Generally, the Natural Gas Act (NGA) preempts a state’s ability to enforce its own state laws with limited exceptions. The purpose of the NGA preemption of state law is to expedite interstate energy projects such as natural gas pipelines that could otherwise be entangled in state regulations in multiple jurisdictions.
There are limited exceptions to the NGA preemption of state law. One such exception is the ability of states to exercise permitting authority under the Clean Water Act pursuant to 15 U.S.C. 717b(d)(3). In 2017 and 2018, there has been extensive litigation in the federal courts regarding state authority under the Clean Water Act carve out from NGA preemption. Most challenges involved whether states had acted lawfully in either issuing or denying 401 Water Quality Certifications under the Clean Water Act.
Conflicts over the NGA and the Clean Water Act carve out are likely to continue. As reported in North American Oil & Gas Pipelines, natural gas infrastructure projects are expected to be “$417 billion, an average of $23 billion annually, from 2018 through 2035. This includes transmission pipelines, compressors, laterals, gas-lease equipment, processing, gas storage and LNG export facilities.”
Politico recently reported that the Trump Administration is considering steps to curtail the states ability to hold up or block interstate pipelines by exercising state’s permitting authority under the Clean Water Act. This from Bloomberg regarding the proposal:
The effort, possibly done through executive order, is aimed chiefly at states in the Northeast U.S., where opposition to pipeline project has helped prevent abundant shale gas in Pennsylvania and Ohio from reaching consumers in New York or other cities….New York used a Clean Water Act provision to effectively block the construction of a natural gas pipeline being developed by Williams Partners LP to carry Marcellus shale gas 124 mi to New England.
Any executive order that target the NGA carve out language will almost certainly be challenged by states intent on protecting their ability to regulate water quality impacts through issuance of 401 Water Quality Permits under the Clean Water Act. As projects continue, there will no doubt continue to be extensive federal litigation in this area.
With a divided Congress, it is unlikely there will be amendments to the NGA similar to the Energy Policy Act of 2005 which was the last congressional attempt to expedite oil & gas infrastructure projects.