Ruby Red Tape

Last month the 682-mile Ruby started feeding liquefied natural gas from the Rocky Mountains to the growing West Coast markets. Stretching underground from Opal, Wyoming to gas interconnections near Malin, Oregon, the pipeline is one of those “infrastructure” projects that everyone in Washington claims to favor. Naturally, the regulatory state ensured that the $3.65 billion project came in 23% over budget and four months off schedule.

El Paso, a Texas-based gas pipeline firm, began the “pre-filing” process in January 2008, which is essentially applying for a permit to apply for the permit known as an “environmental impact statement.” Created by the National Environmental Policy Act of 1969, these are required for every major U.S. project and need the approval of the alphabet soup of federal agencies—stretching, in the case of the Ruby, from the Federal Energy Regulatory Commission to the Bureau of Land Management and dozens of other U.S., state and local agencies.

In this case the environmental impact statement was a binding agreement between the government and El Paso about how the Ruby project would proceed. It contained detailed instructions for everything from rights-of-way; to “critical habitat” for the blackfooted ferret and Ute ladies’ tresses (a type of orchid); to housing regulations about when the project’s 5,290 workers would stay in campers or area motels; to paleontology rules. After two and half years, and more than 125 “stakeholder” meetings and agency “scoping” hearings, El Paso received the final sign-off in July 2010.

Did we say paleontology rules? Yes, at the height of construction, El Paso had 215 archeologists in the field “to mitigate affects to cultural resources,” as required by the National Historic Preservation Act of 1966.

Some of those cultural resources included rock stacks, which are, well, what they sound like. Rock stacks were used as navigational markers for routes and trails prior to maps, and the Ruby’s route was designed to avoid more than 2,000 of them. El Paso also organized 10 rock stack ceremonies to celebrate the significance of these structures to local Native American tribes, though the project did not cross reservation land.

Solicitude was also extended to wild horses. The ditch for the pipeline was outfitted with temporary ramps so mustangs and burros could climb out if they fell in.

Construction was also delayed somewhat because of unusually heavy weather in Oregon and Nevada, though a larger problem was the greater sage-grouse. While the bird is not listed under the 1973 Endangered Species Act, construction was halted from March to May of this year to accommodate mating season. A 44-member environmental inspection team identified 1,600 migratory bird nests during construction, none of which were disrupted or “impacted” (in layman’s terms, killed). The only exception was one nest that was relocated to an avian rehabilitation center—a real thing—because it contained four eggs.

El Paso says that it is a good corporate citizen and environmental steward, and no doubt it is. But companies have also learned that they’re lucky when projects of this magnitude come in merely 23% off budget, and they know that the true risks and unmanageable costs aren’t Oregon rain storms but inflexible regulators and political opposition. El Paso was sued eight separate times to shut down the Ruby, and some litigation is still pending.

More to the point, all of this—spending years in government pre-planning, rerouting an energy corridor to avoid rock piles—carries a large economic price. Capital expenditures on archeologists and bird courtship could be put to more productive use elsewhere in the economy. The Ruby saga isn’t remarkable except in how unremarkable it is, how routine, and this ordeal replicated countless times across the entire economy helps to explain why the recovery is so mediocre.

The current White House did not create all of this regulatory burden. But the stringency and complexity of the current Federal Register of rules does illustrate the insanity of adding even more pages. As President Obama has ruefully acknowledged, there’s no such thing as a shovel-ready project. As he hasn’t acknowledged, the reason isn’t a lack of projects but an excess of government.

The Ruby pipeline is up and running, but “restoration” work continues. El Paso is employing manpower in the service of soil management and to prevent the spread of nonnative foliage and grass species. As a Federal Energy Regulatory Commission director put it in a July letter to El Paso, “Should my staff determine that restoration is not progressing in the manner agreed to by Ruby, the matter may be referred to the Commission’s Office of Enforcement for corrective action.”