Addressing Inefficiencies in the Energy Sector: Proposed Energy Permitting Reform Act 2024 | Womble Bond Dickinson

The permitting process has been identified by many commentators as a primary cause of delays in the development of energy, infrastructure, and mining projects in the United States. With energy demand set to increase significantly in the coming decades, along with increased geopolitical uncertainty, the need to secure the nation’s energy resources is a goal that has received strong bipartisan support. To that end, on July 24, Senators Joe Manchin (I-WV) and John Barrasso (R-WY), Chairman and Member of the Senate Energy and Natural Resources Committee, respectively, introduced the Energy Permitting Reform Act (NEW24584 (senate.gov)) (the “bill”) to address certain areas of concern that affect permitting and licensing in the energy and mining industries.

Below is a brief overview of some of the key provisions of the Bill that affect the energy sector. The proposed changes for the mining industry will not be covered in this client alert, although we continue to monitor progress in this area. For an in-depth analysis of the permitting reforms with a focus on the mining sector, please see our recent white paper on the subject, Permitting Reforms for Mining and the Energy Transition.

Renewable energy

The Bill proposes a number of new rules and legislative changes that have the potential to increase the deployment of renewable energy projects on land and offshore. Key initiatives that the Bill introduces include:

• Sea wind. The bill would require the Department of the Interior to hold no less than one auction per year for offshore leases for wind projects during the years 2025 through 2029, with a minimum auction area of ​​no less than 400,000 acres per year. (There have been four auctions of offshore leases for wind projects since 2021, according to the Bureau of Ocean Energy Management.) The bill would also require the Secretary of the Interior to establish an initial target date for achieving 30 gigawatts (“30 gigawatts”) within 180 days of enactment of the bill.GW”) offshore wind energy production.
• Renewable energy on land, on federal lands. The bill revises the current goal of 25 GW of renewable energy deployed on federal lands by 2025. The new goal, if the bill is enacted as currently written, would be 50 GW of renewable energy deployed on federal lands by 2030. Based on information provided by the Bureau of Land Management, as of June 1, 2024, there was 17.4 GW of renewable energy generating capacity installed on federal lands, consisting of 69 geothermal projects, 54 solar projects, and 41 wind projects.
• New timetables for the renewable energy permitting process. The bill would impose new deadlines on the Secretary of the Interior and the Secretary of Agriculture for applications for rights of way for eligible projects. The bill also provides a 90-day deadline for the Secretary of the Interior or the Secretary of Agriculture to notify applicants whether an environmental impact statement is required.
• NEPA Exemptions. The Act 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 enactment of the Act, that would create one or more categorical exemptions under the National Environmental Policy Act of 1969 (the “NEPA”) for low-disruption activities necessary for renewable energy projects. The Act adds more clarity on what is considered a “low-disruption activity”:
  • isolated surface disturbances less than five acres in size that have been subject to a site-specific analysis in a document prepared pursuant to NEPA that has been previously completed;
  • activity at a place where the same type of activity was carried out in the five years prior to the date of commencement of activity;
  • activities on previously blighted or developed land for which an approved development plan or any environmental document prepared pursuant to NEPA analyzes such activities as reasonably foreseeable, provided that the plan or document was approved within five years prior to the date on which the activities were to occur;
  • the installation, modification, operation or decommissioning of commercially available energy systems located on a building or other structure (such as a roof, parking lot or facility, or mounted on signage, light gates or fences);
  • the maintenance of a minor activity, other than the construction or major renovation of a building or facility;
  • preliminary geotechnical studies; and
  • installation and removal of temporary weather stations.
• Geothermal. The bill introduces a number of measures intended to improve conditions for geothermal developers, including the introduction of certain exemptions from NEPA review, agency notification deadlines, and annual lease sales.

Transmission and planning of electricity

The last two decades have seen an increase in the intermittent deployment of renewable energy as demand for electricity has grown. These trends are set to continue, with electricity demand in particular looking set to grow significantly due to the anticipated energy demands from data centers and transportation applications. As a result, there is a growing awareness that transmission networks are not fit for purpose to meet these developments.

The Act would make a number of changes to the permitting and transmission planning processes. With respect to permitting, the Act strengthens the Federal Energy Regulatory Commission (“FERC”)’s authority to issue construction permits for projects in the national interest without first having to designate those projects as National Interest Electric Transmission Corridors (“NIETCs”). In fact, the Act would eliminate the NIETC concept altogether and allow FERC to act on a wider range of proposed transmission projects.

In addition to authorizing the reforms, the bill introduces two new sections to the Federal Power Act (“FPA”) that would require Regional Transmission Organizations/Independent System Operators (“RTOs/ISOs”), except the Electric Reliability Council of Texas (“ERCOT”), to jointly submit periodic plans with neighboring RTOs/ISOs for interregional transmission. Initial plans would be required to be jointly submitted within two years of enactment of the bill and updated at least once every four years. The bill would authorize FERC to establish precise regulations for the submission of transmission plans, as well as to approve proposed cost allocations.

Oil and gas

In addition to measures to facilitate the development of renewable energy projects, the bill would also establish regulations to promote domestic oil and gas production. Key proposals for the oil sector are outlined below.

• Export of liquefied natural gas (“LNG”). The bill would require FERC to approve or deny, within 90 days of notice under NEPA, all LNG export applications and applications for re-exported U.S. natural gas to be transported by pipeline to liquefaction facilities in Canada or Mexico. In the event FERC does not issue an order within 90 days, the application would be deemed to have been granted.
• Onshore Oil and Gas. The bill would amend current law that requires the Department of the Interior to offer oil drilling space as gas wells on federal lands for which statements of interest have been filed. Under current statute, any federal land (regardless of whether a statement of interest has been filed) could be offered at auction for oil and gas leases to meet the statutory minimum annual requirements. In addition, 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 the mineral property is small.
• Offshore Oil and GasAs with offshore wind, the bill would require the Department of the Interior to conduct no less than one auction per year for offshore leases from 2025 through 2029. There are currently three planned for the 2024 through 2029 period. The Bureau of Ocean Energy Management’s “Summary of Procedures for Determining the Adequacy of Bids for the Sale of Offshore Oil and Gas Leases, Effective March 2016, with Central Gulf of Mexico Sale No. 241 and Eastern Gulf of Mexico Sale No. 226” would be codified.

Final thoughts

The bill would introduce a number of key changes that would streamline permitting for a large number of energy projects; however, the above summary is by no means an exhaustive list of all the proposed measures included in the bill. Given the current legislative calendar, it is unclear when (if ever) the bill will be taken up seriously by legislators. We will continue to monitor developments with respect to the proposed Energy Permitting Reform Act.

(Show source.)