Can Biden Have It Both Ways? New Rules Aimed at Faster Permitting While Bolstering Analysis

From NEPA Phase 2 to power plant emissions to transmission siting, the Biden administration has recently issued a slew of new rules and funding that are part of the administration’s broader vision to expedite permits for clean energy initiatives while also bolstering the analysis of environmental and social impacts of projects.

These rules are collectively and individually impactful to natural gas and power markets as they have the potential to speed up or slow down project development and increase investment in some sectors while decreasing it in others.

Keeping the big picture in mind is important, but the devil is in the details, so we will be taking a close look at each of these in separate articles starting with the Department of Energy’s (DOE) Centralized Integrated Transmission Application Process (CITAP), which seeks to streamline transmission project permitting. CITAP significantly improves the transmission process, but it has limitations as well.

Rulemaking Snapshot

Permitting reform happens in one of three ways, ideally all at once: better process, more resources, or better analysis. To improve the process, we can try changing laws, but Congress is often too divided. So a step down from that is changing or issuing new regulations or “rules” that implement these laws and creating interagency and stakeholder agreements that will improve analytical efficiency and quality. Pair that with adequate funding, people, and analytical tools and voila! Problem solved.

If only it were that easy. There are hidden balancing acts in all of this. For example, trying to improve analytical quality and avoid litigation through early stakeholder engagement may help in some cases, but it might also give opponents more time to cause problems like filing lawsuits. There is also a balance between doing enough analysis to avoid legal issues and ensure a well-designed project and not making the process too slow or expensive. Additionally, most new rules in the permitting reform arena are litigated themselves. Finally, throwing money or people at a problem doesn’t necessarily fix it and the tech industry is littered with failed or underused IT solutions.

We will explore all of these rules in light of this balancing act, starting with DOE’s CITAP rule. But first, it is important to keep an eye on the big picture as these rules are all part of a larger plan.

Transmission: FERC and DOE

In response to the persistent challenges facing the nation's electrical grid, DOE unveiled two final rules aimed at expediting the permitting process: CITAP and a rule streamlining environmental reviews for specific projects. FERC also just announced that it will convene a special meeting on Monday, May 13, 2024, to consider two transmission reform proposals that will be on the Open Meeting the following day that aim to update its regulations on 1) transmission planning and cost-sharing, and 2) siting and permitting transmission facilities.

This is all against the backdrop of DOE's “Building a Better Grid initiative,” FERC’s interconnection Queuing Order 2023, and newly announced DOE funding for transmission projects, which we discussed in depth in the following articles:

• FERC’s Authority Over Electric Transmission Likely Still Not Enough to Overcome State Objections
• Spark or Static? FERC’s New Generator Transmission Interconnection Rule
• Transmission Bids for Green Spending at DOE

Coal and Gas Power Plant Emissions: EPA

The EPA recently finalized four significant new regulations targeting power plant emissions, spanning from greenhouse gas emissions standards to hazardous air pollutants and wastewater discharge standards. From setting stringent limits requiring certain power plants to capture up to 90% of CO2 emissions to revising mercury and air toxics standards, each regulation addresses a distinct aspect of power plant pollution. Challenges are all but certain.

This new rule emerges against the backdrop of other regulations, such as the “Good Neighbor Plan,” which, having originated in the Obama administration, still aligns with President Biden's goals of curbing pollution and addressing the effects of fossil fuel combustion. The plan mandates 23 states to lower their downwind ozone pollution levels, and we anticipate a Supreme Court ruling on it this summer.

Environmental Analysis: CEQ’s NEPA Phase II Regulations

The White House Council on Environmental Quality (CEQ) just issued its Phase II regulations implementing the National Environmental Policy Act (NEPA). These regulations are much more extensive than the more targeted Phase 1 regulations and are significant not only for their substantive approach to things like climate change and environmental justice analysis, but also because once they go into effect, agencies will need to begin their own implementation procedures. CEQ will also need to review its own guidance and update it accordingly. Just as they were under President Trump, we expect these to be litigated.

