Deep Dive Episode 238 – The Future of NEPA Reform
As a condition of his vote for the Inflation Reduction Act, Sen. Joe Manchin demanded space for his own permitting-reform package in the latest spending bill. While his proposed legislation was ultimately pulled over objections to aspects tangential to permitting, interest in permitting reform remains strong. The target of many reformers’ ire is the current interpretation of the National Environmental Policy Act: a 1970 statute designed to ensure that the government gives adequate consideration to environmental impacts before embarking on major actions. While this has had significant benefits for environmental quality, the review process is often long, costly, and subject to aggressive litigation that often stretches for years. Is it time to rewrite portions of NEPA? And, if so, what should those reforms look like?
Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.
[Music and Narration]
Introduction: Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker.
On October 5th, 2022, The Federalist Society’s Regulatory Transparency Project hosted a virtual event titled “The Future of NEPA Reform.” The following is the audio from that event.
Sarah Bengtsson: Hello, and welcome to this Regulatory Transparency Project virtual event titled “The Future of NEPA Reform.” My name is Sarah Bengtsson, and I am the Associate Director of the Regulatory Transparency Project here at The Federalist Society.
Today, October 5th, 2022, we are pleased to have with us an excellent panel of intellectually diverse legal experts. After a discussion between panelists, we’ll go to an audience Q&A. So please enter any questions you have into the Q&A function at the bottom of your Zoom window.
Our moderator for today’s discussion is Michael Buschbacher, counsel at Boyden, Gray, and Associates. Before joining the firm, Mr. Buschbacher served in the leadership office of the DOJ’s Environment and Natural Resources Division where he worked on several NEPA related issues including the Trump era revisions to the NEPA regulations. He has also written about NEPA reform and grid reliability for the Wall Street Journal and the American Conservative respectively. You can read more about Michael and all of our speakers today at regproject.org. That is regproject.org.
Finally, a note that as always, all expressions of opinion on today’s program are those of the speakers joining us. Thank you all for joining. And with that, Michael, the floor is yours.
Michael Buschbacher: Well, thank you, Sarah and I apologize that you can only hear and not see me. We had — the building internet went out at 11:45 this morning. But maybe that’s a good thing that you can’t see me.
So I’m delighted to be moderating a conversation about this very important topic — NEPA and permitting reform more generally. Environmental law presents some unique challenges compared to other areas. Every other area of law is really just about the rules and procedures about governing the relationships between people, but environmental law goes further, and it not only regulates interpersonal and intercorporate relationships but also the relationships between humanity and the environment. And that’s premised on our deep intuition that the environment has a profound intrinsic value simply because it exists. Some people say that that was John Muir’s idea. I’m sure he was a big part of why we feel that way so much today but it’s much more primal. I think you can go back to Noah’s ark and see that feeling.
But our relationship with the environment is also complicated and deeply ambivalent. We’re part of the natural world and we depend on it yet we’re distinct from it and opposed to it in some important ways. To survive, we need shelter and food, warmth, protection from the elements, etc. and to thrive we need a lot more. We need cities, complex machines, economies, energy, all that. And all those things have environmental costs and environmental policy, and environmental law is thus the attempt to optimize the balance between human goods and environmental goods.
At the beginning of our attempts to do this balancing nationally, stems NEPA which was passed in 1970. And despite its name, NEPA, the National Environmental Policy Act wasn’t designed to mandate any particular substantive environmental policy, rather its provisions speak about process. And the heart of this is the requirement that federal agencies prepare an analysis often referred to as an environmental impact statement or EIS for “major federal actions significantly affecting the quality of the human environment.”
NEPA was written in a time of technocratic optimism and confidence that agencies would be able to figure things out without much trouble. And as written, it didn’t give anyone the right to sue if they didn’t like an agency’s NEPA analysis. But starting just a year later with Judge Skelly Wright’s 1981 opinion in Calvert Cliffs’, courts have interpreted, and some might argue, rewritten NEPA to allow private parties to sue agencies for failures to comply with its requirements. In fact, the first sentence in that decision candidly acknowledges and indeed celebrates that that lawsuit was “Only the beginning of what promises to become a flood of new litigation — litigation seeking judicial assistance in protecting our natural environment.”
Over the years since Calvert Cliffs’ NEPA litigation has become one of the most important parts of environmental law. And it’s had a profound impact on our society. Some of which is unquestionably good and some of which has some significant costs, especially as NEPA has been used simply as a roadblock in some instances to delay and drive-up costs. And the rise of NEPA has also coincided with the creation of a number of other administrative hurdles and structures that restrain the federal government’s ability to act in other ways.
To name just a few, you’ve got the Endangered Species Act with its consultation requirements, you’ve got permits under the Migratory Bird Treaty Act, the Clean Water Act, and for some issues the Clean Air Act, and a number of state and federal provisions that deal with land use. On the federal level, you’ve got Indian Reservations and federally protected land in addition to the holdings that the federal government just owns outright. And then, of course, you have the whole range of regulations that govern each individual area whether it’s creating pipelines and going to FERC or whether it’s dealing with the NRC if you want to build a nuclear plant.
