If we can’t get permitting right, how will we ever get sensible regulation?
The proposed Keystone XL Pipeline project has faced more than its share of legal and bureaucratic hurdles in the decade since it first was proposed. A recent court case threatens to stall it yet again, along with pipelines across the country. This latest hurdle is because of a combination of bureaucratic carelessness and judicial overreach. The implications for national security, climate change, and future living standards are potentially large.
The case — Northern Plains Resource Council v. U.S. Army Corps of Engineers (9th Cir. Nos. 20-35412 and 20-35414) — comes from the U.S. District Court in Montana. It involves the Army Corps of Engineers’s Nationwide Permit 12, which essentially pre-authorizes the discharge of fill material into certain waters in connection with projects involving pipelines or wires. Thousands of projects across the nation rely on Permit 12, which the Corps has reissued at intervals since 1977.
In 2005, a trial court held that the Corps must consult with the U.S. Fish and Wildlife Service (FWS) before reissuing Permit 12. In response, the Corps initiated formal “programmatic” consultation with FWS and the National Marine Fisheries Service before reissuing Permit 12 in 2007 and 2012.
Unfortunately, the Corps did not consult with the FWS for its 2017 reissuance, deciding instead that reissuing Permit 12 would have “no effect” on listed species or critical habitat, and consultation is not required unless reissuing the permit “may affect” listed species or a critical habitat. That ill-considered decision is the root of the current litigation.
A trial court held that this failure to consult violated the Endangered Species Act, which requires such consultation when a possible action by the Corps “may affect” listed species or critical habitat. As a result, pipelines across the country are stalled — whether or not their construction poses an environmental risk.
The Corps argues that Permit 12 does not evade the consultation requirement because it does not authorize any project that “may affect” a listed species or critical habitat to proceed unless the Corps determines that the project has no effect or it completes the consultation required by Section 7 of the Endangered Species Act.
To be authorized to act under Permit 12, a permittee must comply with several general conditions, one of which requires a permittee to notify the Corps’s district engineer if a project “might affect” listed species or critical habitats. Once notified, the district engineer will either determine that the project has “no effect” on listed species or critical habitats, or else require project-specific consultation.
The trial court ruled that the Corps’s approach of allowing permittees to make the initial decision violated Section 7(a)(2) of the Clean Water Act, which requires the Corps to make such determinations. Yet having permittees make the initial decision increases regulatory efficiency. Permittees risk much if they fail to comply with those conditions or mislead the Corps.
Two recent developments illustrate the costs of this uncertainty. On Sunday, the sponsors of the Atlantic Coast Pipeline announced they were abandoning the project because of continued uncertainty and escalating costs. On Monday, the Supreme Court issued a stay of the District Court’s ruling, except as it pertains to the Keystone XL Pipeline. Although other pipelines can proceed until the appeals court rules on the merits, they still face the prospect of having to shut down until the Corps completes its programmatic consultation with the FWS. In many cases this will produce large costs with little benefits.
The prolonged delay in approving the Keystone XL Pipeline should concern all Americans, even environmentalists who have strongly opposed it. Building the pipeline will reduce the free world’s reliance on autocratic regimes whose security interests differ from ours. But to the extent we cannot build pipelines in general, either because of political opposition or bureaucratic inertia, progress in generating more electricity with cleaner-burning natural gas, rather than coal, will also be more expensive and take longer.
The same impediments often affect the construction of new transmission lines, which, unlike pipelines, are visible. This will make it harder to transport carbon-free energy from the places it is generated to where it is needed most.
The United States needs faster, cleaner growth, and it will require substantial investment in new infrastructure. Any delay in these investments, whether because of local political opposition, bureaucratic resistance, or judicial second-guessing will also delay the benefits in terms of a cleaner environment and higher living standards.
We need to invest more in professional regulators who are experts in their field and consider all relevant issues before granting a permit. But we also need to give those individuals clearer guidelines and trust their judgment. Otherwise, like Jarndyce v. Jarndyce of Charles Dickens’s “Bleak House,” we will argue until there is nothing left to argue over.
Joseph V. Kennedy is president of Kennedy Research, LLC. He previously was chief economist of the U.S. Department of Commerce, and general counsel of the U.S. Senate Permanent Subcommittee on Investigations.
The Hill has removed its comment section, as there are many other forums for readers to participate in the conversation. We invite you to join the discussion on Facebook and Twitter.