The first installment of the Obama Administration’s comprehensive survey and analysis of the US energy sector provides a detailed roadmap for modernizing the energy transmission, storage, and distribution system to make it more secure and resilient to the effects of climate change while taking advantage of recent advances in energy and information technologies.
On April 21, the Obama Administration released the first comprehensive survey and analysis of the United States’ basic energy infrastructure needs for the 21st century. The Quadrennial Energy Review (QER), announced by Vice President Joe Biden and Secretary of the Department of Energy (DOE) Ernie Moniz, provides a critical analysis of vulnerabilities in the energy transmission, storage, and distribution systems in the United States. The report also includes policy recommendations to modernize these systems and to make them more secure and resilient to the effects of climate change and more flexible in response to recent advances in energy and information technologies.
The first QER report includes several specific recommendations for investments in energy infrastructure upgrades and new policies designed to promote responsible development of domestic energy sources and to facilitate more timely environmental review and permitting decisions. Priorities outlined in the report will likely shape legislative and administrative actions that could affect markets and shape commercial opportunities in the energy sector. Key recommendations include the following:
On January 9, 2014, President Barack Obama directed an interagency Task Force, which included members from all relevant executive departments and agencies, to submit a QER report every four years beginning in 2015. The reports are intended to undertake a rigorous review of existing federal energy infrastructure and policy and to provide an integrated set of recommendations on how best to transform US energy production, delivery, and consumption systems at the local, state, and federal levels. The QER is a key component of the Obama Administration’s Climate Action Plan and is designed to ensure that new federal energy policy meets the nation’s economic, environmental, and energy security goals by providing an “analytically based, clearly articulated, sequenced and integrated actions, and proposed investments over a four-year planning horizon.”
This first installment of the QER recognizes that the US energy landscape is undergoing an unprecedented transformation in the way that we generate, deliver, use, and even think about energy. These fundamental changes present challenges and opportunities to public- and private-sector stakeholders that are addressing, for example, the technical challenges associated with the influx of large quantities of variable energy resources; heightened safety concerns; the political challenges associated with competing energy, environmental, and economic policy goals; and the regulatory challenges posed by the complex, multilayered network of permitting authorities and regulations that govern the US energy system. To accommodate the interests of those most affected by these challenges, the DOE hosted 13 stakeholder engagement meetings across the country to gather public input for the QER.
The first QER report focuses on US infrastructure for transmission, storage, and distribution (TS&D) of energy, because these basic components of the energy delivery system will shape supply and end-use patterns and practices for decades. Further, the federal government has recognized that once built, this infrastructure is relatively inflexible, and thus getting it right from the outset will determine whether the government can collectively meet the nation’s energy, national security, and climate change objectives.
The QER report outlines a multiyear roadmap to guide federal actions at the legislative, executive, and administrative levels that relate to energy infrastructure investments, siting and permitting, electricity market integration, workforce development, and heightened grid security.
Improvements to TS&D Infrastructure Siting and Permitting
Although it is important to consider the changing energy mix and how best to integrate new technologies onto the electric grid, for example, this cannot be achieved without improving interagency coordination and transparency for project planning and siting—an issue addressed in the final chapter of the QER report. The cost, time, and complexity of siting and permitting large infrastructure in the federal system will be a serious hurdle to implementing the QER’s infrastructure recommendations. Currently, there are “more than 35 distinct permitting and review responsibilities across more than 18 Federal agencies and bureaus, implemented by staff at headquarters and hundreds of regional and field offices.” To make this system less onerous for developers, the Obama Administration has committed to reducing permitting timelines for major infrastructure projects by half while also improving outcomes for communities and the environment. But, as the QER recognizes, it is still an open question whether, absent additional legislative authority and congressionally appropriated funding, these reforms can be accomplished.
To that end, the QER adopts five key recommendations to assist with the siting, permitting, and review of infrastructure projects: (1) allocate resources to key federal agencies; (2) prioritize meaningful public engagement through consultation with American Indian tribes, coordination with state and local governments, and facilitation of nonfederal partnerships; (3) expand landscape- and watershed-level mitigation and conservation planning; (4) enact statutory authorities to improve coordination across agencies; and (5) adopt Administration proposals to authorize the recovery of costs for review of project applications.
Even if all these recommendations are followed, however, meaningful change may remain elusive unless the Administration sustains cabinet-level leadership and support for such reforms. Further, most of the decisions necessary to permit infrastructure projects are made by state or local agencies or in local field or state offices of federal agencies. To obtain truly transformative changes in energy infrastructure siting and permitting, the key agency staff at the state, local, and regional levels must be personally invested and dedicated to the Administration’s priorities.
Additional QER Recommendations
Other QER chapters identify important opportunities to modernize, expand, replace, or transform the TS&D system so that it better accommodates changes in energy supply, integrates forward-looking information and security technologies, and meets increasing demand for new consumer services. This includes recommendations for smart grid technology and distributed generation, as well as modernization of the strategic petroleum reserve and the safety challenges of methane gas. Key recommendations include the following:
Building on the foundation laid by the Blueprint for a Secure Energy Future and the Climate Action Plan, the QER represents another step in the Administration’s efforts to leverage US domestic energy resources while strengthening energy security, reliability, and climate resiliency. Although the QER is only advisory, it recommends several specific legislative actions that would change the landscape for future and ongoing energy sector development, including funding the Interagency Infrastructure Permitting Improvement Center, a pilot version of which is currently housed in the Department of Transportation; restore appropriations to the various federal agencies responsible for infrastructure siting, review, and permitting; and update Strategic Petroleum Reserve (SPR) release authorities to allow the SPR to be used more effectively to prevent serious economic harm to the United States in case of energy supply emergencies. The QER report may also reignite stalled congressional efforts to accelerate natural gas pipeline repair to prevent explosions and accidents, decrease costs to consumers, and reduce methane leaks that contribute substantially to the US “carbon footprint.”
If nothing else, the QER report serves as a stark reminder of how much work there is to do to create the energy infrastructure necessary to support the modern economy, and of the many opportunities for innovative companies to contribute to that process. In light of the complex landscape and shifting federal priorities regarding TS&D infrastructure development, siting and security, companies doing business in this sector will benefit from counsel with the breadth and depth of experience necessary to develop a successful strategy and the acumen and relationships to execute it.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Kenneth M. Kulak
James T. Tynion III
 Steering Committee on Federal Infrastructure Permitting and Review Process Improvement, “Implementation Plan for the Presidential Memorandum on Modernizing Infrastructure Permitting” (May 2014) (hereinafter “Implementation Plan”) at p. 7, available here.
 US Senators Rob Portman (R-Ohio) and Claire McCaskill (D-Mo.) have already recognized the need for enforceable legislation to enable energy policy reform in this area. On January 28, 2015, they introduced the Federal Permitting Improvement Act of 2015, which would streamline and improve the permitting process for economically significant capital projects across all sectors, including electricity transmission and generation. Federal Permitting Improvement Act of 2015, S. 280, 114th Cong. (2015–2016). Congress’s ability to enact legislation like this will be essential to the effectuation of the QER.