So the wisdom and structure of this whole regulatory system has been, as you might imagine, discussed and debated for a very long time both in conversations like this one and also through litigation. And often, one proposed solution to a number of our problems — one or the other — has been some kind of legislative reform. Of course, passing legislation is quite difficult and in the past, this hasn’t gone very far. But perhaps we’re reaching a turning point. And I think the reason for that is that what’s sauce for the goose is sauce for the gander and proponents of the green energy transition have found that the same tools that have been used to slow down pipelines and drilling can also be used to resist solar, wind, and transmission line build outs, to name just a few things. And proponents of green energy transformation generally want to move quite quickly, having substantial changes within the next few decades. Under our current system, and even with the enormous funding from the Inflation Reduction Act, moving that fast under our current system is, as my friend Mario Loyola has pointed out, a fantasy.
And the need to act is becoming even more obvious outside the world of people who pay attention to this. Just think about how much of the US is at risk for blackouts and remember Governor Newsom’s recent pleading with Californians not to plug in their Teslas during peak consumption hours. So these realities are forcing, or at least encouraging, an unlikely group of law makers to come together to hash out a potential permitting reform compromise to make it easier to build new energy and natural resource infrastructure. A key player in this has been Senator Manchin who, as part of his grand bargain to vote for the Inflation Reduction Act, extracted a commitment from democratic leadership to pass a permitting reform bill this year. Senator Manchin styled this as an all of the above solution. I think that might be a little misleading because of heavy subsidies for green energy but at a high level that approach has real bipartisan appeal.
The draft bill that he introduced ultimately unsuccessfully last month had a number of provisions. I’ll walk through those really quickly because it’s going to be the starting point of our conversation today. The first is a two-year target for NEPA reviews for major projects and a one-year target for smaller projects that don’t require a full EIS. Permits also under the bill have to be issued within a hundred days of the NEPA process concluding. For big stuff, there’s also a designation of a lead agency to coordinate the review process and 150-day statute of limitations for court challenges along with what the bill calls random assignment of judges. I’m not quite sure what that means because we already have random assignment of judges in many instances. And then it requires courts to act quickly in their remand orders to agencies.
The bill also had a special priority list requirement that directed the president to designate some 25 energy projects for priority review to be updated every 180 days. It also lowers the threshold for so called fast 41 streamlined permitting for energy and natural resource projects primarily by expanding what kinds of projects can qualify including opening it up to critical minerals and lowering the cost threshold from $200 million to $50 million. The bill also had modifications to Section 401 of the Clean Water Act — proposing a year for states to take action on water permits, but it also expanded state discretion to block infrastructure such as pipelines based on indirect impacts on water quality.
And perhaps most significantly, the bill has fundamental changes for the federal power act. Expanding Federal Energy Regulatory Commission or FERC’s authority to direct the creation of transmission line construction and letting FERC override state’s objections. It also provides for socialization of some of the costs. And finally, because it’s very near and dear to Senator Manchin’s heart, the bill puts very strong pressure on the federal government to finish the permitting process and construction authorizations for the Mountain Valley Natural Gas Pipeline. Now, the bill flopped. It was withdrawn by Manchin himself, but I think it comes down more to the fact that it’s a substantial project that the bill tried to undertake including being mostly a FERC reform bill more than a permitting reform bill. It didn’t make substantive changes to NEPA or the Clean Water Act, Clean Air Act, or the Endangered Species Act. And the timelines moreover are — they’re soft. They’re the kind of things that agencies can and will ignore and find ways to game the system if they want to, for example by not starting a clock when they should.
Yet, despite all this, I think permitting reform is hardly dead. The bill and some other bills that have made the rounds around capitol hill are continuing to get real interest from lawmakers. So today’s discussion is going to focus on what this all should look like. Discussing what’s good, what’s bad, what needs tweaking, and what, if anything, needs to be added or taken out of the first bid that Senator Manchin put forward in his bill.
I’m delighted to be joined today by two very distinguished panelists who have given this an awful lot of thought and done a lot of research on this. Professor James Coleman and Professor David Adelman. Professor Adelman is the Harry Reasoner Regents Chair in Law at The University of Texas at Austin. He writes on environmental law, intellectual property, climate change policy, and focuses on the interaction between the way that science and law interact. Before entering, Academia Professor Adelman clerked for the Honorable Samuel Conti of the US District Court for the Northern District of California and worked at Covington and Burling in D.C. He was also a senior attorney with the Natural Resources Defense Council also in D.C.
Professor Coleman is the Robert G. Storey Distinguished Faculty Fellow and Professor of Law at Southern Methodist University’s Dedman School of Law. Professor Coleman is a graduate of Harvard College and Harvard Law School, former clerk to Judge Steven Colloton on the Eighth Circuit, and a former associate at Sidley Austin where he worked for three years, which I have to say was a good choice because I did the same thing. Professor Coleman’s scholarship addresses regulation of North American energy companies, and he’s testified before Congress about how to reform NEPA.
We’ll begin this webinar by giving some time to each speaker to give opening remarks, and then a few minutes for responses. And then, we’ll kick off the question-and-answer portion that I’ll start, and then we can move onto audience questions which you can submit using the question button in the Zoom window. We’ll begin with Professor Adelman. So, David, please take it away.
