Following weeks of anticipation, US Senator Joe Manchin (D-WV) released the text of the Energy Independence and Security Act of 2022, his permitting reform legislation, on September 21, 2022. As part of an agreement to win Senator Manchin’s support of the Inflation Reduction Act, Democratic leadership committed to bringing energy infrastructure permitting reform to a vote this year, namely by including it in a continuing resolution (CR) to extend government funding before the end of the fiscal year on September 30.
Whether this legislative tactic will succeed remains uncertain, as opposition voiced by some Democrats in the Senate and House of Representatives could mean that a large number of Republican votes will be required for passage. And Republicans have a competing proposal that may derail any support they would lend to Senator Manchin’s proposal.
Overview: Energy Independence and Security Act of 2022
At bottom, the Energy Independence and Security Act would help to streamline the federal approval process for major energy infrastructure projects and accelerate agency reviews of these projects.
Significant aspects of the proposal include the following:
- Setting a timeframe for completing National Environmental Policy Act (NEPA) reviews for major energy and natural resource projects. Specifically, where an environmental impact statement (EIS) must be completed, federal agencies would have two years to complete. Where the less extensive environmental assessment (EA) is required, federal agencies would have one year.
- Requiring all other permitting to be issued within 180 days of completing the NEPA review.
- Requiring designation of and establishing responsibilities for a lead agency to coordinate project reviews and ensure a complete and timely review process.
- Setting a 150-day statute of limitations for challenging projects in court and requiring courts to set a reasonable schedule, not to exceed 180 days, for agencies to act on judicial decisions that remand to the agency or vacate an issued permit.
Strategically Important Projects List
The Energy Independence and Security Act also requires the president to maintain a list of 25 strategically important energy and natural resource projects. In consultation with the secretary of energy, secretary of the interior, administrator of the Environmental Protection Agency (EPA), and the Federal Energy Regulatory Commission (FERC), the president is required to identify 25 projects within 90 days of enactment and to update the list of projects every 180 days thereafter for the next 10 years.
Designated projects must require an EA or EIS and review by two or more federal or state agencies, cost more than $250 million, and have sufficient financial support from the project sponsor to ensure project completion. The president will give priority to projects that will significantly advance one or more of the following objectives: reducing energy prices in the United States, reducing greenhouse gas emissions, improving electric reliability, advancing emerging energy technologies, strengthening domestic energy supply chains, and creating jobs paying prevailing wages.
Of the 25 projects, at least
- four must be for the mining, extraction, beneficiation, or processing of critical minerals;
- six must be to generate or store energy without use of fossil fuels;
- five must be related to producing, processing, transporting, or storing fossil fuels;
- two must be electric transmission projects;
- two must be carbon capture, utilization, transportation, or storage projects; and
- one must be to produce, transport, or store clean hydrogen.
FERC
The Energy Independence and Security Act also clarifies that FERC has jurisdiction to regulate interstate hydrogen infrastructure under the Natural Gas Act. Currently, the Natural Gas Act does not specifically address FERC’s jurisdiction over hydrogen pipelines and storage facilities. The Energy Independence and Security Act amends the definition of “natural gas” as set forth in Section 2 of the Natural Gas Act (15 U.S.C. § 717a) to mean “(A) natural gas unmixed; (B) any mixture of natural and artificial gas; or (C) hydrogen mixed or unmixed with natural gas.” The Energy Independence and Security Act serves as a step toward addressing the regulatory uncertainty that currently exists with respect to the federal agency (or agencies) that can exercise jurisdiction over hydrogen infrastructure.
