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September 2023 Exclusive Story

Permitting Obstacles Frustrate Energy Projects, Hurt U.S. Consumers

ARLINGTON, VA.—Overregulation has stalled more than 30 important energy infrastructure projects across the country, indicates a new study by Americans for Prosperity. The group emphasizes that these projects remain in limbo despite energy costs near all-time highs and projections that indicate demand will steadily increase during the next decade.

The analysis, which AFP says it conducted with the energy data and analytics firm Arbo, reveals how regulatory burdens cost states tens of thousands of jobs, forfeit billions of dollars in economic growth and prevent millions of American households from accessing reliable and reasonably priced energy.

“Runaway permitting regulations are holding up countless energy projects that would make life more affordable for American families,” says AFP Regulatory Policy Fellow Marc Marie. “President Biden’s crusade against affordable energy has only made the problem worse. Oil and gas prices are on the rise, home energy prices are through the roof and Americans are paying more for less.

“This study reveals project after project bogged down in permitting delays that will lower Americans’ energy bills if it is built,” Marie adds. “Americans are counting on Congress to end the top-down policies that are stifling production and make real reforms to unleash our country’s energy resources.”

Cost Components

AFP’s analysis divides the roster of obstructed energy projects into separate reports covering federal permitting delays’ impacts on infrastructure plans in Arizona, Montana, Nevada, Pennsylvania, Ohio and West Virginia. AFP’s website also offers a closer look at the human cost of this obstruction with an article and video chronicling how Washington’s regulatory overreach has decimated a coal and natural gas producing town in Pennsylvania.

AFP says obstructing energy projects can have huge effects on utility prices, which vary according to area and the structure of the local energy system. In most cases, the group says, the factors driving energy utility price impacts can be grouped into:

  • How the energy is made;
  • Demand volumes;
  • Energy transportation;
  • Environmental rules; and
  • Upgrades to the energy supply chain.

Regarding the first category, AFP observes that different energy production methods, such as coal, natural gas, wind, solar or water, entail different costs. Swings in these costs can affect how much consumers pay for electricity or for the natural gas used in stoves. Meanwhile, it continues, the second category reflects the extent to which elevated energy consumption during hot summer days or other busy periods can push prices higher.

The third category, which considers costs involved in transmitting and delivering energy, includes maintaining pipelines, power lines, transformers and other equipment. “These costs can affect the prices paid,” AFP observes, “and these costs are expected to increase as wind and solar grow in the energy mix.”

As for how regulations and policies aimed at reducing pollution and carbon dioxide emissions influence energy prices, AFP points out that that rules targeting power plant emissions may impose additional costs on certain facilities, which typically are passed on to consumers. Regarding energy supply chain upgrades, the analysis notes that investments by private industry in new power plants, pipelines, transmission lines and other energy infrastructure improvements can reduce prices by making the system more reliable and efficient.

Permitting Problems

Maintaining reliable, efficient and low-cost energy in the United States is impossible without energy supply chain upgrades, AFP’s report indicates. “Historically, fossil fuels have been a consistent and reliable source of energy,” it observes. “But permitting delays for new pipelines, refineries and mining and drilling leases are needlessly raising utility bills and prices at the pump.”

As the combination of innovation and government mandates expand renewable generation sources’ role, the analysis says, questions arise about how unfavorable weather conditions will affect sun and wind-powered generation. Meanwhile, it continues, federal permitting delays are delaying significant projects.

“Balancing the need for streamlined and efficient energy systems with environmental stewardship is an ongoing challenge,” AFP says. “Striking the wrong balance can lead to delayed projects, which harms energy consumers and the environment.”

When critical projects are held up by permit delays or litigation, AFP says companies often must consider abandoning those projects even if they will increase energy abundance with minimal or even positive environmental impacts. According to the report, such cancellations stem from:

  • Slow permitting;
  • Cost increases;
  • Uncertainty and risk;
  • Administrative burden; and
  • Limited innovation and investment.

“All energy infrastructure projects must obtain some degree of permitting from either the state or federal permitting authorities,” the analysis notes. “In particular, natural gas pipelines that cross state lines require approval from both the federal government and each state where the project will be constructed. Federal regulations and bureaucratic procedures often add delays to this process.

“There have been several cases where litigation has resulted from the permitting process, posing a barrier to projects even after regulators sign off,” AFP adds. “These lawsuits are exceptionally time-consuming and cause significant delays. This can extend timelines for project completion, causing uncertainties for developers and potentially increasing costs.”

