balance in that it ensures a timely review of the approval to cross our national boundary but does not affect any of the important environmental reviewing and permitting that is needed to actually construct or site the project,” Green said.

Obama administration officials criticized the bill. Michael Knotek, the deputy under secretary for science and energy said it could limit the Energy Department’s ability “to make reasoned and responsible decisions,” and would hinder “consideration of the environmental effects of such projects.”

“The bill would prevent the thorough consideration of complex issues that could have serious safety, environmental, and other ramifications,” Knotek said in a written statement filed with the committee on Monday.

Kevin Wolf, the assistant secretary for export administration said the Commerce Department also had serious concerns. In particularly, he warned that the 120-day deadline would “unnecessarily limit the ability for the executive branch to make reasoned and responsible decisions.”

In testimony set to be delivered Tuesday, environmental lawyer Paul Blackburn says “the current permitting process is scattered among too many states and federal agencies” and is one “that only a pipeline industry attorney could love.”

But, Blackburn says in his prepared remarks, broader changes are needed — not creating “an extremely accelerated review time frame” and exempting border-crossing energy projects from federal environmental reviews. The Upton-Green bill will only give pipeline companies an advantage at burrowing “deeper into chaotic and complex regulatory terrain,” and disadvantage landowners in the project’s paths.

INGAA letter on cross-border energy infrastructure bill

Blackburn testimony on cross-border energy infrastructure bill