US debt limit agreement would greenlight Mountain Valley gas pipe project

The debt limit agreement reached between House Republican leaders and the White House would ratify federal permits for the 304-mile, 2 Bcf/d Mountain Valley Pipeline, likely clearing the path for the long-delayed natural gas project to advance this year -- provided Congress approves the bill.

Legislative text of the agreement between President Joe Biden and House Speaker Kevin McCarthy was released late May 28, with a vote expected on the 99-page bill to lift the US debt ceiling in the US House of Representatives on May 31.

The bill, called the Fiscal Responsibility Act of 2023, would declare that Congress finds timely completion of the Mountain Valley project is in the national interest, and state that Congress "hereby ratifies and approves" all federal authorizations and permits needed. It directs a handful of federal agencies, including the US Army Corps of Engineers and the US Federal Energy Regulatory Commission, to issue all permits needed for construction and initial operation.

The project, which would connect Appalachian Basin gas supplies to Mid-Atlantic markets, has faced setbacks in the US Court of Appeals Court of the 4th Circuit, which has repeatedly found fault with federal permits on endangered species, national forest crossings, and wetland and stream crossings, amid multiple challenges from environmental groups.

Adding to the troubles in the 4th Circuit, the US Court of Appeals for the District of Columbia Circuit on May 26 also said FERC needed to better explain why it did not perform a supplemental environmental review of the Mountain Valley Pipeline after sedimentation problems ensued before allowing construction to resume.

But the bill would rein in the role of the courts, likely freeing the pipeline from a recurring loop of litigation setbacks after permits are reissued.

It states that no court shall have judicial review of those federal permits. And any legal attacks on the validity of that section of the bill could be heard in the DC Circuit, rather than the 4th Circuit.

According to Gary Kruse, managing director of Arbo, the bill, if approved, would enable completion of the pipeline by the end of 2023 or the beginning of 2024.

The project has been in the process of regaining previously invalidated permits. It has been awaiting a Clean Water Act Section 401 water quality certification from West Virginia (struck by the 4th Circuit) and a CWA Section 404 water crossing permit from the Army Corps. FERC would also play an important role in orders authorizing construction.

Senator Joe Manchin, Democrat-West Virginia, who has long championed the project, cheered its inclusion in the legislation, as did Senator Shelley Moore Capito, Republican-West Virginia.

"I am proud to have fought for this critical project and to have secured the bipartisan support necessary to get it across the finish line," Manchin said in a statement.

Permitting measures

Preserving a key Biden priority, the debt limit bill excluded proposals to repeal or curtail clean energy tax incentives provided by the Inflation Reduction Act of 2022. But for the first time ever, the agreement would enact statutory "pay-go" rules requiring agencies to match the cost of new regulations with equal savings.

The overall deal also includes a small set of measures to aid permitting of both fossil fuel and clean energy projects. Reflecting parts of House Republicans' Lower Energy Costs Act, it would limit environmental impact statements under the National Environmental Policy Act to two years, with environmental assessments capped at one year. It calls for designation of a lead agency to supervise the preparation of environmental documents. The lead agency could extend the deadlines, but only by "so much additional time as is necessary," the bill said. The proposal would also expand categorical exclusions under NEPA for lower-impact projects and raise the threshold for projects subject to NEPA reviews.

In addition, energy storage projects would become eligible for the federal government's Fast 41 dashboard for tracking and coordinating major infrastructure projects.

Turning to transmission, the bill calls for a study of power transfer capabilities among regions of the US -- stopping far short of sweeping than many Democrats have sought. But McCarthy said he pledged to keep working on permitting reform this Congress.

"There's discussion about how we move forward in a bicameral, bipartisan way [on transmission] and really studying this and make sure we forward in the way that solves problems, not cause[s] more," said Representative Garret Graves, Republican-Louisiana, a key negotiator on the debt bill.

Under the bill, the North American Electric Reliability Corp. would need to submit the transmission study to FERC within 18 months. After gathering public comment, FERC must submit a report to Congress on its conclusions, including recommended statutory changes.

The overall permitting measures fall short of both parties' ambitions. Republican lawmakers want more aggressive policies to lower barriers for new oil and gas pipelines and LNG exports, while Democrats have called for a wider array of provisions to help plan, site and pay for electric transmission seen as key to deploying clean energy.

Both parties hope to advance a more sweeping, bipartisan permitting package through regular order in the months ahead, although progressives have cautioned against limiting public input, particularly for marginalized groups, or accelerating fossil fuel development.