Impacts of the U.S. Midterm Election Voting Results on the Pipeline Industry
It took more than a week after the election for the Republicans to win enough seats to control the U.S. House of Representatives. While Democrats will maintain control of the Senate, the Dec. 6 Georgia runoff election between incumbent Raphael Warnock (D) and Herschel Walker (R) will determine whether the status quo is maintained (50-50 Senate with ties broken by Vice President Kamala Harris) or the Democrats gain an extra seat, thereby reducing Sen. Joe Manchin’s (D-W.Va.) ability to thwart or shape President Joe Biden’s legislative agenda, which may be more important than ever, given that Manchin has been sparring with the president and is holding up a confirmation hearing for Richard Glick, the chairman of the Federal Energy Regulatory Commission (FERC). Absent confirmation, Glick will lose his seat, leaving FERC with only four commissioners in January.
House of Representatives
Although the anticipated red tsunami following the election was downgraded first to a wave, then a ripple and finally a puddle, it was still large enough for Republicans to obtain a majority in the House. Even a slim majority is significant: It means that Nancy Pelosi (D-Calif.) will no longer wield the Speaker’s gavel, but it’s too early to know whether Kevin McCarthy (R-Calif.) will replace her. To become Speaker of the House, he must first overcome some division within the Republican ranks.
A Republican controlled House likely represents a bulwark against White House initiatives, including more stringent climate change measures. By the same token, most bills that pass the House will be rebuffed by the Senate and president, with the likely result for the next two years being legislative gridlock.
Although McCarthy had indicated a desire to roll back some of Biden’s prior legislative achievements, it is uncertain how much rolling will occur regarding the production and investment tax credits for new renewable generation made available by the Inflation Reduction Act (IRA). Those tax credits may not be trimmed, because they could be used to build new generation facilities in red states, where the wind blows hard and sun shines bright. Instead, look for Republicans to take a moderate approach on energy and climate change, one that promotes clean energy innovation, but champions infrastructure permitting and regulatory reform and unlocks more oil and gas resources.
House committee hearings may be used to reshape the energy policy discussion. If appointed to chair the House Energy and Commerce Committee, Cathy McMorris Rodgers (R-Calif.) would advocate for “an all of the above energy strategy” to meet the country’s energy needs and streamline review under the National Environmental Policy Act (NEPA), which hampers the timely development of infrastructure projects, not just pipelines, but also solar and hydroelectric projects. Not wanting to “pick winners and losers,” McMorris Rodgers could use Congressional oversight hearings to explore the Department of Energy’s loan and spending programs for clean energy under the IRA. Similarly, Bruce Westerman (R-Ark.), the ranking member of the House Committee on Natural Resources, has stated that as chairman, he would conduct oversight of the Department of Interior’s work on a new five-year plan for offshore oil and gas leasing in federal waters, with a goal to boost (instead of hamper) new drilling in parts of the Gulf of Mexico and off Alaska’s coast.
Glick is the FERC chairman. He became a commissioner in 2007 and chairman in January 2021. His term expired in June, and President Biden nominated him for another five-year term. Yet Glick has not yet received a Senate confirmation hearing, and if not confirmed by the end of this year, his tenure at FERC will end. After the election, the chairman of the Senate Energy and Natural Resources Committee indicated that he is not inclined to hold a hearing. Manchin is the committee chairman, and he’s upset, not just with Glick, but also with the president.
Glick’s position on climate change is well known. For example, as a commissioner, he dissented to a 2018 an order authorizing construction of a pipeline project:
Climate change poses an existential threat to our security, economy, environment, and, ultimately, the health of individual citizens. Unlike many of the challenges that our society faces, we know with certainty what causes climate change: It is the result of GHG emissions, including carbon dioxide and methane, which can be released in large quantities through the production and consumption of natural gas. Congress determined under the NGA that no entity may transport natural gas interstate, or construct or expand interstate natural gas facilities, without the Commission first determining the activity is in the public interest. This requires the Commission to find, on balance, that a project’s benefits outweigh the harms, including the environmental impacts from climate change that result from authorizing additional transportation.
Glick’s position is consistent with the president’s position on climate change and “all-government” approach to reducing greenhouse gas emissions. Thus, after becoming president, Biden named Glick FERC chairman. Thereafter, Glick began to implement the White House agenda, which earlier this year included two updated policy statements, one describing the analytic framework under which FERC would determine whether to approve natural gas pipeline projects, the other explaining how FERC will assess the impacts of natural gas infrastructure projects on climate change in its reviews under NEPA and the Natural Gas Act. Manchin promptly criticized the policy statements and called a hearing where he admonished the FERC commissioners:
[You all] acknowledge that no federal agency, including FERC, has established a threshold for determining what level of project greenhouse gas emissions is significant. Why do you all think FERC, whose primary purpose is to regulate efficient and reliable energy, should be the first agency to set such a standard, rather than environmental agencies?
FERC subsequently designated both policy statements as “drafts” and sought further public comment.
Fast forward to the weekend before the election. While in California, President Biden preached that coal plants are too expensive: “We’re going to be shutting these plants down all across America and having wind and solar.” That upset Manchin, who quickly stated: “President Biden’s comments are not only outrageous and divorced from reality, they ignore the severe economic pain the American people are feeling because of rising energy costs.”
At bottom, the president has staked out positions on energy that are directly at odds with West Virginia’s reliance on the development of coal, oil and natural gas resources. Unable to resolve this conflict and unwilling to switch political parties, Manchin is withholding Glick’s confirmation, ostensibly to show West Virginians that their senior senator is fighting for them and to remind Biden that Manchin is still a force to be reckoned with, especially in a narrowly divided Senate. Glick is simply collateral damage, and that’s unfortunate. If Glick is forced out, Biden will tap one of FERC’s other two Democrats (Allison Clement or Willie Phillips) to be chairman and nominate new FERC commissioner. It’s unclear whether the next chairman (or the unknown nominee for FERC commissioner) will prove more agreeable to Manchin, he will determine if and when to hold the confirmation hearing. In the meantime, an equally divided FERC would likely result in few, if any, natural gas infrastructure projects being approved before fifth commissioner is appointed.
Tags: November December 2022 Print Issue, permitting, Regulatory Policy, Washington Watch
Washington Watch is a regular report on the energy pipeline regulatory landscape. Steve Weiler is an attorney at Dorsey & Whitney LLC in Washington, D.C. Contact him at email@example.com.