SOURCE:
Senator Manchin said that Democratic leaders had “committed to advancing a suite of commonsense permitting reforms this fall that will ensure all energy infrastructure, from transmission to pipelines and export facilities, can be efficiently and responsibly built.”
With that promise, Manchin agreed to the “Inflation Reduction Act” that recently passed the Senate along party lines.
But since then, 47 of his fellow Democratic Senators rejected a permit streamlining measure. The Senate voted 50–47 to approve a Congressional Review Act resolution sponsored by Senator Dan Sullivan that would undo the Biden administration’s regulatory changes to the National Environmental Policy Act (NEPA), but Manchin was the only Democratic Senator who voted in favor. NEPA is the 50-year-old law that requires federal agencies examine the environmental impacts of their actions, essentially regarding all new projects from funding a new road or permitting a new pipeline or power plant. The vote is not a good omen for streamlining regulations since to proceed outside of the Budget Reconciliation process, 60 votes will be necessary.
The pipeline permitting situation is holding up oil and natural gas pipelines that are needed to ship these fuels so that Americans can have the fuel they need for transportation, heating and electricity production. Pipelines are the safest and least costly method of shipping oil and natural gas. But, pipelines are having difficulty getting the permits they need and are often caught up in multiple legal challenges from opponents of energy projects.
Mountain Valley Pipeline
Senator Manchin believes he got approval for the Mountain Valley pipeline to move natural gas from West Virginia to southern Virginia that was originally set for completion in 2018 and that is 94 percent complete. The delays have increased the pipeline’s cost from the original estimate of $3.5 billion to $6.6 billion. The White House and congressional leaders have agreed to ensure final approval of all permits for the Mountain Valley Pipeline, according to a summary released by Manchin’s office that also details what the Senator expects in permitting reform including restrictions on NEPA reviews. The agreement, which requires separate legislation under “regular order” (requiring 60 votes) would also move any further legal challenges to the Mountain Valley pipeline permits from a federal appeals court to the D.C. Circuit Court of Appeals.
Great Lakes Tunnel and Line 5
Another pipeline operator, Enbridge, wants to replace its Line 5, an oil pipeline that crosses the Great Lakes through the Strait of Mackinac, with the Great Lakes Tunnel that will be bored through rock about 100 feet below the lakebed virtually eliminating the chance of a pipeline spill. The Great Lakes Tunnel is a $500-million private investment by Enbridge that was conceived in 2018. While attempting to get the necessary permits for the project, Michigan governor Gretchen Whitmer took legal action to close Line 5 supposedly due to the potential for an oil spill, despite no major spill occurring in its 69-year history. Line 5 runs from Superior, Wisconsin to Sarnia, Ontario, and together with Line 78 forms a critical part of the Enbridge Mainline system out of western Canada. Line 5, which typically runs at full capacity can ship about 540,000 barrels per day of light oil and natural gas liquids to refineries in Detroit, Michigan; Toledo, Ohio; Warren, Pennsylvania; and Ontario and provides oil interconnections to Montreal, Quebec. Enbridge has filed a complaint seeking an injunction to prevent the shutdown, stating that pipeline regulation is a U.S. federal matter, not a state matter.
There are nine refineries served by the system that encompasses Line 5 with oil distillation capacity of more than 1 million barrels per day that produce over 400,000 barrels per day of gasoline, 200,000 barrels per day of diesel and 150,000 barrels per day of jet fuel. The impact of closing line 5 would mean that these refineries would need to obtain oil elsewhere, use other more expensive forms of transportation (rail or truck), or operate at reduced rates. Some of these refineries would be at a major competitive disadvantage relative to other refineries that are still able to receive oil by pipeline. A Line 5 shutdown could result in higher petroleum product prices in a market that has recently seen record prices and would further tighten conditions for existing refineries due to refinery closures from COVID lockdowns and converting several refineries to biofuels due to lucrative state and federal subsidies. It would also affect propane prices in Michigan, which is heavily dependent on it for a source of heating as well as for agriculture.
Conclusion
Pipeline permitting reform is clearly needed to ensure Americans have the fuels they need. But, it is unclear whether Senator Manchin can get his fellow Democratic Senators to enact the reform he has indicated in his summary that covers several aspects of permitting. Manchin expects new legislation this fall that will provide that reform. However, the situation does not look good given that 47 Democratic Senators voted against the Sullivan amendment, which would be a start to reform, by rolling back the Biden administration’s changes to NEPA.