Democrats prepare overhaul to energy permitting

Market: Crude oil, Emissions, Natural gas, Oil products
01/08/22

A legislative side deal that US senator Joe Manchin (D-West Virginia) made with top Democrats in negotiations on a massive climate bill would fast-track permitting of natural gas pipelines, electric transmission and other energy projects.

The side agreement, a summary of which Manchin's office released today, includes plans for sweeping changes to federal permitting practices that have slowed down, or blocked entirely, the construction of natural gas pipelines and electric transmission lines. The summary offers new details of the "commonsense permitting reforms" that Manchin said President Joe Biden, US Senate majority leader Chuck Schumer (D-New York) and US House speaker Nancy Pelosi (D-California) pledged to advance as part of negotiations on a budget package with nearly $370bn in energy security and climate spending.

Manchin's agreement includes plans to limit the ability of states to use "section 401" water permits to block natural gas pipelines and other infrastructure, by restricting the scope of how states handle permits. It would also set a two-year limit for federal reviews of major energy projects under the National Environmental Policy Act and designate a lead agency to manage those reviews.

Those policies are similar to permitting changes made under former president Donald Trump that at the time won accolades from the oil and gas sector. Many Democrats fought Trump's attempts to fast-track pipeline permitting, but have pushed for ways to expedite electric transmission projects. Biden's own administration in June began to reverse the changes Trump made section 401 water permitting.

Manchin's side agreement also seeks to complete the $6.6bn Mountain Valley natural gas pipeline, which starts in West Virginia but has faced years of permitting-related delays. The agreement will require federal agencies to take all actions to "permit the construction" of the project and provide the US Court of Appeals for the DC Circuit jurisdiction over further lawsuits, the summary from Manchin's office said. It would also require a random assignment of federal judges to hear permit challenges for all types of energy projects.

US midstream company Equitrans Midstream, the lead developer of the Mountain Valley Pipeline, said it is working "diligently" with regulators to secure all required permits. The company has previously complained that many lawsuits involving the 300-mile natural gas pipeline were heard by the same three-judge panel on the US 4th Circuit Court of Appeals that repeatedly ruled against the project.

Democrats have yet to release legislative text for the energy permitting bill, which Manchin wants to be advanced this autumn. If the Senate ends up voting on the bill, it would need to be bipartisan and win the support of at least 60 Senators to avoid the threat of a filibuster.

Among the other parts of the energy permitting agreement include plans to give the US Federal Energy Regulatory Commission (FERC) more authority in overseeing the construction of interstate electric transmission pipelines. The US president would also be required to designated 25 high-priority energy projects — with a balanced list of project types — and then prioritize the permitting those projects.

The agreement would also "clarify" the role of the FERC in the regulation of interstate hydrogen pipelines and storage, import and export facilities. Hydrogen regulation is currently spread among multiple state and federal jurisdictions, and some industry officials have called for increased FERC control to speed hydrogen infrastructure development.

By Chris Knight and Emmeline Willey

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