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Bipartisan Support for Permitting Reform Could Unleash America’s Energy Potential

 

By Atticus Vernacchio, National Taxpayers Union

With lingering inflation remaining as an unfortunate reality, prices for many goods are running higher than just a few years ago. One way to counter these inflationary pressures is to encourage the development of cheaper domestic sources of energy. Unfortunately, under current laws and regulations, it takes an average of five years for energy projects to get the required permit from the federal government to proceed. These wait times impose undue burdens on companies that fund development projects and consumers who are stuck with higher costs due to these delays.

These regulatory roadblocks also make it harder to achieve the clean energy goals set by the White House and many in Congress. Issues with permitting are so extensive they’ve resulted in rare unity between Republicans and Democrats on the idea of reforming the onerous permitting process — though there is a lack of consensus on how to do that. 

Background 

The Department of Energy estimates that the United States would need to expand its transmission systems by at least 60 percent to accommodate clean energy. The status quo of the permitting process makes this already lofty goal far more difficult to achieve. 

There are a number of laws that burden infrastructure projects. The National Environmental Policy Act (NEPA) addresses permitting most directly. NEPA mandates that federal agencies evaluate the environmental implications of their proposed actions before making decisions. NEPA forces these federal agencies to file environmental impact statements (EIS) that can take years to finalize.

Other key laws include the Endangered Species Act (ESA) and the Clean Water Act (CWA). The ESA protects and recovers endangered species and their habitats. If an agency finds that an energy project could potentially harm any species listed as threatened or endangered, the project’s timeline and cost skyrockets. Similarly, the CWA regulates the discharge of pollutants into the nation’s surface waters. Obtaining permits under this act can be time-consuming, especially if the project could potentially impact any bodies of water.

The Clean Air Act (CAA) and the Federal Land Policy and Management Act (FLPMA) play similar roles. The CAA regulates air emissions and establishes National Ambient Air Quality Standards. Energy projects often require permits under the CAA to ensure that the projects do not violate these air quality standards. The FLPMA governs how the Bureau of Land Management manages public lands. Energy projects proposed on public lands must undergo a rigorous review process under FLPMA, adding further time and cost burdens to obtaining permits.

Siting authority is another significant issue for finishing energy infrastructure projects on time and on budget. This term refers to the power to approve the location of new energy projects, such as power plants, transmission lines, or pipelines. This authority is often split between federal, state, and local governments. A project may need to secure permits from multiple agencies at different levels of government, each with its own set of requirements and review processes. This fragmentation can result in significant delays and increased costs for energy projects. Democrats often prioritize completing the projects with federal power, while Republicans focus on giving the state ultimate authority.

The Fiscal Responsibility Act and Permitting Reform

This year’s debt ceiling negotiations revealed a willingness to change existing permitting legislation. Support for reform emerged from both sides of the aisle, with legislators such as Representatives Brad Wenstrup (R-OH), Scott Peters (D-CA), Mike Waltz (R-FL), and Nancy Mace (R-SC), as well as Senators John Hickenlooper (D-CO) and Joe Manchin (D-WV) discussing common ground during an event earlier this summer. Though this momentum did not culminate in comprehensive legislative reform, bipartisan efforts nevertheless resulted in some positive changes. 

The Fiscal Responsibility Act (FRA) enacted in June 2023 set a new two-year limit on NEPA’s environmental impact statements, which at present take four and a half years on average. That said, if an agency misses the two-year deadline, all they have to do is “consult” with permit applicants. The Act doesn’t specify what this consultation entails, but it could become a loophole for further delays. 

Furthermore, the time limit starts whenever the agency proposes that action is required. This could be one of three dates: when the agency decides the project needs an EIS or EA, when the agency tells the project sponsors that their application is complete, or when the agency publishes its official notice of intent to write an EIS. Of course, the agency wants to start the countdown as late as possible. To compound the issue, the current definition of proposal leaves room for interpretation, meaning that defining it might require court intervention. 

Ironically, a major reason why an EIS takes so long has nothing to do with the agencies themselves. Competitors and environmental groups often use litigation as a way to kill off projects they don’t approve of, forcing EIS authors to be incredibly detailed and careful when reviewing a project to head off potential litigation avenues. For example, New Jersey filed a NEPA lawsuit earlier this year against Manhattan’s congestion toll project on the grounds that the impacts on New Jersey were not studied enough. This is a common occurrence. Instead of suing on shaky grounds and possibly losing, an affected group claims that the EIS didn’t analyze “all significant impacts,” requiring agencies to spend excessive time on analysis instead of constructing the project.

