Pipelines Face More Scrutiny in Biden Era

The Biden administration is signaling that tighter scrutiny lies ahead for oil and natural gas pipeline projects, following its high-profile decision to scrap the Keystone XL pipeline. Policy watchers are pointing to language underpinning US President Joe Biden’s wide-spanning executive order on climate change as indicative that tougher rules are coming for permitting oil and gas infrastructure (OD Jan.27'21). That holds implications not only for the federal approval process for getting pipeline projects over the finish line, but could carry impacts for routine maintenance and provide ammunition for legal challenges by environmental activists. “It definitely will have an impact on pipeline approvals,” said Marcie Keever, legal director for advocacy Friends of the Earth, pointing out that several major pipeline projects, including TC Energy’s Keystone XL and Enbridge’s Line 3, would carry crude from the Canadian oil sands, which is seen as having a higher carbon intensity (OD Jan.19'21). Higher Bar Biden’s order, issued Wednesday, mandates that federal permitting decisions consider the effects of greenhouse gas (GHG) emissions and climate change, and requires federal agencies to craft a plan to accelerate the development of clean energy transmission infrastructure (OD Jan.27'21). The requirements add another significant wrinkle to a lengthy approval process that was already vulnerable to litigation, which has contributed to significant delays in major pipelines getting built. Under the National Environmental Policy Act and other statutes, courts have increasingly ruled that pipeline projects must undergo some level of review of their GHG footprint, which has long been a tension point at the Federal Energy Regulatory Commission and other agencies. The Biden administration seems poised to raise the threshold for calculating those impacts. The White House Council on Environmental Quality is preparing to update and reimpose its "social cost of carbon" formula for assessing GHG costs, which was dropped by the administration of former President Donald Trump. That could force agencies to take a much broader, more holistic look at the potential impacts of energy projects, Keever says. The Biden administration has also signaled that there will be an intensified focus on methane, which could lead to new monitoring and repair requirements for pipelines, adding to the costs of construction, operation and maintenance, said Michael Drysdale, an attorney at the law firm Dorsey & Whitney. He added that “overall, one would expect much more intensive and difficult environmental review and permitting processes for pipelines, including potential rejection of requests altogether.” Grapple Over DAPL An early test may be how the Biden administration responds to the latest legal machinations over the embattled Dakota Access pipeline (DAPL). Earlier this week, an appeals court upheld a lower court’s ruling that canceled the oil pipeline’s permit and demanded a more extensive study of the line’s environmental impact (OD Jan.26'21). The ruling threatens the shipment of over 550,000 barrels per day of crude to the US Midcontinent through the pipe, a main artery for crude from the Bakken tight oil play that is headed to premium refining markets on the US Gulf Coast and beyond. A status hearing in the suit is set for Feb. 10, but the US Army Corps of Engineers under Biden may choose to address the underlying issue in the suit -- that a lower court found legal fault with the easement allowing the pipeline to cross under Lake Oahe, a tributary of the Missouri River. A recent analysis from ClearView Energy Partners found that the pipeline “very likely faces a temporary shutdown of operations pending a revised review by the Corps,” although it is unclear whether the court or the Corps will move first. Bridget DiCosmo, Washington