BACKGROUND PRESS CALL
BY SENIOR ADMINISTRATION OFFICIALS
ON THE PRESIDENT'S EXECUTIVE ORDERS PROMOTING
ENERGY INFRASTRUCTURE AND ECONOMIC GROWTH
Via Teleconference
April 9, 2019
5:32 P.M. EDT
MR. DEERE: Thank you, Operator. And good evening, everyone. Thank you for joining us for tonight's preview call to preview the President's executive orders promoting energy infrastructure and economic growth that he is scheduled to sign tomorrow afternoon in Texas.
This call is embargoed until 8:00 p.m. this evening. You will be hearing from [senior administration official]. Do note that the call is considered on background, attributable to a senior administration official. And again, I repeat, the call is embargoed until 8:00 p.m. this evening.
With that, I will turn it over to [senior administration official] for opening remarks before we take Q&A.
SENIOR ADMINISTRATION OFFICIAL: Thank you, Judd. And thank you, everyone, for joining us today. Tomorrow, President Trump will be signing two executive orders to advance energy infrastructure development. These executive orders were driven by the National Economic Council and Director Larry Kudlow. The first executive order relates to energy infrastructure, generally, and the second relates to cross-border infrastructure. Taken together, these two executive orders will promote the development of new energy infrastructure, create jobs, and provide affordable, reliable energy to consumers.
I'd like to take this opportunity to first highlight some provisions of the President's Promoting Energy Infrastructure and Economic Growth executive order.
Section 401 of the Clean Water Act: The President's executive order will ensure Section 401 of the Clean Water Act is implemented consistent with statutory intent. Outdated federal guidance and regulations issued by EPA have caused confusion and uncertainty, leading to project delays, lost jobs, and reduced economic performance.
Many states implement Section 401 faithfully; however, the implementation of Section 401, on occasion, has caused delays in the permitting and development of energy infrastructure that would have broad, regional, and national benefits. Interim guidance issued in 2010 should be updated to ensure consistency with the Clean Water Act, case law, and agency findings.
Existing enabling regulations predate the creation of the Clean Water Act Section 401 itself and need to be updated. President Trump's executive order calls for a review and update of the EPA's 2010 Interim Guidance and its existing regulations, in consultation with states, tribes, and relevant agencies.
LNG exports: The President's executive order also recognizes that existing LNG standards have failed to adapt and recognize industry best practices and modern technologies. LNG safety standards were originally drafted nearly 40 years ago. Modern, large-scale liquefaction import/export facilities bear little resemblance to the small peak shaving facilities of 40 years ago.
President Trump's executive order calls on the Secretary of Transportation to review and update DOT's Part 193 safety regulations to reflect modern technologies and best industry practices.
Currently, DOT regulations do not authorize LNG transport in rail tank cars. The executive order also directs the Secretary of Transportation to propose a rule to treat LNG the same as other cryogenic liquids and permit it to be shipped in approved rail tank cars.
Rights of way: President Trump's executive order facilitates coordination among the Secretaries of Interior, Commerce, and Agriculture to renew expired rights of way. Numerous electric transmission and distribution lines operate in expired right of ways, complicating access for workers to conduct vegetation management and facility maintenance. Vegetation management is critical to minimizing fire and other operational risks.
The President's executive order requires the development of a master agreement for energy infrastructure right-of-way renewals and reauthorizations to expedite the renewal process, promote vegetation management, and provide consistency.
Energy infrastructure financing: President Trump's executive order also recognizes that United States capital markets are the deepest and most liquid markets in the world, and it's thrived under the principle that companies owe a fiduciary duty to shareholders to strive to maximize shareholder return. Many infrastructure projects rely on capital markets for financing. The order seeks to address barriers to financing new energy infrastructure.
The executive order directs the Secretary of Labor to review data filed with the Department of Labor and inform the Assistant to the President for Economic Policy on relevant trends and energy investments.
The Secretary will also review existing guidance on fiduciary responsibilities for proxy voting and determine whether updates are needed.
Reports required under the executive order: Finally, the President's energy infrastructure executive order requires that Secretaries of Transportation and Energy submit a report to the President on the economic effects of the inability to transport domestic energy sources to (inaudible).
The first report will assess deliveries of natural gas and other domestic energy sources to New England, while the second report will assess the limitations on the export of natural gas, oil, and other domestic energy sources to the West Coast of the United States.
The order also requires a report to identify ways the federal government can be best positioned to provide intergovernmental assistance to state and local governments.
I'd now like to shift gears and walk through the President's second executive order on cross-border energy infrastructure.
Clarifying the permitting process: This executive order will streamline the process for considering applications for presidential permits for certain energy, transportation, water, and other infrastructure projects at the borders of the United States, while protecting the environment.
The President's executive order clarifies that any decision to issue or deny a cross-border permit shall be made solely by the President of the United States.
Under the order, the Secretary of State will continue to receive permit applications and provide advice to the President on whether a proposed permit serves the foreign policy interests of the United States.
The Secretary of State is directed to adopt procedures to complete the process of soliciting information from federal agencies and providing assistance to the President within 60 days of receiving an application.
