Experts React: Senators Manchin and Barrasso Announce Permitting Reform Bill

Commentary by Quill Robinson, Kunro Irié, Ray Cai, andCy McGeady

Published July 25, 2024

On July 22, 2024, U.S. senators Joe Manchin (I-WV) and John Barrasso (R-WY), chairman and ranking member, respectively, of the Senate Energy and Natural Resources Committee, released a bipartisan bill to reform the permitting process for energy projects in the United States. The Energy Permitting Reform Act of 2024 aims to enhance energy security and accelerate the deployment of clean energy technologies necessary for decarbonization.

In this commentary, CSIS scholars explore the significance of this bill.

Permitting Reform Progress, Not Perfection | Quill Robinson

Providing Legal Clarity on Fossil Fuel Disputes | Kunro Irié

No Panacea, But Still a Boon for Renewables | Ray Cai

U.S. Economic Strategy Relies on a Bigger Grid; This Legislation Gets It | Cy McGeady

Permitting Reform Progress, Not Perfection

Quill Robinson, Senior Program Manager and Associate Fellow, Energy Security and Climate Change Program

The Infrastructure Investment and Jobs Act and the Inflation Reduction Act (IRA) have catalyzed hundreds of billions of dollars in investment in clean energy manufacturing and deployment in the United States over the last several years. Despite this historic influx of capital, the federal permitting process has proven to be a chokepoint, slowing the deployment of the clean energy infrastructure necessary to meet the United States' climate goals. According to one study, 80 percent of the IRA's 2030 emissions reduction potential could be lost if transmission expansion remains at the current rate of 1 percent per year. The need to streamline the permitting process to achieve the emissions reduction potential of the Biden-Harris administration's landmark climate laws has brought Democratic climate hawks on Capitol Hill into the permitting reform conversation.

Congressional Republicans have consistently supported expediting the permitting process for fossil fuel projects to grow domestic energy production and enhance the United States' energy security. The Trump administration significantly narrowed the application of the National Environmental Policy Act (NEPA) (a fixture of the federal permitting process), an action that was later reversed by the Biden-Harris administration. In 2023, Republicans negotiated modest reforms to NEPA as a part of the debt ceiling package. Today, there is a growing bipartisan consensus that the permitting status quo is untenable, though Republicans and Democrats differ in their ambition for reform and ultimate goals.

The Manchin-Barrasso bill is the product of over a year of hearings and bipartisan negotiations. It is a compromise that includes provisions that will benefit both fossil fuel and clean energy projects. However, it is important to note that Senator Manchin formally left the Democratic Party earlier this year and that the fossil fuel-related provisions he negotiated are viewed unfavorably by some members of his former party and their allies in the environmental community. On the other side of the aisle, some Republican members of Congress may argue that the bill does not go far enough. With the election approaching, the Energy Permitting Reform Act's path to the president's desk is long. Nevertheless, it is an important marker of progress on addressing a challenge hindering the United States' energy security and climate goals.

Providing Legal Clarity on Fossil Fuel Disputes

Kunro Irié, Visiting Fellow, Energy Security and Climate Change Program

Following several years of legal disputes in which the Biden administration's minimal scheduled lease sales were met with court challenges and reversals, the proposed bill would reinvigorate lease sales and permitting on public lands. The Bureau of Land Management is required to hold lease sales of onshore acreages every year, and under the Outer Continental Shelf Lands Act, the Bureau of Ocean Energy Management is charged with developing offshore lease sales that "best meet the energy needs for the 5-year period following." Shortly after taking office, President Biden announced a sweeping moratorium on all new leases on public lands and offshore waters. Subsequent legal challenges negated the moratorium in August 2022. Both bureaus have since released the minimal amount of acreage, which has drawn additional legal challenges from both industry and environmental groups.

By requiring the Department of the Interior to hold at least one offshore lease sale per year for a minimum of five leases to be granted from 2025 to 2029, as well as by requiring the department to offer onshore leases of at least 2 million acres or 50 percent of the total leases that received submissions of interest from industry, this bill could allow for a clearer legal framework in offshore acreage leasing. Current production from federally leased lands and waters accounts for approximately 25 percent of total oil and 11 percent of total natural gas production. Although the lack of new leases might not be as impactful in the short term, it will become more apparent over the long term as existing fields deplete. The reforms have already been welcomed by industry groups, but they may be a hard pill to swallow for environmental groups, as they could act as a foundation for a revival of regular lease sales.