David Adelman: Thank you, and I really appreciate being invited to talk about NEPA and permitting reform. The way we talked about this is I’m going to set the stage for why permitting has become such a significant issue particularly in the context of energy transition. And I may say a couple of things as well about how streamlining has already occurred particularly in the context of the National Environmental Policy Act.
So to set the stage, we’re at the — still at the beginning of the beginning of this massive energy transition that’s going to occur across the economy. Everyone agrees that the electricity sector is the center piece and really the backbone around which that transition is going to occur. And so the permitting issues go far beyond just the utility sector but that’s what I’m going to focus on, and I think mostly what we’re going to focus on today. And so what I wanted to do was draw on some relatively recent research that is very much representative of the work that’s going on right now that provides a sense of the scale and the speed of the change that has to occur.
And so the study I’m going to start with is the Net Zero study that came out at the end of 2021 by the Princeton Group. And their findings are very much affirmed and consistent with many other similar studies that have occurred. And to make this transition, we’re talking about not only rebuilding the grid — so having new different types of generation — but expanding it substantially, probably by roughly a factor of two, maybe north of a factor of three and a half. And we’re going to try and do that within roughly at least the next 25 to 28 years if we want to be net zero by 2050.
To give you a sense of what this is going to require, the most deployment — and I’ll focus initially at least on renewables — we’ve deployed in a single year is 25 GW of new capacity. Under this Net Zero America, we should be doing currently about 40, and that, starting in 2026, would go up above 70 GW. So roughly three times what we’re currently doing at the national level every year really for right until 2050. At the national level, what that’s going to require with regard to transmission is a 60 percent increase in transmission under the various scenarios, I should say, under this analysis by 2030 and roughly a tripling of transmission by 2050.
These numbers are just staggering and very, very hard to get your head around. So what I thought I would do is focus a little bit more on Texas and maybe provide a smaller scale context for how this transition is going to occur. And one of the things I want to underline is Texas is arguably, I think by — many people believe, probably the most favorable place for any kind of new major infrastructure and deployment of major facilities. It’s got minimal state level regulation. It has a massive industrial base, very sophisticated state agency. And so if things are going to happen fast anywhere, it’s most likely going to happen in Texas.
So Texas — the grid is about 90 GW total. We currently have — I think it’s around 34 GW of wind in the market. And so roughly over a decade or so, being this is reasonably generous, we added a little bit more probably than 25 GW of new generation capacity. In a study conducted at the university of Texas and with collaborators in Colorado, to get to net zero in Texas we would be needing for essentially the next 28 years to be building 10 GW of new wind generation on an annual basis. So I’m obviously focusing on renewables and a specific class of renewables, but that scale of transition is very much representative of what we’re trying to do.
It’s just a massive shift, and one of the things that makes it so challenging is, if you think about the operation of the Texas grid, one of the things that makes it unique is in the around 2013, 2014, we completed construction of about 7 billion dollars’ worth of new transmission going out to the regions where there’s a lot of wind and solar generation or resources. So that took a chunk of time, it alleviated congestion in the grid for a few years, but we now are seeing significant congestion in what’s referred to as “curtailment,” which basically means that generators in west Texas in certain locations have to essentially turn off their generation even if it’s zero cost wind generation or zero cost solar generation. And the curtailment rates in Texas are currently range depending on where you are in west Texas between 13 and 35 percent. And so we made this massive investment, we got a really positive response, but it’s enormously difficult to keep up with it.
ERCOT is in the process of developing plans to basically construct new generation capacity, not quite on the scale of the craze from about ten years ago, but really, really substantial. But that’s not going to come online until at the earliest 2027, and it could be as late as 2030. So during this period of time when we’re supposed to be adding just 10 GW per year, just looking at wind, ignoring solar and other generation capacities, we’re having a hard time just keeping up with the generation that’s already on the grid. And if the electricity sector is central to the energy transition generally, having adequate transition is absolutely essential to building new renewable generation sources. And so they’re intimately connected, and building new transition, as I’m sure we’ll talk about and is widely recognized, is enormously challenging for a whole variety of reasons. And so we need to be able to move faster. I think there’s no disagreement over that.
So let me just say a couple of things about NEPA and just set the stage for how that’s changed over time. So with regard to NEPA, there are different levels of environmental reviews. Currently, and these are just broad national averages, 95 percent of the reviews occur under what are referred to as “categorical exceptions,” or “exclusions,” I should say. And those are sort of minimal. They can be done really in a manner of days or weeks — so relatively efficient, nominal administrative process. About five percent are under environmental assessments which is a shorter form of environmental reviews, and less than one percent overall are environmental impact statements. And the number of environmental impact statements between about 2010 and today has declined by about 40 percent. For example, in 2021, for the very first time, fewer than 100 environmental impact statements were issued by the federal government — the entire federal government.
So what I just want to suggest is, environmental impact statements are really important, environmental reviews are important. Often the most high-profile developments are subject to them, and therefore, we should consider them carefully, but they are by far and away the exception to the rule. Similarly, litigation, even over environmental impact statements as opposed to the National Environmental Policy Act generally, are relatively rare. So EIS’s are litigated about 15 to 20 percent of the time, roughly speaking. Those are the best numbers that we can come up with.
