By: Josh Price, Capstone energy analyst
September 25, 2022 – These days, bipartisan deal-making is rarely without a dose of requisite last-minute drama, as evidenced by the latest clash surrounding the stopgap funding measure Congress must pass by the end of the month.
Shortly after Senator Joe Manchin (D-WV) released his long-awaited permitting reform legislation— designed to streamline approval of fossil fuel and renewable energy projects—on September 21, a handful of Republican Senators, such as Steve Daines (R-MT) and Kevin Cramer (R-ND) who have previously supported similar efforts, came out against the bill. Additionally, Sen. John Cornyn (R-TX), a key champion of permitting reform, speculated ominously that the controversial bill, dubbed the Energy Independence and Security Act of 2022, “doesn’t stand a chance.”
On the other side of the aisle, Sen. Tim Kaine (D-VA) said he would vote against the bill over the Mountain Valley Pipeline provisions that would expedite the pipeline, while Rep, Jared Huffman (D-CA) formally announced he’s a “no” on permitting reform attached to the continuing resolution (CR), a must-pass government funding bill.
Despite the adverse headlines over the permitting deal this past week, Capstone believes the recent data points are more noise than signal, particularly as it relates to the outlook for at least 10 Republicans to join the “yes” camp on permitting reform. Fundamentally, the reforms in Sen. Manchin’s bill are Republican policies, largely mirroring provisions from previous bills, including a proposal from Sen. Shelley Moore Capito—who has now endorsed Manchin’s bill—which all 50 Republican Senators have co-sponsored.
The key question is, will politics—namely Republican recalcitrance to “reward” Sen. Manchin’s vote on the Inflation Reduction Act and give Democrats a permitting win ahead of the election—stifle support for previously-endorsed positions? And does the political upside for Republicans from frustrating Sen. Manchin’s effort trump potential backlash for inaction on long-held permitting priorities? On both these questions, we continue to believe the answer is no. However, as with all contentious votes, the situation is very fluid, particularly as Sens. Manchin and Capito whip their colleagues for the upcoming vote, which Sen. Schumer slated for Tuesday, September 27.
Ahead of Tuesday’s vote, here are the key dynamics we are thinking about and watching to assess the near-term outlook for permitting reform:
Advocates for a “Clean” CR Injecting Uncertainty to Dissuade Schumer from Combining Bills. Both Republicans and progressive Democrats seek to decouple the permitting bill from the CR, albeit for different reasons. Republicans, projected to win the House in the upcoming election, would likely prefer to negotiate and enact permitting reforms from a position of greater leverage while preventing Sen. Manchin from taking credit for their policies. To this end, Sen. McConnell previously called on Republicans to “stand firm” on a “clean” CR, without any non-funding-related riders. Progressives, on the other hand, are loathe to be forced to choose between funding the government and expediting fossil fuel infrastructure. To this end, we expect both ends of the spectrum will continue to inject uncertainty in the prospects of a combined bill passing, highlighted by recent comments from Sens. Cornyn and Cramer as well as multiple letters from progressives in the House and Senate. However, we view these as efforts to shape Schumer’s decision rather than unbiased prognostications of the vote outcome.
Comments from Maj. Leader McConnell—a Close Ally of Capito—Key Indicator for Upcoming Vote. As of this writing (9/24), Sen. McConnell has yet to go on the record on his position on Sen. Manchin’s bill. The day after Sen. Manchin released the bill, Sen. McConnell told reporters, “We’ve certainly all been talking about it, and it’s been much under discussion in our conference.” However, since then he has remained on the sidelines. We are closely watching any guidance from Sen. McConnell on how Republicans should vote on the bill, particularly considering his close ally—and likely future member of Republican leadership—Sen. Capito threw her support behind Manchin’s bill. Before the release of Manchin’s bill, Sen. McConnell gave a raving review of Sen. Capito’s bill on the Senate floor, so her new-found support for Manchin’s bill may weaken arguments concerning Capito’s as a viable alternative.
First-Time and Evolving Comments from Republican Leadership and Key Moderates. Given the loss of Sen. Sanders (I-VT) and likely Sen. Kaine (D-VA), Manchin will likely need at least 12 Republicans to back the combined CR and permitting reform bill next week. Several Republicans have yet to voice their position on the bill and will be key to watch ahead of the vote. Additionally, while some Republicans like Sen. Tillis previously voiced opposition, we have seen a pivot back to a more measured response.
