Permit Reform for Energy Projects: A Clear Need for Time Limits and Simplification

 

     Everybody seems to agree that we need permit reform for energy projects. Well, almost everyone. I am guessing the environmentalist organizations that specialize in slowing and stopping energy projects are not in favor of permit reform. OK, maybe those environmental scientists that do 4.5 year (avg. for large energy projects according to the Council on Environmental Quality) environmental impact studies don’t favor reform either.

     Republican senators Shelley Moore Capito of West Virginia and John Barrasso of Wyoming, both ranking members of the Senate Energy and Natural Resources Committee and the Senate Environment and Public Works Committee, plan to introduce significant permit reforms to Congress in the near future. They note at the beginning of their op-ed:

 

“The federal permitting process forces American energy infrastructure to endure a maze of regulations, mountains of paperwork, bureaucratic foot-dragging, and costly studies. That’s all before the court battles begin.”

 

For critical minerals they note that it can take 10 years to get a mine permitted. That can impede our competitiveness and secure China’s monopolies. The same long time frame can be true for a hydroelectric dam. The environmentalist tactic of sue to delay has had a large impact on project viability and project cost, often adding billions of dollars and years to projects deemed necessary. This, no doubt, hurts the American economy. They write:

 

“Environmental activists skillfully exploit America’s broken permitting process. They even use their litigation as a selling point to raise huge sums of money.”

 

“Frivolous lawsuits are common. As a result, critical projects— pipelines, transmission lines, wind and solar farms, power plants, roads, tunnels, bridges, and mines — are significantly delayed or killed. The result is fewer jobs, higher prices and more imports, traffic and blackouts.”

 

They argue that the piecemeal permit reforms offered by Majority leader Chuck Schumer last year were not adequate. They’re plan has four principles:

 

1)     Permit reform should be technology neutral and fuel neutral, not favoring one technology or fuel over another.

2)     Permit reform must include enforceable timelines —with specific time limits on environmental reviews.

3)     There should be time limits on legal challenges. They’re proposal would require challenges to be limited to within 60 days of project approval. The goal is to eliminate the “endless litigation” that is now common and is meant clearly by the challengers to delay projects so that developers will give up as has happened on several large natural gas transmission pipelines.

4)     More limits on executive branch manipulation – this is in response to the Biden administration’s flouting of oil and gas lease sale rules. They note that the administration “has ignored laws requiring lease sales, doubled permitting times, slashed the lands available for projects, missed sales deadlines, and raised royalty rates and other fees.”

 

They also note that there are quite a few Senate Democrats that favor permit reform such as WV Senator Joe Manchin who tried to get permit reform going last year.

 

     It is not just oil and gas and critical minerals infrastructure that need permit reform but just about every kind of energy project. Nuclear energy projects are slowed significantly and cost more due to unnecessarily tedious permitting requirements and long timelines before approval. So too are hydroelectric projects where not only original permitting but required costly recertification processes are cumbersome.

     It should perhaps be pointed out that companies that are profitable are better able to mitigate environmental harms. That is why I have said that mitigation should trump litigation and that litigation often ends up reducing mitigation, which is the opposite of its intent. Many of the environmentalist challenges have resulted in more carbon emissions when the intent was less carbon emissions. Future potential economic challenges like stranded asset liabilities should be the concern of project developers and investors and not environmentalist groups like the Sierra Club. Determining whether a project is needed, as required by FERC for natural gas pipelines, also should not be something those environmental groups get to influence. The simple fact is that these biased environmentalist groups have been allowed to have enormous power and influence. They are, in essence, acting as a proxy for environmental regulators, adding new layers of requirements, even as they work not for the government nor for any economic interest, but only for their own biased interests.