Spotlight on DOE’s CITAP and a New Categorical Exclusion

The road to Hell may be paved with good intentions, but how the Hell do we build new transmission projects? According to DOE, you need the four key components in the CITAP program and a new categorical exclusion under NEPA. But are these just well intended or do that have teeth? The four components are:

1. A single lead agency: DOE will coordinate all necessary federal environmental reviews and authorizations.
2. A two-year permitting deadline: If an agency does not adhere to the two-year deadline, then developers can begin a presidential appeal process to request the president to issue the appropriate permit.
3. A centralized online portal: the portal will allow project developers to directly upload relevant information and will serve as a centralized resource for federal permitting communications removing the need for siloed and separate communications with individual agencies.
4. Community engagement: Transmission developers must create comprehensive public participation plans before seeking federal authorizations.

The new Categorical Exclusion (CE) under NEPA covers certain energy storage systems (e.g. batteries) in areas that have already been developed. DOE also updated existing CEs to streamline environmental reviews for projects using existing transmission rights of way. A CE is an action that the agency has shown over time does not have a “significant impact” on the environment. Once established, a CE eliminates the requirement for additional environmental reviews every time the agency undertakes that action.

The first three components of the CITAP and the CE provisions are all aimed at saving time, which is a clear problem with permitting transmission lines. DOE’s website points to a study by the Niskanen Center that compiled electric transmission permitting data from 2010 to 2020. The study showed that environmental impact statement reviews across all electric transmission projects from 2010 to 2020 took an average of 4.3 years to complete, with a median of 3.7 years and a range stretching from 1 to 11 years.

To tackle this issue, the most impactful provision is the elevation procedure embedded within the two-year permitting deadline. Governed by a separate Memorandum of Understanding signed by agencies in May 2023, this process enables a developer or a state where a delayed project is situated to appeal the permit delay for a presidential decision. In practice, no agency wants to have that appeal process triggered, so it operates as a real incentive to hit the two-year deadline.

The CE provisions carry significant impact by offering an efficient means of cutting down environmental analysis while encouraging development in pre-disturbed areas and existing rights of way. The time-saving potential of the central portal is contingent upon its development quality. However, individual filing procedures at disparate federal agencies are not well known for their collective efficiencies, so the likelihood of the portal being an improvement and resulting in time savings is strong.

The primary goal of community engagement plans is not to save time, but to engage in meaningful consultation. However, proponents theorize that time savings result from conflict avoidance. DOE rightly characterizes this as “a new and novel approach to transmission infrastructure development,” but time savings could go either way and still depend on the level of opposition.

Notably missing from this program is condemnation or “eminent domain” authority. DOE does not have it by statute, so regulations cannot provide it. However, Section 216(e) of the Infrastructure Investment and Jobs Act (IIJA) did grant eminent domain authority to developers through FERC (which is the subject of one of its upcoming rulemakings), but state-owned land was expressly excluded from that provision, so state opposition could still be an issue. For example, Louisiana lawmakers are considering Senate Bill 108, which proposes banning expropriation (condemnation in Louisiana) for transmission projects that don't primarily serve Louisiana. The bill passed the Louisiana Senate with overwhelming support and has been recently amended and passed to a third reading in the Louisiana House.

Back to the Big Picture

Returning to the core tenets of permitting reform — better process, more resources, or better analysis — this rule encompasses elements of all three. However, it also functions as a vital component within a broader framework. Its closest counterparts are the forthcoming FERC transmission reform initiatives, particularly the one centered on siting, alongside FERC's Order 2023, as transmission lines must integrate with the grid. Moreover, the new CEQ NEPA regulations will govern any federal aspect of a transmission project, typically activated by crossing federal land, accessing federal funding, or necessitating federal permits for environmental considerations such as air, water, or endangered species.

If you would like more detailed analysis of new regulations or their impacts, please contact us.