The cross-border infrastructure covered by the executive order includes applications for issuance of presidential permits for the construction, connection, operation, or maintenance of the following: pipelines, conveyer belts, and similar facilities for exportation or importation of all products to or from a foreign country; facilities for the exportation or importation of water or sewage to or from a foreign country; facilities for the transportation of persons, things, or both to or from a foreign country; and finally, bridges to the extent that congressional authorization is not required.
FERC and DOE make permitting decisions in accordance with executive orders 10485 and 10530, which are exempt from this executive order.
FERC will continue to issue presidential permits for natural gas pipelines that cross U.S. borders, while the Department of Energy will continue to issue presidential permits for cross-border electric transmission lines.
Under the order, environmental reviews under the National Environmental Policy Act and other applicable laws for infrastructure within the United States will be conducted by the appropriate land management and permitting agency. More efficient cross-border permitting process is good for the American economy, generating significant state and local tax revenues that can be invested in local communities.
Additionally, all presidential permits for cross-border infrastructure issued prior to this order shall remain in full force and effect. Finally, the order revokes and replaces Executive Order 13337 of April 30th, 2004, and EO 11423 of August 16th, 1968.
Q Hi, this is James Osborne with the Houston Chronicle. Can you hear me?
SENIOR ADMINISTRATION OFFICIAL: Yes, we can.
Q Oh, good. On the first part of the executive order on pipelines, it sounds like that’s going to sort of streamline the federal process. Is it going to do anything -- would it do anything to get states like New York from blocking these pipeline projects? I mean, does this address that part of the equation?
SENIOR ADMINISTRATION OFFICIAL: So the executive order will direct EPA to evaluate and update the existing guidance that’s provided to states for how Section 401 of the Clean Water Act is implemented. As you know, Section 401 (inaudible) delegated authority to the states; however, under this executive order, we'll be directing EPA to return the federal interpretation of the statue to statutory intent, which should alleviate some of these problems moving forward.
Q Hello, this is David Schultz with Bloomberg Environment. I just wanted to ask another question about the Clean Water Act section that you mentioned. Will this require the EPA to go through the formal notice-and-comment process that it typically goes through for rulemaking? Or is there something that can be done more quickly than that?
SENIOR ADMINISTRATION OFFICIAL: So, both. So EPA will be working with the draft interim guidance from 2010, and obviously guidance is something that doesn’t go through the formal notice-and-comment process. They'll also be evaluating and updating the regulations, which does require the formal EPA notice-and-comment process. So, both.
Q Hey, yes. Sorry, this is Tom DiChristopher from CNBC. Yeah, there's been a number of commentaries that, essentially, an executive order can't override a federal law. I'm just wondering -- to what extent do you think that this could actually change what's happening in New York or perhaps what's happening in Washington with coal exports?
SENIOR ADMINISTRATION OFFICIAL: So, right now, there are a lot of problems with the way the Clean Water Act is being interpreted. There are a lot of inconsistencies with the 2010 Interim Guidance. For example, it provides that states may waiver certification, while federal agencies are the only entity that can waive.
There's overreliance on a single case. The Jefferson County PUD vs. Washington Department of Ecology from 1994 and the conclusions are (inaudible) it allows the certifying agency to determine what constitutes a complete application that starts the timeframe clock. The guidance conflicts with the City of Fredericksburg vs. Burke from 1989, which is (inaudible) this notion. It also conflicts with the FERC declaratory order and Millennium Pipeline, stating one-year clocks starts on the receipt of an application.
With all these problems, it's imperative that the administration take action to provide clarification and certainty so that we can have a much more orderly and efficient permitting process going forward under this statute.
Q Hi, it's Ariel Wittenberg with E&E News. Just to clarify around the 401 issues -- does the executive order specifically tell EPA to look at the timeline issue for the certifications? Or is this just telling them, generally, to look at guidance? And I’m also curious why you need to include this in an executive order; I know some EPA officials have already said that they been kind of working on these issues for a few months.
SENIOR ADMINISTRATION OFFICIAL: This is a very big priority for the White House and for the President, and we thought it is very important for us to provide direction to the agencies as they begin to work on this. Obviously, as they go through the regulations, they have to go through the formal notice-and-comment rulemaking and to include all of that input going through the process. But that is something that we’ve asked them to look at.
Q Hi. Good afternoon. This is Toluse Olorunnipa with the Washington Post. Thanks for doing the call. Could you give us a sense of how quickly the impacts of this executive order might be felt and whether or not any of the projects that are currently delayed will be streamlined and there will actually be an on-the-ground impact -- in X-number of months, X-number of years? Have you gamed that out yet to get a sense of how long this might take to work its way through the process?
SENIOR ADMINISTRATION OFFICIAL: So this executive order touches on a range of issues. So the impact of the actions will vary based on which section we’re talking about. So, for certain ones, we think the effect is going to be pretty quick. For other projects tied up in litigation, obviously, that’s a much longer-term issue.
