Manchin and Barrasso Revive Permitting Reform This Congress
Sens. Joe Manchin (I-W.Va.) and John Barrasso (R-Wyo.) recently proposed the Energy Permitting Reform Act of 2024, a bipartisan permitting reform legislation. This piece will evaluate the Manchin-Barrasso bill, highlight its strengths and shortcomings, and offer important context for why such legislation may be worth pursuing.
Permitting Reform Context
In recent years, policymakers have come to an unavoidable conclusion: The United States has a serious problem with building things. This is of great concern to the energy industry, which is heavily focused on building new clean energy to replace old fossil energy. Permitting becomes an especially noteworthy challenge when contemporaneous policy efforts focus almost exclusively on subsidies, with recipients unable to claim those subsidies due to permitting delays. In a nutshell, permitting difficulties make other energy and environmental policies costlier and less effective.
R Street has made two broad findings on permitting policy that make reform important. The first is that it takes a long time to issue permits. The average timeline to issue an environmental impact statement (EIS)—the highest level of environmental review a project permit can require—is 4.7 years. While this period can be shorter for projects under expedited processes or policy change, major infrastructure projects (including energy) generally must wait multiple years to receive a permit.
The second finding is that clean energy and related infrastructure like transmission or mining (for required minerals) are far more likely to require EISs than fossil fuels. Clean energy comprises a larger share of projects requiring an EIS across all major permitting agencies. Notably, clean energy projects account for 90 percent of projects on the federal permitting dashboard (compared to 3 percent for fossil fuels).
Fossil fuel projects rarely face the same hurdles. This is partially because clean energy projects like offshore wind farms often have big footprints and because many types of fossil fuel projects receive categorical exclusions (CXs) from environmental review. Now that clean energy investment is growing (much of it without CXs), permitting reform has created an interesting moment of shared priority for both conventional energy developers (fossil fuels) and clean energy ones.
What the Permitting Reform Bill Would Do
The proposed legislation would address several key permitting challenges and cuts across almost all energy sectors. While more detailed explanations are available, notably the section-by-section summary, here we aim to give some simple highlights.
Judicial Review
The bill would set a statute of limitations for challenging energy and mineral-related National Environmental Policy Act (NEPA) decisions to 150 days. The current limit is six years (two years for some projects). For context, California’s corollary environmental permitting process has a 30-day limit.
Transmission
The proposed bill would modify the federal “backstop” authority by allowing projects that would qualify as “in the national interest” to be treated as such without requiring a determination from the Federal Energy Regulatory Commission (FERC) beforehand. Essentially, this would expand backstop authority and shorten the process for receiving it. This authority is exercised only if states take more than one year to respond to project applicants.
The bill requires FERC to promulgate a rule on interregional transmission planning. This would ensure regions engage in joint planning using compatible methodology, including a minimum set of reliability and economic benefits like reducing grid congestion. The bill specifies that the cost of new interregional transmission will be allocated according to the benefits customers receive.
The bill also expands the use of CXs for projects on federal land where a right-of-way permit already exists (a CX avoids the need for an EIS under NEPA, shortening the permitting timeline).
Renewable Energy
The biggest win for renewable energy in the bill is the improvement to transmission policy, because a major challenge for clean energy is that the locations with the most energy generation potential do not always overlap with existing transmission access. The legislation offers reform to the permitting of generation as well.
The federal government would be directed to permit 50 gigawatts of renewable energy on federal land by 2030. To further this effort, renewable energy would receive CXs similar to those applied within the oil and gas industry, where projects with low impacts or on previously disturbed land would not require review under NEPA. It is unclear at this point how many projects would be affected by this, but it is a notable step forward in achieving some parity for how different energy types are treated under NEPA.
Fossil Fuels
The bill would require the executive branch to offer leases for both onshore and offshore oil and gas production and prevent the federal government from delaying responses to coal leases. For some context, the Biden administration did not offer offshore oil and gas leases until forced to do so by the Inflation Reduction Act (IRA). When it did offer leases, it offered only three (as opposed to the usual 15-20), which is likely what prompted this proposed statutory requirement for the executive branch to offer federal land for fossil fuel leases.
