Manchin’s permitting-reform bill splits Dems, pro-renewables groups

The Energy Independence and Security Act of 2022, the permitting-reform bill introduced by Senator Joe Manchin and Senate Majority Leader Chuck Schumer on Wednesday, has split clean-energy advocates and Democrats in Congress over a fundamental question: whether to support a law that could make it easier to build harmful fossil fuel infrastructure — but would also make it easier to build the clean energy infrastructure needed to prevent the worst impacts of climate change.

It’s a debate that’s been brewing since last month, when Schumer (D-New York) promised to support permitting reforms demanded by Manchin in exchange for the West Virginia Democrat’s support of the Inflation Reduction Act. The resulting bill, which includes rules for streamlining fossil fuel pipeline projects and special dispensation for the Mountain Valley fossil gas pipeline running through Manchin’s home state, has come under fire from environmental and conservation groups as a giveaway to fossil fuel interests — a view that’s shared by a number of Democratic members of Congress.

But groups representing clean energy manufacturers, developers and corporate buyers have joined Schumer, House Speaker Nancy Pelosi (D-California) and President Joe Biden in backing the bill. They say it could dramatically streamline and speed the development of solar and wind power, energy storage projects and other key carbon-free resources.

In particular, the bill could significantly lower the barriers to building a key piece of that low-carbon electricity infrastructure: new high-voltage transmission lines to carry solar and wind power from where it’s most cheaply produced to where it’s in greatest demand.

The U.S. will need to double or triple its already record-setting growth rates for solar and wind power to cut carbon at the pace needed to meet its emissions-reduction targets. 

And for that to happen, thousands of miles of new transmission infrastructure will need to be built, say studies on zero-carbon scenarios from the U.S. National Renewable Energy Laboratory, the Massachusetts Institute of Technology and Princeton University.

But currently, transmission projects take up to a decade or more to build — if they can get built at all. In the past two decades, a number of high-profile transmission projects from the windy Midwest plains to the forests of Maine and the Pacific Northwest have faltered in the face of opposition from states, counties, private landowners and conservation groups that have used regulatory or legal means to block permits to build them.

At the same time, many transmission projects proposed by utilities and grid operators to state regulators have run aground on disputes over how to share project costs between the utilities involved, and by extension, their customers, who bear those costs via increased rates.

Transmission policy reform could thus be ​“one of the single best ways to ensure that we have clean, renewable energy and that it’s not stranded — that it reaches where it needs to reach,” said Allison Nyholm, vice president of policy at the American Council on Renewable Energy, which is supporting the permitting-reform bill.

“We need streamlining for transmission to happen, without a doubt,” she said. 

New federal authority over how transmission projects are permitted and paid for

The new Manchin-Schumer bill would streamline transmission by giving the Federal Energy Regulatory Commission (FERC), which regulates interstate electricity and fossil gas transmission, and its parent agency, the U.S. Department of Energy, new powers to address permitting and cost-allocation issues at a federal level.

Because transmission lines cross so many property and jurisdictional boundaries, they’re ​“far harder to permit than generation and just about every other type of energy infrastructure,” said Rob Gramlich, founder and president of consultancy Grid Strategies.

U.S. Senator Martin Heinrich, a New Mexico Democrat who has introduced transmission reform bills that did not get passed, made a similar point earlier this month. ​“I’ve got enough experience with these big engineering projects and transmission lines to know that right now, it takes too long to go through this process,” Heinrich told The Washington Post in an early September interview.

Provisions in the bill would allow FERC to designate certain transmission projects as being in the national interest, Gramlich said. That could allow federal agencies to expedite permitting and in some cases override objections from state utility and energy regulators.

DOE had a similar authority granted to it with the passage of the 2005 Energy Policy Act. But attempts to wield that authority have foundered on legal and jurisdictional challenges.

The new bill ​“is definitely an improvement on that” prior structure, said Elise Caplan, director of electricity policy at the American Council on Renewable Energy, with a simplified process that allows FERC to request a national-interest designation for individual projects and gain approval from DOE to use its permitting authority.

Using federal authority to override state or local permitting decisions is a controversial prospect, to be sure.

The National Association of Regulatory Utility Commissioners sent a letter to Senate leaders last week warning that these provisions would ​“serve only to centralize and consolidate federal authority, limiting or eliminating state and local input into siting decisions.” The letter warned that projects being pursued under this new federal oversight authority could remain vulnerable to further legal challenges and delays.

