Originally published for customers April 7, 2023
What’s the issue?
House Resolution 1 in each Congress is usually reserved for a bill that is the primary focus of the new Congress. After Republicans took control in January, they used that bill as a vehicle for expressing their views on energy policy.
Why does it matter?
Senator Schumer has indicated the bill is dead on arrival in the Senate. Similarly, President Biden has promised to veto it if it finds its way to his desk. But now that the theater of passing this “statement” bill is over, perhaps there is now room for some bipartisan legislation to address some concerns that both parties seem to share about the energy future for this country.
What’s our view?
One clear bipartisan view is that China is our enemy when it comes to the nation’s energy future. But if you strip the bill of its more partisan elements, there may be some areas where cross-aisle cooperation is possible even in this Congress.
House Resolution 1 (H.R.1) in each Congress is usually reserved for a bill that is the primary focus of the new Congress. After Republicans took control in January, they used that bill as a vehicle for expressing their views on energy policy. Senator Schumer has indicated the bill is dead on arrival in the Senate. Similarly, President Biden has promised to veto it if it finds its way to his desk. But now that the theater of passing this “statement” bill is over, there may be an opportunity to enact some bipartisan legislation to address concerns that both parties share about the energy future of this country.
One clear bipartisan view is that China is our enemy when it comes to the nation’s energy future. But if you strip the bill of its more partisan elements, there may be some areas where cross-aisle cooperation is possible even in this Congress.
The Main Provisions of the H.R.1
The newly installed Republican leadership in the House passed a rule that purportedly limits each bill to a single purpose. According to that rule, “a bill or joint resolution may not be introduced unless the sponsor submits for printing in the Congressional Record a statement setting forth the single subject of the bill or joint resolution.” The preamble of H.R.1 appears to satisfy this requirement by stating the purpose of the bill as being “ [to] lower energy costs by increasing American energy production, exports, infrastructure, and critical minerals processing, by promoting transparency, accountability, permitting, and production of American resources, and by improving water quality certification and energy projects, and for other purposes.” The preamble sure seems to be more than a single subject, but it nonetheless acts as a framework for considering the various aspects of the bill.
Increasing American Energy Production and Promoting Transparency
Much of the bill is dedicated to the first purpose identified in the preamble, “increasing American energy production, exports, infrastructure, and critical minerals processing, by promoting transparency, accountability, permitting, and production of American resources.” These provisions, which are generally found in the section of the bill with its own short name, the “TAPP American Resources Act,” are designed to increase fossil fuel production in all areas of the country. The bill requires a number of actions, including specifying the deadline for the Interior Department’s next five-year plan for oil and gas production, requiring a certain number of oil and gas lease sales each year in at least nine key energy producing states, and reducing the royalty rate for such leases.
These provisions alone would account for Senator Schumer’s and President Biden’s views about the bill. This is certainly true with respect to the many sections that roll back provisions found in the Inflation Reduction Act, a signature measure of President Biden during his first two years in office. Such measures have no chance of ever passing in the current Congress and are part of the theater of the bill. Some even expressly acknowledge their theatrical nature by stating that they are the “sense of Congress” without proposing any solution to the problem identified.
Improving Water Quality Certification
We have written extensively about the problems that natural gas pipelines have encountered in New York and New Jersey in obtaining approval under section 401 of the Clean Water Act. However, this problem has so far been limited in geographic scope to those two states. The bill attempts to address the perceived problems in two different ways.
First, it amends the language of Section 401 to limit a state’s ability to deny a permit to federally approved projects for actual discharges to the protected waters of the state. These provisions are fairly similar to a decision by the Second Circuit concerning the Constitution Pipeline that upheld New York’s denial of a water quality certificate to that project as proper given the state’s responsibility “for evaluating the environmental impacts of a proposed pipeline on New York waterbodies in light of the State's water quality standards.” This statute would essentially strengthen that holding and make it applicable across the entire country, including in circuits such as the Fourth Circuit, which may have a more lenient view on the standards a state can rely on to deny a certificate. Because this provision would apply generally to all projects, including renewable energy and traditional energy projects, we could see some version of it eventually finding its way into a bipartisan bill addressing permitting reform.