And so I want to suggest that the federal government, probably for decades, has been attempting to streamline the processes under NEPA. I don’t want to suggest that there isn’t more that can be done, but I think we have to be very careful about ascribing too much to the delays associated with NEPA and both because of the relative scarcity of the number and declining number of EIS’s, but also the causation issue is much more complex than people often suggest. It’s often not clear that NEPA is the rate limiting factor. It’s often resources, sometimes it’s state and local procedures, or changes in projects that elongate the time for preparing an EIS. So it’s not that the EIS is slowing the process, it’s that the EIS has to wait for these other things to occur or wait for resources to be put in place before it moves forward. So I just want to caution people to understand and appreciate the complexities and the fact that environmental impact statements occur or apply to a relatively small number of projects overall.
So I’ll stop there, and I’ll let James take it. And then we can have a more give and take conversation after he talks.
James W. Coleman: Well, thank you so much both to David and Michael. It’s wonderful to be here talking with you. So just to underline a couple of the points that were very ably made by Michael and David. Yeah, this is — there is an incredible need for new transport to enable new energy sources. And one of the ironies of the energy system is that some of our traditional energy sources like oil and coal, they can get by whether or not new energy infrastructure is built because they have a lot of existing infrastructure in terms of oil pipelines and rail lines for coal, and they have a lot of flexibility in terms of how they get to market because they can go by rail, by pipeline, by vessel, by water, etc.
For these newer and cleaner energy sources, and here I’m thinking of both natural gas, renewable electricity, and also if you were talking about hydrogen or carbon capture, they’re harder to transport. And we don’t already have the infrastructure. So if we’re going to have more renewable electricity built in the United States, it’s only because we’re able to build a lot of power lines to get that to market. Same thing if we want to have a hydrogen industry or a carbon capture industry etc. So they are crucially dependent on new, long distance, typically interstate, infrastructure projects.
And I think the other thing that has made this very salient right now is that we’ve just authorized $390 billion of spending on these new cleaner energy sources and technologies. That’s about $3,000 per US household so it’s a lot of money, and if it’s going to have a positive effect, in terms of actually deploying new cleaner energy infrastructure, it will because we’re able to build a lot of these new infrastructure projects. So as we talk about — I’m going to say some things that I think are not great in the current proposal that we’ve had out there from Senator Manchin.
As we discuss all of that, if you want to follow along — if you go to my twitter @energylawprof, I’ve just tweeted — energylawp-r-o-f — I have just tweeted out both the text of that Manchin proposal and also the one-page summary of that as well as a couple other things on this topic. One of the things that I tweeted out was — one of the big challenges is, when that Inflation Reduction Act was passed, that reconciliation bill that spent about almost $400 billion on clean energy, there were a lot of models that were put out that said, “Well, this is going to reduce our greenhouse gas emissions in the United States because we’re going to deploy these cleaner energy technologies.”
Now, the interesting thing about that is one of the assumptions that was included in all of those models was that we were going to build a huge amount of new transmission lines to bring renewable energy to market, to bring solar power to market, and to bring wind power to market. And in fact, typically, those models all assume that we would have many new interstate powerline projects built here between now and 2030. So in basically about seven years. And for those of you who talk to transmission developers, it’s a long process. Currently, if you were to put out a proposal for a new power line to bring renewable energy to market, you could easily wait 10, 15, 20 years to start construction. And so that would be a huge change to our legal system if we made it possible to build new power lines that quickly.
And so the question is, “Well, what could we do to speed up construction of those new interstate power lines and other projects that are necessary to clean up our whole energy system?” And I think as David highlighted, and I’m really glad we have — David along with coauthor Rob Glicksman as well as John Ruple who’s at Utah have done a lot of work on just empirically what kind of environmental impact statement do we get, what kind of projects receive them, and how are they challenged in court, how many are challenged in court, how long are the delays for that? So he’s a real expert on that topic. As he said, it’s not just the National Environmental Policy Act. Really there are a whole suite of permitting requirements that make it difficult to build some of those interstate projects.
And if you actually focus on powerlines, typically they get state by state approval. And so a lot of times, the roadblocks that we’re talking about to development of those projects, are state permitting processes. And one challenge that we’re seeing in the powerline area is that typically, the — our power grid grew up organically from state specific and urban area specific power grids that met and there’s some transfer of power. But unlike the natural gas system, which grew up with big pipelines going from Texas to the east coast, you haven’t had traditionally a lot of really long-distance transport crossing multiple states of electricity.
Now, that’s changing a little bit with renewable — with the increased reliance on renewable energy, there are places in the country like the great plains where wind power is stronger. There are places in the country where solar power is stronger. And if we want to take full use of those resources, that means building power lines that go across multiple states. But just as any landowner might not want a power line going over their backyard no matter how necessary and useful that power line was, there are a lot of states that say, “You know what, I don’t want to be the extension cord for you.”