The FRA does make some realistic changes to NEPA. It shifts the responsibility for drafting the EIS from every agency involved to the agency with the most jurisdiction over a project. For example, if a number of agencies were in charge of constructing an interstate highway, they might designate the Federal Highway Administration as the lead agency, and it would supervise the EIS accordingly. The act also permits the project proponents to prepare their own EIS for the agencies. This change has the potential to significantly improve permitting for project proponents, as it gives them far more control over the speed of the process. 

In the months since the debt ceiling negotiations rekindled the conversation, there have been a number of proposals for permitting reform. Each of the proposals has positive elements, but some are better than others.

Proposals from the Executive Branch

Recently, the White House Council on Environmental Quality released phase two of its own reform plan for NEPA. The rule proposed by the Biden administration aims to ensure timely and unified environmental reviews while upholding, and in some cases increasing, existing environmental regulation. Despite the council’s attempts at speeding up the process, by restoring and clarifying many of NEPA’s original regulations, as well as expanding the power of federal agencies, the rule might open “future projects up to new litigation and extended delays,” as expressed by Congressman Bruce Westerman (R-AR).

The administration’s proposed reforms were perhaps influenced by the Supreme Court’s ruling on the Mountain Valley Pipeline project (MVP), which Senator Joe Manchin (D-WV) managed to expedite during FRA negotiations. The MVP pipeline project was proposed in order to bring natural gas, a more environmentally friendly alternative to other power sources, across the midwest. The provision barred all litigation on the pipeline unless taken to a federal appeals court — much to the chagrin of environmental advocates, who sought to halt the project with excessive lawsuits. They responded with more litigation, drawing production to a standstill once again. On July 27, the U.S. Supreme Court allowed the project to proceed, upholding a Biden administration request to Congress’s “constitutional prerogatives to amend retroactively the relevant legal standards and processes in order to hasten the completion of an infrastructure project it considers vital to the national interest.”

Congressional Reform Proposals

Well before the Biden administration’s proposal, Sen. Manchin reintroduced the Building American Energy Security Act (S. 1399). He first introduced the act to the Senate in December 2022, where it was blocked by a tie vote. Similar to what was later enacted in the FRA, the Manchin bill proposed to set a two-year deadline on all environmental reviews, rather than environmental impact statements specifically. Additionally, if an agency misses their deadline, project sponsors would be able to have a court order the agency to finish the review within 90 days. The Act also would have created a 150-day statute of limitations for all litigation and ensured expedited consideration for energy project permits, prioritizing projects of strategic national importance. 

Sens. Tom Carper (D-DE) and Brian Schatz (D-HI) have also released the Promoting Efficient and Engaged Reviews (PEER) Act. While it proposes a two-year review timeline for environmental reviews, it allows for a “senior agency official” to bypass that deadline as long as they provide a written justification. More positively, the PEER Act would accelerate the planning, siting, and construction of interregional transmission lines. However, the bill’s proposal to solve slow review times involves increasing agency funding, including $500 million for the EPA, and broadening programmatic reviews, which the bill’s sponsors claim will streamline the process.

In June, Sen. Martin Heinrich (D-NM) introduced the Facilitating America’s Siting of Transmission and Electric Reliability (FASTER) Act. It would grant the Federal Energy Regulatory Commission’s (FERC) siting authority, uses community benefits agreements to garner local support for projects, and would set a maximum of 3 years for FERC to approve or deny a project. 

The most recent Republican-led permitting reform bill was the Revitalizing the Economy by Simplifying Timelines and Assuring Regulatory Transparency (RESTART) Act (S. 1449) of May 2023. Introduced by Sen. Shelley Moore Capito (R-WV) and eight cosponsors, the RESTART Act includes a one-year timeline for environmental assessments and a two-year timeline for environmental impact statements. If an agency doesn’t meet the deadline, the project will be considered approved. Moreover, it bars litigation if an agency deemed a project to have no significant environmental impact at the time it began. The Act also lightens restrictions of the CWA and the ESA. 

Conclusion

The current permitting process for energy projects in the United States presents significant obstacles to bringing new sources of energy online and achieving the clean energy goals set by many lawmakers. The bipartisan recognition of this as an issue and the willingness for reform are promising steps forward. However, efforts must balance the need for speed and efficiency with respect for states’ rights and the taxpayer. Congress should consider proposals like the PEER Act and the FASTER Act which attempt to speed permitting through federal funding, with caution. Congress should also aspire to reform the environmental permitting process to ensure that it does not create counterproductive restrictions and insurmountable bureaucratic barriers.