The same cannot be said for the second way in which the bill addresses water quality certificates. In this other section, which is applicable only to natural gas pipelines, the bill would eliminate entirely the need for a pipeline applicant to provide a water quality certificate from the states in which its project is located. Instead, FERC would be given sole authority to impose conditions in the certificate after considering input from the states in question. This provision, which would apply to only natural gas pipeline projects and not renewable energy projects, is unlikely to garner bipartisan support. In addition, it may result in a “be careful what you wish for” result for pipelines, if FERC falls back into the hands of a Democratic majority. At least for now, in most of the country the standards for water quality certificates are controlled by state agencies that are open to pipeline development. Putting control of this decision in FERC could allow that agency, controlled like it was just recently by a demagogic chairman, to use the water quality aspects of the project to make pipeline development more difficult even in states that are open to such development. In addition, this “solution” would not even solve the problem in New Jersey, because that state has not only the authority under section 401 of the Clean Water Act, but also the section 404 authority held by the U.S. Army Corps of Engineers in most of the country.
It is especially ironic that this measure is included in a bill that also requires FERC to formally withdraw the Certificate Policy Statement and Greenhouse Gas Policy that it issued under former Chairman Glick. A key concern about the Greenhouse Gas Policy is that Congress had never given FERC authority over greenhouse gas emissions and it was using that policy as a subterfuge to thwart pipeline development. One can only imagine what a future chairman could do to thwart pipeline development nationwide by using water quality authority that Congress has expressly granted to FERC.
Improving Energy Projects
The portion of the bill that would have the widest impact on energy projects is the provision that expressly enacts into law the regulations adopted by the Trump administration on July 16, 2020, titled “Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act” and then reversed by the Biden administration on April 20, 2022. While there may be aspects of these regulations that would be worthy of consideration, the connection to the Trump administration and the perception that the rules ignored fifty years of precedent make this portion of the bill a political third rail for Democratic politicians. Therefore, this portion of the bill is almost certainly dead on arrival in the Senate and even more so if it were to reach President Biden’s desk.
In addition to this provision, though, the bill did contain more tailored statutory changes that could potentially garner bipartisan support as they would be equally applicable to both traditional energy and renewable energy projects. One such provision is designed to streamline the granting of land rights for any “energy facility.” That term is broadly defined to include any facility the “primary purpose of which is the exploration for, or the development, production, conversion, gathering, storage, transfer, processing, or transportation of, any energy resource.” This section addresses not only the scope of the required environmental review, but limits judicial review of the decision to appeals filed by parties who participated in the environmental review, based on issues raised to the agency that issued the decision and is filed with the court within 120 days following the final decision. All of these types of reforms would be welcome, not only with respect to this specific class of decisions, but more generally across all permits and may be something that would attract bipartisan support.
For Other Purposes
The bill was passed essentially along party lines, with only four Democrats voting for it and only one Republican against it. However, during the consideration of the legislation, the House considered 37 amendments to the bill. Most of those amendments were adopted or rejected by voice vote, but 14 of the amendments were put to a recorded vote and from those we can gain some insight as to points of agreement between the parties by comparing the vote totals for each.
As seen above, only three amendments garnered support above the two-thirds level that the Constitution requires to override a presidential veto. Two of those provisions would limit the ability of the Chinese government to gain control over energy assets here in the U.S., and the third simply required local offices of three agencies to develop plans for promoting and advertising job openings in those offices. The next two provisions in order of most votes could best be described as limitations on any efforts by the federal government to restrict consumers’ ability to purchase and use gas stoves in their homes. One amendment that had been proposed in committee would have essentially forced the approval and completion of the Mountain Valley Pipeline project. House leadership didn’t even allow that amendment to be considered and that amendment has been converted into a stand-alone measure, which for now appears to be going nowhere in the Republican-controlled House.
Given this history, there appears to be little hope of a bipartisan package of reforms that would benefit both traditional energy projects and renewable energy projects. However, now that the Republicans have completed their act of legislative theater, perhaps real reform measures can be worked on quietly in the background and still find their way through to passage. Given the slight majorities in both chambers, we still believe that the only measures that can be adopted are those that benefit all forms of energy. We will continue to follow developments in both chambers.