The Energy Independence and Security Act amends the Federal Power Act to clarify that FERC has the authority to promote and encourage the construction or modification of electricity transmission facilities, to direct the construction of transmission determined to be in the national interest (upon application by a state or utility), and to issue, after notice and hearing opportunity, a construction permit for a project conditionally determined by the secretary of energy to be in the national interest if FERC also finds the project satisfies a list of relevant considerations. In addition to giving the federal government increased permitting authority for transmission lines that are found to be in the national interest, the Energy Independence and Security Act requires FERC to ensure that project costs are allocated to customers that benefit and allows FERC to approve payments from utilities to jurisdictions that are impacted by a project.
Mountain Valley Pipeline
Finally, the proposed legislation creates a process for an expedited approval of the controversial Mountain Valley Pipeline project, eliminates judicial review of certain pipeline permits, and directs that any appellate review of the project would be pursuant to the original and exclusive jurisdiction of the US Court of Appeals for the District of Columbia Circuit.
Political Prospects
At the time of this writing, it remains uncertain whether Senator Manchin and Senate Majority Leader Chuck Schumer will be able to secure the 60 votes needed to ensure that permitting reform is attached to the CR.
At a minimum, 10 Republican Senators will have to cross the aisle to support voting on the legislation. Republicans recently introduced their own permitting reform legislation, authored by fellow West Virginia Senator Shelley Moore Capito, and seem resistant to supporting Manchin, given his role in passing the Inflation Reduction Act via reconciliation. Furthermore, Senator Bernie Sanders (I-VT), and potentially more progressive Democrats, have threatened to withhold support for permitting reform. Each Democratic defection will only increase the number of Republicans required to move the proposal forward.
Finally, the deadline to pass a CR before the end of the fiscal year is quickly approaching and the text of the Manchin proposal is only now being reviewed by the rest of the Senate. Senator Manchin has said that he has a commitment from leadership to move his proposal without amendments, which could speed up the process also but make negotiations with Republicans more difficult.
With all that said, the Energy Independence and Security Act is worthy of analysis, regardless of whether it is ultimately included in the upcoming CR. In the event that the proposal is not included in the CR, it will likely serve as the basis for future negotiations, whether in the lame-duck period or in the 118th Congress. Of course, those negotiations will hinge on the outcome of the midterm elections. We will monitor developments and reevaluate our analysis as a path forward becomes clearer.
Competing Proposal: Simplify Timelines and Assure Regulatory Transparency (START) Act
Earlier in September, Senator Moore Capito introduced the Simplify Timelines and Assure Regulatory Transparency (START) Act, also aimed at streamlining the permitting process. The bill includes the following provisions:
- Codifying in statute the NEPA regulations promulgated by the Trump administration, the Navigable Waters Protection Rule’s definition of “waters of the United States,” and Nationwide Permits issued or modified in 2021. Changes to NEPA include limiting the time to prepare environmental impact statements to two years and to prepare environmental assessments to one year, as also reflected in Senator Manchin’s proposal; limiting the length and complexity of environmental impact statements and environmental assessments, requiring that considered effects must be reasonably foreseeable and have a reasonably close causal relationship to the proposed action; and requiring that considered alternatives must be technically and economically feasible.
- Prohibiting the use of the Biden-Harris administration’s interim estimates for the social cost of greenhouse gases.
- Granting a state the right to develop energy resources on federal lands within its borders and the sole right to promulgate regulations or requirements on hydraulic fracturing on lands within its borders.
- Reducing the time for Endangered Species Act consultations from 90 to 60 days.
- Setting a 60-day statute of limitations to challenge final agency actions regarding judicial review of issuance of a permit, license, or similar permission for energy projects.
- Allowing federal agencies to use NEPA categorical exclusions promulgated by another federal agency.
Senator Moore Capito’s proposal does not expressly address hydrogen or carbon capture, utilization, and storage projects. Although such projects would still benefit from the permitting reform proposals, the bill does not, for example, subject hydrogen to regulation pursuant to the Natural Gas Act.
Any movement on Senator Moore Capito’s proposal would likely hinge on Republicans winning control of Congress in the November elections.
Government affairs manager David Mendelsohn contributed to this blog post.