Talks are moving ahead in Congress on a broad energy permitting package after the Republican-majority US House of Representatives passed its starting proposal March 30.

Democrats, who control the Senate, want more aggressive measures to speed construction of transmission lines. They have also balked at provisions of the House bill that would roll back major Inflation Reduction Act climate programs and lower barriers to oil and gas pipelines and other fossil fuel infrastructure.

But speeding oil and gas projects is a major priority for Republicans, and a divided Congress will likely force trade-offs. Although many Democrats are uneasy about supporting fossil fuel infrastructure, adding transmission will be crucial to Democrats' climate goals and fulfilling the clean energy potential of the Inflation Reduction Act.

"I think Democrats in the Senate are definitely going to want to come to the table on transmission," Neil Chatterjee, a former Federal Energy Regulatory Commission chairman and past adviser to Senate GOP Leader Mitch McConnell, said in an interview. "What will be interesting to watch is ... can you form a coalition of folks who understand that in order to get durable bipartisan consensus, you're probably going to have to negotiate something that ... expedite[s] the build-out of natural gas infrastructure in the short term?"

Senate Energy and Natural Resources Committee Chair Joe Manchin (D-W.Va.) will take a "close look" at the House bill and "is hopeful there might be a pathway to permitting legislation that could gain bipartisan support," spokesperson Sam Runyon said.

As part of that effort, the Senate energy committee will hold a permitting oversight hearing but has yet to set a date, Runyon added.

Meanwhile, Sen. John Barrasso (R-Wyo.), the ranking member of the Senate energy committee, is partnering with Sen. Shelley Moore Capito (R-W.Va.), the top Republican on the Environment and Public Works Committee, to form legislation similar to the House's bill.

"We look forward to working with any Senate Democrat who is serious about fixing our disastrous permitting process," Barrasso said in a March 30 statement.

House bill an 'opening salvo'

Although seen as a messaging bill with no chance of enactment, the House legislation, called the Lower Energy Costs Act, could streamline permitting for a range of energy projects, particularly pipelines.

"This was House Republicans putting out what they are for," Chatterjee said. "This is a pretty strong opening salvo to that negotiation [with the Senate]."

The bill would limit climate considerations for pipelines under the National Environmental Policy Act and restrict states' ability to stop pipeline projects through the Clean Water Act. It would also make FERC the lead agency for federal pipeline approvals and give the commission exclusive authority to approve or deny siting of gas import and export projects, eliminating the need for the US Energy Department to sign off on LNG exports.

A bigger role for FERC could give the industry more stability, Chatterjee said.

"There's concern about a unilateral administrator [such as the DOE] potentially blocking these things," the former FERC chair said. "[With] FERC being an independent agency with a bipartisan configuration, you can potentially get more consistent outcomes over the course of time."

Gas industry groups praised the House bill. The legislation "would expedite permitting timelines and judicial reviews for energy infrastructure — statutory changes needed to build projects," said Amy Andryszak, president and CEO of the Interstate Natural Gas Association of America.

The House bill's call to designate a lead federal agency for environmental reviews could speed development of all infrastructure, said Brittany Bolen, counsel for law firm Sidley Austin LLP's environmental and government strategies practices. The legislation's proposed time limits for National Environmental Policy Act reviews — which mirror past proposals from Manchin and Capito — could also be helpful but may pose challenges.

"Agencies miss statutory deadlines all the time," Bolen said, which can "end up leading to [legal] challenges and can actually create more steps in the process."

Transmission a likely focus going forward

Along with pushing back on the House bill's fossil fuel-friendly components, Democrats and clean energy advocates want a bigger role for transmission in permitting legislation.

Such preferences will likely guide the Senate's response to the Lower Energy Costs Act.

In the House, Democratic Reps. Sean Casten of Illinois and Mike Levin of California are planning to introduce legislation that could serve as a model for part of a Democratic counterproposal to the House bill.

Casten and Levin's bill would give FERC siting authority for national interest transmission lines, allocate the costs of electricity transmission lines "to all beneficiaries" and establish minimum levels of transfer capabilities between regional grids. It would also establish a FERC Office of Electricity Transmission and make the commission consider the economic, reliability and climate benefits of transmission projects.

The pending bill will share some similarities with the GOP House package, including designating a lead agency to oversee and issue a single comprehensive environmental review for a given project.

Transmission advocates have also called for a federal investment tax credit for long-distance power lines. Sen. Martin Heinrich (D-NM) has introduced transmission tax credit legislation in previous sessions and has said he will do so again this Congress.

"Any truly comprehensive permitting bill needs to help streamline the nation's unworkable approval process for electric transmission lines," American Council on Renewable Energy President and CEO Gregory Wetstone said March 30. "We remain hopeful Congress can negotiate a bipartisan, bicameral solution this year."

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.