Tennessee Takes Lead To Protect Cross-Border Energy Projects

State legislature passed a law limiting the power of local governments to regulate energy infrastructure
Published on September 4, 2023

A U.S. conflict over pipeline regulation could jeopardize Canada’s ability to export oil and natural gas to that country, but recent state legislation offers a glimmer of hope.

While both federal and state authorities traditionally oversee pipelines – including where they are located – U.S. local governments have increasingly been putting the brakes on energy projects, affecting commerce well beyond their borders.

A recent policy paper by the Frontier Centre for Public Policy highlighted this growing issue. The report examined how community activists and environmentalists in Maine had successfully obstructed a pipeline project designed to bring Canadian oil to a Maine seaport. Despite the pipeline’s broader economic implications, activists framed their opposition around air quality concerns, even though such matters are already regulated at local and state levels.

Legal challenges to Maine’s local ordinance argued that it had ramifications beyond the state, affecting both inter-state and international commerce. Despite the logic of these arguments, they were dismissed in court, setting a concerning precedent for the power of local ordinances to halt energy projects.

Lawyers defending the pipeline company argued that this court decision could inspire activists to enact similar local laws, threatening not just pipeline projects but also regional and state economies.

A spokesperson for one Maine energy producers’ association mentioned this kind of precedent could give tremendous power to a small group of people over inter-state commerce. Indeed, across the United States, local and county governments are finding themselves locked in battle with energy companies, state governments, and even the federal government over energy projects that represent jobs and government revenues.

In a stark contrast, an Iowa case saw a federal court side with energy companies. The judge granted an injunction against a local ordinance, arguing that federal laws like the Pipeline Safety Act superseded local regulations.

Tennessee is also offering another approach to this jurisdictional puzzle. The state legislature recently passed a law limiting the power of local governments to regulate energy infrastructure, designed to prevent them from obstructing projects beyond their jurisdiction. The law was drafted to balance local, environmental, and broader economic interests and did not negate existing local or state laws on environmental protection.

Is it fair when activists influence local politics so that they can get ordinances passed that kill projects extending beyond their local community?

This is a significant concern for Canada, which has substantial stakes in ensuring the smooth operation of cross-border energy projects. While Canada can’t intervene in U.S. internal debates over regulatory powers, the outcome of these debates impacts Canadian national interests.

The recent Tennessee legislation offers a hopeful model for other states grappling with this complex issue, ultimately benefiting energy commerce between the two nations.

 

Joseph Quesnel is a senior research associate with the Frontier Centre for Public Policy.

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