Permitting Reform Realization - More Laws or More Rules or Both?

The Fiscal Responsibility Act (FRA) of 2023 was signed into law on June 3 and included a salvo of permitting reforms focused on federal environmental reviews. Many “rulemaking” efforts are in process now to implement FRA law as well as previous congressional directives in the Inflation Reduction Act and Bipartisan Infrastructure Law (BIL). There is broad bipartisan consensus that more reforms are needed to support different partisan project preferences. Reforming the initial environmental review processes for energy infrastructure projects is important, but most agree it won’t be meaningful if projects are litigated out of existence after achieving approvals and starting construction. Different versions of bills proposed by permitting reform champions include critical judicial review reforms that reduce time limits for bringing lawsuits and expedite proceedings and any permitting agency responses to rulings.

As the 2024 presidential election looms over the next 119th Congress, the 118th may be the best chance for additional statutory reform. While the Senate Committee on Energy and Natural Resources has held hearings for testimony to drive a “regular order” stand-alone permitting reform bill, it will be difficult to get stand-alone legislation considered in the last months of the year, when Congress takes up “must pass” legislation such as all appropriations bills and the National Defense Authorization Act (NDAA). Therefore, the chances a new stand-alone bill will emerge have likely decreased, and the same powers that prevented adding permitting reform to the NDAA last year will likely do so again this year.

Manchin-led Momentum Makes More Reform by this Congress Still Possible, but not Probable.

This May in Permitting Perplexions - Possibilities Persist From Hearings, Bills, and Presidential Priorities, our view was permitting reform would happen this year, but a stand-alone bill wasn’t likely, and that completion of the Mountain Valley Pipeline project (MVP) would be included in any such legislation. So far, this has all occurred. But in June, after the FRA passed, we wrote in Permitting Reform Passed by Congress Was Upstaged by the Supreme Court, that more reform would still be needed to really increase certainty and sustain capital allocation to energy infrastructure (especially transmission), and that momentum would be hard to maintain. Since then, the mostly Manchin-led momentum for permitting reform has continued. As recently as July 26, the Senate Committee on Energy and Natural Resources was conducting more hearings for testimony to drive a “regular order” stand-alone permitting reform bill.

A list of many proposed permitting bills was also in Permitting Perplexions, and a few more have since emerged, but if nothing happens this year reform momentum will need to be sustained in the New Year if Congress intends to prevent the persistent permitting problems it has yet to address.

More Reform from Rulemaking In Process

Tracking federal government rulemaking is a full time job, and the relevance to Arbo customers varies. Aside from the environmental (NEPA) reform, which will impact pipelines, most of the in-process rulemaking targets transmission by attempting to federalize enough of the siting and permitting to add significant speed to the process and reduce the risk of individual states or interstate conflicts causing delays and cancellations. Arbo will analyze the impacts of each of these rules to interpret impacts to customers in future ArViews:

• The White House Council on Environmental Quality (CEQ) is seeking public comments on The Bipartisan Permitting Reform Implementation Rule to enforce changes to the National Environmental Policy Act (NEPA).
• DOE is proposing a rule and seeking comments to establish the Coordinated Interagency Transmission Authorizations and Permits (CITAP) Program to accelerate federal environmental review and permitting processes for qualifying onshore electric transmission facilities.
• DOE is in the first stage of process to designate National Interstate Electrical Transmission Corridors (NIETC), which will work in conjunction with “backstop authority” to federalize some siting and permitting authority.
• FERC (with recent pressure from Congress) continues to work multiple rules around transmission cost allocation and planning and backstop siting authority.
• FERC issued Order 2023 on July 27 (See Spark or Static? FERC’s New Generator Transmission Interconnection Rule) to revise procedures for interconnection to the grid and reduce queue backlogs.

Litigation Still Looms over any Building Boom

Reliability, security, affordability, and reducibility of emissions are all critical considerations for energy infrastructure. The amount of continued attention is a big positive. Transmission is now the primary focus and - tragically - should be even more so given the possible causal role of an aging grid in the Hawaii wildfires. The reforms to date of the federal environmental review processes for infrastructure projects are important, but addressing the litigation that happens downstream of project approvals could have an even greater impact on the future of both political parties preferred infrastructure.

For example, a quick look at the time frames for litigating various aspects of MVP and a similarly located project, since canceled, Atlantic Coast Pipeline, shows just how long litigation can take.

As seen above, repeated litigation that lasts approximately one year each can not only slow but ultimately kill a project as the delays and costs mount.

Washington watchers and infrastructure stakeholders are attuned to the end of August recess and actions Congress may or may not take to pass more permitting reform this year. As the 2024 presidential election looms over the next 119th Congress, the 118th may be the best chance for additional statutory reform for the foreseeable future, unless a single party obtains a clean sweep in the 2024 elections. Without it, more reform is limited to, and its impacts reliant on, agency rulemaking.

If you would like to discuss the recent rulemaking developments, please contact us.