Permitting Reform Is A Decoy For Ramping Up Gas

Editor’s note: This story was co-published with The American Prospect.

A just-released permitting reform deal crafted by Sen. Joe Manchin (D-W.Va.) and Senate Majority Leader Chuck Schumer (D-N.Y.) is being touted by lawmakers and the fossil fuel industry as a way to reform misguided environmental laws allegedly blocking the deployment of clean energy around the country.

But a close reading of the legislative text suggests that the primary function of the bill is to empower the president to unilaterally speed up a handful of energy projects, while requiring that at least five of them boost fossil fuels. It would also fast-track the Mountain Valley Pipeline, helping the natural gas industry take advantage of an unprecedented opportunity to sell American gas to a hungry global market.

Yet liberal pundits are helping launder the bill as necessary for building renewables, focusing on a grab-bag of additional measures that would tweak the environmental review process, even as huge factual disputes remain as to how those provisions would impact federal permitting for renewables.

Liberal backers of the bill have developed an acute anxiety that red tape is holding up clean energy construction. The main target of their criticism is the half-century-old National Environmental Policy Act (NEPA), the crown jewel of environmental legislation that mandates a set of procedures to unearth any big environmental or public health impacts before a federal project breaks ground.

But legal experts said major questions remain about whether the bill would fix the actual causes of delay in permitting for energy projects, such as federal agency capacity and state and local opposition to renewables.

Manchin’s Energy Independence and Security Act, which was circulating to Capitol Hill offices on Tuesday evening, limits NEPA reviews to one or two years and shortens the statute of limitations from six years to 150 days, curtailing opportunities for people to oppose energy infrastructure and cutting the time frame that agencies have to review projects.

The legislation, which Schumer has promised to include in a stopgap funding measure that must pass by the end of next week to avoid a government shutdown, faces a steep uphill battle to passage. When Manchin and Schumer announced they had reached an agreement in July on an energy and health care spending bill, they also said they had “reached agreement with President Biden and Speaker Pelosi to pass comprehensive permitting reform legislation before the end of this fiscal year.” The fiscal year ends September 30.

A leaked draft of that proposal drew immediate backlash from Democrats, with House Natural Resources Committee chairman Raúl Grijalva (D-Ariz.) leading nearly 80 House Democrats across the ideological spectrum in demanding House Speaker Nancy Pelosi (D-Calif.) keep the permitting deal out of the government spending measure.

In the Senate, Manchin has said that he will need about 20 Republican votes to pass the measure, but no Republican senator has committed to supporting his bill. GOP senators led by Manchin’s West Virginia counterpart Shelley Moore Capito released their own permitting reform proposal last week. Sen. Jeff Merkley (D-Ore.) is organizing a Senate letter along the same lines as Grijalva’s in the House, with several co-signers.

The draft now makes new offshore oil and gas projects eligible for a fast-track permitting process known as FAST-41, which was put in place under the Obama administration. Only one offshore oil and gas project is currently being permitted under FAST-41, and it has been paused since March 2020.

The bill text could also block current lawsuits aimed at slowing or halting the controversial Mountain Valley Pipeline, mimicking similar language in the Republican permitting proposal. Even conservative Democrat Tim Kaine of Virginia is fuming. (“I will do everything I can to oppose it,” Kaine said about the pipeline provision on Wednesday night). Manchin and Schumer have together raked in more than $340,000 of campaign cash from one of the companies leading the project.

Still, plenty of Democrats are praising the measure for removing barriers to getting energy infrastructure federal permits. “The President supports this legislation to promote energy security, boost our ability to get clean energy built, and get that energy connected to the grid,” Biden spokesperson Karine Jean-Pierre said in a statement after the bill was released. “Today, far too many energy projects face delays — keeping us from generating and shipping critical, cost-saving clean energy to families and businesses across America.”

An influential set of liberal policy analysts emphasizing energy security and infrastructure buildout, whose growing influence is backed by Silicon Valley, have lent their support to the deal. The Institute for Progress, an advocacy group “promoting scientific, technological, and industrial progress” backed by several tech moguls including cryptocurrency billionaire Sam Bankman-Fried and former Google CEO Eric Schmidt, published an article last week slamming NEPA as a costly hurdle to the construction of clean energy.

The authors refer to the current pipeline of projects at the Department of Energy (DOE), where 42 percent of active NEPA projects are related to clean energy, transmission or conservation, while just 15 percent are related to fossil fuels. This is evidence, the paper concludes, that “If anything, NEPA likely stifles newer, environmentally-friendly industries more than older incumbents.”

The sentiment has been echoed by “supply-side liberal” Ezra Klein, who wrote in a recent column about implementing the IRA, “streamlined permitting will do more to accelerate clean energy than it will to encourage the use of fossil fuels. New clean energy infrastructure will be built far faster, and at far larger scale, than new fossil fuel infrastructure.”

The DOE is currently attempting to overhaul the energy system towards clean energy, and its pipeline is heavily and deliberately slanted toward renewable energy projects. It’s not a representative microcosm of the national portfolio of projects, such as those at the Interior Department, where fossil fuels are more heavily represented.

There is no centralized federal database with information about NEPA, and the vast majority of projects are dealt with through categorical exclusions. Since information about those are never disclosed, it’s not possible to cobble together a full portrait of projects undergoing NEPA review.

