IRA Side Deal on Permitting Raising Ire

In order to pass the Inflation Reduction Act (“Act”) last month, a deal was struck with Sen. Joe Manchin (D-WV) to create separate legislation to reform federal energy project permitting.  Now that the Act has been signed into law, Senate Democrats are making good on their promise but, as might be expected, not all parties are supportive.

The reforms (and funding necessary to effectuate them) are proposed to be included as part of a Continuing Resolution that must be passed to prevent a government shutdown beginning October 1.  The language hasn’t been released yet, but according to information posted on Sen. Manchin’s website, the reforms would include:

  • Requiring the President to designate 25 high priority energy projects (including fossil fuel fired generation) that must be given permitting priority;
  • Setting maximum timelines for permitting reviews, including two years for major impact projects under the National Environmental Policy Act;
  • Streamlining the Section 401 Clean Water Act (“CWA”) process, including requiring one of four actions within one year of application – i.e., grant, grant with conditions, deny, or waive certification;
  • Setting a statute of limitations for court challenges to permitting decisions;
  • Clarifying FERC jurisdiction over the regulation of interstate hydrogen pipeline, storage, import, and export facilities;
  • Ending the Department of Energy’s National Interest Electric Transmission Corridor process and replacing it with a new process that will allow the Secretary of Energy to make a national interest determination that will allow FERC to issue a construction permit;
  • Requiring the FERC to ensure costs for transmission projects are allocated to customers that will directly benefit from projects; and
  • Directing all relevant federal agencies to take action to permit the Mountain Valley Pipeline – a natural gas pipeline in West Virginia.

If enacted, these reforms could have a mixed result.  On one hand, the NEPA changes could help offshore wind projects in particular move through the federal permitting process much more quickly (recent offshore wind projects have spent approximately four and a half years in the BOEM environmental review phase).  Similarly, the CWA reforms would standardize the 401 permit process across the states and provide much needed timeline certainty for developers.  However, the reforms will apply equally to fossil fuel projects, essentially giving oil and gas project developers a fast track.

This is causing significant criticism among many Democrats and environmentalists.  The NRDC recently tweeted encouraging people to attend a protest of the reforms being hosted by People vs. Fossil Fuels.  The Sierra Club has taken a more moderate approach, noting; “The Sierra Club supports the Inflation Reduction Act but recognizes the concerns of communities most impacted by the oil and gas industry. . . [t]he organization plans to be vigilant throughout the act’s rollout and stay involved at the federal and state level.”

There is an effort underway to decouple the reforms from the Continuing Resolution, but Democrats like Sen. Chuck Schumer (D-NY), who struck the deal with Manchin, seem intent to include it as part of the Continuing Resolution.

What’s Next?

The House is reportedly set to consider the Continuing Resolution the week of September 12, 2022.  It remains to be seen if the permitting reform will be included, handled separately or how it might be amended from its initially proposed components.

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