Rules of the Road Needed for North American Energy

On Oct. 8, Energy and Commerce Committee Chair Rep. Fred Upton (R-MI) and Rep. Gene Green (D-TX) introduced H.R. 3301, a bipartisan bill to make integrated North American energy infrastructure a reality. Without the certainty of law, America and our neighbors, Canada and Mexico, cannot realize a truly integrated North American marketplace and the United States cannot exercise its new found energy muscle in the global energy marketplace.

At present, there is no US authorizing statute governing cross border crossings of energy infrastructure, such as pipelines and transmission lines. A one page Executive Order governs the process, and it is characterized as the "Presidential Permit Process." Unfortunately, there is little guidance on what is subject to review and what is exempt. Thus, every new application or technical change (e.g. intra-company transfer, name change, etc.) becomes a one-off, entirely subjective examination. The result of the lack of clear guidance is uncertainty and delay.

The Energy and Power Subcommittee of the House Energy and Commerce Committee held a hearing on Oct. 29 on the state of the existing "process" (or lack thereof). The hearing did not focus on the Keystone XL pipeline -- the most famous issue involving the "Presidential Permit Process" -- but rather on the broader question of how all types of cross-boarder energy infrastructure projects should be dealt with in the future.

While delay of the Keystone XL pipeline has garnered widespread pubic attention, there are many other Presidential Permit applications pending at the State Department. Many of these applications are simple changes of ownership filings with no impact on the pipeline's operations or border-crossing status. And yet even these face lengthy delays; it is not unusual to see approvals delayed for five years or more.

H.R. 3301, the North American Infrastructure Act, would address this issue by consolidating and standardizing the cross-border approval process for oil pipelines, natural gas pipelines, and electric transmission lines. The bill would replace and supersede the current processes that have been created in an ad hoc fashion through multiple Executive Orders.

The bill does not waive any environmental laws, and applicable permits would still be required. It instructs that all applications for cross-border oil pipelines be handled by the Department of Commerce, natural gas pipelines by the Federal Energy Regulatory Commission, and electric transmission lines by the Department of Energy. And it requires agencies to approve cross-border applications within 120 days of submission unless they determine the project is not in the national security interest of the United States.

To address existing projects with Presidential Permits, it specifies that existing projects do not need further approvals, including new or revised Presidential Permits, for modifications such as reversal of flow direction, volume expansion or adjustments to maintain flow or in cases of changes in ownership.

With new North American resource abundance, we have the opportunity to better control our destiny and move to greater independence. But we cannot hope to do that without a robust integrated North American energy marketplace.