FERC Chair Richard Glick acknowledged those concerns in comments following the agency’s monthly meeting on Thursday, noting that any effort to streamline transmission permitting ​“needs to be done together” with states. FERC has proposed giving states a clear role in working with federally regulated grid operators and utilities to develop long-range transmission planning.

The new Manchin-Schumer bill would also give a host of federal agencies including DOE the authority to designate 25 ​“energy projects of strategic national importance” that would qualify for expedited review. The legislation also identifies the specific types of projects (and how many of each) that can receive this designation, including critical minerals mining and processing, clean energy generation or manufacturing, carbon dioxide, clean hydrogen and fossil fuels or biofuels production and storage. Of the 25 projects, two can be ​“electric transmission projects.”

Besides giving FERC and DOE these permitting authorities, another provision of the bill would give FERC the power to assess and distribute costs between utilities and grid jurisdictions for these national-interest transmission projects. That alone would ​“be the most significant transmission legislation passed in at least 15 years,” Gramlich said.

Cost allocation tends to be one of the more fractious and potentially deal-breaking issues for transmission projects, he said. ​“The problem is, they provide benefits to everybody, but that means they’re public goods — and it’s notoriously hard to recover the cost of public goods.”

When it comes to transmission projects that benefit all the utilities that use a particular grid, each utility has an incentive to find ways to avoid paying the costs and get other utilities to pay them instead. These disputes over who pays can devolve into regulatory deadlocks that persist for years, as has happened with the Midcontinent Independent System Operator’s efforts to gain consensus over cost-sharing between its northern and southern regions.

Last year, a study commissioned by the American Council on Renewable Energy’s Macro Grid Initiative assessed whether a set of 22 major transmission projects already underway across the country could deliver enough clean energy to amount to nearly 10 percent of the amount needed to decarbonize the entire U.S. electricity supply. These projects have largely secured the permits needed to start construction, but ​“most of them do not have a pathway for cost allocation or recovery,” Gramlich said.

Allocating costs is particularly tricky when it comes to a class of transmission for which there is no working model, he said: projects that connect wide swaths of the country across multiple states and grid-operator jurisdictions.

The new federal Inflation Reduction Act is expected to reduce U.S. greenhouse gas emissions by between 30 and 45 percent by 2030 through its $369 billion in funding for tax credits, grants, loans and other support for a range of clean energy and climate investments.

But whether or not it reaches the high end of that range — which is still below the target of 50 percent by 2030 that the Biden administration is aiming for — may well depend on how much transmission can be built to handle the doubling or tripling of today’s already record-setting rates of solar and wind power deployments.

That’s according to a report released last week by Resources for the Future and the Clean Energy Buyers Institute, the nonprofit arm of the Clean Energy Buyers Alliance (CEBA), which represents companies with clean energy goals including Amazon, Disney, Google, Meta, Microsoft, Target and Walmart. That report finds that a national high-capacity transmission ​“macrogrid” would yield benefits that are three to four times the estimated costs — a conclusion that echoes similar nationwide grid analyses from NREL and a just-released model from Princeton’s Zero Lab.

“Expanding transmission capacity through these reforms will lead to significantly reduced costs for customers by more efficiently moving least-cost power; improved grid reliability by connecting available power across broader regions; and decreased pollution by integrating greater amounts of clean energy,” Bryn Baker, CEBA’s senior director of market and policy innovation, said in a Wednesday statement.

There’s a big jump from passing transmission-friendly policies to actually building such a massive nation-spanning transmission system, of course. Transmission development has stagnated over the past decade, and policies to coordinate power lines that cross states or grid regions are still in the development stages at FERC.

Grid Strategies analyzed the likely impacts of the bill’s provisions by extrapolating how they could speed up and cut costs on new transmission. 

President Joe Biden cited these benefits in a Wednesday statement supporting the legislation: ​“Today, far too many energy projects face delays — keeping us from generating and shipping critical, cost-saving clean energy to families and businesses across America.”

Getting to yes on transmission — and saying no to more fossil fuels 

Gramlich noted that all of the aforementioned transmission policies are separate from the provisions of the newly proposed bill that have drawn the harshest opposition from clean energy and environmental justice groups: those that put limits on how federal environmental laws are applied to energy projects.