Moreover, AFP says, federal regulatory compliance often requires significant additional resources, including time, personnel and documentation, the costs of which are passed on to energy developers and, ultimately, consumers. The same is true of the millions of dollars in additional legal and consulting fees that companies must pay to navigate complex regulatory requirements.

“Excessive red tape and regulatory complexity can introduce uncertainty and risk into energy permitting,” the report warns. “Unclear or constantly changing regulations can make it difficult for developers to plan and navigate an unpredictable permitting process, resulting in project delays and significant financial risks.”

The regulatory burden often includes extensive paperwork, environmental assessments, impact studies and public hearings or other consultations, AFP details. “The administrative burden associated with these processes is time-consuming and resource-intensive for both energy developers and regulatory agencies, detracting from their ability to serve customers and protect the public,” the group says.

Strict or overly burdensome regulations also extract hidden costs by deterring energy innovation and investment, the report continues. “Complex or outdated permitting procedures and regulatory requirements for existing technologies discourage smaller or innovative energy companies from pursuing projects, leading to a less diverse and less competitive energy market,” AFP maintains. “Since innovation historically has made even ‘dirty’ sources cleaner, permitting barriers to innovation also result in negative environmental consequences.”

Although federal requirements and permitting protocols are designed to ensure environmental protection and public safety, the analysis suggests that their cumulative practical impact too often outweighs their benefits.

“The assumption is that government must assess and mitigate potential risks associated with energy projects, such as pollution, habitat destruction or public health concerns, before a project can be built,” the group relates. “Oftentimes, these precautionary measures can be overly burdensome and become a reason for significant delay of these projects, even when there are more effective and efficient ways of addressing environmental concerns.”

Particular Examples

AFP’s state-specific reports detail the individual characteristics and histories of various energy projects that have been tangled in the permitting process and provide updates on each project’s current status.

The Pennsylvania projects the analysis cites include canceled and abandoned projects such as the PennEast Pipeline, Renovo power plant and Constitution Pipeline, as well as delayed undertakings such as the Northern Access 2016 Project and Northeast Supply Enhancement Project.

Northern Access illustrates that not all permitting barriers are erected from Washington. The Federal Energy Regulatory Commission certified the project in February 2017, but two months later, the New York State Department of Environmental Conservation denied the project’s water quality certificate (WQC), AFP relates.

“The project has since been on an extended pause due to litigation between FERC and the NYSDEC related to the WQC,” AFP continues. “Most recently, FERC extended the in-service date for the project from February 2022 to December 2024, but the project has not yet requested the authority to commence construction due to continuing litigation over permits.”

The Ohio projects listed in the analysis include the cancelled Sweden Valley pipeline two delayed projects: the Ohio Valley Connector Expansion and the Trumbell Energy Center. “Dominion submitted an application with FERC at the beginning of environmental review that was completed in August 2018,” AFP says of the Sweden Valley project. “The commission never brought the project to a vote to approve, so Dominion withdrew its application in July 2019, citing FERC’s inaction as the main reason for the withdrawal.”

The Mountain Valley Pipeline, which secured its final approval only after Congress intervened, leads the West Virginia report. Although MVP is under construction, AFP observes, the cancelled Atlantic Coast Pipeline was not as fortunate.

“Despite a Supreme Court ruling overturning the suspension of one of the permits, the Atlantic Coast Pipeline was officially abandoned in July 2020,” the analysis recounts. “Dominion Energy attributed the pipeline’s demise to ‘ongoing delays and increasing cost uncertainty which threaten the economic viability of the project.’”

AFP mentions projects other than MVP that are moving forward. Whether it is the ESC Harrison County gas-fired power plant that is reapplying for permits, the CPV Shay Energy Center natural gas power station that has begun its permitting process or the West Virginia portion of the Ohio Valley Connector Expansion, which is under construction, companies continue to pursue projects.

“The abandonment of the Atlantic Coast Pipeline was a setback for the West Virginia workers and mid-Atlantic markets seeking less carbon-intensive forms of affordable fossil fuel,” AFP observes. “The permitting (red tape faced) by MVP seemed poised to strike a similar blow to economic progress and environmental stewardship. Congress recognized these threats when, in an all-too-rare move, it used its lawmaking power to authorize the pipeline.”

To eliminate the need for such interventions, AFP urges the 118th Congress to prioritize meaningful reforms that will ease Americans’ energy costs and remove barriers to stronger local supply chains. With those goals in mind, the group says it is advocating that the Senate pass HR 1, “The Lower Energy Costs Act.”

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