So we’ve — as an example, there’s a lot of wind power in Oklahoma, and the US southeast could use more renewable energy. And so there was a proposal to build — a project called the Plains and Eastern Clean Line — to take power from Oklahoma across Arkansas to Tennessee. But that immediately ran into opposition from Arkansas. You’ve also seen opposition in Missouri to power lines designed to bring power to the Midwest. So there’s been a lot of opposition to those projects, and the permitting challenge is very difficult. So you have, on the one hand, for things that are federally regulated, you’re having the National Environmental Policy Act which at times can delay projects. As David said, it’s typically not the only thing.
So I think when we think about National Environmental Policy Act reform, we need to think about that as a necessary condition to speed up permitting but not a sufficient condition because there’s other things that are slowing things down. Undoubtedly, if you don’t have your National Environmental Policy Act permit, you can’t — your environmental impact study or environmental assessment done — you can’t build because you have to comply with that. But there are clearly other things that are holding up those federally approved projects as well.
But then we have a bunch of state approved projects that can also be held up by the state permitting and local permitting challenges. And then, even for the federally approved projects, and typically, natural — interstate natural gas pipelines are regulated by the federal government and approved by the federal government. One thing we’ve seen is that states do have some levers to potentially stop those projects. So one is Clean Water Act Section 401 because that pipeline needs a water quality certification before it’s built. Now, there is a process that can lead to review of those state determinations and eventually if the state delays on that determination, it may waive its right to effectively veto that project, but we’ve seen that that has tended to hold up projects. And there are also other requirements that can hold up those projects.
So just as an example, even historically maybe people felt that because it’s better to have federal regulation than state regulation because you only need to satisfy one group of regulators rather than each of the regulators in each of the states which may have their own reasons to hold up the project. But one thing that we’ve seen recently is even with nationally approved natural gas pipelines, like the PennEast Pipeline, like the Atlantic Coast Pipeline, even though they’ve had continued support from the federal government where they’ve got all their permits, because those permits can be challenged in different ways in different courts and because they’re also subject to state hold ups because it’s not a purely federal scheme, there still is the ability for the states to block those projects, sometimes they won’t even get billed. And so for both of those projects, they had all the federal permits they needed. They actually won cases in the Supreme Court defending the permit and their right to use eminent domain, and still because of all the legal challenges they were facing, they were blocked.
So that’s the context for looking at Senator Manchin’s proposal here. And I think if we look at Senator Manchin’s proposal, there are some things that — there’s some things that simply don’t make a lot of sense. There are some things that could be helpful if federal review was a helpful thing. And the reason I say that is, one of the major things that the proposal does — and you can again, see that proposed text as well as the one-page summary — is it gives more federal authority for certain clean energy projects. And that’s both transmission lines that are declared to be in the national interest and probably we’re thinking about power lines to bring renewable energy to market, but it could be other power lines. And also another thing that it gives that federal authority to is hydrogen pipelines. And hydrogen is thought of as a way to potentially store clean energy and a clean burning fuel. So the idea of the bill seems to be, let’s sidestep these state challenges to permitting by putting more things in the federal system.
Now, for me the problem with that approach is that it’s not actually clear that having federal review now speeds up projects because when you look at those natural gas pipeline projects that have that federal review, they’ve been facing lots of roadblocks to review, and the states have existing ways of stopping them. Now, the bill maybe tried to address that by — with the Clean Water Act Section 401 — tweaking some provisions of that. But as Michael suggested, those provisions went both ways. In some ways, it brought in review but in some ways, it tried to put some time limits on review. And I think it ended up leaving no party happy. So that some of the environmental groups that might support Clean Water Act Section 401 were not happy about the limits and industry was more worried about the broadening than it was happy with the limits. So I think that ended up really pleasing no one and I’m not sure what compromise we’re going to find on Clean Water Act Section 401 which gives the states that ability to veto federally approved projects.
And so then, there’s some other things in the bill that I think are kind of a distraction, not necessarily that helpful. So one thing the bill does is it says that for environmental impact statements, typically they should only last two years and for environmental assessments, one year. The challenge of that for me is that it’s very hard to get the federal government to stick by a deadline and sometimes even the deadlines it would like to hit in an ideal world. So there’s really no enforcement mechanism and you might worry that it might actually backfire.
This is something that David has mentioned before which is that, if the courts have the impression that you rushed the review, they might end up basically being more likely to strike down your project because one of — as David’s research and others has shown — one of the — a lot of times for the typical project the NEPA may not slow it down that much. It’s potentially a couple years on the typical project not challenged or overturned in court. But there’s a lot of danger from that long tail of projects that get delayed so long that they never get built, and of course, that’s an ever-present concern for project developers when they even consider whether to propose a project. And it also may tend to lengthen the average review because of course, the agency is also worried about having its review struck down in court. So I’m not sure how helpful those time limits on the federal government are. One thing I proposed is that maybe there should be a time limit on the back-end — an absolute length to how long these challenges can go on. And I described that in the post that I’ve linked on twitter there.