     The case of the Mountain Valley Pipeline is exemplary in showing the results of litigation in slowing progress and inflating costs for projects. The pipeline was supposed to be finished in 2018 at a cost of $3.5 billion. The latest is that it was expected to be finally finished sometime later in 2023 at a cost of $6.6 billion. However, it was just hit with yet another snafu with a water permit. The project has been over 90% completed for a few years now. It is now 94% complete but must await the resolution of the latest challenge. Another pipeline, the Atlantic Coast Pipeline, with similar hopes to bring gas from Appalachia to the southeast where it is needed so that gas can replace coal in power plants, was killed a few years ago. The Mountain Valley Pipeline has also addressed climate concerns by committing to spend $150 million in carbon offsets via capturing and flaring vented methane at a notoriously gassy coal mine complex in Southwest Virginia. This is expected to make the project carbon neutral. The Mountain Valley Pipeline could also make more east coast LNG exports viable with a clear need from Asia and Europe for years to come. This could be the lowest emissions certified responsibly sourced Appalachian gas replacing coal for power and having the fastest and biggest reduction effect on carbon emissions. Many of these projects have been built before. The environmental risks and potential impacts are known in general so lengthy reviews and permitting times are not really a necessity by any stretch.

     In December 2016 I wrote a blog post about permit reform based on an op-ed by Senator Lisa Murkowski and businessman Jay Faison from January 2016. That was over 7 years ago. Thus, as the current Senators note – permit reform is long overdue. I wrote in my post:

 

Calls to Cut Regulatory Red Tape and Expedite Permitting

 

“In a January 2016 op-ed in the New York Times, Alaska senator Lisa Murkowski and businessman Jay Faison argued that new hydropower projects should be pursued, especially on existing locks and dams on the Ohio, Mississippi, Arkansas, and Alabama rivers. Indeed, this is now happening on some of those rivers. They also complained about environmental compliance costs and the time it takes for re-licensing existing facilities so they can continue operating (exceeding a decade and $50 million in some cases). They mention bills that were in both houses to expand hydropower as part of the larger energy bill that Obama threatened to veto. They also recommended “coordinating hydropower projects on a regionwide basis” to decrease permitting time and enhance environmental mitigation. They also mentioned new hydrokinetic technologies for converting tides, waves, ocean, and river currents into energy. Murkowski’s bill suggested giving permitting authority for hydropower projects to the FERC and to exclude other regulatory bodies like the U.S. Fish and Wildlife Service from the permitting process. While environmental groups charge that excluding the U.S. Fish and Wildlife Service, U.S. Forest Service, the National Park Service, and the Bureau of Indian Affairs from the permitting process would remove safeguards – there is little doubt that doing so would allow projects to be built faster and cheaper without such bureaucratic red tape. Murkowski’s argument is basically for expediting permitting for both new projects and re-licensing. Even the DOE recognizes these regulatory problems and suggests better cooperation between agencies. As in several other industries the permitting process has become cumbersome and needs to be more efficient.”

 

I would emphasize that one phrase again: “coordinating hydropower projects on a regionwide basis.” This kind of bundling for any energy project, especially of environmental impact statement data, can easily reduce permit duties and times. It has been done with required bat studies in some places. Sharing data in the same region rather than duplicating it over and over is one simple fix. There is no evidence that many similar studies in smaller areas are needed and that regional studies are inadequate. Unforeseen events do occur such as spills and leaks but there is no evidence that longer permit times and more rigorous impact studies prevent or reduce such events. There are also uncertainties with weather which can be compounded by limited construction windows for things like tree clearing and burying pipelines. Sedimentation and erosion challenges are not always predictable. Another thing they mention is having too many agencies having to sign off. In addition to federal agencies there are state agencies. Most of these agencies are not adequately staffed and have slow turnaround times. Those agencies should perhaps be part of the public comments process rather than having activists flood the public comments with general statements about “dirty fracked gas’ or “carbon bombs.” The process needs to be simplified in order to reduce time. Having sign-off power should mean being given a certain amount of time to raise reasonable objections and suggestions for improvement. Some of the public comments, particularly by local citizens affected, regardless of their approval or disapproval of the project, do act as useful input and can be seen as a kind of suggestions for improvement. In any case, time limits are clearly needed. The whole process has become ridiculous, as has been argued.

