Challenges to U.S. Energy Infrastructure Challenge U.S. Energy Leadership

Mark Green
Posted July 7, 2020

Building and expanding U.S. pipeline infrastructure in this country shouldn’t be so difficult – not considering the critical role pipeline construction and operation play in American energy leadership, job creation and economic growth.

Modern natural gas and oil pipelines are the safe connection between consumers and America’s abundant, reliable, cleaner energy. Additional infrastructure is needed so that no matter where people live, they can be better served – expanding the benefit of domestic energy abundance.

Unfortunately, it has become increasingly challenging to get projects off the drawing board because of almost endless legal maneuvering and government red tape. Both contribute to delay and uncertainty that undermine project investment and completion.

Over the weekend builders of the proposed Atlantic Coast Pipeline (ACP) canceled the natural gas project, first announced in 2014, that was to run from West Virginia, through Virginia and into North Carolina, citing the pipeline’s “legal uncertainty.” The Laborers’ International Union of North America estimates its ACP construction jobs would have peaked at more than 2,500.

On Monday, a federal judge ordered the shutdown of the Dakota Access Pipeline, which has been transporting crude oil since 2017 from the Bakken in North Dakota, through South Dakota and Iowa and into Illinois. The judge in the case said a previous environmental review was insufficient and ordered a new one that could extend into next year. A Phillips 66 spokesman said the ruling will impact markets, customers and jobs while further damaging an already struggling economy.

These are significant reversals for consumers and the needs of our national energy infrastructure network. They point to the success of undermining tactics by infrastructure opponents and the failure of a pipeline permitting system that allows such methods to bear fruit. API President Mike Sommers:    

“Between the Atlantic Coast Pipeline cancellation and now the ruling to shut down the Dakota Access Pipeline – we are deeply troubled by these setbacks for U.S. energy leadership. Our nation’s outdated and convoluted permitting rules are opening the door for a barrage of baseless, activist-led litigation, undermining American energy progress and denying local communities the environmental, employment and economic benefits modern pipelines provide. The need to reform our broken permitting system has never been more urgent.”

ACP and Dakota Access, unfortunately, aren’t isolated cases. Michigan’s Line 5, a key crude oil pipeline serving the Midwest, has been embroiled in legal skirmishing that has taken on a political tone. Last week a state judge ordered the partial reopening of Line 5 pipeline, which had been shut down in wrangling over whether some recent damage to part of the line under the Straits of Mackinac required its closure.

Consumers had lots to lose if Line 5 stayed completely closed, starting with the subtraction of about 56,000 barrels per day of crude oil and 15,000 barrels per day of propane from the Michigan economy. In fact, Line 5 delivers 65% of the Upper Peninsula’s propane and 55% of the Lower Peninsula’s. Meanwhile, about 30% of the light crude on Line 5 serves consumers in Michigan, powering industry and feeding into refineries where it is turned into gasoline, diesel, jet fuel and other products people use every day.

Again, these kinds of benefits have been blocked by those opposed to natural gas and oil as well as pipelines. In addition to the difficulties surrounding ACP, Dakota Access and Line 5, we’ve seen a concerning trend in the review/permitting phase of project development:

• Section 401 of the Clean Water Act (CWA), according to EPA Administrator Andrew Wheeler, has been used to hold key infrastructure “hostage” by states exceeding their Section 401 authority.
• Review processes under the National Environmental Policy Act (NEPA), last updated in 1978, have significantly impeded infrastructure, delaying some projects for years.
• The Nationwide Permit 12 program (NWP 12), long used to efficiently balance environmental protection and the streamlining of a variety of utility and infrastructure projects with limited environmental impacts, was temporarily suspended by a federal judge in Montana last month – just for new natural gas and oil pipeline construction.

This week the U.S. Supreme Court reinstated NWP 12 for pipeline construction projects while the lower-court ruling is appealed. Unfortunately, the high court didn’t reinstate a NWP 12 permit for the Keystone XL pipeline, which was at issue in the Montana case. One step forward, but only one. Paul G. Afonso, API chief legal officer and senior vice president:

“The highest court has reinstated Nationwide Permit 12, and for good reason. Pipelines are the backbone of America’s energy infrastructure and the safest way to deliver affordable, reliable and cleaner energy to communities across the country. This is a significant step toward restoring more certainty for energy companies, but declining to revive the permit for Keystone XL is short-sighted as the project has already been thoroughly reviewed for well over a decade. As this case moves forward, we will urge the US Court of Appeals for the Ninth Circuit to reinstate the permit for all pipeline projects, including Keystone XL.”

It bears repeating: America needs more energy infrastructure. The need has been estimated at more than $1 trillion over the next 15 years. These recent developments weaken American energy leadership now and could have ramifications well into the future. Projects should not be politicized and, more broadly, review and permitting processes should be transparent and provide a reasonable level of certainty so that investments in large, complex, multi-billion-dollar projects may be made.