The Manchin Bill Will Not Reform Permitting Process

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The Manchin-Schumer permitting bill, which has been attached to the Continuing Resolution funding the federal government beyond September 30, contains many promising-sounding reforms that would almost certainly do little to speed up the federal government’s spectacularly dysfunctional environmental permitting process. CEI has just published a policy briefing paper by my colleague Mario Loyola, “Unleashing America’s Energy Abundance,” that explains in some detail how the bill “only tinkers at the margins of a major national problem.”

There is, however, one section of the bill that is far worse than ineffectual tinkering. That section—page 76, line 20 through page 86, line 14—would vastly expand the Federal Energy Regulatory Commission’s (FERC) authority over the electric grid and allow it to put climate goals ahead of electric reliability and affordability.

Under current laws, utilities are usually obliged to connect electric power producers to the grid, but the Manchin-Schumer bill would create a procedure whereby FERC would apply to the Secretary of Energy “to designate any electric transmission facility proposed to be constructed or modified to be necessary in the national interest.” Once the Secretary applies an eight-factor test (which could include almost anything, including climate salvation) and decides to designate a transmission line as “necessary in the national interest,” FERC can then command that the transmission line be built.

For example, if a group of billionaire wind energy investors want to build massive wind farms in Wyoming—in order to take advantage of the expanded and extended tax credits in the Inflation Reduction Act—and the only market for the electricity produced is consumers in southern California, then the Secretary of Energy could designate it as being of national importance and FERC could then compel construction of a colossally expensive high-voltage transmission line of 600 to 800 miles.

But in at least two respects it gets worse. First, the states currently take the lead on helping utilities obtain rights of way for transmission lines. This sometimes includes granting the use of eminent domain. FERC can step in to resolve disagreements between the states. The Manchin-Schumer bill would expand FERC’s current limited authority to use eminent domain. FERC would no longer have to wait until states reach an impasse, but could condemn rights of way from the beginning. Property owners across America should be worried.

Second, who will pay for these high-voltage transmission lines of national importance? The bill would require FERC to “take into account and fairly allocate both the broad range of reliability, economic, and other reasonably anticipated benefits.” Further: “the cost … shall be allocated to customers within the transmission planning region or regions that benefit from the facilities in a manner that is at least roughly commensurate with the estimated benefits.”

In other words, the investors who are going to make hundreds of billions of dollars from federal subsidies of new wind and solar facilities don’t have to pay for the high-voltage transmission lines costing hundreds of billions of dollars. Instead, FERC could socialize the costs to customers by attributing some alleged climate benefits, no matter how amorphous or dubious, to the project. Electric consumers across America should be very worried.

These provisions amount to the nationalization of grid management by FERC and the Department of Energy for the purpose of integrating new renewable energy projects. Climate considerations could be used to justify projects that cannot be justified on the grounds of increased reliability or lower electric rates. The total costs of transmitting intermittent and unreliable electricity from locations where the wind blows or the sun shines to the distant places where most Americans live in order to achieve “net zero emissions” have been estimated at trillions of dollars. Whatever people think of the other provisions in the Manchin-Schumer bill, the FERC provisions provide compelling reasons to defeat the bill.