The legislation has similar language for renewable energy leasing, especially wind, which would prevent a future president from taking the opposite approach of the Biden administration by refusing to lease for renewable energy while offering leases for fossil fuels.
Additionally, the legislation statutorily unwinds the administration’s pause on liquefied natural gas (LNG) exports and sets guidelines for determining their lifecycle greenhouse gas impact. Some climate hawks may view this as a win, as it codifies requirements for evaluating lifecycle emissions that didn’t preexist, but opponents may dislike this move because it makes it harder for an administration to prevent LNG exports without new research (as President Joe Biden attempted).
Minerals
A 2022 court ruling, colloquially called the Rosemont Decision, stated that mining permits only apply to land where mining activities could occur (i.e., where minerals are present). The case in question was a proposed mine that planned to dump waste rock from mining activities on national forest land. From a legal perspective, it may make sense that a permit to mine does not entail a permit to dump waste rock. But this decision has thrown the mining sector for a loop, because there is no way to mine without ancillary activities and land use. Proving that all such activities occur where minerals exist is a burden that may or may not be feasible.
The legislation would cleverly address this decision by allowing proposed mining plans (part of the permitting process) to have “mill site claims” for ancillary mining operations allowed as part of the mining permit.
What Is Missing from the Bill
Notably, some of the more contentious issues in permitting reform are missing from the bill. There are no changes to standing, which has been a key issue (and one that R Street has pointed out would be among the most impactful for permitting reform). Similarly, there is no proposal for expanded community engagement (a common response to judicial review proposals).
And while transmission lines get some love in the bill, fossil fuel pipelines are largely absent. Naturally, this also applies to carbon dioxide pipelines, which will likely remain a key permitting challenge in the future.
What the Bill Would Do If Signed Into Law
Where the bill falls short is in addressing more comprehensive judicial review. Litigation is a consistently cited cause for permitting delays because agencies have incentive to produce litigation-resistant permits even in instances where permitting decisions are not litigated. So long as permits are vulnerable to litigation, agencies will keep producing longer permitting documents to avoid having to redo permits from litigations that find deficiencies in their decisions.
That said, this bill is substantial and would move the ball forward considerably on permitting reform. It would establish a more equitable arrangement for the use of CXs so that renewable energy could also benefit from easier permitting, and it would cut out some opportunities for political shenanigans in the issuing of leases or slow-walking decisions.
Transmission reform, while not comprehensively addressed in this bill, would get a big boost, and even a modest increase in transmission availability to areas siting renewable energy would be beneficial.
On the economic front, this bill would reduce timelines and allow for the quicker market entry of capital so that consumers could get the benefits of investment earlier. It would also ease access to valuable, high-demand resources, especially minerals.
The bill would likely yield environmental improvements as well, particularly in greenhouse gas emissions. A Princeton University study estimated that 80 percent of the IRA’s potential climate benefits were locked behind permitting reform—an issue the bill would address at least partially. And while some critics may point to increased fossil fuel production as an outcome of the bill, it is important to note that this increased production oftentimes does not increase net global emissions because of the displacement of higher-emitting foreign producers. This is particularly important for offshore oil production in the Gulf of Mexico, which is among the least emission-intensive in the world.
Conclusion
As proposed, the Manchin-Barrasso bill would yield economic and environmental benefits unattainable under current permitting policies. While the legislation does not address all major issues in permitting, it is not the only permitting reform bill likely to be signed into law. Notable permitting reform victories were part of the Fiscal Responsibility Act, which set deadlines for agencies on environmental review, and the Fixing America’s Surface Transportation Act, which reformed judicial review for qualifying major infrastructure projects.
Ultimately, if the question is whether the United States would be better off with this permitting reform as law, the answer is yes.
Explore the R Street Institute’s past work on permitting reform here.