US energy sector pushes broader permitting bill

The inclusion of faster environmental reviews in a pending debt limit bill should only be the start of an overhaul to federal permitting, oil industry and renewable industry groups say.

The debt limit bill, which the US House of Representatives plans to vote on tonight, aims to fast-track the government's process to prepare reviews under the National Environmental Policy Act (NEPA), potentially avoiding situations such as the protracted review of the now-canceled 830,000 b/d Keystone XL pipeline. The debt bill would place a two-year deadline on the review of large projects, set page limits and expand the use of "categorical exclusions" that can speed along reviews, among other changes that the oil and gas industry have supported.

The bill could be a "game changer" for energy development and unlock billions of dollars in investments that have been slowed by the federal permitting process, industry group American Petroleum Institute president Mike Sommers said. But those changes are only the start to meaningful changes to federal permitting laws that have not been updated for decades.

"It's just one step of the process," Sommers said at an event held today by Punchbowl News. "We need to do something on the Clean Water Act. We need to do something on judicial reform as well because we get held up over and over again in the courts."

Permitting problems over the last five years have led to the cancellation of major gas pipelines in the northeastern US, such as the $8bn Atlantic Coast Pipeline and the $700 Constitution Pipeline. Oil and gas groups have backed Republican legislation that would make it harder for states to deny water permits, along with providing a fast-tracked process for courts and federal regulations to respond to permitting lawsuits.

But any bipartisan agreement later this year to expedite the permitting of oil and gas projects would almost certainly have to include language that Democrats want to make it easier to approve electric transmission projects and tie renewables into the grid. The White House earlier this month said those elements — along with federal siting authority for CO2 and hydrogen pipelines — should be part of a broader permitting deal.

The debt limit negotiators left a "lot on the table" for a broader permitting bill that could get bipartisan votes, American Clean Power Association chief executive Jason Grumet said. The renewable energy group has sought legislative language to make it easier to build out electric transmission needed for wind and solar projects.

"They did the smart easy stuff, which is what you should do when you're trying to get a bigger piece of legislation passed," Grumet said.

Democrats have yet to coalesce on the exact legislation they would like to expedite the approval of electric transmission and clean energy. Among the leading ideas is requiring states to ensure a minimum transfer capacity between electric grids, an idea that congressional committees could work on in the coming months as part of broader permitting negotiations.

Among the most contested energy provisions in the debt limit bill is its approval of the delayed $6.6bn Mountain Valley Pipeline, which environmentalists and some progressive Democrats argue will undercut President Joe Biden's climate agenda. Gas industry officials say they support finishing the project but worry that, absent broader permitting changes, congressional intervention risks becoming the only way to approve major projects or hold oil and gas lease sales.

"That is not the position we should be in," Sommers said. "We should have a regularized, permanent process that allows these projects to be built in a timely manner."

Despite the permitting wins for the energy sector in the debt bill, its passage could complicate the political dynamics to passing a second, broader permitting bill. By passing some of the permitting updates with broad consensus, Congress will be left largely with more complicated issues and and have less political pressure to come through with a deal, industry officials observing negotiations say.

By Chris Knight