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In this episode, we discuss:
The FREEDOM Act, Congressman Harder’s new bipartisan permitting certainty bill
Permitting certainty design choices: contractors, de-risking programs, and more
The Build America Caucus and its upcoming policy initiatives
Thomas Hochman: Welcome to Right of Way, a podcast about energy policy, energy politics, and above all the upcoming permitting reform negotiations. I’m Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, and I’m joined by Pavan Venkatakrishnan, a policy advisor here at FAI.
Since the summer of last year, a major question has hung over permitting talks: Is it possible to limit the ability of the executive branch to weaponize the permitting process?
It’s not the first time policymakers have asked this question. Indeed, in the middle of the Biden administration, Senator Manchin’s team drafted up an early version of what is now known as “permitting certainty” language in response to the president’s treatment of oil and gas.
But the concept of permitting certainty is now more important than ever. As the partisan pendulum has swung back in the Republican direction, the current administration has leveraged delays and a variety of executive tools to halt, slow, and cancel wind and solar projects across the country. In this environment, key Democrats have announced that they will not engage or advance permitting reform talks without legislation to curb these abuses.
So over the last few months, a growing industry coalition – from wind and solar to oil and gas to manufacturers and hyperscalers – has called for greater permitting certainty. And now, we may have a legislative answer in The FREEDOM Act.
Congressman Josh Harder, a California Democrat who heads up the Build America Caucus, is leading a bipartisan group of Congressmen in introducing the bill.
And on that note, we’re very lucky to have Right-of-Way’s first member of Congress joining us today to discuss all of this: Congressman Josh Harder. Congressman, thanks so much for joining us.
Congressman Harder: Thanks for having me.
Pavan: So to begin, Congressman: At a high level, what was the inspiration for this bill? What issues does the FREEDOM Act try to address?
Congressman Harder: This bill makes it a lot harder for politics to kill energy projects. Over the past couple of administrations, we’ve seen time and time again that presidents and administrations want to overwhelm good projects.
Republicans were frustrated by what they saw the Obama administration do to the Keystone Pipeline, and now Democrats are pretty upset with what they’re seeing the Trump administration do to wind and solar projects – trying to cancel projects that have already been approved, trying to block projects that are really necessary, and heaping more red tape on projects that would be a major value add.
And so what this bill is meant to do is cut through all of that and try to make it easier to get shovels in the ground, lower our energy prices, and ultimately help us be a more pro-growth, prosperous, successful country.
Pavan: So the FREEDOM Act has a very bipartisan coalition behind it – a number of Democrats and Republicans alike on this bill. How did that coalition come together, and what does it tell us about where there’s common ground on permitting?
Congressman Harder: It tells us that nobody likes having their projects get canceled. I think that both parties have experienced the frustration of watching administrations weaponize permitting against their preferred energy sources. Republicans want to know that a future Democratic president can’t use these tools against oil and gas. Democrats are obviously seeing this right now with wind and solar being canceled.
And I also think that this is a reflection of the broader abundance coalition that’s emerging – Build America is really trying to unite pro-growth members of the Democratic and Republican parties and folks who want to see things get built regardless of partisan affiliation. We’ve seen each side go after different energy sources. All it’s done is spike prices, spike uncertainty, and ultimately make America less competitive. And so we can’t keep permitting in this environment only on one side or the other. We’ve got to be able to have this bipartisan approach if we’re going to get it actually solved.
Thomas: Makes sense. When we talk about permitting certainty, we talk about permitting abuses as a one-way ratchet, where every single administration pushes out the boundaries a little bit further in treatment of disfavored energy sources, and then the next administration will just push it out a little bit further.
To your point, the FREEDOM Act is a tech-neutral bill – the permitting certainty language applies to all technologies equally. Can you speak a little bit to that structure? You got at it a little bit, but would love to hear a bit more.
Congressman Harder: This is all about a level playing field. We shouldn’t let politicians pick their preferred energy sources. We should let the market figure that out, especially because there’s so much really fantastic research and development going into energy products that aren’t necessarily hitting the mainstream yet. Think about all the great growth that we’ve seen in geothermal, all this exciting new nuclear development that we hope is able to hit the mainstream, which is also a big part of some of the permitting discussions that we’ve had.
