Energy at Work: Upgrading America’s Energy Infrastructure

America's Energy Opportunity

Like other forms of infrastructure, America’s energy infrastructure is a key driver of job creation, growth and competitiveness throughout the economy. Maintaining a modern, flexible and secure network of electric power transmission and distribution lines, oil and natural gas pipelines, and storage facilities is essential to delivering affordable and reliable energy to U.S. businesses and consumers, promoting growth across all sectors of the economy, and supporting the country’s thriving domestic energy industry.

Unlike other forms of public infrastructure, American energy infrastructure is largely privately owned, operated and financed. The major obstacle for transportation infrastructure renewal — funding — is not a significant problem for energy infrastructure. Until quite recently in fact, privately financed U.S. energy infrastructure renewal has been an American success story. However, technology and policy drivers are rapidly changing the way energy is produced and consumed in the United States, requiring a faster pace of investment and modernization.

Currently, the regulatory framework and permitting systems that surround the energy sector were designed for another age, locking in a pace of infrastructure modernization and expansion that is out of step with the energy sector’s rapidly changing needs. Congress and the Administration have a unique opportunity to accelerate investments in energy infrastructure by updating regulations, establishing strong investment incentives and streamlining permitting processes — ultimately putting more private-sector capital to work for America’s farms, factories and households.

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Recommendations

The case for investing in America’s energy infrastructure systems is clear, as are the challenges. With private-sector owners and operators of the country’s energy transmission and storage systems poised to inject new capital into upgrading and expanding these networks, Congress and the Administration have an important role to play in creating the conditions necessary to accelerate these investments. Enactment of FAST-41, a fast-track process for infrastructure permitting, and recent executive orders issued by the current and previous Administrations provides a strategic and actionable path forward to improving the nation’s approach to permitting energy infrastructure. It now falls to federal agencies to fully and promptly implement the reforms and processes laid out in FAST-41 and these orders and to all levels of government to look for opportunities to update regulations, establish strong investment incentives and streamline permitting processes.

Streamline permitting review procedures.

The federal government should continue to improve the efficiency of federal permitting processes in an environmentally sound manner, consistent with federal law and policy. This work includes aggressive implementation of Executive Order No. 13766 (Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects), the reforms required in FAST-41 and Executive Order No. 13807 (Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects). Specific actions should include:

Appoint a new executive director of the Federal Permitting Improvement Steering Council (FPISC), who would report directly to the director of the National Economic Council and be responsible for regularly updating the President and Cabinet on the status of major energy projects.
Per E.O. 13807, direct executive agencies and departments to begin designating small infrastructure projects (i.e., projects costing less than $200 million) of national significance as “high priority” and including them on the FAST-41 dashboard.
Task the FPISC executive director to develop a plan to improve coordination of federal and state permitting efforts and timelines.

Conduct a thorough review of the National Environmental Policy Act (NEPA) review process.

The NEPA review process often takes more than a year to complete and is increasingly being used by project opponents to litigate against validly issued permits. In conjunction with E.O. 13807, the Council on Environmental Quality should undertake a timely and thorough review of the NEPA review process, including options for ensuring that agencies have adequate resources and staffing capacity to handle NEPA review requirements in an efficient and timely manner. Aggressive implementation of E.O. 13807 would constitute a meaningful step that could be taken to streamline and shorten environmental reviews without affecting environmental quality.

Establish effective federal backstop siting provisions for nationally or regionally significant electric transmission infrastructure projects.

Major interstate transmission lines face significant regulatory hurdles. Existing statutory provisions in Section 216 of the Federal Power Act, as enacted through the Energy Policy Act of 2005 (EPAct 2005), have not provided an expedited means for siting nationally significant transmission lines, which was the intent of the legislation.

Expand coordination on transmission infrastructure.

Improved coordination among federal agencies, including the Federal Energy Regulatory Commission (FERC), the Department of Transportation (DOT), the Department of the Interior, the Department of Agriculture, the Department of Energy (DOE), the Army Corps of Engineers, state regulators and other stakeholders, is needed to address the complexity, unpredictability and inefficiency of transmission planning, siting and cost allocation decisions for interstate and interregional transmission projects. It is also needed to address the complex planning and infrastructure decisions associated with hardening the grid and accounting for the increased deployment of distributed energy resources — particularly for those transmission projects that cross federal lands. Within this context, executive agencies should move quickly to fully implement E.O. 13807 by identifying “energy right-of-way corridors” and expediting permitting review processes for energy infrastructure on federal lands.

Maintain supportive regulatory policies for transmission investment.

In accordance with Section 219 of the Federal Power Act, as added by EPAct 2005, FERC should continue to provide transparent rate incentives for cost-effective upgrades to the nation’s transmission infrastructure to facilitate grid modernization and support competitive wholesale electricity markets. FERC also should approve returns on equity that reflect the need for and risks of new investments in transmission, physical resilience and cyber security, and energy storage assets.

Maintain supportive regulatory policies for natural gas and oil pipeline investments.

FERC, DOT, DOE and the Environmental Protection Agency should continue to provide a stable regulatory environment for natural gas and oil pipeline investments that is consistent with the following guidelines:

Addresses known, quantifiable risks that have been demonstrated through data;
Is supported by transparent, data-driven cost-benefit analysis;
Eliminates inconsistencies within and across existing laws and regulations;
Accounts for industry’s physical and technological operating constraints and maintains flexibility for operators; and
Incorporates the latest science and technology, including provisions for further updates to processes and requirements as technology continues to evolve.

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Business Roundtable is an association of chief executive officers of leading U.S. companies working to promote a thriving economy and expanded opportunity for all Americans through sound public policy.

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