The Keystone XL Pipeline was dealt a death blow when President Obama rejected it last November. While it was a setback for that project’s developers, it hardly represents a halt to the development of all transmission pipeline infrastructure projects.

As of late last year, U.S. Industrial Info, a provider of global market intel-ligence with a specialization in energy markets, said it was tracking 72 active oil and gas pipeline projects across the country. More are surely to come.

The main takeaway from the Keystone XL decision should not be that future pipeline projects are doomed, but rather that the process to get to the final decision took far too long.

More efficiency

The example serves as a call to regulatory bodies in the energy industry to take a look at how they might make improvements to any and all review processes. Prominent among the regulatory reviews is the Federal Energy Regulatory Commission’s (FERC) interstate pipeline review process, which could be refined to become more efficient.

To understand how the FERC process could be revised, it’s first important to look at the differences between interstate pipeline projects that cross multiple state lines and intrastate pipeline projects, those located entirely within a single state. FERC has authority at the federal level to review and approve the need and siting for interstate pipeline projects.

Meanwhile, intrastate pipeline proj-ects are subject to whatever process state authorities have established for review and approval. In some states, such as New York and Ohio, there is a clear state review process for obtaining authoriza-tion to construct certain types of intra-state pipelines. In contrast, Pennsylvania currently has no intrastate transmission pipeline siting process and no review of the need for such a project, except under very limited circumstances.

Interstate pipeline projects can impact local communities in both positive and negative ways, especially the local production, gathering and dis-tribution components of the industry. This local impact is one of the reasons why much of the opposition to inter-state pipeline projects originates at the state and local level. While FERC tech-gas transmission pipeline project can connect with interstate facilities and improve services available in other states. For example, an intrastate pipe-line project could relieve excessive demand for use of a nearby interstate pipeline, eliminating costly congestion and inefficiencies.

Regardless of whether a pipeline is interstate or intrastate, it has under-standable and necessary impacts on local, state and national constituencies. In fact, FERC often requires that pipe-line projects obtain necessary federal, state and local construction-related approvals and permits in addition to its own approvals.

The conflict between those want-ing to harness the full benefits of the fill gaps in existing facility siting pro-cesses. States that currently have no established process for the siting review and approval of intrastate transmission pipeline projects, like Pennsylvania, must establish them. Without clearly defined state authority over siting issues, it would be nearly impossible to develop a more efficient review framework.

Second, there must be a reframing of how we define interstate and intra-state pipeline projects. Since FERC has already acknowledged the local impacts of interstate projects, it must find a bet-ter way to address local opposition and challenges. To do this, it could consider borrowing concepts from the process used for the siting and development of interstate electric transmission lines.

The national electric grid is con-nected through a series of intrastate lines each approved and sited at the local level. While the electric trans-mission line siting process puts the authority entirely with the states, FERC might benefit from giving some level of authority to the states in the develop-ment of transmission pipelines.

A new review paradigm might be called the “federal-state partnership process.” In this process, the intrastate “legs” of an interstate transmission pipeline project would be concurrently reviewed by each state authority for purposes of line-siting issues and state and local permit approvals.

nically has complete authority over the interstate pipeline siting and approval process, it would be hard to argue that local voices do not have any influence.

Thinking locally

Local impacts can vary widely based on the specifics of a project. For instance, a project taking NGL from Pennsylvania to a Gulf Coast processing area may have minimal service impact on the states in between. But a regional dry-gas transmission project in three adjoining states, while technically an interstate project, can significantly affect and improve local services available in each of those states.

Similarly, intrastate projects can impact interstate service. An intrastate country’s vast natural gas resources and local activists and environmentalists often opposing infrastructure projects presents an opportunity, not just a chal-lenge. The pipeline industry, the public and regulatory agencies must work together to establish a transmission pipeline review process that delivers timely, evidence-based decisions and considers all reasonable stakeholder input at the local, state and federal level. Sound projects that impact multiple states should not fail to be developed or proposed out of fear that the siting pro-cess is too expensive or too long.

A new approach

Before any new review processes are established, all parties must work to Meanwhile, FERC could simulta-neously address federal environmental standards and the interstate need for the transmission pipeline.

To be eligible for this review process, states would be required to demonstrate they have an adequate review process and must adhere to a timeline for review that lines up with the FERC process. States should also not be able to condi-tion their approvals with requirements that conflict with FERC.

Dividing responsibility clearly between FERC and state authorities in this manner would hit the sweet spot of each jurisdiction doing what it does best. It would also provide certainty in timing so that when a FERC approval is received, project developers can move quickly to obtain construction permits
and move the transmission pipeline project forward. This approach would not be a circumvention or substitution of FERC policies, but rather an efficient process designed to address the increas-ing demand on the part of FERC and the public for local oversight of trans-mission pipeline projects.

Benefits of collaboration

Undoubtedly, any efforts to introduce a new transmission pipeline review process will take time and effort, but a potential federal-state partnership pro-cess will have benefits for almost all of the parties involved in what has become a complex and at times contentious endeavor. These benefits would include:

• A clear timeline—Both the public and the pipeline industry would benefit from understanding the timing involved in executing

transmission pipeline projects and would be able to take the necessary steps to prepare

for the ultimate execution of those projects.

• More local input, more local buy-in—By empowering states and local governments in the siting process, it would be easier to secure the local buy-in necessary to move transmission pipeline projects forward. The local opposition that has voiced concerns over recent projects would have a more appropriate forum for their arguments, and transmission pipeline companies would be able to refocus their efforts to answer concerns.

• A more comprehensive view of infrastructure development—

With state and federal input into siting and a more clear process for development, the transmis-sion pipeline industry would be able to more effectively build out other necessary components of the country’s energy infrastruc-ture. The certainty of the process would allow for the development of refineries and the direct deliv-ery of resources to utilities for energy production, among others.


The need to expedite the consideration and review of certain infrastructure projects has recently been recognized at the federal level. Passed by Congress late last year, HR 22, the “Fixing America’s Surface Transportation Act” (FAST Act) contains an entire section (Title XLI) devoted to “Federal Permitting Improvement.” President Obama signed the act into law in December.

Projects subject to this permit streamlining process include those requiring authorization or environ-mental review by a federal agency (like FERC) in such areas as the construction of infrastructure for “pipelines,” among others and are (i) subject to the National Environmental Policy Act of 1969 (NEPA), (ii) are likely to require a total investment of more than $200 million and (iii) do not qualify for abbreviated authorization or environmental review under any other law.

The streamlining process in the FAST Act requires agencies to involve themselves early in the review of appli-cable projects and, importantly from the perspective advanced here, requires the lead federal agency conducting the NEPA and other environmental reviews of a covered project to “coordinate

the federal environmental review and authorization process under this subsec-tion with any state, local or tribal agency responsible for conducting any separate review or authorization of the covered project to ensure timely and efficient completion of environmental reviews and authorizations.”

The thrust of this portion of the FAST Act is consistent with the fed-eral-state partnership process for gas transmission pipeline projects.

The last decade has seen dramatic changes in the U.S. energy landscape, which have been accompanied by opti-mism about the potential for natural gas to help solve many of the country’s pressing energy concerns. Now, it is incumbent upon all stakeholders to establish the processes to make that opti-mistic vision a reality. While the provi-sions of the FAST Act are moving in the right direction, the federal-state partner-ship process is the next logical step.

John F. Povilaitis and Alan M. Seltzer are shareholders with the law firm of Buchanan, Ingersoll & Rooney PC.

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