So the — and then there’s some parts — that I think Michael indicated that are a little bit silly — of this proposal. So one of the things it says is that there should be random assignment of judges for these pipeline projects. Now, A, there already is random assignment. The only real exception to that is if it’s a related case, and then appropriately, it typically goes to the same panel. If the suggestion is that the related case rules shouldn’t be used anymore, presumably that would be worse for new energy infrastructure projects because the reality of trying to build a new energy infrastructure project is you have to win every case in court. And so if you have a bunch of different panels, that just is more opportunities for your project to be blocked. So that seems to be — have been driven specifically by the Mountain Valley Pipeline’s frustration with the panel that they got, and they wanted a new panel, but it really is counterproductive for energy sources in general.
Finally, there are some parts of this that are really just about the Mountain Valley Pipeline. I mean, I think one thing that most people have talked about this proposal would agree with is that overall this kind of shuffles around a lot of authority, not clear it would speed up projects very much. The one project that it really does make a big change on is that Mountain Valley Pipeline in Virginia — that Virginia pipeline there that Senator Manchin has been very supportive of because it actually removes judicial review for the steps that the federal government is supposed to take to expedite that permit. And so I do think this proposal would be very likely to get the Mountain Valley Pipeline built. It’s not clear to me that it would really help the broad swath of new projects that we need to build a cleaner, more secure, more reliable energy future. So with that, I’ll look forward to the discussion.
Michael Buschbacher: Excellent. Thank you. I’ll start with David. Do you have anything in response to Professor Coleman’s remarks?
David Adelman: Sure. One of the things I want to underline. Texas is unique for a lot of reasons. For example, FERC doesn’t have authority over what goes on within Texas, but from a developer’s perspective it is the best place in the country. There’s almost no federal land. There are endangered species issues, but they tend to be much more toward the coast, and most of the development, although more development is occurring towards the coast right now. But in essence, for many if not most projects in Texas, you can avoid all federal permits. I would say it’s exceedingly rare that you have to follow NEPA. And I just want to underline, we are having trouble, at the rate at which we’re deploying wind and solar in Texas, keeping up. Keeping up with new transmission — even beginning to approach the volume of new development that we’re going to need just in Texas where it’s relatively easy to develop.
And so I understand that we need to streamline permitting. I understand that NEPA and many other settings can be a significant factor, but even where it’s not essentially at all a factor, we’re still not developing as fast as we would like to. And so I think it’s clear evidence that we have to think more prospectively about how we’re going to promote faster development. And so one of the things that I think is somewhat dispiriting about the Manchin legislation is it’s not really grasping just what a step change in the rate of deployment we need and what a step change we need in the way we’re approaching the permitting process.
I think we’ve seen some very modest examples where the federal government or states like California have attempted to get ahead of development rather than thinking about it purely responsively. So some of the efforts on federal land — I think there were efforts in California to mitigate some of the problems associated with the California Environmental Quality Act which is basically California’s version of NEPA. But that we’re more adopting a land use — a forward-looking land use planning approach to looking more globally at what needed to happen and putting everything in place so that you could streamline all the various and coordinate all the various permitting processes.
One thing I’ve wondered, in the Manchin legislation, there are these priority projects. It’s attempting to kind of promote coordination efficiency and maybe directing resources towards them. That’s a more targeted version of it and maybe there’s some merits associated with it, but I just don’t think we’re quite appreciating how challenging this situation is and how much we need really a paradigm shift in the way we’re thinking about planning and how we’re integrating the permitting processes along with it.
Michael Buschbacher: Let me ask a follow up on that. One of — and maybe this is just because I’m a litigator and I just have some availability bias in the way I look at this, but the way in which litigation gets used as it’s not in — certainly not in every case — it’s only in a few cases, but it’s often in very important cases, and it’s often, if we’re talking about building out renewable transmission line things or new renewable generation projects, those things are bigger and newer. I think as Professor Coleman pointed out; we already have a lot of fossil fuel infrastructure. So it seems to me that there’s a litigation problem that this bill doesn’t do much to solve. The statute of limitations just means you have to get things filed. People will do that on these important cases.
And maybe related to this is the way in which permitting and different permitting authorities get used to drive policy that, for instance, this administration really wants to do stuff about climate change and it’s used NEPA reviews particularly in FERC to look at climate issues that — the impact of this or that individual project, it’s not a very ideal situation to think, how are we going to weigh the costs and benefits for a national climate policy in the context of this one permitting decision? So I wonder what needs to change if anything about those things, or is the paradigm shift you’re envisioning something that needs to happen elsewhere?
David Adelman: So I mean, I hear you in terms of trying to pack more even into like broader scope in the environmental reviews associated with let’s say a pipeline sighting and that that can add further burden to the agency’s work. I mean, my sense is that there will be relatively — a lot of the NEPA reviews, obviously there are specific challenges associated with particular projects, but the people who do these reviews have really well-established procedures and analytic methods for undertaking these assessments. And so my guess is that maybe it will take a little while to integrate them, but I’m not sure that including consideration of upstream CO2 or downstream CO2 emissions is going to really have that much effect either way. I think that the people who actually are doing the reviews will adapt to them.
