Sen. Joe Manchin (D-W.Va.) opened Thursday’s hearing of the Senate Energy and Natural Resources Committee with an urgent call for members on both side of the aisle to put politics aside and hammer out a bipartisan bill to accelerate and streamline permitting of energy and transmission projects.
“No energy sector is immune to permitting roadblocks,” Manchin said. “We all need to sit down and negotiate in good faith. We need to take our names off the bill and go back to a bipartisan permitting reform bill. That’s the only way we can take the politics out of this. It’s not me; it’s not [Ranking Member Sen. John Barrasso (R-Wyo.)]. It’s not any of our colleagues. It’s getting permitting done for the sake of our country.”
Manchin’s comments set the tone for a hearing that reflected the current state of play on “permitting reform,” as the issue is commonly referred to. Manchin wants to have a bipartisan bill completed by the time Congress goes into recess for August, but while potential common ground has emerged on some issues, flashpoints remain that will require tradeoffs and compromise.
Potential points of agreement include the need for permitting to be technology- and project-neutral, while also setting predictable time frames both for environmental reviews under the National Environmental Policy Act (NEPA) and for legal challenges to project approvals.
The points of conflict are cost allocation for interstate transmission lines and FERC’s “backstop” siting authority, under which the commission can approve such projects if a state has failed to act on a permit for a year or has denied a permit for a project deemed in the national interest. Both are issues that raise thorny questions about federal authority versus states’ rights on permitting such projects.
The momentum for compromise on these and other issues is being driven by the common agreement that changes are urgently needed. At stake is the country’s ability to leverage the billions of dollars of clean energy funding in the Inflation Reduction Act and Infrastructure Investment and Jobs Act to reach President Joe Biden’s goals of a 100% decarbonized grid by 2035 and net-zero emissions economy-wide by 2050.
Senators on both sides of the aisle talked about key projects in their states that have been bogged down in the permitting process or litigation for years.
Manchin’s is the Mountain Valley natural gas pipeline, a 300-mile-long project running from northwestern West Virginia to southern Virginia, which filed its first permit application in 2014. The pipeline is 94% complete, according to the project website, but remains tied up in litigation, with the U.S. Supreme Court most recently sending a suit filed by landowners in western Virginia back to district court for reconsideration.
Sen. Steve Daines (R-Mont.) pointed to the Rock Creek and Libby mine projects, proposed silver and copper mines to be located in a major wilderness area in his state, which environmental groups have been opposing for at least two decades.
‘Designed to Fail’
Industry stakeholders at the hearing also spoke of the diverse impacts of delayed and canceled projects resulting from the current system.
“The process for planning transmission that spans more than one region is unworkable,” said Jason Grumet, CEO of the American Clean Power Association. “It subjects developers to an impossible triple hurdle, requiring separate approvals by each region and a ‘coordinated’ interregional approval process, which is literally designed to fail because different regions apply different evaluation metrics and have no obligation or incentive to consider full project benefits.”
Growing markets for renewable energy and electric vehicles mean that “demand for [minerals] is expanding exponentially,” Rich Nolan, CEO of the National Mining Association (NMA), said in his testimony. “But we have not seen corresponding actions to support increased production of these critical mined materials.”
Citing an NMA analysis, Nolan said, “In 2022, the U.S. reached its highest level of mineral import reliance. … Each new announcement of a blocked domestic mine locks in our competitive weakness and weakens our national security. Without permitting reform, we will be watching the global competition for minerals and energy control from the sidelines.”
Elizabeth Shuler, president of the AFL-CIO, measured the impacts of permitting delays in terms of potential union jobs lost. The 18 years it took for the recent final approval of the TransWest Express transmission line meant “18 years of lost economic opportunity for workers,” she said.
“Every job in every part of the energy sector and the manufacturing sector depends on permitting and siting,” she said.
“Full implementation of the [Inflation Reduction Act] alone will create more than 1 million new jobs and bring down emissions across the economy. But without permitting reforms, job creation will be more modest, and emissions could actually go up.”
