The permitting process has been identified by numerous commentators as a major cause of delays in the development of energy, infrastructure, and mining projects in the United States. With ongoing energy demand set to increase significantly in the coming decades, along with increased geopolitical uncertainty, the need to secure domestic energy resources is an objective that has received strong bipartisan support. To that end, on July 24th, Senators Joe Manchin (I-WV) and John Barrasso (R-WY), the Chair and Ranking Member of the Senate Energy and Natural Resources Committee, respectively, introduced the Energy Permitting Reform Bill (NEW24584 (senate.gov)) (the “Bill”) with the aim of addressing some of the areas of concern affecting permitting and licensing in the energy and mining industries.
The following is a brief overview of some of the key provisions of the Bill affecting the energy sector. The proposed revisions affecting the mining industry will not be addressed in this client alert, though we continue to monitor progress in this area as well. For a deep dive into permitting reforms with a particular focus on the mining sector, please consult our recent white paper on this subject, Permitting Reforms for Mining and the Energy Transition.
Renewable Energy
The Bill proposes a number of new rules and legislative amendments that have the potential to increase deployment of onshore and offshore renewable energy projects. The key initiatives that the Bill introduces include:
- Offshore wind. The Bill will require the Department of the Interior to conduct no less than one auction per year for offshore leases for wind projects between 2025 and 2029, with the minimum tendered area being no less than 400,000 acres per year. (Since 2021, there have been four offshore wind lease auctions, according to the Bureau of Ocean Energy Management). The Bill further stipulates that within 180 days of the Bill entering into force, the Secretary of the Interior must establish an initial target date for achieving 30 gigawatts (“GW”) of offshore wind energy production.
- Onshore renewable energy on Federal land. The Bill amends the current target of 25 GW of renewable energy being deployed on Federal lands by 2025. The new target, should the Bill be enacted as currently drafted, would be 50 GW of renewable energy on Federal land by 2030. Based on information provided by the Bureau of Land Management, as of 1 June 2024 there was 17.4 GW of installed renewables generating capacity on Federal lands, comprising of 69 geothermal projects, 54 solar projects and 41 wind projects.
- New timelines in renewables permitting process. The Bill would impose new deadlines on the Secretary of the Interior and the Secretary of Agriculture for rights-of-way applications for eligible projects. Further, the Bill also foresees a timeline of 90 days for either the Secretary of the Interior or Secretary of Agriculture to notify applicants if an environmental impact statement is required.
- NEPA carve-outs. The Bill introduces the concept of “low disturbance activities,” and directs the Secretary of the Interior and the Secretary of Agriculture to promulgate regulations within 180 days of the Bill entering into force which would create one or more categorical exclusions under the National Environment Policy Act of 1969 (“NEPA”) for low disturbance activities necessary for renewable energy projects. The Bill adds further clarity on what is to be considered as a “low disturbance activity”:
- individual surface disturbances of less than five acres that have undergone site-specific analysis in a document prepared pursuant to NEPA that has previously been completed;
- activities at a location at which the same type of activity has previously occurred within five years prior to the date of commencement of the activity;
- activities on previously disturbed or developed land for which an approved land use plan or any environmental document prepared pursuant to NEPA analyzed such activity as reasonably foreseeable, so long as the plan or document was approved within five years prior to the date of the activity;
- the installation, modification, operation or decommissioning of commercially available energy systems located on a building or other structure (such as a rooftop, parking lot, or facility, or mounted to signage, lighting gates, or fences);
- maintenance of a minor activity, other than any construction or major renovation, or a building or facility;
- preliminary geotechnical investigations; and
- the installation and removal of temporary meteorological stations.
- Geothermal. The Bill introduces a number of measures to improve conditions for geothermal developers, including the introduction of certain exclusions from review under NEPA, deadlines for agency notifications, and annual lease sales.
Electricity Transmission and Planning
The past two decades have seen an increase in intermittent renewable energy deployment alongside growing demand for electricity. These trends are set to continue, with electricity demand in particular looking poised to grow significantly due to anticipated energy needs from data centers and transportation applications. As a result, recognition that transmission grids are not fit for purpose to address these developments has been growing.
The Bill would introduce a number of revisions to the transmission permitting and planning processes. With respect to permitting, the Bill strengthens the hand of the Federal Energy Regulatory Commission (“FERC”) to issue construction permits for projects that are in the national interest, without those projects needing to first be designated as National Interest Electric Transmission Corridors (“NIETC”). Indeed, the Bill would eliminate the concept of NIETCs entirely and allow FERC to act on a greater number of proposed transmission projects.
In addition to permitting reforms, the Bill introduces two new sections to the Federal Power Act (“FPA”) that would require Regional Transmission Organizations / Independent System Operators (“RTOs/ISOs”), with the exception of the Electric Reliability Council of Texas (“ERCOT”), to jointly submit periodic plans with adjacent RTOs/ISOs relating to interregional transmission. The initial plans would need to be jointly submitted within two years of the Bill being enacted and updated at least once every four years. FERC would be authorized by the Bill to establish precise regulations on the submission of transmission plans, as well as approving proposed cost allocations.
Oil and Gas
In addition to measures intended to facilitate the development of renewable energy projects, the Bill would also enact rules designed to promote domestic oil & gas production. The key proposals affecting the petroleum sector are set out below.
- Liquified Natural Gas (“LNG”) Exports. The Bill would require FERC to approve or deny, within 90 days of the applicable notice under NEPA, any application for LNG exports and applications for re-exported piped U.S. natural gas shipped to liquefaction facilities in Canada or Mexico. In the event FERC does not issue an order within the 90-day deadline, the application would be considered granted.
- Onshore Oil & Gas. The Bill would amend existing laws that require the Department of the Interior to offer acreage for oil as gas drilling on Federal land for which expressions of interest have been submitted. Based on the current drafting of the relevant statue, any Federal land (regardless of whether an expression of interest has been filed) could be offered for oil & gas lease auctions in order to satisfy the statutory annual minimum requirements. Further, the Bill would eliminate the need for developers to obtain a drilling permit under the Mineral Leasing Act in certain circumstances where the Federal interest in a mineral estate is only minor.
- Offshore Oil & Gas. Similar to offshore wind, the Bill would require the Department of the Interior to conduct no less than one auction per year for offshore leases between 2025 and 2029. Currently, three leases are planned over the 2024-2029 time period. The Bureau of Ocean Energy Management’s “Summary of Procedures for Determining Bid Adequacy at Offshore Oil and Gas Leases Sales Effective March 2016, with Central Gulf of Mexico Sale 241 and Eastern Gulf of Mexico Sale 226” would be codified.
Final Thoughts
The Bill would introduce a number of key revisions that would improve permitting for a large number of energy projects; however, the above summary is by no means an exhaustive list of all proposed measured included in the Bill. With the current legislative calendar, it is unclear when (if ever) the Bill will be taken up by lawmakers in earnest. We will continue to monitor developments with respect to the proposed Energy Permitting Reform Act.
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