US oil, natural gas and coal industries are bracing for the release of new standards that could derail, postpone or at least create new legal hurdles for some of the country's largest planned energy projects, including interstate pipelines, LNG export facilities and refineries.
"If there is politically charged project you can be sure that their attorneys are advising them to dot every i and cross every t," said George Mannina, an environmental litigation attorney and partner at the Nossaman law firm. "If it has a lot of emissions then there attorneys are already probably advising them to address these issues."
At issue are new standards the White House's Council on Environmental Quality is expected to release this spring on how agencies should consider climate change and greenhouse gas emissions under the National Environmental Policy Act when siting and permitting new projects. The 1970 law established procedural requirements for federal agencies to prepare environmental assessments and impact statements when considering new projects.
While NEPA reviews vary by agency, the new standards will likely advise them to consider the effects a project would have on climate change, such as emissions from coal exports, a change that industry lobbyists said could open projects to new legal challenges and cause reviews to drag on indefinitely.
"It's setting up a parallel path for challenges that would encumber or delay energy projects the country needs and that meet the identified and established requirements for approval," said Richard Ranger, a senior policy adviser with the American Petroleum Institute.
Oil, gas and coal groups have been raising concerns about the new standards since they were proposed in 2010.
"We are concerned about how the proposed Climate Guidance could affect federal permitting decisions for such natural gas pipe projects as well as the installation or modification of natural gas combustion equipment by commercial and industrial customers," the American Gas Association wrote in comments on the 2010 proposal.
But the White House has done little to ease those fears and some lobbyists said it would likely cause agencies, such as the Federal Energy Regulatory Commission, to take on a role it is incapable of.
Agencies that have jurisdiction over energy projects "don't have experience ... or reliable science to assist them with determinations on the effects of project approval or the consequence of a particular project on greenhouse gases," Ranger said.
Lisa Beal, the Interstate Natural Gas Association of America's vice president, environment and construction policy, said policy was expected given President Barack Obama's recent attention to climate change issues.
While the Department of Energy has yet to decide if it will increased LNG exports, it's unknown if the new NEPA standards could hold up FERC's permitting and siting for export facilities, Bill Cooper, president of the Center for LNG, said. "I don't think we know yet," Cooper said. "It's worrisome, obviously, but we'll have to just wait and see."
Bill Snape, senior counsel with the Center for Biological Diversity, downplayed the impact the new NEPA standards may have on future energy projects, particularly since the would not be new, binding regulations, but policies agencies would have the option of following.
"When an agency really wants to do good environmental analysis, it is always able to do so ... in a timely fashion and it is always able to get its action done," he said. "The action may slightly change because of that environmental action, but I have never seen any project stopped because of NEPA."
CONCERNS MAY BE 'A LOT OF HYPE'
One lobbyist for a gas industry group said the concerns over the new standards may be "a lot of hype" because gas projects would have less impact on climate change than other energy projects, such as a coal export facility. In fact, this lobbyist said, the NEPA changes could be a benefit for gas-related projects since the standards may include comparative reviews, showing that a gas project would have less impact than a coal project, for example.
Mannina, a NEPA legal expert, said it is "conceivable" the new standards could benefit gas projects over other energy sources because analyses would look at a given project's positive and negative impacts.
"NEPA is a statute that says analyze and understand, it doesn't mandate a particular result," Mannina said. "If a project, no matter how controversial, examines all environmental issues then NEPA should not stop the project."
But much of the new standards could be open to legal interpretation, Mannina said, potentially exposing projects to lengthy and expensive court battles. For example, NEPA standards would require agencies to look at any project that would have a significant impact, but environmentalists would likely define significant differently than industry. These groups will also likely fight over what a proper examination of these effects by a given agency will be, he said.
Depending on how the new standards are finalized, they could "create arguments that parties could use in court or in administrative challenges that will add delay and cost and no benefit to the public and no benefit to the environment," Ranger said.
The Keystone XL pipeline, LNG exports, possible future drilling in the Arctic and production efforts in the Gulf of Mexico could all be held up by the new NEPA standards, Ranger said.
"What we are very certain of is that the science does not exist to assign a climate change consequence to a particular project," Ranger said. "Let the debate over climate change continue ... what no one has demonstrated ... is that you can attribute to the construction of the Keystone pipeline or to the modification of a refinery or to the building of a new chemical plant ... that the following impacts occur to the overall greenhouse gas or CO2 inventory. You can't do that."
