Democrats to step up permitting push, but GOP may run out the clock

BY: JOSH SIEGEL, BEN LEFEBVRE | 11/09/2022 05:00 AM EST

Congressional Democrats are expected to press ahead with plans to update energy permitting rules before the end of the year, but Republicans may not be in the mood to strike a compromise if they take control of the House or Senate.

Instead, House Republicans who dismissed Sen. Joe Manchin‘s proposal to streamline permitting rules this summer as too modest are likely to push their own plan next year if the votes from Tuesday that are still being tallied give them the majority. That would set up a partisan struggle over the effort to ease the regulatory requirements for new energy infrastructure.

Washington Rep. Cathy McMorris Rodgers, who is in line to chair the Energy and Commerce Committee if Republicans win the chamber, told POLITICO in an interview ahead of the election that permitting would be a “top priority,” and criticized Manchin’s effort because it “doesn’t get us to where we need to be.”

“The number one barrier for energy projects in the U.S. today is permitting,” she said. The GOP effort is likely to include measures to expedite critical minerals mining and processing projects on federal lands, she said.

Republicans have called for a shortening the environmental reviews for projects and curbing states’ power to block pipelines and other fossil fuel infrastructure, while Democrats have leaned into the need to build new high-voltage power lines to speed the development of wind and solar plants to shrink carbon emissions.

Without those changes, Democrats fear the billions of dollars in clean energy incentives provided by the Inflation Reduction Act could be stranded. And Republicans who have long complained about permitting delays could lose an opportunity to implement reforms that would benefit energy sources they support, such as hydrogen and natural gas.

“This remains the most important priority in building clean energy at scale,” said Rich Powell, CEO of ClearPath, a conservative group that supports fighting climate change. “The urgency for a fix is only going to keep increasing.”

After hitting resistance in September from the left flank of the Democratic party as well as Republicans angry over his support for the IRA legislation, Manchin withdrew his proposal from the government funding bill that would have tightened the timelines for reviews under the National Environmental Policy Act and given the Federal Energy Regulatory Commission sweeping powers over permitting transmission lines.

Democratic leaders have said the fight is not yet over and they’ll work to move reform legislation before the end of the year — since their leverage will only decline next year if Republicans take over the House. Biden has also urged Congress to act on permitting reform, seeing it as a potential solution to relieve high energy costs.

Proponents see two potential paths forward to passing permitting reform by the end of the year: attaching legislation to the annual defense policy bill that’s expected to be considered later this month or December’s government spending bill.

Manchin said last week that he is attempting to get permitting reform legislation tacked onto the must-pass National Defense Authorization Act, and he’s framed the the legislation as an “energy security” measure that will help combat high energy prices from Russia’s invasion of Ukraine. But Republicans are wary of loading up the defense policy bill with extraneous measures, and time is running short to reach a deal.

Negotiations around the end-of-year spending bill could be a more viable vehicle for a bipartisan deal. Some analysts cited parallels with previous energy-related deals made in the waning days of the year, like in 2015 when former President Obama reached a deal with Republicans to extend wind and solar tax credits in exchange for lifting a ban on oil exports.

But Democratic leaders are juggling several competing priorities for the lame-duck, including efforts to vote on proposals protecting same-sex marriage and shoring up the electoral process, along with a potential push to raise the debt ceiling in a bid to avert a standoff with Republicans next year.

Some in the energy industry are pushing the GOP to accept a bipartisan bill before the political momentum fades since neither Republicans nor Democrats have enough votes to pass anything along party lines.

“The Republicans owe it to the energy industry to at least make the effort to do some form of bipartisan permitting reform,” said Stephen Brown, an energy consultant and former lobbyist for the refining industry. “This issue is one of those game-changing dynamics that comes along once every four or five years.”

Some Senate Republicans say they are interested in forging a compromise in the lame-duck session. People familiar with the negotiations say senators led by Manchin and his home-state GOP colleague Sen. Shelley Moore Capito have held informal discussions about permitting priorities in recent weeks in the lead up to the election.

“Anything we do in lame-duck along these lines is worth a try,” said Sen. Kevin Cramer (R-N.D.), a member of the Senate Environment and Public Works committee.

Observers say a collaborative path could be successful — if it’s pursued quietly and can avoid the partisan sniping expected from the slew of oversight hearings that Republicans have promised will emerge if they take their committee gavels in January.

“There are a lot of moderate Republicans in the House wanting to do something like permitting reform,” said Bruce Thompson, energy lobbyist with CapeDC and former head of the oil and gas trade association American Exploration and Production Council. “The best way to do this is outside the spotlight. We really do need for this to happen.”

The parties remain far apart on key elements of a potential permitting reform package. Republicans say the Manchin proposal doesn’t go far enough to change the National Environmental Policy Act, the bedrock environmental law first adopted in 1970, which they see as a barrier to building energy infrastructure. They are also skeptical of giving more authority to the federal government over permitting transmission lines, an idea that’s gotten pushback from some of the nation’s largest utilities.

“That from a policy basis was one of the problems,” said Sen. John Cornyn (R-Texas). “I wouldn’t support a federal takeover of the system.”

For Democrats, any deal would have to bring changes to the power sector that enable clean energy sources to grow at a faster pace.

“If Republicans refuse to negotiate on transmission, I can’t imagine what the parameters of an agreement would look like,” Sen. Tina Smith (D-Minn.) said in an interview.

But some observers are skeptical any deal will be possible next year if Republicans turn their focus to oversight hearings on subjects ranging from the Energy Department loan program to allegations of wrong-doing by President Biden’s son, Hunter.

“I don’t see anything getting across the finish line past both the House and Senate and getting signed,” said John Northington, Sr., a former Clinton administration official and consultant who works with oil and gas companies and conservation groups. “They’ll be so distracted on other extraneous issues, I don’t see anything happening that would be palatable for the administration to sign. It’ll just be a circus on the House side.”

Some Democrats worry Republicans won’t negotiate in good faith if the permitting debate moves to the next Congress — where the GOP may resist bipartisan compromise and be more interested in rallying their base voters ahead of the 2024 presidential election.

“Whether they are interested in actually expediting clean energy is an open question,” said Rep. Kathy Castor (D-Fla.) in an interview. “They are so wedded to the polluters I don’t hold out much hope they would be able to break away from that.”