Here are the key Senators to watch, in our view:
|Republican Senator||Position||Comments 9/22||Comments 9/23|
|Capito (R-WV)||Yes||Said that she plans to back a permitting reform proposal from her home state colleague (link)||N/A|
|Barrasso (R-WY)||Lean No||“I have a lot of concerns with it. Clearly it doesn’t do the sort of things that we need, and I think in certain areas it makes it worse.” (link)||N/A|
|Blunt (R-MO)||N/A||Said he hadn’t looked at the legislation yet but would be surprised if it got to 60 votes (link)||N/A|
|Cassidy (R-LA)||N/A||“Still reviewing the bill” (link)||N/A|
|Collins (R-ME)||N/A||Sen. Susan Collins’ office declined to comment. (link)||N/A|
|Cornyn (R-TX)||N/A||“I can’t see how it’s going to pass,” (link)|
“Between Republicans who are not inclined to help Senator Manchin out of a bind and Democrats who are going to vote no, it doesn’t stand a chance,” (link)
|Cramer (R-ND)||No||“I think it does as much harm as good if it does any good at all,” (link)||“The way it looks to me is this whole deal was about one pipeline in West Virginia” (link)|
|Daines (R-MT)||No||Said he will vote against Manchin’s bill because its reforms don’t cover forestry. (link)||N/A|
|Graham (R-SC)||No||“I’d like more. I get nothing in South Carolina. I’ll be a ‘no,’” (link)||N/A|
|Kennedy (R-LA)||N/A||“The decisions I’ve got to make is, on balance, is some permitting reform better than no permitting reform? I’m trying to understand whether Sen. Manchin’s proposal really is permitting reform.” (link)||N/A|
|Murkowski (R-AK)||Lean Yes||“Still reviewing the bill” (link)||Talking to GOP colleagues — including those from states with less of a direct stake in MVP — about how building the pipeline “is good for our nation’s energy economy” (link)|
|Portman (R-OH)||N/A||“I think there are good things in it. I think there are things that need to be improved. But it was never done in a bipartisan way.” (link)||N/A|
|Romney (R-UT)||N/A||“Still reviewing the bill” (link)||N/A|
|Scott (R-FL)||N/A||“Still reviewing the bill” (link)||N/A|
|Sullivan (R-AK)||N/A||N/A||“The thing that always helps get legislation moving [is] if people are willing to take good, constructive suggestions. That’s what I’ve been telling those guys for a couple of weeks now,” (link)|
|Thune (R-SD)||N/A||N/A||“It’s hard to say because we don’t know what else is on it,” he said of the text of the continuing resolution that has yet to be released. “They haven’t really shown their hand on that yet. There are lot of discussions going on around different permutations of the CR including Manchin’s permitting reform. Our members are still trying to get more information and process it.” (link)|
|Tillis (R-NC)||Lean Yes||“I’m not supportive of what’s come out,” (link)||“It clearly falls short of Capito’s bill…So we’ve got to see whether or not it really is a step forward or window dressing. And there have been arguments on both sides of the proceeding.” (link)|
“I like the idea of getting the pipeline completed,” (link)
|Toomey (R-PA)||Lean Yes||N/A||“The pipeline is very important to me” (link)|
Path Forward for Permitting Reform In CR or Year-End Omnibus Spending Bill
On September 22, Sen. Schumer filed cloture on a House-passed bill that will serve as the vehicle for the combined CR and permitting bill. On Tuesday evening, the Senate will vote to begin debate on this legislative vehicle. Sen. Schumer will then call for a vote to amend the bill by adding the combined CR and permitting legislation, potentially with additional riders such as Kentucky flood relief funding, Ukraine funding, Mississippi water crisis funding, and other provisions. If the vote fails, Sen. Schumer will need to negotiate on the floor by adding new provisions to secure enough Republican support or advance a “clean” CR with the permitting reform language. If the Senate passes a CR with or without the permitting reform legislation, the House would then pass it in the same or next day to prevent a government shutdown. We expect Congress to continue negotiating on the permitting reform package into year-end if it fails to pass through the CR.