On December 7, Senator Joe Manchin (D-WV) released the latest version of his energy permitting text, hoping to attach it to the National Defense Authorization Act. Given the opposition from both Republican leadership and progressive Democrats, this is unlikely. Still, the bill contains two notable new approaches to permitting electricity transmission that: a) address concerns about previous drafts of the text, and b) could help build transmission that will unlock America’s diverse energy resources and increase energy independence.
The first change in this updated version concerns who permits projects and where they get permitted. Building interstate transmission has become extremely difficult as each state must separately authorize a project. Past attempts to fix this by creating a federal authority were only partially successful. For example, the 2005 Energy Policy Act created a clunky federal authority that would come into play if a state delayed project approval. However, this authority was geographically confined to certain areas and mandated roles for both DOE and FERC. Due to successful legal challenges, it ultimately remained unimplemented.
Another past example is the 2021 Infrastructure Investment and Jobs Act. While significantly improving things by activating the federal authority if a state denied authorization for any reason, it still maintained both the geographic limitations and the awkward two-agency approach. And while Senator Manchin’s September draft did nothing to fix either of these problems, his latest proposal takes big steps forward on both by eliminating the geographic limitations on federal permitting authority (consequently eliminating DOE’s role in the process).
If this language were enacted, developers–faced with a state denial or delay–would take their case directly to FERC. In turn, FERC may approve the project if it benefits consumers, reduces congestion, or increases energy independence. Offhand, it is hard to imagine a project that doesn’t check at least one of these boxes. It’s also important to note that FERC can only site the portion of an interstate project in a state that delayed or denied its permit. Other states on the route would retain their authority. And, of course, any line serving only a single state would still fall exclusively under its jurisdiction.
The other major issue the text addresses is that, regardless of who sites it, direction is provided on who pays for new transmission between regions (aka, cost allocation). FERC has a process in place by which eligible lines have their costs allocated, ensuring that they are roughly aligned with benefits–and that consumers should not shoulder the price tag for a line that offers them no benefit.
However, there is no clear guidance or authority on if and how this process should apply to all transmission lines. Particular gaps are lines that interconnect regions, lines that fall outside traditional planning processes or regional boundaries, and transmission connecting offshore wind. The new bill provides that FERC will review and approve plans for allocating the costs for these lines following existing practices and precedents. In a significant clarification from previous drafts, this bill specifies what benefits FERC can consider when assessing allocation of costs. They are limited to improving system operation and lowering cost to consumers, and cannot include some yet undefined broader set of economic or environmental benefits that some groups were concerned could happen, which would amount to a spending carte blanche.
The proposed changes bring necessary clarity to the transmission development process while maintaining a clear state role. Congress should find a vehicle for enacting the transmission provisions of Senator Manchin’s proposal in the lame-duck session. This is essential if we want to build energy infrastructure at a speed and scale that will create jobs, lower consumer costs, and decrease emissions. If that isn’t possible, it should be a priority for the 118th Congress.