Paul Ulrich, vice president of Jonah Energy, a Wyoming natural gas producer, spoke of increasingly long time frames for permitting oil and gas projects, with environmental reviews taking anywhere from six to 12 years.
“The average time to process an [application for a permit to drill] a well has increased by 124% from 2018 to 2022, averaging 271 days,” Ulrich said.
Certainty, Speed, Consistency
In his opening remarks, Sen. Barrasso summarized the three principles that GOP lawmakers and many industry stakeholders are advancing as a basis for reform.
“First, legislation must benefit the entire country, not a narrow range of special interest-favored technologies or a limited group of projects,” he said. “Second, it must include enforceable timelines to ensure environmental reviews don’t drag on for years. Third, it must place limitations on legal challenges to prevent endless litigation intended to kill projects.”
Bills introduced by Manchin, Barrasso and Sen. Shelley Moore Capito (R-W.Va.), ranking member of the Senate Environment and Public Works (EPW) Committee, all have proposed a two-year limit on environmental impact studies, the most intensive level of NEPA review, and one year for lesser environmental assessments. (See related story, Podesta Lays Out Biden’s Priorities for ‘Permitting Reform.’)
They also call for reviews to be led by a single federal agency that coordinates the associated reviews of other agencies and issues a single, final environmental review.
Manchin’s Building American Energy Security Act includes a 150-day time limit on legal challenges once a project has been permitted. Both Barrasso’s Spur Permitting of Underdeveloped Resources Act and Capito’s Revitalizing the Economy by Simplifying Timelines and Assuring Regulatory Transparency Act would cut that time frame down to 60 days.
Grumet said ACP supported the basic concepts such proposed reforms with the caveat that “none of these changes will undermine the bedrock protections of our environmental law.”
But, he said, “while NEPA reform is necessary, it is not sufficient” to accelerate the buildout of the interstate transmission needed for rapid clean energy deployment and to ensure adequate energy transfers between regions in emergency situations.
Grumet’s written testimony details ACP’s “discussion framework” for changes to NEPA permitting and FERC backstop siting authority that could cut transmission approvals to three years. Under this framework, project developers could apply to the Department of Energy for a designation of a National Interest Electric Transmission Corridor for their projects, with the department issuing a decision within 90 days. FERC would undertake a NEPA review, with a two-year time limit, while the project developer could simultaneously file for state approval and begin the pre-application process for FERC backstop siting. (See DOE Rolls out New Process for Designating Key Transmission Corridors.)
“Congress [would] codify FERC’s proposed policy for simultaneous state and FERC review,” according to Grumet’s statement. “This would continue to recognize the primacy of the states’ role in siting transmission infrastructure but would help remove a year off the backstop siting authority process, as the FERC prefiling process takes that long and would likely be completed by the time a state made its decision on whether to permit a line, saving a year in the overall permitting process.”
Shuler also advocated for accelerated permitting timelines “that [do] not come at the expense of the rights of states, tribes, communities or other stakeholders to have an effective voice in the process or to intervene informally.”
Her three must-haves were certainty (“We need to know when a final decision will be made, and that it is in fact final.); speed “to deploy a full range of clean energy technology”; and consistency, meaning “a standardized process that can apply to all forms of permitting for all technologies.”
Ulrich and Nolan both called for clear timelines on permitting and legal challenges, and a prohibition on moratoriums on either coal or natural gas leasing, or pipeline approvals.
Federal vs. State Primacy
While Democrats and Republicans spoke of the need for speed on permitting, the sharpest questions of the hearing came on the issues of cost allocation and FERC’s backstop siting authority.
Sens. Cindy Hyde-Smith (R-Miss.) and Josh Hawley (R-Mo.) pushed Grumet for his position on federal versus state primacy on permitting and whether states should pay for transmission that provides no direct economic benefits to their residents.
While first established in the Energy Policy Act of 2005, Grumet said, “the backstop authority enabling federal action to permit projects of national significance has been used successfully exactly never, and if it were employed, it would take a decade or longer to permit a long-distance line.”
