Unpacking The Pros And Cons Of The Energy Permitting Reform Act Of 2024

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As the 118th Congress winds down, Senators Joe Manchin (I-WV) and John Barrasso (R-WY) have introduced the Energy Permitting Reform Act of 2024. The legislation purports to streamline the permitting process for energy projects, a goal long sought by the fossil fuel industry and now many renewable energy companies as well. With Manchin retiring and Barrasso moving on from his position as ranking member of the Energy and Natural Resources Committee, both senators likely see this bill as a potential capstone to their energy policy legacies.

There’s a chance the legislation could pass during the lame-duck session after the election, making it crucial to understand its implications fully. While the Act includes some very modest changes that could be beneficial, it more importantly would create a number of serious problems that raise red flags.

Some changes in the legislation are positive or largely neutral. For example, the Act includes provisions that guarantee at least one offshore oil and gas lease sale per year in the Gulf of Mexico, from 2025 to 2029. The Biden administration has had historically few lease sales, but this bill would do little to change that since it only barely raises the legal minimum.

The Manchin-Barrasso bill also closes a pathway by which the Biden administration was able to “pause” LNG export approvals. It would force the Energy Secretary to make an up or down decision on LNG export applications within 90 days of environmental reviews being completed. Applications that go beyond the deadline would be deemed approved automatically. However, the Biden LNG export pause was stayed by a judge, suggesting it may have been illegal. If so, this provision may have little practical effect.

Beyond that, the bill creates exemptions from some permitting rules for geothermal exploration, as well as some permitting relief for geothermal production. It also sets a 150-day deadline for seeking judicial review of agency actions, which could help limit the litigation that is one of the primary sources of project delays.

Taken together, these provisions could potentially provide a modest boost to domestic energy production, and by extension U.S. energy security. However, a closer examination reveals a number of problematic aspects of the legislation as well. The bill’s language on ratepayer protection is particularly weak, especially concerning cost allocation for transmission lines. It allows for customers to bear costs of building out transmission infrastructure so long as they receive more than “trivial” benefits, including when the costs to those individuals far outweigh the benefits.

The language on cost allocation could lead to unfair burden-sharing across consumers, forcing some to subsidize projects that primarily benefit others. Even FERC Order 1920, which has its own problems as explained by FERC Commissioner Mark Christie, provides better consumer protections by stating that costs to consumers be at least “roughly commensurate” with the benefits they receive.

Read more at Forbes