Congress Tackles Permitting Reform
This last week featured new activity in the U.S. Senate on the issue of additional permitting reform for pipelines and electric transmission. Chairman Joe Manchin (D-WV) held a hearing and Majority Leader Chuck Schumer (D-NY) chided the Federal Energy Regulatory Commission (FERC) for not more quickly utilizing their existing authority to expedite new electric transmission.
On Wednesday, July 26, the Senate Energy and Natural Resources held a hearing to examine the opportunities Congress has to address permitting reforms to expand the buildout of electric transmission lines, pipelines, energy production on Federal lands, and more. This hearing was an opportunity for Chairman Joe Manchin (D-WV) to garner Republican support for more electric transmission. In his opening statement, Senator Manchin celebrated the steps the Fiscal Responsibility Act (FRA) took to improve the permitting process, but he emphasized that there was still a great deal of work to do.
“Congress took a meaningful step toward -- forward in June with the Fiscal Responsibility Act, the debt deal, with several common-sense reforms that I know had bipartisan support from our committee members. That included firm deadlines to complete reviews, requirements that agencies work simultaneously on a single environmental review, and several others. But there are still much more to do,” Manchin said.
The hearing was split into two sections. The first panel of witnesses included Mr. Antonio P. Smyth, Executive Vice President at Grid Solutions & Government Affairs; Mr. Jason M. Stanek, former chairman of the Maryland Public Service Commission; and Mr. Senior Vice President of Transmission & Gulf of Mexico at the Williams Company.
The three transmission witnesses focused heavily on the burden of uncertain timelines and litigation on projects. Senator Manchin suggested that the Committee pursue adopting measures to expedite permit review processes via set timelines, something he has championed through the Building American Clean Energy Security Act 2023. Other Democrats on the Committee, such as Senator John Hickenlooper (D-CO), focused on the need for a minimum transfer requirement and the importance of communities being allowed to rely on one another for energy support. He has legislation to that effect that received attention in the final discussions of the FRA and still may be one of the real opportunities to compromise with Republicans.
While Republicans expressed their support for transmission modernization, cost allocation remains one of the primary obstacles to progress. As a general refresher, the ‘cost allocation’ debate essentially stems from concerns that massive transmission projects connecting rural, energy-producing states to urbanized energy-consuming states will result in consumers in states along the route helping to pay for the transmission without receiving the same level of benefit that urban areas with high electricity demand.
The second session of the hearing addressing natural gas investments featuring Mr. Erik G. Milito, President of the National Ocean Industries Association, Mr. Pete Obermueller, President of the Petroleum Association of Wyoming, and Ms. Kelly Speakes-Backman, Executive Vice President of Public Affairs for Invenergy, focused on concerns that the Biden Administration has only allowed two lease sales in the last ten quarters.
Republicans on the Committee highlighted this as an attempt by the Administration to halt oil and gas production altogether. Senators Manchin and Barrasso (R-WY), the Ranking Member of the Committee, agreed that there could be no transmission expansion without codified language protecting the oil and gas industry. The two Committee leaders committed to working together to find a bipartisan solution and Senator Manchin was heard speaking to reporters after the hearing that his conversations with Barrasso on merging policies to boost transmission with measures to promote fossil fuels, along with restraining judicial challenges against projects, have been productive. Both leaders have articulated their shared interest in passing a comprehensive permitting reform bill before the end of this year.
Senate Majority Leader Chuck Schumer (D-NY) also focused his attention on permitting as he sent a letter last week to Acting Chair Willie Phillips and his fellow commissioners at the FERC. Leader Schumer’s letter specifically referenced two rules: one focused on “expeditiously finalizing a strong transmission planning and cost allocation rule” and another on “federal backstop electric transmission siting." FERC must have been listening as they did act in their hearing on July 27 to approve their rulemaking from last year, titled, “Improvements to Generator Interconnection Procedures and Agreements.” It was initially published in June of 2022.
At the most recent meeting, FERC passed the new rule and Acting Chair Phillips was quoted saying, “This new rule will enable America’s vast power generation resources to connect to the grid in a reliable, efficient, transparent and timely manner, and in doing so, help provide more reliable, resilient and affordable electricity for all consumers.” The rule passed on the 27th would streamline the interconnection process for transmission providers, providing greater timing and cost certainty to interconnection customers, and preventing undue discrimination against new sources of power generation. You can read a fact sheet from that rule here; additionally, FERC reported that the rule will take effect 60 days after publication in the Federal Register.
Despite Schumer’s insistence on stronger rules, FERC’s current commissioners may not be positioned to vote for the more expansive measures he asked for in his letter.
Manchin’s Wednesday hearing was the latest in a series of meetings held to address these issues, and it is clear there is a desire to have meaningful guidance codified by Congress this year. But time is running short on the legislative calendar. Lawmakers have already begun leading DC for the start of the August recess and their return in September will feature a flurry of intense negotiations covering the FY24 appropriations package, the 2023 Farm Bill, and passing the NDAA. With a busy schedule and an upcoming election, it will require persistence and dedication to see permitting reform in 2023. If it happens it is likely to be added to one of these “must-pass” appropriations bills before the end of the year.