But using the backstop authority does not mean cutting states out of the process, Grumet said. “Instead of having to wait for states to move forward, we can use the backstop authority that was already put into law, give the states a chance to move forward with that permitting but have the federal government have a response if the states fail to act,” he said. “It is not taking them out of the process; it’s just requiring them to work within the process.”
Answering a question from Hawley on states’ jurisdiction in transmission permitting, Grumet said, “States have a role to play and have to have a role. But that role has to be guided with the same kind of deliberate national interest that we’ve been talking about … that there [are] transmission interests that [are] in the national interest. …
“Electricity moves very quickly, covers far distances, and we have to be able to bring that larger vision so that we actually protect ourselves as a nation and as a community,” he said.
Similarly, on cost allocation, Grumet said regions have a role to play, but “they have to play it. They can’t rope-a-dope the nation into energy insecurity.”
Projects must be justified on the basis of the economic benefits they provide, he said, “but we have to recognize that there are benefits greater than what you’re paying per kilowatt-hour. It’s a benefit for your lights not to go out. It’s a benefit for your region to be able to be saved with power if you have a terrible storm. It’s a benefit for you to have the capacity to bring new industries into your region. It’s a benefit to have lower-cost power brought to you from other parts of the country.”
The calls for a “regular order” of bipartisan negotiations notwithstanding, the chances are mixed for a substantive bill being negotiated by August recess.
Manchin is calling for concessions on both sides. “We can’t let the perfect or the politics be the enemy of the good and continue to live with an outdated permitting system that kills much needed projects across the spectrum,” he said at Thursday’s hearing.
But ClearView Energy Partners sees only limited overlap between the GOP bills and Manchin’s, as well as a bill that EPW Chair Tom Carper (D-Del.) hopes to have finished by Memorial Day.
Capito’s bill could undercut NEPA authority by allowing de facto approval of projects if an environmental review is not completed within the proposed two-year time frame. Further, legal challenges to such approvals would be severely limited.
Manchin has promoted his bill, which he reintroduced this year after failing in December, as the only one currently on the table that has drawn demonstrated bipartisan support, with 40 Democrats and seven Republicans voting for it.
One of its key provisions is a requirement for the president to designate a list of 25 key energy projects that would be prioritized for permitting. The list would be periodically updated and would have to represent a “balanced” mix of technologies: “critical minerals; nuclear; hydrogen; fossil fuels; electric transmission; renewables; and carbon capture, sequestration, storage and removal.”
Its key sticking point is its provisions that would expedite the completion of the Mountain Valley pipeline and severely limit any legal challenges to final permitting.
The apparent consensus at the Senate ENR hearing was far from universal, as environmental organizations, absent from the hearing, have advanced a different strategy for accelerating permitting, based on early engagement with communities and tribal groups and “smart from the start” planning.
Speaking at a recent EPW hearing on permitting, Dana Johnson, senior director of strategy and federal policy at WE ACT for Environmental Justice, said, “We really need to start community engagement much earlier in the process. … Advocates in that space noticed that when industry comes to them, when they are able to negotiate, when we have community meetings before a permitting process even begins, we are able to work in partnership to solve the challenges of bringing a project to fruition.”
Federal support for such engagement was a central provision of Biden’s permitting reform priorities, which the White House released last week. Biden specifically calls for federal agencies to designate a chief community engagement officer and provide funding to help small communities and groups build the resources and expertise to participate in federal permitting processes.
In direct opposition to GOP bills, the president’s priorities put a stronger focus on clean energy, calling for legislation to accelerate interconnection of solar, wind and storage projects sitting in interconnection queues. Rather than limits on NEPA reviews, Biden supports increased interagency cooperation and the use of “programmatic environmental reviews” to speed up permitting in transmission corridors or in specific areas of federal lands.
ClearView characterized Biden’s priorities more as “trying to find a middle ground” between Manchin’s bill and Sen. Ed Markey’s (D-Mass.) “progressive priorities” released in March, which call for increased funding for NEPA reviews and for engagement with environmental justice communities.
“Herding proverbial cats within one’s party may be a prerequisite to successful negotiations with the other side,” ClearView said. “But we would suggest it falls well short of bridge building between Republicans and Democrats at this time.”