 

     J.P. Morgan CEO Jaimie Dimon in a recent letter to shareholders called for invoking eminent domain for renewable energy projects. It is true that there is quite a bit of public opposition to wind and solar projects around the U.S. as well as in Europe. Energy writer Robert Bryce keeps a database of this opposition in the U.S. U.S. pipelines have benefitted from eminent domain laws. However, pipelines by nature are difficult to move and obviously, sections can’t be skipped. Although utility-scale wind and solar projects can be quite large they can also be moved around. Pipelines also form a narrow right-of-way that can be easier to accommodate on large properties. Many people don’t want large swathes of their property to be covered by panels and turbines. One could say that the bad news is that if a vastly accelerated deployment of renewables is desired, it is likely that eminent domain would be needed since opposition will likely increase rapidly along with that accelerated deployment. Dimon also called for reform of permitting, interconnection queues (see my blog post from February 2023 for details about queue issues), and siting of projects. He worries that implementation of the Bipartisan Infrastructure Law, the CHIPs act, and the Inflation Reduction Act will be ineffective or too slow due to lack of investment in projects that have a hard time getting approved, mostly due to opposition to siting and difficulty with the interconnection queue. He also worries that that would put us behind target for solar buildout deemed necessary for decarbonization. He called for a Marshall Plan for global energy and food security. He is certainly bullish about green energy and again he suggests that robust investment is key but in order for that to happen projects need to go from proposal to reality much faster:

 

“Widespread investing across the private sector will aid domestic manufacturing, invigorate research and development in green innovation, help create resilient supply chains, lift up local economies and build the U.S. clean energy workforce by up to 9 million jobs over the next decade.”

 

     Permit reform has quite a few potential upsides: lower costs for developers, faster permitting times, reduced regulatory uncertainty, relief of bottlenecks in pipelines and interconnection ques, and faster deployment of renewable technologies. One might count reduced influence from biased environmentalists as a potential upside. One could argue that a potential downside is that the environment may be compromised. However, there is no evidence that slowing projects down decreases negative environmental impact. The permitting process should be focused on making sure the company is prepared for any contingencies that might arise. The government issues permits with input from local citizens and stakeholders in a public comments process. Those stakeholders can include other government agencies, state and local government agencies in the sign-off process, and people and groups in favor and not in favor of projects. Clearly, there is an outsized influence of people and well-funded groups not in favor of projects such as pipelines that are able to present numerous legal challenges. Climate change is often invoked as a general objection and perhaps as a reason (or excuse) to act aggressively against such projects. In such cases there is often less consideration for real-world near-term emissions reductions that projects like pipelines can enable.

      Permit reform for U.S. infrastructure in general, not just energy project permitting, is being pursued by a large coalition of chambers of commerce acting as business advocacy groups. On March 27, 2023 this coalition wrote a letter to Congress, noting the biggest obstacle to infrastructure is a broken permitting system. They called on Congress to Permit America to Build and thry called the current permitting process “outdated, inefficient, and unpredictable.” The letter states that the groups are united around the following principles:

 

·       Predictability – Project developers and financers must have an appropriate level of certainty regarding the scope and timeline for project reviews, including any related judicial review.

 

·       Efficiency – Interagency coordination must be improved to optimize public and private resources while driving better environmental and community outcomes.

 

·       Transparency – Project sponsors and the public must have visibility into the project permitting milestones and schedule through an easily accessible public means.

 

·       Stakeholder Input – All relevant stakeholders must be adequately informed and have the opportunity to provide input within a reasonable and consistent timeframe.

  

 

References:

Genuine permitting reform is long overdue. Sen. Shelley Moore Capito and Sen. John Barrasso. West Virginia News. April 11, 2023. Genuine permitting reform is long overdue | Opinion | wvnews.com

The Future of New American Hydroelectric Projects, Large and Small: Towards More Efficient and Environmental Use of Hydro Resources and Hope for Faster and Better Permitting and Regulatory Assessments. Kent C. Stewart. Blue Dragon Energy Blog. December 11, 2016. Blue Dragon Energy Blog: The Future of New American Hydroelectric Projects, Large and Small: Towards More Efficient and Environmental Use of Hydro Resources and Hope for Faster and Better Permitting and Regulatory Assessments

Invoke eminent domain, Marshall Plan for renewable energy, said JP Morgan CEO. Ryan Kennedy. PV Magazine. April 7, 2023. Invoke eminent domain, Marshall Plan for renewable energy, said JP Morgan CEO – pv magazine USA (pv-magazine-usa.com)

Coalition Letter on Permitting Reform. U.S. Chamber of Commerce. March 27, 2023. Coalition Letter on Permitting Reform | U.S. Chamber of Commerce (uschamber.com)