With regard to thinking about, I don’t know, I guess you were asking about the permitting process more broadly, I guess, and the degree to which litigation in the most important projects is holding things up and if the project is more important, then it’s more likely to be litigated even though there’s a relatively small volume of litigation, it could be having a disproportionate impact. I think those are issues to definitely consider. I think that what we’re talking about though is just a huge change in the volume of deployment of transmission which is going to be a precondition to a lot of new generation capacity being constructed.
And at least what we’ve observed is, the people who litigate these cases — now, it’s a little bit more challenging if it’s local, but they only have so many resources. And so if we really try to ramp things up, I think that litigation most likely won’t be able to keep pace with the rate of change that we actually need. I think that could create problems of its own and it maybe that we want to do something like have designated projects and have alternative procedures for working with localities with respect to them and use that to either mitigate the potential for litigation or maybe, in extreme cases, limit it to some significant degree. I think that’s something that’s worth at least discussing. I think it will be enormously controversial though.
And I think we risk losing sight of — I mean, when you look at the maps of these projections of the change that — just the amount of transmission, the amount of new generation that has to occur is going to be fundamentally changing these communities, and we need to prepare them for it. And I think I guess my sense is, being more forward looking and thinking about concerns about equity and sharing resources and making sure that local communities get benefits, I think that’s going to be as much or more important than these legal technicalities.
Michael Buschbacher: On that point, I just have a — and this is for both of you — with the politics here, not everyone — certainly not everyone in the Senate — wants that transition to occur for a number of reasons. Either because they see it as needlessly costly or because they see it as comparatively disadvantaging the kind of resources that their states have or because of some ideological position. What is the — how should that factor into the political calculus that’s going on, and what is the thing that can be given in exchange if you’re Senator Manchin and you want to achieve that transmission build out, but you also want to see the “all of the above” development occur? What do you think is going into that and what should be going into that negotiation?
James W. Coleman: Well, let me say something about that because I do — that is the big challenge. I’m going to be a little bit optimistic here which is, I do think that there is room for a grand bargain, and I think that’s possible for a couple reasons. Again historically, I think the natural gas industry has been looked at as treated more favorably than the power line industry because the natural gas industry has that federal regulation. And I think for years, people that wanted to build interstate power lines would look at the natural gas industry and say, “Hey, we want that kind of federal review.”
Now, I think — and so you might imagine, well, the natural gas industry doesn’t want to be lumped in with these other sources if it’s treated better. But I think we’ve now reached the point with all the challenges that have grown to the natural gas industry and completing pipelines that there is some agreement between the natural gas industry and the renewable power industry in the need to simplify new transmission. And so if they were both in federal review for many of those projects, I think that you would see a group saying, “Hey, look, we need more projects.”
And I think there’s a lot of environmental groups or groups that are interested in reducing carbon emissions in the world that wouldn’t necessarily be opposed to a little bit of build out of natural gas transmission, and I say that for a couple reasons. One is of course, we promised a huge amount of new natural gas. Pretty much all of our incremental supply to Europe to help replace Russian supplies of gas and also to ensure that they don’t backslide too much toward — as they currently are — towards brown coal and basically combustion of wood which are much dirtier sources. But also, in addition to all of that incremental capacity, we’re signing deals everyday to send natural gas to Asia where it both provides reliable power to places that are really in desperate need of it right now if you look at Pakistan or Bangladesh where they’re having power outages, but also, it’s specifically to replace coal in those countries. And that’s also very true in India and to some extent China, Korea, Taiwan, etc. So the — and so there is a case to be made that that natural gas in the US could have a positive environmental impact.
Now, there’s environmental groups who are opposed to that both from its — they don’t like the infrastructure domestically and their perspective would be “No. Just force Europe and Asia to go more directly to renewables without having a thermal source of energy.” So that’s not uncontroversial but I think you’re seeing a lot more support on the progressive side for that than you have in the past and for this idea of a broad joined up coalition in favor of more infrastructure. I think that’s been very remarkable. And one way that you maybe see that is that Senator Manchin, at least the political theory of his proposal, was basically that he was going to get 50 democrats and 10 republicans. Now, I don’t think he’ll get every last democrat, but I think his bill is clearly pitched basically at a mostly democrat with picking off a few republicans.
Now, I don’t know what kind of proposal could actually get through, if it would have to be a little bit more balanced or otherwise, but I think that’s interesting. And I think the other reason that I do think you might see a change is exactly what David said that there’s a true need for a step change in our construction of these clean energy infrastructure sources. And remember the National Environmental Policy Act, in many ways, is adopted in response to a huge infrastructure build out that we had in the years after World War II, and we continue to receive massive, massive benefits from that interstate highway system and from the energy system that was built out at that time. I mean, in fact, if you look at crude oil pipelines to this day, there are more crude oil pipelines built before 1970 — so they’re more than 50 years old — than there are built after the National Environmental Policy Act was passed after 1970. And so we continue to get benefits from that old infrastructure.
Same thing would be true of the interstate highway system. Now, I do think there were clear environmental downsides to doing that. So my grandmother was raised in the Rondo neighborhood in St. Paul, a primarily African American neighborhood, that was destroyed by interstate highway construction. It’s often used as an example by President Biden. So that is — there were clear areas where we weren’t considering the environment enough in that previous build out, but it’s also clear that we received massive benefits from that infrastructure build out. And I think right now, we’re basically — we need a new infrastructure build out. And I think there are enough diverse parts of the energy system that would benefit from that build out that you could get a pretty broad coalition in favor.
