By Kevin Sunday

 

Despite a high level of personal savings and more job openings than workers, the average American is pessimistic about the state of the economy — and not without reason. While wages are increasing, prices for consumer goods and utilities are rising faster. This is a result of production capacity in any number of industries being severely curtailed during the pandemic, along with generous government assistance that has in some cases delayed re-entry of workers or encouraged working age adults to retire early or shift into part-time work.

To ease these cost pressures, the PA Chamber is urging state and federal lawmakers to execute a smart, targeted policy of regulatory reform — and we are pleased to see some efforts are underway, starting with the historic, bipartisan infrastructure legislation enacted by Congress in mid-November.

While many of the headlines surrounding the Infrastructure Investment and Jobs Act touched on the internal congressional debate and the bill’s linkage to a massive, $3.5 trillion social spending bill, as well as the infrastructure bill’s topline investments in broadband, rail, roads, bridges, ports, water and airports, the bill also codifies some extremely important permit reforms.

This cannot be understated. Congress has sent a clear and direct signal that it recognized the federal permitting process is entirely too cumbersome, and that while additional investment is needed in our nation’s infrastructure, projects can only get built as fast as the permitting process can move.

These reforms include the codification of a Trump administration executive order dealing with the implementation of the National Environmental Policy Act. While well-intentioned, NEPA, which predated much of modern environmental law, has become a paperwork exercise that provides fodder for any number of anti-development stakeholders to try to effectively veto projects in the courts. Federal agencies spend years trying to cover all their bases in their NEPA reports in an effort to fend off the litigation.

The bipartisan infrastructure bill provides significant streamlining in the work federal agencies are required to do. This includes limiting the extent to which agencies must identify alternative approaches to proposed projects, as well as affording the Secretary of Transportation the discretion to categorically exclude review for critical projects. The legislation also includes abbreviated timelines for agencies to move on critical projects once reviews are completed, as well as how long agencies have to respond to a lead agency’s proposed action.

This are important steps, and we are pleased to see Congress act. There is clearly more to be done.

For one, higher oil and gas prices are expected this winter, in part due to infrastructure constraints. These constraints are not a product of industry being unwilling to deploy the capital necessary to move hydrocarbon molecules to market, but because of states in the mid-Atlantic, New York and New England abusing the regulatory process in order to halt construction of interstate pipelines. Similar issues are at play with electric transmission build-out, which is necessary to bring online new generation resources as the grid undergoes an energy transition. Congress should recognize that if a federal agency lawfully permits an interstate project, states should not be able to stand in the way.

Relatedly, because of this pipeline obstruction, New England has in recent winters imported liquefied natural gas from foreign countries, including Russia – despite some of the most prolific natural gas wells in the world being situated in northeast Pennsylvania. The New England grid operator has warned that new gas delivery infrastructure is necessary to guard against blackouts and brownouts.

A reasonable person might ask, in the absence of sufficient pipelines, why American cargo ships can’t be the ones delivering American LNG from Houston or Louisiana ports into New England? Why is New England relying on foreign tankers?

The answer is in part the Jones Act, an archaic, protectionist bill dating back to World War I. This law severely limits the number of available ships and crew that are allowed to deliver cargo between two U.S. ports. The bill’s requirements result in shipping rates that are exorbitantly more expensive than inbound foreign cargo ships delivering the same product. Unfortunately, this law has bipartisan support, including from President Joe Biden, and it is unlikely to be meaningfully reformed — which is a shame, given that the Jones Act also results in a massive cost and time increase for dredging projects that are needed to expand port infrastructure, including LNG export facilities.

The president’s administration recently issued a call for OPEC+ cartel countries to increase oil and gas production, as domestic commodity prices increase significantly. This, from the same administration that attempted to bar development of oil and gas on federally owned lands and has both actively opposed energy infrastructure projects and has to date been ambivalent about ensuring federally permitted projects get constructed.

The Department of Energy was created more than 45 years ago, with Congress explicitly noting in the creating legislation that the overreliance on foreign countries’ energy presents national security risk. Since that time, DOE and the private sector expended significant capital to innovate and deploy new forms of energy and, importantly, novel methods to create, develop and use it. Arguably the biggest invention in the past 50 years is hydraulic fracturing, which has created tens of billions of dollars in new economic activity, significantly lowered energy burdens on businesses and families, and resulted in a massive leap forward in environmental progress with respect to air quality.

There are vast domestic oil and gas resources available for the administration to leverage should it want to — it is a dodge for the White House to instead be asking OPEC+ to increase production. The cartel countries declined; it is now up to this administration and Congress if they want to move forward with policy that will increase supply of the vital energy (and associated infrastructure and refining capacity needed in a modern economy), or if they are content to see prices continue to rise for families and consumers.

 

Kevin Sunday is director of government affairs for the PA Chamber.