Senate permitting bill eyes advances for transmission, LNG, renewables, oil

US permitting of electric transmission, LNG exporting facilities, oil and gas wells and renewable energy projects could get a boost under a broad bipartisan bill released by Senate Energy and Natural Resources Committee Chairman Joe Manchin, Independent-West Virginia, and Ranking Republican John Barrasso of Wyoming.

The lawmakers floated their bipartisan proposal July 22 saying it would "strengthen American energy security by accelerating the permitting process for critical energy and mineral projects of all types in the United States."

In an area of recent contention, the bill aims to permanently extinguish the Biden administration's January 2024 pause on key LNG export authorizations. It sets time limits for Department of Energy LNG export decisions and says the agency must rely on prior climate and energy studies until its new analyses are ready.

The bill also reflects Manchin and Barrasso's displeasure with actions they assert have discouraged oil and gas production. Their legislation gives a nod to continued demand for oil and gas, with provisions offering more favorable leasing terms.

In one cross-cutting section, the bill seeks to shorten judicial review timelines by setting a 150-day statute of limitations on challenges to final agency action on projects and requiring courts to expedite legal battles. Agencies would have only 180 days to act in cases where courts send authorizing decisions back for changes.

Prospects are uncertain for getting the bill, tackling multiple difficult issues, enacted this year.

Grid expansion, renewables

Transmission supporters welcomed provisions that would expand the Federal Energy Regulatory Commission's siting authority over interstate grid projects and direct the agency to issue a rule on interregional planning.

The bill would give FERC new authority to make national-interest determinations for transmission projects that improve electric reliability and reduce grid congestion costs. FERC would be authorized to issue construction permits for those projects, in consultation with states and other affected parties, without relying on a formal national-interest designation from the DOE.

Notably, the bill would also authorize FERC to exercise eminent domain for national-interest transmission projects.

FERC would have 180 days to issue a rule that requires neighboring grid regions to submit joint interregional transmission plans. Those plans would be required to use a common set of input assumptions, models, and timelines that allow regions to jointly identify and select projects. Planners would be required to consider a minimum specified list of reliability and affordability benefits. They would also be required to consider advanced conductors and reconductoring, as well as existing regional transmission plans.

The bill aims to boost clean energy deployment on federal land by requiring the secretaries of Interior and Agriculture to establish categorical exclusions for "low disturbance" activities for renewable energy projects.

The bill would also require categorical exclusions for geothermal resources and annual federal geothermal lease sales. Total installed geothermal capacity in the US could potentially grow from just over 3 GW to 38 GW by 2035 and 90 GW by 2050, according to a study released last year by the National Renewable Energy Laboratory.

In addition, the legislation would set a new goal of installing 50 GW of renewable energy capacity on federal land by 2030. The US is already on track to exceed an existing federal goal of 25 GW by 2025.

LNG projects

The bill's attention to LNG comes after the DOE in January paused reviews of authorizations of LNG export authorizations to non-Free Trade Agreement nations, saying it needed time to update the climate and economic studies on which it bases its public interest determinations.

While a July 1 court ruling stayed the pause, that relief appeared unlikely on its own to jumpstart approvals.

Imposing new deadlines, the Manchin-Barrasso legislation would require the DOE to make export authorizing decisions 90 days following the final environmental review document issued by FERC or the Maritime Administration, for exports from the US to non-FTA nations.

The legislation also would require peer review of the DOE's new climate and economic analyses.

US LNG advocacy groups welcomed the proposal.

"Overall, it drives some predictability into this process [which] is something we have been talking about for a long time," said Charles Riedl of the Center for Liquefied Natural Gas.

Fred Hutchison of LNG Allies called the automatic approval following failure to act a "vital enforcement mechanism." He also applauded new time limits proposed for DOE decisions on extensions of export authorizations; the DOE would have to act within 90 days of receipt of an application.

Tailored to the Senate energy panel's jurisdiction, the legislation does not include provisions reining in state authorities to reject pipeline projects using Clean Water Act water quality certifications.

Such provisions have been a priority for natural gas pipeline developers after several projects along the East Coast died following state permit denials.

The Interstate Natural Gas Association of America called "incremental" steps in the bill "encouraging," while hoping to see "complementary" legislation to further permitting reform.

The Sierra Club called on Congress to reject the legislation, despite acknowledging that some provisions may accelerate deployment of clean energy and transmission.

The legislation "would open up federal lands and waters to more leasing and drilling and unnecessarily rush the review of proposed gas export projects, forcing decisions to be based on flawed, outdated studies," the group said in a July 22 release.

Oil, gas leasing

The legislation sets out to clarify aspects of the Inflation Reduction Act that tied the future of renewable energy development on federal lands to the continued leasing of acreage for oil and gas development. Such provisions were added to secure vital support for the IRA from Manchin.

The bill stipulates that the lesser of 2 million acres or at least half of the acreage nominated for onshore oil and gas leasing must be offered in the year prior to Interior issuing any right-of-way for wind or solar projects on federal lands. It is intended to ensure that the IRA provision at issue is met based on acreage for which industry has expressed an interest.

The bill also addresses Republicans' and the oil industry's concerns over the 2024-2029 National Outer Continental Shelf Oil and Gas Leasing Program, which was finalized in December with the fewest offshore oil and gas lease sales in history.

Under the bill, Interior would have to hold an auction annually through 2029. This would require at least five offshore lease sales between 2025 and 2029, compared with the three currently contemplated.

Analysts at S&P Global Commodity Insights expect no immediate impact on US oil production from Interior's reduced leasing program due to long lead times for new leases. However, fewer lease sales and increased restrictions could prompt producers to seek opportunities outside the Gulf of Mexico, affecting medium- to long-term production.

The bill also throws out changes to Interior's methodology for assessing bids submitted in future oil and gas lease sales.

And the legislation would return Interior to issuing leases within 90 days to the highest bidder subject to the prior bid adequacy procedures in place since 2016.