But a paper published earlier this year goes further than most prior research. Existing studies have focused on Environmental Impact Statements, the highest level of review, which account for just 1 percent of all NEPA decisions.

NEPA critics cite a federal government study from 2020 which found that EIS reviews take an average of 4.5 years to complete and are on average 661 pages long as evidence of the law’s excess.

But the new paper, by environmental lawyers John Ruple and Jamie Pleune, and statistician Erik Heiny, looked at 41,000 NEPA decisions completed by the U.S. Forest Service between 2004 and 2020, examining factors driving review time, and found that “a less rigorous level of analysis often fails to deliver faster decisions.”

NEPA’s legal rigor is not the source of delay, the researchers found. If stringent requirements were slowing down projects, Pleune said in an interview, “you would expect distinct spheres clumped into specific levels of analysis. You would have very fast categorical exclusions, and very slow environmental impact statements. But that’s not what you have. You have some categorical exclusions taking as long as an environmental impact statement.”

Pleune and her colleagues found that understaffing at agencies was a key driver of delays in the projects they examined. Matt Darling, a fellow at the libertarian Niskanen Center, which supports the deal, acknowledged this in an interview.

“Right now, we have a regulatory state that is ill-suited for the administrative capacities that we have. You could beef up the administrative capacities, [or] you could tone down the regulatory state,” he said. Asked how that should be solved, Darling said, “that’s beyond me.”

Some right-wing analysts agree that NEPA isn’t the key impediment to building. Mike McKenna, an energy lobbyist with MWR Strategies who headed President Trump’s DOE transition team, said the project is unlikely to change the permitting process very much, since it targets NEPA, a procedural tool for communities to seek review of projects, rather than the laws they actually invoke to protect themselves.

“There’s not a single project I can think of that has been significantly delayed because of NEPA itself,” McKenna said. “If you’re serious about permitting, you have to get to the Clean Water Act, the Historic Preservation Act, the Clean Air Act, the Endangered Species Act.”

The Institute for Progress critiques NEPA at length, before pivoting to solutions largely focused on the Federal Energy Regulatory Commission (FERC), the agency responsible for siting interstate transmission lines and natural gas infrastructure.

FERC has played a key role in quickly approving natural gas pipelines, rubber-stamping nearly every project that comes across its desk under the “public convenience and necessity” standard. But the agency lacks permitting authority over electricity transmission lines, which instead lies with states and localities, requiring developers to seek multiple permits for the same project. The Institute for Progress suggests that FERC be given this coordinating power.

The permitting bill text would substantially reform FERC’s role in the transmission process, allowing the Secretary of Energy, at FERC’s request, to designate electricity transmission projects as in the "national interest.”

But it’s not clear what the impacts of that reform would be. “It’s really hard to make a prediction about whether that change would be significant,” said Ari Peskoe, Director of the Electricity Law Initiative at Harvard Law School. “For the typical transmission projects that are running through the utility industry, I think there are other hurdles that those projects face.”

The legislation would also grant FERC the authority to allocate costs based on who benefits most from transmission projects, a measure that Peskoe said could be substantial, although he pointed out that previous “cost allocation proceedings at FERC have been contentious. Obviously, companies would prefer to reap benefits from new infrastructure while also avoid paying for it… Any new authority from Congress that clearly authorizes FERC to consider the full range of transmission’s benefits when it considers who pays for new transmission will be helpful.”

“Senator [Brian] Schatz [(D-Hawaii)] stuck this [transmission] thing into this bill to suddenly make it a heroic transmission bill. That’s not the way you legislate,” said Jean Su of the Center for Biological Diversity. “It’s totally random, it has nothing to do with the rest of the bill, and it actually is totally divorced from the multiple other bills that exist and actually are trying to tackle this problem.”

Schatz has presented his support for the bill that makes it easier to build natural gas pipelines as a necessary compromise with Manchin in order to “make it easier to build these big planet saving projects.” But the liberals writing in favor of the bill’s pro-renewable impacts have also explicitly said they support ramping up natural gas exports.

“There’s a very solid case, from a climate change and energy security perspective, that you should be doing more to have more natural gas transport capacity,” Arnab Datta, one author of the Institute for Progress paper, said in an interview. “In a world of rising energy demand, especially in places like India, Kenya, or Ghana, where they want better standards of living or better quality of life, we need to be thinking about the best way for those countries not to rely on coal. Having cheap natural gas for them would be much better.”

The bill itself makes this argument about the Mountain Valley Pipeline, saying that project would “reduce carbon emissions” even though the government has not released any official estimates proving that is the case. Environmental groups estimate the pipeline will have the emissions equivalent of 23 coal-fired power plants.

Erin Overturf, an attorney at environmental group Earthjustice, called the argument that gas sent overseas would reduce global emissions “deeply flawed,” partly since increasing gas exports requires the U.S. to build long-lasting transport infrastructure. Even if exported gas is used to replace coal, researchers have found, methane leaks and intentional releases may eliminate any emissions savings.

Meanwhile, the natural gas industry itself has taken to marketing the bill as a boon for green energy. On Bloomberg TV earlier this month, Alan Armstrong, CEO of an Oklahoma-based natural gas company, argued for “getting it done such that we can move ahead with very effectively building out the infrastructure in the U.S., both for the sake of natural gas pipelines and renewables.”