August 2023 Vol. 78 No. 8
Washington Watch
New permitting provisions in budget bill slight natural gas industry
Stephen Barlas | Washington, D.C. Editor
(UI) — The natural gas industry greeted the permitting reform bill Congress passed and President Biden signed on June 3 with something short of enthusiasm. The permitting provisions in the Fiscal Responsibility Act of 2023 (FRA/H.R. 3746) had only glancing benefits for gas pipelines and were chiefly written to benefit wind, solar and electric energy deployment.
At the same time, it got Sen. Joe Manchin (D-W. Va.), a potential derailer of the entire package, on board by requiring all federal agencies to approve the Mountaineer State’s Mountain Valley pipeline within 21 days of Biden’s signature.
The Interstate Natural Gas Association of America (INGAA) tried to put its best face on its disappointment by praising the National Environmental Policy Act (NEPA) reforms, which “are an important first step towards achieving the permitting reform needed to get the United States back to building energy infrastructure in this country.”
But it added that “more reforms to our country’s permitting processes are necessary.”
The National Gas Council, which includes INGAA, American Petroleum Institute, Natural Gas Supply Association, Independent Petroleum Association of America and the American Gas Association, went further asserting “…the agreement does not address many of the key issues surrounding permitting of natural gas infrastructure projects.”
The bill falls far short of the provisions in two Senate bills introduced in May 2023, by two Republicans, as the House and Senate were trying to reach a bipartisan compromise on permitting reforms. No Democrats in the Senate supported either of those two bills, which had numerous GOP co-sponsors. These two bills were the Revitalizing the Economy by Simplifying Timelines and Assuring Regulatory Transparency (RESTART) Act (S. 1449) and the Spur Permitting of Underdeveloped Resources (SPUR) Act (S. 1456).
On June 27, the Natural Gas Council sent two letters, one devoted to each of those two bills, to the Democratic chairman and top Republican on the Senate Energy and Natural Resources and Environment and Public Works Committees, asking for action on the bills. Sen. Shelly Moore Capito (R-W.Va.) and Sen. John Barrasso (R-Wyo.) are the prime sponsors of those two bills.
In a press conference after passage of the FRA, Sen. Capito said some of the provisions in the bill Biden signed “touched on” some of what was in the Barrasso and Capito bills. But she said what was left out of the final bill could serve as a “jumping off point” for bipartisan talks on additional permitting reform steps in her committee, Senate Environment and Public Works.
Sen. Thomas Carper (D-Del.) chairs that committee. His office did not respond to a query regarding the possibility of further permitting reform legislation. Neither did the office of Sen. Manchin, who according to press reports planned to hold hearings on permitting reform in July before the August recess. No such hearings were scheduled on the Energy Committee’s website.
The marque permitting reforms in the FRA deal concern the NEPA, which requires federal agencies to take certain environmental review steps before approving all kinds of construction projects, including pipelines. Interstate and intrastate pipelines may be helped generally by the reforms in the FRA, but so will every other form of energy.
Moreover, the NEPA reforms will now have to go through federal agency rule writing with the prospect of the agencies washing away some of the intended benefits of the NEPA changes.
The law firm Van Ness Feldman, which does a lot of pipeline regulatory work, added, “While these provisions are intended to yield significant benefits for projects requiring federal approvals or funding, the actual impact will depend substantially on how the reforms are implemented, and there remains considerable interest in other aspects of permitting and siting reform making further legislative action likely.”
James Rusk, in a blog post for the law firm Sheppard Mullin Richter Hampton, wrote: “Most of the amendments simply codify regulatory definitions or agency practices already in effect, so the practical impact of the changes is likely to be limited.”
Beyond Mountain Valley
Beyond the edict to finally approve Mountain Valley, which has been delayed repeatedly since 2017 by federal agency reviews spurred by environmental groups, there were no pipeline specific provisions in the FRA. That was despite the fact that some federal agencies are considering actions that would impede pipeline construction.