The proposed legislation also seeks to resolve the liquefied natural gas (LNG) export approvals debate that emerged earlier this year. This bill would, in practice, eliminate the "LNG pause" by ruling that the Department of Energy (DOE) shall proceed on applications under existing study results until new studies are finalized. It also includes a strict 90-day decision timeline for the DOE to assess if a project should not be approved-addressing concerns that DOE authorizations have dragged on for many months. However, the bill does not restrict any studies or subsequent updates on the approval process, including any updates to the "public interest" interpretation. Considering the current political environment, the time the bill may take to pass, and the fact that the Biden-Harris administration expects to conclude ongoing studies and restart with potentially updated standards in spring 2025, the immediate impact of this bill on LNG is unclear. Even so, it would provide clarity over disputed points about the LNG approval and review process.

No Panacea, But Still a Boon for Renewables

Ray Cai, Associate Fellow, Energy Security and Climate Change Program

The Manchin-Barrasso bill could provide relief and reassurance to the United States' burgeoning renewable energy industry. Today, low-carbon energy sources account for over 95 percent of the 2,600 gigawatts of capacity in interconnection queues. Only a fraction of these proposed projects, however, may end up being built; a mere 14 percent of total capacity that sought connection from 2000 to 2018 went into service, according to some estimates.

Local, state, and federal permitting roadblocks have been a chief culprit. Currently, it takes an average of more than three years for renewable generation projects and four years for transmission lines to clear a tortuous mix of government reviews, which includes the oft-criticized Environmental Impact Statement (EIS) process mandated by NEPA. With lawsuits thrown into the mix, some projects have taken more than 10 years to receive regulatory approval.

Though by no means exhaustive, the proposed legislation addresses multiple permitting pain points across the renewable value chain. Elevated targets for renewable deployment on federal land (Section 207) and offshore (Section 302) are obvious positives. The statute of limitations, expedited review, and agency recourse clauses (Section 101) could accelerate judicial processes and decrease litigation exposures. Categorical exclusions (CATEX) exempting "low disturbance activities" from EIS processes (Section 206) will reduce wait times and compliance costs for some types of projects, such as expansions or modifications (e.g., adding storage), at renewable sites.

For mining, where activity has stalled despite bipartisan efforts pushing for a more robust domestic supply chain, the bill shores up existing laws through leasing provisions and enables potential critical mineral projects to use federal land through the establishment of a "mill site" claim (Section 210). Similar CATEX and leasing provisions are made available to geothermal energy (Section 208); coming on the heels of the bipartisan Geothermal Energy Optimization Act introduced in March, this could buoy commercialization momentum in the nascent sector.

While further study will likely be needed, favorable initial reactions from renewable energy stakeholders (see press releases from the American Council on Renewable Energy, American Clean Power Association, and Solar Energy Industries Association) point to clear potential upsides for the industry.

U.S. Economic Strategy Relies on a Bigger Grid; This Legislation Gets It

Cy McGeady, Fellow, Energy Security and Climate Change Program

If rebuilding the United States' position in semiconductor fabrication or preserving leadership in artificial intelligence technology is in the strategic national interest, then by extension, so too is the expansion of the U.S. power grid to serve these and other growing, energy-hungry industries. This package of proposed reforms understands the stakes and rightfully targets the high-voltage, interregional transmission projects that deliver maximum strategic benefit to the United States but that are paradoxically the most burdened by status quo permitting and planning regimes.

At a high level, this legislation clarifies and organizes the overall architecture of U.S. transmission planning. Doing away with National Interest Electric Transmission Corridors, which are legally and bureaucratically cumbersome, affirms the primary role of states and utilities in developing transmission project plans within regional working groups.

The federal role is to ensure that transparent, regular, and rigorous transmission planning proceeds across the nation in these regional formats. To this end, the legislation directs the Federal Energy Regulatory Commission to issue a new interregional transmission planning rule roughly similar to the recent Order No. 1920, which covered regional planning. Both rules will deliver transmission projects that create bigger and better integrated pools of generation, which in turn will deliver widespread economic and reliability benefits to household and industry ratepayers.

The legislation preserves and streamlines the use of federal backstop siting authority. This ensures that narrowly defined state interests and the free-rider problem don't result in an investment equilibrium that undermines the national strategic interest. Projects developed under the new interregional planning rule would automatically meet the national interest criteria for backstop siting authority, and given the structure of Order No. 1920, projects developed under regional planning would likely qualify as well.

In total, this legislation brings desperately needed coherence to the overall planning landscape, and alongside important permitting provisions elsewhere in the text, it could deliver the strategic energy infrastructure that long-term U.S. economic strategy requires.

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