I think that’s the theory of the Manchin bill. I don’t think the theory is that misplaced. Maybe it needs to be a little bit more balanced in partisan terms. But the theory that there may be a coalition I think is accurate. It’s just that it’s going to take a little bit more time to work out the details. You can see senator — we’ve seen senators from both parties saying maybe something could be attached to the defense bill, maybe something could be done in lame duck. I would not be surprised to see ongoing negotiations about this for a couple years because I think it’s going to take a while to work out the compromises and provisions that people are willing to live with on both sides.
Michael Buschbacher: Let me at least — go ahead.
David Adelman: So I think everyone recognizes the politics are enormously difficult to traverse. I don’t think there’s any simple answer. I’m skeptical about whether there’s a grand bargain. One of the ways the IRA I’ve heard described is an effort to change the political economy around the energy transmission. And part of that is by directing significant resources to a diverse range of communities and making it clear that their life will be better and that their local economies will benefit and that they’ll all — we’ll all benefit from this transition, not only because of climate change, because of a lot of other economic benefits associated with it — cheaper energy, we hope, in the long run at least. And so it seems to me that’s kind of a structural change that we’re hoping for. I hope it’s not essential that we get to that point because it feels like it’s going to take a while for that to play out, but it seems like that’s part of the calculus at least of the Biden administration and the people who pass that legislation.
It’s harder to see how this permitting legislation fits in because it just doesn’t seem — when you look at the different provisions in it, they’re overall relatively modest. The most significant one is the one that Michael referred to which is the FERC changes in authority. And it’s still not clear, as James said, that that goes far enough. So just in the context of what we need to do, I worry that we spend a lot of time on this and we’re focusing on these little details of specific aspects of the legislation, and none of them really get us all that close to where we really need to be. And on the other hand, waiting for the politics to change seems really, really tough.
The only other thing I sometimes think of is, you really just try to be as opportunistic as you possibly can. You drive development in places where people are open to it. You have these designated projects which are opportunistic in themselves and maybe you drive them too. You demonstrate the value of this form of economic development. And maybe that also kind of propels shifting views about it and its benefits and recognition that, while there are trade offs with it, that overall the benefits to people broadly are more than offsetting them. I think it’s still really hard because it seems like it’s going to be — particularly with regard to transmission that is so important — there are going to be some communities that are disproportionately impacted, and maybe it is that we just funnel other resources to those communities to make this form of development acceptable. But I think it’s really important to appreciate just how dramatic a change we’re seeking here. And by virtue of that, how significant the impacts are going to be on at least some local communities.
Michael Buschbacher: Well, we’re almost out of time, and I do want to — I’m going to mash up two audience questions very quickly here. One is that — I guess is, are we headed towards some perfect storm of energy efficiency because of the ways in which we’re not adapting quickly enough? And related to that, is that something that could change the progressive sort of — I don’t want to say doctrinaire — but very firm line that led them to reject the Manchin bill despite the fact that, as James points out, it’s largely in their favor in terms of what they’d be getting out of it. Are those two things related?
James W. Coleman: So let me say a couple things about that. I mean, so one is, I am concerned about how our reliability is going to work going forward because the fact that oil and coal are easy to transport, and store does make markets a little bit more stable in them. So for instance, we were two percent short of oil for all of 2021. We were consuming 2 million barrels per day more than we were producing, but we lived off our stores for that period of time, and so there weren’t catastrophic shortages. Prices rose, but there weren’t those catastrophic shortages.
With electricity, one of the big reasons for the power outage in Texas was that we were — the frequency of the grid deviated because we were a little bit short for four minutes on the electric grid. So the electric grid is just much more challenging because you have to always exactly balance how much power is supplied and demanded. So I just think that is an incredible technical challenge that can be met with a lot of new infrastructure, but it is just a really an extreme amount of infrastructure is required.
The second thing is, I think we just need to be exploring some of those suggestions that David said about maybe some priority projects. I would also look at maybe priority corridors where it would be easier to permit, or you could use existing rights of way. And then, I think the third thing that I’ve looked at and proposed — you can see my proposals — is basically that there, again, there has to be some cut off to litigation just to remove that specter that “I’ll never get my project built,” so that developers know when they go in, as long as they get favorable reviews from the government, eventually they’ll be able to go forward.
Michael Buschbacher: I see we’re a minute over. So unless anyone has a pressing need to get one final word in on anything, I think we can wrap up. But this has been a fascinating discussion. I’ve learned a lot. And it’s going to be very interesting to see what happens in the coming months and years in this area.
Sarah Bengtsson: Thank you, Michael, for hosting and for facilitating a great discussion today. And I also want to say a big thank you to our panelists, David and James, for sharing your time and your expertise as well. And thank you to our audience, of course, for tuning in and for participating. You can find more of our content on our website at regproject.org or follow any major social media platform @fedsocrtp to stay up to date. With that, we are adjourned.
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This has been a FedSoc audio production.
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The University of Texas at Austin School of Law
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