US Senate passes debt bill in boost to permitting

The US Senate has passed a bipartisan bill to suspend the limit on federal debt and accelerate the permitting of energy projects, ensuring its enactment before a potential first-ever US default.

The measure will now go to President Joe Biden, who has vowed to sign the bill. Biden spent weeks negotiating the deal with US House of Representatives speaker Kevin McCarthy (R-California) and has supported its passage. Failure to pass the bill by 5 June could have caused a US default that economists warned could roil the global financial system and trigger millions of domestic job losses.

But in a relatively undramatic ending to weeks of anxiety and threats of a downgrading of the US credit rating, the Senate voted 63-36 late on 1 June to approve the bill after lawmakers voted down a series of amendments that would have jeopardized passage before the default deadline. The broad bipartisan support came as Republicans and Democrats each tried to claim victory in negotiations over the debt limit, which is currently capped at $31.4 trillion but will now be suspended until January 2025.

The final vote will take off the table an issue that has all but paralyzed Washington over the last month and forced Biden to cut short an overseas trip. Biden began bipartisan talks with congressional leaders before deciding to negotiate directly with McCarthy and his staff. House Republicans initially sought deep cuts to spending and the repeal of most of last year's Inflation Reduction Act, but the final deal leaves that law largely intact and only limits spending for fiscal years 2024-25.

The permitting revisions in the bill have won praise from oil industry and renewable energy groups, who see a chance to target the delays that can arise when projects are subject to review under the National Environmental Policy Act (NEPA). Reviews can drag on for years for major projects such as the now-canceled 830,000 b/d Keystone XL pipeline, frustrating developers that cannot move forward until the process is complete.

The debt limit bill will impose a two-year deadline for federal agencies to prepare complex NEPA reviews, with the option for developers to enforce missed deadlines in court. The bill also gives developers more of a role in preparing reviews and broadens the use of "categorical exclusions" that offer fast-tracked reviews of similar projects.

In a surprise to many energy lobbyists, the debt limit agreement unveiled last week includes language to issue federal permits for the $6.6bn Mountain Valley Pipeline, which has been held up because of lawsuits from environmentalists.

The 300-mile natural gas pipeline from West Virginia to Virginia is now on track to be completed this year, so long as it receives new state water permits to replace ones that were thrown out in court.

The approval of the Mountain Valley Pipeline delivered a victory to Senate Energy and Natural Resources Committee chairman Joe Manchin (D-West Virginia), whose vote for the Inflation Reduction Act was tied to a commitment to vote on a permitting bill that would also authorize the project. But the inclusion of the measure triggered backlash from climate groups and frustrated Biden allies such as US senator Tim Kaine (D-Virginia), who say the pipeline should not be allowed to sidestep the standard permitting process.

Oil industry groups and renewable energy interests are pushing Congress to take up a broader permitting bill later this year that would trade speeding permitting of electric transmission lines sought by Democrats with changes to support oil and gas pipelines sought by Republicans.

By Chris Knight