And so the job of Congress and any administration should be creating that competitive enabling environment to let any form of energy succeed or fail based on its own merits. Whenever I talk to developers, they tell me the one thing they need is permitting certainty. Projects are getting held up across the board under months, years, decades of administrative reviews, only to see political vendettas snatch defeat from the jaws of victory. Making sure that level playing field allows every energy project to compete, I think, is ultimately going to help benefit everybody.
Thomas: So this is a big bill. If I remember correctly, it’s upwards of 70 pages.
Congressman Harder: I don’t know if that’s a big bill in Congress anymore. I mean, we’ve got bills that are thousands of pages.
Thomas: That’s true. I guess it’s an amendment to the Energy Act of 2020, which I think was thousands of pages, to your point. So I take it back.
But let’s talk a bit about the specifics here. One of the more novel provisions in the bill is pairing deadlines with a court-approved contractor process. This provision says that once a deadline is missed – that’s three months for routine authorizations like categorical exclusions and road permits, a year for complex authorizations like NEPA reviews and Endangered Species Act reviews – the developer can go to court and get a court-approved contractor to complete the permitting process. Can you walk us through how that interacts with the bill’s deadlines and why the FREEDOM Act opts for that structure?
Congressman Harder: The North Star here is making sure that projects can stay on time. And so the problem we’re trying to solve is agency inaction. There’s a lot of reasons for missed deadlines. But what this act does is set clear deadlines for administrative approval, empowering developers to get what they need when agencies miss those deadlines.
What we don’t want is the approval process getting skipped altogether, which is another way to think about this. You can imagine by-right development where if the agency can’t make up its mind or can’t actually hit a deadline, a project just goes through. We think that would cause other big issues, especially when you’re dealing with the federal government and some of the size of these energy projects.
And so what we opted for instead is a bit of a middle ground where there’s some accountability, there’s some consequences if an agency misses its deadline. What we’re doing here is authorizing qualified, court-approved contractors to complete some of that administrative work that the agencies can’t do on their own – because the agencies are telling us they’re swamped, they can’t do it. The developers are telling us this work is pretty simple, we have folks that do it already. Third-party contractors are already quite common in energy development. They’re already preparing environmental analysis for these federal permits. So hopefully allowing them to do some of this work is going to both save agencies time without actually compromising the approval process that we want to make sure still has that credibility, so folks are being kept protected.
Thomas: Right, you don’t want a situation where the consequence for the agency missing a deadline for a Clean Air Act permit is that there is no Clean Air Act permitting at all. So it makes sense how this helps you get around that issue.
Pavan: The bill also creates an insurance-style de-risking program wherein developers pay premiums and can file a claim if the government breaks the rules – unreasonable delay, or pulling or materially altering a permit in an illegal or unlawful manner. Can you explain why that structure was chosen?
Congressman Harder: This is travel insurance for the energy industry. If you book a flight and it gets canceled, the airline pays the price. New energy projects need that same kind of assurance that they’re not going to have the rug pulled out from under them if the federal government misses a paperwork deadline. These projects require enormous upfront capital investment – billions of dollars in many cases for large projects.
And so what this de-risking insurance is about is making it clear: if the government revokes a permit, if it misses a deadline, there’s some path to compensation. And hopefully by putting some skin in the game for the government – not a subsidy, because developers are paying into this fund – we’re going to see those incentives be more aligned towards speed.
Thomas: Makes perfect sense. So we’ve talked a little bit about the prospective stuff – all the projects that are currently in the permitting pipeline or about to begin the permitting pipeline. But there’s also a retrospective piece here: This bill has language limiting the government’s ability to issue stop work orders and to revoke permits for projects that are already substantially permitted. Can you speak to that?
Congressman Harder: This is about stopping the referee from changing the rules after the game has already been played. Imagine if after the game, the referee changed the rulebook and said actually that game went from being 2-0 to 10-0, or to 0-10. We have to make sure that there is a full permitting process and that when construction begins, the confidence from the market is that the rug isn’t going to be pulled out from under them.
If you just look at what’s going on with the offshore wind industry right now – these fights with the current administration trying to revoke approvals – one of these projects is 87 percent built already. So this bill allows agencies to halt projects only in extreme circumstances where there’s clear immediate safety issues or if the permit was actually illegal. We want to make sure that safety net continues and raises the bar significantly. The idea here is making sure that when you actually put a shovel in the ground, you’re going to be able to continue to build that project and the community and taxpayers are going to reap those benefits.
