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After discussions and lengthy negotiations, Senators John Barrasso (R-WY) and Joe Manchin (I-WV) released their comprehensive permitting bill. The 75-page Energy Permitting Reform Act of 2024 addresses permitting challenges for all types of energy and infrastructure within the Energy and Natural Resources Committee’s jurisdiction.
Here are 10 initial takeaways from the bill.
With advancements in technology, the potential for geothermal as a clean, firm power source is massive. The Act would create categorical exclusions (CEs) under the National Environmental Policy Act (NEPA) for geothermal activities. Critically, by amending the Energy Policy Act of 2005, CEs would also apply to the exploration and development of geothermal, putting it on equal footing with oil and natural gas.
In January, President Biden announced a pause on pending decisions for increased liquefied natural gas (LNG) exports. The pause affects countries that do not have a free trade agreement with the United States, which are where most LNG exports go. As we’ve detailed extensively, the administration’s pause is misguided. The economic, environmental, and national security reasons for expanding LNG exports are strong. Rather than hold a project in limbo, the bill would mandate the Department of Energy (DOE) to approve or deny permits for LNG exports within 90 days. Failure to act in that timeframe would deem the projects automatically approved.
Unless there is a national security concern, U.S. companies should be able to freely trade goods around the world, including energy. The government should not limit natural gas exports any more than it should limit exports of cars, clothes, or corn. The 90-day timeline is a marked improvement but Congress should remove DOE from the process altogether.
Through better coordination and expanded categorical exclusions, the Act would make it easier to permit and develop renewable projects on federal lands. It includes CEs for areas of five acres or less that have already undergone a NEPA review, areas that have had the same activity occurring within the last five years, and previously disturbed or developed land. These are pragmatic fixes that will expedite permitting for renewable projects that have minimal environmental impact.
The United States has an abundance of minerals critical to meeting our energy, economic, and national security needs. Yet, development of these resources is painfully slow, which in some instances results in reliance on countries that are hostile to American interests and have far worse environmental standards. A recent report from S&P Global found the U.S. has the second slowest mine development times in the world; it takes nearly 29 years from discovery to production. American mines face more uncertainty and litigation than their counterparts in Canada and Australia. This bill offers a solution to the Rosemont court decision, which affects other mining support activities on federal lands.
The compromise solution of permitting mill sites for mining-related activities on a limited amount of acreage will provide more certainty for the industry while assuaging environmental concerns of expanded operations. More reform is necessary, particularly Clean Water Act modernization, to capitalize on America’s mineral abundance, but that falls outside the committee’s jurisdiction.
Often overlooked as a clean, reliable electricity source, extending hydropower licenses is unnecessarily costly and time-consuming. One California dam operator applied for a new permit in 2005 and despite meeting all the requirements, the Federal Energy Regulatory Commission still had not approved the permit. While dams could operate on temporary approvals, the high costs and drawn-out process disincentivize re-licensing, which could take clean power off the grid and threaten reliability. As Politico noted, more than 160 hydropower projects will have their respective licenses expire in the next 3.5 years. While more reform is necessary to make it easier to license new hydropower projects and re-license existing ones, the bill’s four-year license extension for covered projects is a step in the right direction.
The legislation clarifies and requires the Department of Interior to hold onshore and offshore lease sales for oil, natural gas, and offshore wind, and sets a goal of authorizing 50 gigawatts of renewable energy on federal land by the end of the decade. Capitalizing on America’s energy abundance is good and requiring agencies open access is better than the agency stalling. However, agencies have stalled even when there are statutory requirements to hold lease sales. While market signals determine how much interest those lease sales gather from industry, an overhaul of the entire process is necessary. Rather than setting arbitrary goals and holding a fixed amount of lease sales, policymakers should reform the process to be more responsive to market demand.
Two of the biggest obstacles that inhibit project development are judicial review and, generally speaking, the entire NEPA process. NEPA is woefully outdated as a tool to protect the environment, as evidenced from the constant issuances of categorical exclusions. NEPA has disproportionately harmed clean energy production and frivolous lawsuits led largely by national environmental activist organizations have stalled everything from critical minerals and wind projects to transmission expansion and more effective forest management. The Act would establish a 150-day statute of limitations to seek judicial review from an agency, but that still leaves plenty of time for activists to sue. More comprehensive judicial reform and NEPA reform are necessary but are outside of the Senate Energy and Natural Resource Committee’s jurisdiction.
There is consensus that transmission bottlenecks exist and relieving those bottlenecks through some combination of upgrading existing infrastructure and building out new lines can help lower costs, improve grid reliability and reduce emissions. How much transmission expansion we need is subject to debate.
The legislation proposes reforms to improve interstate and interregional transmission planning and permitting. The bill would create efficiencies in these processes and further bolster FERC’s authority by eliminating the DOE’s National Interest Electric Transmission Corridor designation process. However, two of the major sticking points for any bipartisan agreement on transmission policy have been cost allocation (who pays versus who benefits) and the relationship between federal and state authority. While the section-by-section of the bill emphasizes that “customers receiving no benefit or benefits that are trivial in relation to the costs shall not be made to pay”, there is also some broad language for the construction permit to be consistent with the public interest and with “sound national energy policy and will enhance energy independence.” Well-defined benefits that center around improving affordability and reliability while restricting cost socialization among other consumers is a must. Any vague, more subjective considerations can muddle that picture.
By law, the North American Electric Reliability Corporation (NERC) conducts periodic reports on the reliability and resource adequacy of the bulk power system. With power plant regulations that could prematurely close existing firm power generation, subsidies for mature technologies that distort energy markets and investment in new generation, and overbearing regulations that make it increasingly difficult to increase supplies, NERC is already sounding the alarm with warnings of future power outages and inadequate resource capacity. This Act would require that NERC assessment of proposed regulations “identify reasonably foreseeable adverse effects of the proposal on grid reliability, consider available ways to mitigate the effects of its proposal, and account for input from affected transmission organizations (e.g., Regional Transmission Organizations).” The bill would also require NERC’s assessment to be submitted to FERC and the public docket for any federal agency regulation, standard, or rule. Grid reliability assessments are an important tool for grid operators, policymakers, and the general public. Having their knowledge included as part of future regulations will help give them even more weight in the process. There may be legitimate reasons for why these assessments would only apply for proposed regulations after the date of enactment (of the Energy Permitting Reform Act), but having them for regulations like the Clean Power Plan 2.0 would be very useful.
More analysis of the bill is necessary to fully understand the potential impacts of the Energy Permitting Reform Act of 2024. There is much more to digest – both additional benefits and potential drawbacks and unintended consequences. Further, additional, ambitious reform is necessary to fix other systemic policy and regulatory problems that thwart new energy supplies, which must emanate from outside the Energy and Natural Resources Committee. But an initial quick read of the bill suggests there’s a lot to like including streamlining the permitting process to help lower energy bills and emissions and improving electric reliability and America’s competitive advantage as an energy superpower.
While more reforms will be needed, the Energy Permitting Reform Act of 2024 is a good start.
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