An all-of-the-above approach for permitting energy infrastructure

Ensuring energy abundance in the coming decades will require an extensive expansion of energy infrastructure, including at least doubling American electric transmission capacity and creating pipeline systems for hydrogen and CO2. Yet transmission infrastructure projects are stuck in a state and local regulatory rut that will block these ambitious (and necessary) goals. In July, Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.) announced they would introduce permitting reform legislation — with transmission as a priority. Luckily, model legislation for permitting transmission already exists in the form of the proposed 2021 Streamlining Interstate Transmission of Electricity (SITE) Act. Congress should include the SITE Act in a permitting reform bill and use it as a framework for regulatory structures for CO2 and hydrogen pipelines.

In 1938, Congress passed the Natural Gas Act (NGA) because it recognized that attempts to build interstate pipelines were undercut by states unwilling or unable to permit them within their borders. Some projects needed a different permitting and siting regime that could take a broader view of regional and national needs. The NGA established a federal siting authority for interstate natural gas pipelines at the Federal Power Administration, which later became the Federal Energy Regulatory Commission (FERC). Under this authority, FERC permitted hundreds of thousands of miles of pipelines, including more than 13,000 new miles in the last 25 years. 

Transmission lines experience the same challenges at the hands of state siting authorities that natural gas faced 80 years ago. In 2009, Virginia regulators refused to review an interstate transmission line project until they had more information from the West Virginia and Maryland state commissions. In 2021, Pennsylvania regulators rejected the Independence Energy Connect lines connecting to Maryland due to insufficient benefits for their constituents, leaving Maryland ratepayers in limbo. And until recently, the Grain Belt Express connecting Kansas to Indiana through Missouri and Illinois found itself in a nine-year state regulatory holding pattern. 

The NGA demonstrates that a federal system for siting infrastructure can eliminate these problems. Still, the NGA is not without flaws: namely, the overbuilding of unnecessary infrastructure, indifference to environmental consequences, and disregard for private property rights. Considering these design flaws, the SITE Act creates a federal transmission siting authority modeled on natural gas that incorporates four lessons from NGA.

First, one of the most critical components for establishing effective regulatory structures for electricity transmission lines and pipelines is eliminating multi-agency or state-federal handoffs. These handoffs slow development and stifle investment thanks to increased timelines and procedural uncertainty. To speed infrastructure development and entice private capital, Congress should establish an exclusive, single-agency federal siting authority at FERC for relevant energy infrastructure. It should not rely on interagency coordination or await failure in state siting processes. 

The second lesson is that ensuring respectful and fair treatment of landowners to avoid unnecessary public opposition and litigation is crucial. When conveying eminent domain authority, Congress must provide a process for landowner engagement that guarantees clear communication, fair treatment, and swift compensation.

Narrow eligibility criteria are the third key for federal siting. The current federal authority for siting transmission lines requires the Department of Energy to determine what lines are in the “national interest”. Congress should define project characteristics where the federal authority is appropriate instead of leaving this to the discretion of agency staff or political appointees. Limiting eligibility to large multi-state projects (e.g., in transmission, only lines that can carry a large amount of power) will ensure that the federal government focuses only on infrastructure with multi-state benefits while maintaining state control of local projects. 

Finally, we must eliminate archaic regulatory processes. Streamlining agency proceedings under the NGA and Federal Power Act will make siting fairer and faster. Landowners – or project developers – appealing a decision should not be delayed by an internal rehearing process nor stymied by conflicting rules on how to intervene. Removing these barriers will ensure that impacted landowners can participate in proceedings while speeding up court resolution of contested issues. 

The current political landscape presents a rare opportunity to create a system for transmission lines and pipelines that will most effectively get things built, address climate change, and enable energy abundance. Using the lessons learned from NGA, Congress should seize this critical opportunity to establish a consistent permitting process across transmission, hydrogen, and CO2 infrastructure, using the SITE Act as a model.

Liza Reed is the research manager for low carbon technology policy at the Niskanen Center. David Bookbinder is chief counsel at the Niskanen Center.