Opponents say those parts of the bill would strip protections against new fossil fuel pipeline projects from the communities at most risk of being harmed by them. The provisions include limiting the time environmental reviews can take under the National Environmental Policy Act (NEPA) to no more than two years for major projects and one year for other projects, and setting a 150-day limit on bringing court challenges to decisions made under the law. Today there are no time limits on NEPA reviews, which can last more than four years on average, according to a 2020 report from the White House’s Council on Environmental Quality.

The bill would also limit states’ authority under the Clean Water Act to object to federal projects such as oil and gas pipelines. This authority has been used to block new fossil gas pipelines by states such as New York. And it contains specific provisions requiring federal agencies to ​“take all necessary actions to permit the timely completion” of the Mountain Valley Pipeline project, which crosses Manchin’s home state of West Virginia.

Manchin defended these changes in a Wednesday press conference as good for consumers and U.S. competitiveness. ​“No matter what you want to build, whether it’s transmission pipelines or hydropower dams, more often than not, it takes too long and drives up costs,” he said.

But groups that oppose the bill say that the potential to use these streamlining provisions to proceed with fossil fuel pipelines against the interests of states, communities and the environment outweighs whatever potential benefits the bill’s provisions could provide for clean energy development.

“We don’t need to gut the Clean Water Act and other bedrock environmental laws to build out wind and solar energy,” Brett Hartl, government affairs director at the Center for Biological Diversity, said in a Wednesday statement. ​“Any member of Congress who claims this disastrous legislation is vital for ramping up renewables either doesn’t understand or is ignoring the enormous fossil fuel giveaways at stake.”

That view was also expressed in a letter signed by more than 400 climate scientists and energy researchers such as Mark Jacobson and Michael Mann asking Pelosi and Schumer to reject the bill.

Schumer plans to attach the permitting-reform bill to a continuing resolution that would allow funding of the federal government to extend past the end of the fiscal year on September 30. Failure to pass that bill could lead to a government shutdown.

Some Senate Republicans, many of whom have been calling for similar permitting reforms for years, have aligned in opposition to Schumer’s plan, which will need to get 60 votes to overcome the threat of a filibuster. Many Senate Democrats have said they support the bill, although Tim Kaine of Virginia has joined Vermont Independent Bernie Sanders in opposing it.

In the House of Representatives, Pelosi supports the bill. But a group of 77 House Democrats have come out against it and are promoting their own legislation, the Environmental Justice for All Act, which focuses on enhancing the role of communities of color, low-income communities, and Native and Indigenous nations in the National Environmental Policy Act review process.

Representative Raúl M. Grijalva, the Arizona Democrat who chairs the House Natural Resources Committee and is lead sponsor of the ​“EJ for All” bill, said in a Thursday press conference that he supports policies that could increase the speed and scale of clean energy growth, and that the transmission policies the bill contains are ​“important and merit a discussion.”

But Grijalva added that he ​“can’t see a sugar-coating — including this issue — that makes everything” else that’s in the bill acceptable. 

Mildred McClain, founder of environmental justice group Harambee House/​Citizens for Environmental Justice, said at Thursday’s press conference that slow and cumbersome review processes aren’t the reason why energy projects take too long to be built. Instead, she blamed precarious project funding for delays caused by energy developers, and insufficient staffing and training at regulatory agencies for delays in review processes. Limiting environmental review threatens to ​“limit public participation and silence community voices,” she said.

Gramlich questioned whether the bill’s policies would really lead to a dramatic increase in fossil fuel infrastructure, noting that ​“concern about investing in stranded assets and declining demand for fuel” are more likely to limit growth in new pipelines.

He also noted that the Natural Gas Act has given FERC nationwide jurisdiction over permitting and siting fossil gas pipelines, whereas its authority over electricity transmission permitting and siting is far more limited.

“Transmission really is an interstate, multistate thing,” he said. ​“It needs to be much more at the federal level than it has been.” 

Past bills have proposed giving federal agencies more authority over transmission grid development, and it’s possible that the policies in the permitting-reform bill could be brought forward in future legislation if this bill isn’t passed, he said. ​“But there’s never been a commitment from the Senate majority leader, House speaker and president to attach something to a must-pass piece of legislation — and that’s what we have now.”