For example, the Federal Energy Regulatory Commission (FERC) published draft new policies, with regard to its consideration of greenhouse gas emissions when vetting pipeline applications. Also, the Army Corps of Engineers is considering changes to Nationwide Permit 12, which allows pipelines to get fast approval of projects when crossing rivers, streams and wetlands.
The NGC had addressed some of those key issues a month prior to passage of the FRA in a May 1, 2023, letter to Sen. Manchin and others. It said:
“Congress must reform the Clean Water Act (CWA) certification process to promote efficiency, properly scope state reviews and conditioning of permits, eliminate inconsistent results across agencies, and ensure that agencies use the process only to protect water quality, not pursue unrelated goals.
“Congress should also eliminate unnecessarily long and unduly burdensome National Environmental Policy Act (NEPA) reviews by clarifying agencies should only analyze reasonably foreseeable environmental effects causally related to the proposed project, focusing analyses on feasible alternatives, and establishing review schedules.
Finally, Congress should end pointless, project-killing delays by establishing timelines for judicial review of CWA certifications and NEPA reviews and requiring a clear connection between the project and effects on water quality before a court can vacate a certificate and prolong the review process.”
The FRA accomplished few of those objectives, leading the gas industry to press post-FRA for action on the Capito and Barrasso bills. The RESTART Act, for example, clarifies that agencies should only analyze reasonably foreseeable environmental effects of a proposed project, consider only alternatives that are technically feasible and within the jurisdiction of the reviewing agency, allow agencies to adopt categorical exclusions recognized by other agencies, and establish enforceable deadlines that, if unmet, deem the NEPA requirements for the project fulfilled.
It would also write language into the Clean Water Act to ensure federal and state agencies use the process only to protect water quality. In addition, the proposal would provide regulatory certainty by maintaining existing Nationwide Permits that allow pipelines and others to move forward with projects with minimal environmental impact on streams, rivers, wetlands and other bodies of water.
The pipeline industry is a regular user of NWP 12, whose use is chiefly regulated by the Army Corps of Engineers. The Trump administration, as it was leaving office in January 2021, made changes to NWP 12 which, for the most part, pipelines applauded. But the Biden Administration announced in March 2022 a “formal review” of NWP 12 ominously stating “previous uses of NWP 12 have raised concerns identified in Executive Order 13990, such as environmental justice, climate change impacts, drinking water impacts and notice to impacted communities.”
INGAA replied that the vast majority of projects authorized by NWP 12 involve minor discharges of dredged or fill material associated with small maintenance, repair or modernization projects.
“Modifying NWP 12 to limit or delay its use would be inconsistent with Congress’s goal of creating a streamlined permitting program and impose undue administrative requirements on the Corps, state agencies and the public,” INGAA said in its comments to the Corps.
More than a year later, the Corps has not done anything further regarding that formal review of NWP 12. However, clearly the pipeline industry is concerned enough about potential action, hence the provision in the Capito bill to keep NWP 12 just as it was as established in January 2021 by the Trump administration.
Capito’s RESTART Act does touch on FERC’s authority by listing some prohibitions on the FERC’s use of what is called the “social cost of carbon” metric, which environmentalists have pushed as a means of stopping some pipeline projects because of estimated greenhouse gas emissions. For example, the bill outlaws FERC’s use of the SCC when it “(1) may increase the cost of energy, including the levelized cost of electricity and gasoline prices, as determined through a review by the Energy Information Administration; or (2) could prolong the timeline necessary to promulgate that regulation, guidance or agency action.”
Barrasso’s SPUR Act would follow the NGC’s recommendations on limitation of NEPA review authority by allowing consideration only of environmental effects which:
- “Are reasonably foreseeable, not speculative and not remote in time or geographically remote.
- “Have a reasonably close causal relationship that is not the product of a lengthy causal chain to the proposed action or alternative action, respectively, as determined by the Commission.
- “The Commission has the ability to prevent and that would not occur absent the proposed action or alternative action.
- “Do not constitute potential effects from emissions upstream or downstream of the facility that is the subject of the application under section.”
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