Pavan: Got it. So just stepping back here for a moment: the issue of the day politically is affordability. We’ve heard it mentioned in many recent gubernatorial campaigns by Democrats and Republicans alike, and in Congress. How do you look at the ways in which the FREEDOM Act and permitting reform more broadly interact with the affordability issue?
Congressman Harder: The best way to lower energy prices is to finish more energy projects. That feels like pretty common sense. If you look at some of the projects that have been canceled – you think of Esmeralda 7 in Nevada that would have produced enough energy to power two million homes – there are projects like that all across the country that are getting canceled.
And that’s not even counting all the projects that haven’t even started because of just how tense this political vendetta against solar and wind has gotten. Ultimately, if you care about energy prices, if you care about making life more affordable, then we have to stop blocking the development of some of our quickest-to-deploy resources at a time when demand is skyrocketing. There are folks in my district in Stockton that are paying more for electricity to keep the lights on and the AC on in the summer than they’re paying in rent or their mortgage every single month. That’s absolutely unacceptable, and we need to do better.
Thomas: Yeah, it’s remarkable. Particularly in regulated markets, the costs of permitting are passed directly onto ratepayers. I was watching somebody testify to House Natural Resources a few months ago, and they were speaking plainly about how when the cost of permitting goes up, the cost of rates goes up directly with it. You can see it very clearly.
So – you chair the Build America Caucus, also known as the Abundance Caucus. Can you tell us a little bit about what the caucus is trying to accomplish, what it’s set its sights on, and of course how this bill fits into that broader agenda?
Congressman Harder: Build America is a bipartisan effort to build housing and energy better, faster, and cheaper – and really every part of American life that has been held back by red tape. We’ve just made it way too difficult to build projects that 80, 90 percent of the general public wants to get built. And we’ve done that for so many decades that now we’re seeing housing prices that are pricing out folks my age and millions and millions of Americans. We’re seeing energy prices skyrocket. We’re seeing billion-dollar boondoggles like high-speed rail in my home state of California that aren’t actually getting built because it’s so expensive and challenging to build infrastructure.
And so Build America is trying to fix that and trying to be the hub in Congress to make sure that we are getting shovels in the dirt, pushing forward pro-growth policy across party lines, and making the government work better now so hopefully your bills can be more affordable in the future.
Pavan: So having worked on the FREEDOM Act, Congressman, what other priorities do you personally have over the next year for your work in Congress?
Congressman Harder: We’re taking on a lot – everything from innovation and how to make it easier to do good, high-quality science in the United States, how to make it easier to push real important clinical trial breakthroughs through clinical trials, which have become unbelievably expensive. Infrastructure.
But I would say probably after the FREEDOM Act and the work we’re trying to do on energy, the biggest priority that I have and our caucus has is housing – making it easier to build millions of new homes in the coming years. It used to be that you could buy a home in your 20s. And now the median home buyer in the United States is 56. 56! That’s outrageous. Folks have to make incomes of $200,000 or $300,000 a year just to be able to buy a home in my district in California. That’s just out of reach for the vast majority of folks. And it is 100 percent downstream of the fact that we just have not built enough housing in recent decades.
So it’s not just a congressional problem. We’ve got folks working on this, doing great work at a state and local level. But our goal this year is to pass the first major pro-housing bill in Congress that we’ve seen in 50 years – since Congress passed Section 8 and Community Development Block Grants in the 70s. So we’ve got some real good bills coming up here, but ultimately the goal is to build those houses that could have been and should have been built over the last couple of decades and ultimately make housing more affordable for everybody.
Thomas: Okay, so Congressman, we always end our show by asking our guests for an energy policy hot take. So I have to ask you: What is yours?
Congressman Harder: It’s probably not surprising after this conversation, but it’s that climate change is a permitting problem, not a technology one.
When you talk about climate change with folks, they will talk to you about an amazing new startup or a breakthrough on solar or something like that. But it turns out that lawyers can beat engineers every day of the year. And I think it’s important for folks to understand that permitting delays are ultimately just a quiet subsidy for the status quo.
If you love how American life looks today, if you feel like electricity prices should be even higher, then let’s keep the current permitting framework that we have. If you think that status quo is not actually doing what it should, then let’s go out and try to fix it.
Thomas: Congressman Harder, thanks so much for joining Right of Way.
Congressman Harder: Thank you.
