On January 24, the Trump Administration issued one Executive Order and Three Presidential Memoranda that affect energy projects in the United States, including in particular two pipeline projects blocked by the Obama Administration:

  • An Executive Order “Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects,” including updates to the electric grid, pipelines, telecommunications systems, and transportation infrastructure.
  • Two Presidential Memoranda designed to expedite review of the Keystone XL and Dakota Access crude oil pipeline projects.
  • A Presidential Memorandum promoting American-made products in the construction and retrofitting of pipelines.

These Presidential Directives do not change applicable law, but they send a powerful policy message that permitting agencies should accord energy infrastructure projects, including natural gas and oil pipeline projects, priority treatment provided they serve national economic interests.

Executive Order Expediting Environmental Reviews for Infrastructure Projects

The Executive Order is the broadest of the four executive actions related to energy. It seeks to “streamline and expedite . . . environmental reviews and approvals for all infrastructure projects, especially projects that are a high priority for the Nation.”

The decision whether a project is a “High Priority Infrastructure Project” is to be made by the Chairman of the White House Council on Environmental Quality (CEQ), on his or her own initiative, or upon request by an agency or state governor. The Chairman of the CEQ is given a broad mandate to consider such factors as a project’s “importance to the general welfare,” “environmental benefits,” and “such other factors as the Chairman deems relevant.”

For those efforts designated “High Priority Infrastructure Projects,” CEQ is to work with the agency in charge of the regulatory review to create an expedited review schedule, and “[a]ll agencies shall give highest priority to completing such reviews and approvals by the established deadlines.” When deadlines are not met, the head of the relevant agency must provide a written explanation for the delay and suggest actions to complete the remaining review elements expeditiously.

Having CEQ play a role in setting schedules could prove helpful given its role in overseeing implementation of the National Environmental Policy Act, which often drives the schedule for the key environmental reviews for a project. CEQ’s views on how to expedite environmental reviews may carry some weight with both federal agencies and the courts.

Nonetheless, because an Executive Order cannot override statutory requirements, agency heads and CEQ will have to balance the interest in an expedited review against the risk that any shortcuts may enhance the vulnerability of the permitting process in any subsequent judicial review.

Moreover, Executive Orders may not always be adopted by “Independent Agencies,” or those agencies typically led by five-member Commissions, the members of which cannot be removed at will by the President. These agencies, including the Federal Energy Regulatory Commission, oversee many of the nation’s large infrastructure projects and have some of the longest and most difficult environmental review timelines.

The pairing of this Executive Order with several pipeline-related Executive Actions is noteworthy. However, the order also applies to electric transmission line projects and a broad range of other types of infrastructure projects that can in the ordinary course entail a decade or more of regulatory review.

The effectiveness of this Executive Order will likely hinge on project proponents making the case early on to state governors, agency heads, or the CEQ, that their projects deserve “high priority” treatment. It can be expected that a queue will form quickly, and additional agency resources to accelerate reviews are not likely to be forthcoming given the new Administration’s freeze on federal hiring.

Presidential Memoranda Related to Keystone XL and Dakota Access Pipelines

A Presidential Memorandum invites TransCanada to re-apply to the U.S. State Department for a Presidential permit for the Keystone XL pipeline, a project denied a critical State Department import permit in 2015. It further directs the Secretary of State to complete his or her review within 60 days, and to find “[t]o the maximum extent permitted by law,” that the prior environmental reviews conducted on the pipeline satisfy the National Environmental Policy Act and the Endangered Species Act. The memorandum also instructs the Secretary of the Army and the Secretary of the Interior to conduct expedited reviews and authorizations for the pipeline for any permits or requests that fall under their purviews.

This memorandum does not in itself make the “national interest” determination that is necessary for the permit, but rather invites the State Department to consider what terms and conditions are necessary to satisfy the national interest.

A separate Presidential Memorandum addresses the Dakota Access pipeline, a pipeline which recently faced controversy with Native American communities over the U.S. Army Corp of Engineer’s decision to permit it to cross a portion of Lake Oahe. It likewise directs agency heads to grant expedited reviews and approvals for project permits “to the extent permitted by law.” It also asks the Army Corps to “consider” whether to rescind or modify a recent decision to re-review the environmental impact of the site, and instead conclude that the prior reviews were sufficient.

These memoranda likely bode well for the regulatory reviews of both pipelines. However, these memoranda are more akin to helpful nudges to move the projects along, rather than complete reworks of the regulatory frameworks in which the projects operate. The changing leadership of the agencies at issue is likely to be at least as influential in driving change.

Indeed, to the extent these projects are likely still to face litigation at the federal and state level, there is a chance the Presidential Memoranda may have unintended consequences. Federal agency determinations have to be defended by “substantial evidence” under the Administrative Procedure Act, and courts often take closer reviews at permitting determinations that flip back and forth not because of changing technical issues, but because of changing political landscapes.

However, the litigation risk may be lower than would be expected for two projects with such controversial histories. The Keystone XL Pipeline Presidential permit is a foreign policy determination not reviewable by courts. (Other agencies’ permits required for Keystone XL likely do not enjoy that benefit.) And for the Dakota Access pipeline, a court has already ruled once that the Army Corps’ prior review of the project was sufficient under the National History Preservation Act.

Both projects may also face challenges in the form of civil disobedience.

Presidential Memorandum for Pipelines to Buy American

Lastly, the Trump Administration directs the Secretary of Commerce to develop a plan, “in consultation with all relevant executive departments and agencies,” under which all new and retrofitted pipelines shall “use materials and equipment produced in the United States.” The memorandum makes clear in regards to iron or steel products used in pipelines that such products, if manufactured outside the United States, or if they use foreign semi-finished iron or steel, are not “produced in the United States.”

The Presidential Memorandum does not explain by what authority the Executive Branch may impose a Buy American requirement without underlying statutory authority, nor does it address any of the implementation details that proved vexing to the Obama Administration in its efforts to enforce the “Buy American” requirement of the American Reinvestment and Recovery Act of 2009, except to say that any follow-on Executive Action will only be enforceable “to the extent permitted by law.”

That being said, the choice by the new administration to issue this memorandum in its second full day in office should not be ignored. It is part of the “America first” platform that was a centerpiece of the President’s campaign and inaugural address. How it is implemented by the Secretary of Commerce will have significant implications for all pipeline companies and operators as they seek to develop and ultimately construct new pipeline infrastructure in the United States.