In a bid to boost the U.S. oil and energy sector, President Trump is set to sign a couple of executive orders to fast-track oil and gas pipeline projects. Making good on his campaign promises, Trump is likely to overhaul some environmental permits to mitigate the roadblocks on energy infrastructural development and aid the energy companies to avoid unnecessary red tape.
Well, this is not the first time that Trump will be intervening by signing new orders to expedite the pipeline projects in the United States. He did sign executive orders in 2017, just a few days after he took upon his new administration, for smoothing the track for Keystone XL and Energy Transfer’s (ET - Free Report) Dakota Access Pipeline.
Clean Water Act Reform in the Cards?
Environmental protests and state authorities’ attempts to block energy infrastructure projects have induced intervention by Trump, who is planning to roll out orders to trim regulations and speed up interstate pipeline construction.
It is most likely that Trump will direct Environmental Protection Agency to reform the Clean Water Act, under which energy companies are supposed to obtain state approvals for the construction of pipeline projects that are green lit by the federal government. Trump’s orders will be aimed at streamlining sanctioning procedures and limiting the state’s involvement in Clean Water Act permits.
Notably, the long-stalled Constitution Pipeline project—which is jointly owned by Williams Companies (WMB - Free Report) , Cabot Oil and Gas (COG - Free Report) , Duke Energy Corporation (DUK - Free Report) and Atlas Gas —has been denied a water permit by the New York state regulators, crushing the hopes of the companies to bring the pipeline online by 2019. While Cabot sports a Zacks Rank #1 (Strong Buy), both Williams Companies and Duke Energy carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
The New York State Department has denied water quality certification to Millennium Pipeline’s Valley Lateral project. New York’s DEC had also refused a Clean Water Act certification for National Fuel Gas Company’s Northern Access Project in April 2017, which was finally rescinded by the FERC last October. The state’s ruling was overturned as it took longer than the stipulated time for the review of the pipeline.
Trump is poised to issue orders that will promote such projects reeling under water permit hurdles. While Trump’s orders can’t quash states’ authority in assessing the pipeline projects under the Clean Water Act, these can surely prohibit the state regulators from delaying the review process and curbing their powers to some extent.
Will Cross-Border Pipeline Projects Get a Boost?
The President is set to issue an order to stimulate the cross-border energy infrastructure by curbing the environmental reviews of the pipeline projects whose construction are delayed, as was the case with TransCanada Corporation’s (TRP - Free Report) Keystone XL pipeline. The order is likely to limit the State Department’s power to review the environmental impacts of cross-border infrastructure projects. While the permit decisions of the project are expected to rest with the President only, the State Department will just be responsible for advising the government on the pipeline projects within a specified timeframe.
Well, Trump’s broader goal is to reduce energy prices by revitalizing the infrastructural projects in a country, which is witnessing high production of oil and gas even amid takeaway constraints. We know that Trump gets enraged over rising oil prices and has resorted to twitter many times, criticizing OPEC actions and blaming it on high prices. The President believes that regulatory barriers on pipeline development stifle the nation’s progress toward energy independence.
Even if the orders will not be able to jump-start widespread development of infrastructural projects, these will represent a formal push by the President to curb the State Department’s intervention, which has been apparently becoming a major threat to the construction of pipelines.
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