The main thing we want to be doing here is to kind of reset and take a look at how the federal government impacts these investments and build out an energy infrastructure and make sure that we provide a good, consistent, viable path forward, in terms of a relationship between the private sector and the federal government going forward.
Q Hi. This is Chris Knight with Argus Media. I wanted to ask about the second one -- the cross-border one. Since Trump already signed the Keystone XL executive order, it’s a little strange that now you’re doing a second one after the fact. Can you talk about why you’re rolling it out in that order?
SENIOR ADMINISTRATION OFFICIAL: So the previous order was a presidential permit; it was not an executive order. What we’re rolling out tomorrow will be an executive order to clarify how the process works for all future cross-border infrastructure permitting. So obviously, the President took action on a specific project, issuing a presidential permit not too long ago. But this is a recalibration of the entire process going forward -- not just for pipelines, but, as I stated earlier, for broader infrastructure and other cross-border infrastructure that faces a lot of uncertainty due to the current process.
Q Hi. This is Gabe Rubin from the Wall Street Journal. Beyond reviewing how retirement funds may use (inaudible) strategies or vote on shareholder proposals, does the order direct the Department of Labor to do anything that would change funds’ investment strategies? I mean, is that something that the Department of Labor can even do?
SENIOR ADMINISTRATION OFFICIAL: As you’re probably aware, under ERISA, fund managers have fiduciary obligations to look out for the best interests of their beneficiaries. And so, the directive under the EO is to study and make sure that these (inaudible) requirements -- that some fund managers are pursuing are being pursued consistent with that statutory obligations. The fiduciary duty is the hallmark of ERISA and we believe it’s an essential protection for beneficiaries so that they do have adequate retirement savings, and that the focus of an ERISA plan is on retirement savings, and not other social and political goals.
Q Hi. This is Tom DiChristopher again. So can you just clarify the second executive order? Are you saying this essentially changes the system where the Secretary of State, usually approves the cross-border (inaudible) that now the President now does that, if I understand you correctly. And what would be the purpose for that?
SENIOR ADMINISTRATION OFFICIAL: So that's correct. So this order revokes and replaces Executive Order 13337 of April 30th, 2004, and EO 11423 of August 16th, 1968, and clarifies that any decision to issue or deny a cross-border permit shall be made solely by the President.
Q Hi, Tim Gardner at Reuters. Just to -- I'd like to follow up on that last question there. What -- how does that -- changing it from Secretary of State to President -- how does that improve the projects’ viability and how it's going to change energy markets? Thanks.
SENIOR ADMINISTRATION OFFICIAL: One of the goals is to -- so under the -- this isn't a power reserved for the President; it has been delegated to the Secretary of State in the past. We've moved it back to the President. This will ensure that our land management and environmental agencies will be doing environmental reviews within the United States. We won't have the State Department doing NEPA.
This is also a clarification of the presidential's inherent authority over foreign affairs to grant (inaudible) cross-border permits for infrastructure.
Q Hi, this is Tim Puko at the Wall Street Journal. Thank again for doing this. I have two quick questions. One, just very quickly: I wanted to know if there is anything in here regarding streamlining how the Interior Department oversees permitting under the Endangered Species Act. I don't -- I think I missed that. I thought you might have said something, but I don't remember for sure.
And two, I wanted to clarify your answer to the first question about what is delegated to the states. Could you explain a little bit more how extensively you expect this to withdraw the authority that is now delegated to the states and what's put back under direct federal oversight?
SENIOR ADMINISTRATION OFFICIAL: The first answer would be no.
And then for your second question: The main goal here is to have EPA do a review of all of the 2010 draft guidance, as well as the existing regulations. So we're not trying to take away power from the states, but we are trying to make sure that state actions comply with the statutory intent of the law.
So the actual regulations predate the existence of Section 401 of the Clean Water Act. So it's pretty clear that these regulations need to be updated.
As I mentioned earlier, there are a lot of inconsistencies with (inaudible) as well as agency actions and precedents. So we need to make sure we update this to provide certainty, provide scope, to provide timing so that states can implement this in a more consistent manner that allows projects to have more certainty going forward.
Q Hi, this is (inaudible). Quick question on the LNG-export element of the executive order. I wasn't clear on its revising existing standards of DOT. Is that related to safety and equipment and things? A little more clarity on that one, hopefully.
SENIOR ADMINISTRATION OFFICIAL: Sure, so you're correct. So existing LNG standards have failed to adapt and recognize industry best practices and modern technologies. As you might know, the safety standards were originally drafted nearly 40 years ago and were designed more for small peak-shaving facilities. Obviously, now, with the energy renaissance that we've had in the United States, there a lot of LNG export facilities that are making their way through the permitting process (inaudible) and that are currently operating.
So the Department to Transportation will be directed to update their safety standards to track with modern technologies and best industry practices under Section 190 -- Part 193 of their regulations.
MR. JUDD: Operator, with that we will conclude this call. I do want to thank [senior administration officials] for briefing everyone.
Reminder that the call is embargoed until 8:00 p.m. this evening, and that, for the speakers, they were on background attributable to a senior administration official.
Thank you again to everyone for joining us.
END 5:55 P.M. EDT
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