Wednesday, May 1, 2019

Shale Law in the Spotlight – President Trump’s Executive Order on Promoting Energy Infrastructure and Economic Growth

Written by Chloe Marie – Research Specialist

On April 10, 2019, President Donald Trump issued two executive orders, both addressing the energy infrastructure sector and providing direction on actions required to further expand it.  In this Shale Law in the Spotlight article, we will discuss the Executive Order on Promoting Energy Infrastructure and Economic Growth.  In our next Shale Law in the Spotlight article, we will discuss the Executive Order on the Issuance of Permits with Respect to Facilities and Land Transportation Crossings at the International Boundaries of the United States.

In the Executive Order on Promoting Energy Infrastructure and Economic Growth, President Trump sought to “promote efficient permitting processes and reduce regulatory uncertainties that currently make energy infrastructure projects expensive and that discourage new investment.”  The Executive Order thus imposes directives that will effectuate the President’s goal of promoting certainty and predictability in the regulatory system.

Direction to Environmental Protection Agency

To start, President Trump mandated that the Environmental Protection Agency (EPA) amend EPA’s Section 401 Water Quality Certification regulations as well as the existing interim guidance, entitled “Clean Water Act Section 401 Water Quality Certification: A Water Quality Protection Tool for States and Tribes.”  President Trump declared that these regulations and guidance are “outdated” and have the effect of “hindering the development of energy infrastructure projects in the United States.”  Based upon President Trump’s directive, EPA must propose a new guidance and amended regulations within 60 and 120 days, respectively.

Following this, President Trump has directed EPA to engage in a joint interagency review of existing federal guidance and regulations addressing Section 401 of the Clean Water Act, working with the head of each agency involved in the Section 401 certification process.  All agency heads will be required to update their respective guidance and regulations to be consistent with that of EPA.

Direction to Department of Transportation

The Executive Order also directs the Secretary of Transportation to implement regulatory changes to the LNG safety existing regulations codified in 49 CFR Part 193.  President Trump noted that these regulations are only relevant to “small-scale peakshaving, satellite, temporary, and mobile facilities,” for which they were initially designed.  According to President Trump, however, these regulations are not appropriate for new large-scale LNG facilities.  As such, the Secretary of Transportation should develop these new regulations using a risk-based standard.

Furthermore, the Secretary of Transportation is required to introduce, in the next three months, new regulations treating LNG in the same way as other cryogenic liquids, thus allowing LNG transportation by rail tank cars.  At the present time, the Federal Railroad Administration does not allow LNG to be transported by rail for reasons of public safety and security.  The Executive Order directs the Secretary of Transportation finalize new regulations by May 2020.

Direction to Department of Labor

In the Executive Order, President Trump notes that the bulk of the financing of energy projects in the United States comes from the private sector.  Relying on a 1976 Supreme Court decision holding that disclosure of Environment, Social, and Governance (ESG) information is “material” for making fiduciary decisions “if there is a substantial likelihood that a reasonable shareholder would consider it important,” President Trump has now required the Secretary of Labor to analyze the data for retirement plans provided by the Department of Labor (DOL).  In this review, the Secretary is to look for “discernible trends” in investment decisions in the energy sector for the purpose of maximizing financial returns for shareholders.

The Secretary must then update the Assistant to the President for Economic Policy on these trends within 180 days.  At about the same time, the Secretary of Labor also must review the existing DOL guidance regarding the fiduciary responsibilities for proxy voting and decide whether it should be repealed or amended, in accordance with the policy intent of this Executive Order.

Direction to Other Departments Including Interior, Agriculture, Commerce, Energy, and Transportation

Moreover, the Executive Order notes that many right-of-way agreements for energy infrastructure projects contain sunset provisions so that the granted rights-of-way will expire at a certain time in the future, thereby creating uncertain conditions for those who own or operate facilities within these rights-of-way.  In order to avoid problems that are posed by expired right-of-way, President Trump directed the Secretary of the Interior, the Secretary of Agriculture, and the Secretary of Commerce to develop a “master agreement” for renewing or reauthorizing energy infrastructure rights-of-way, in addition to establishing processes and procedures to this effect.

The Executive Order also mandates the Secretary of Transportation, together with the Secretary of Energy, to submit findings to the President about the results of actions taken by state, local, territorial, and tribal authorities that have contributed to issues associated with the transportation of natural gas and other domestic energy resources in some regions in the United States.  Additionally, governmental agencies are required to allow for a meaningful review of their existing authorities relating to transportation and development of energy resources produced domestically, and they must report on how further progress towards advancing the Executive Order’s policy purposes might be achieved through their authorities.

Finally, the Executive Order requests that the Secretary of Energy, together with the heads of other relevant agencies, provide insights on the economic development opportunities of the Appalachian region.


This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

No comments:

Post a Comment