A Bipartisan Energy Deal? – The Wall Street Journal

by | May 2, 2022 | Energy


The Editorial Board

May 2, 2022 6:44 pm ET

Pumpjacks on the outskirts of town in Midland, Texas, April 4.


Jordan Vonderhaar/Bloomberg News

West Virginia Democrat

Joe Manchin

wants to cut a bipartisan compromise on energy. It’s not a crazy idea, but the risk is that Democrats will lure Republicans into accepting superficial permitting reforms in return for a gusher of green energy spending.

Any worthwhile deal, at a minimum, should make the National Environmental Policy Act (NEPA) a less lethal regulatory weapon. While a large pipeline can be built in a year or two, federal permitting can take two to three times as long. If there are lawsuits—and there always are—you’re looking at a decade or more. Add that to the cost in present value of any energy or other project.

The bipartisan infrastructure deal included modest NEPA reforms, such as a two-year shot clock for federal agencies to complete environmental impact statements. The law also requires federal agencies to work on a review at the same time rather than wait in turn.

Alas, the Administration’s new NEPA regulations, announced last month, will create more red tape that increases costs and expands litigation risk. Federal agencies going forward will have to consider the “cumulative” and “indirect” project impact.

While the rules don’t specify every potential tangential impact, they put an emphasis on climate and “environmental justice.” Project developers will have to mitigate these effects—say, by installing electric-vehicle chargers in minority communities. This is a way to get businesses to pay for the Administration’s Build Back Better plan that can’t pass Congress.

The Administration’s inflated “social cost” of carbon—a speculative estimate of the global harm that could result from climate change, including foreign conflict and migration—will jack up costs even more. The White House pegs the social cost of CO2 at $51 per ton—about 50 times higher than the Trump Administration’s estimate—and is planning to increase it.

A higher cost of carbon means that companies could have to spend more to compensate for their emissions—and regulators are sure to deem some projects too costly to permit. Any energy deal should override the Administration’s NEPA anti-reforms and explicitly prohibit federal agencies from considering climate and social factors.

It should also limit executive discretion to wall off federal land from development under the Antiquities Act and Endangered Species Act. And it should limit states’ power under the Clean Water Act to veto pipelines and high-voltage transmission lines. This would help green energy too.

How about setting a shot clock on approving drilling permits? Texas requires regulators to process permits in three days. The Biden Administration on average takes six months. Pipelines planned in existing rights-of-way of other pipelines should be approved automatically.

Another idea reportedly under consideration is to deem liquefied natural gas exports to a NATO country to be in the “public interest,” thereby short-circuiting Department of Energy review. Even better: Eliminate DOE’s reviews. They’re redundant since the Federal Energy Regulatory Commission must permit export terminals.

The model for a deal would be the 2015 compromise between

Barack Obama


Paul Ryan

that lifted the ban on oil exports while extending green energy tax credits. The model should not be the infrastructure deal that Republican Senators agreed to last summer that included mostly liberal priorities—e.g., a public transit blowout—with small permitting reforms sprinkled in.

Republicans will likely gain leverage after the midterms to negotiate reforms, so there’s no urgency to strike a deal now. No deal is better than a bad one.

Review & Outlook: The Administration’s new Disinformation Governance Board is likely to promote more public mistrust. Images: AFP/Express/Getty Images/AP Composite: Mark Kelly

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