Foot-dragging by state regulators imperils energy infrastructure projects

Keeping America’s rapidly expanding economy humming along will require, among other things, a state-of-the-art energy infrastructure commensurate with the demands of technology-driven global competition. When we stand in our own way, we fall behind, to the delight of global rivals eager to take advantage of our self-inflicted wounds.

{mosads}A development in Virginia, one with national implications, illustrates the clash between rising to the challenge and drowning in bureaucratic inertia. There, the proposed Atlantic Coast Pipeline (ACP), which would transport natural gas from the energy-rich Marcellus Shale in West Virginia through central Virginia before turning south into North Carolina, is set to begin construction. The project, a joint venture involving Dominion Energy, Duke Energy, Southern Company, and Piedmont Natural Gas, is targeted to be in service during the second half of 2019.

But the $5.1 billion, 600-mile project, after clearing a formidable gauntlet of federal and state regulatory hurdles, has run headlong into obstruction by an obscure body known as the Virginia State Water Control Board.

Multi-Layered Approval Process

As part of the federal and three-state approval process, the U.S. Army Corps of Engineers spent a year reviewing all river and stream crossings under a regulatory framework approved by the Virginia Department of Environmental Quality.  

The Corps issued federal water quality permits for the ACP in January, but its action came a few weeks after Virginia’s State Water Control Board had thrown a monkey wrench into the process. In December, the board, by a 4-3 vote, approved a permit for the ACP but, in an unprecedented move, delayed certification of the permit until studies of the project’s effect on sediments, karst, and erosion had been completed. This came after the project had already been approved by the Federal Energy Regulatory Commission, U.S. Forest Service, National Park Service, Virginia Department of Environmental Quality, Virginia Outdoors Foundation, West Virginia Department of Environmental Protection, and the North Carolina Department of Environmental Quality.

Even though the Army Corps of Engineers had reviewed and approved the waterways crossings in question, the State Water Control Board’s demand for additional and redundant studies delayed the start of construction until this spring.  

What’s more, the board on April 12 further undermined the established regulatory approval process by allowing a 30-day comment period on whether the approvals the Corps granted for individual stream crossings by the pipeline adequately protect Virginia’s waters. After the board has received and reviewed the public comments, there is nothing to keep it from coming up with new ways to subvert the established regulatory approval process. 

Bait and Switch

Trust between regulators and developers is essential if infrastructure projects are to proceed in a timely and affordable manner. Creating regulatory uncertainty for all developers, not just for the Atlantic Coast Pipeline, will make it harder and costlier to build public infrastructure. This could establish a dangerous precedent in Virginia — and elsewhere — of approving a permit based on a clear regulatory framework and set of permitting requirements, and then threatening that permit months later by potentially revoking it and establishing a different regulatory framework and permit requirements.

Pipelines, like most energy projects, are inherently controversial and subject to vigorous public debate. But the approval process should proceed under the rule of law and not be undermined by regulators who willy-nilly replace an established regulatory framework with one more to their liking. The shenanigans in Virginia will be closely watched elsewhere in the country, where opponents of pipelines or other energy projects will be tempted to copy-cat the arbitrary moves of the Virginia State Water Board.  

Bonner R. Cohen is a senior policy analyst with Committee For A Constructive Tomorrow (CFACT), a non-profit promoting positive market-friendly solutions to environmental issues. He is also a senior fellow at the National Center for Public Policy Research, and serves as a Senior Policy Adviser for the Heartland Institute. Dr. Conner’s articles and commentary have appeared in the Wall Street Journal, Forbes, Investor’s Business Daily, New York Post, Washington Times, National Review, and dozens of other newspapers in the U.S. and Canada.