In today’s edition, we’ll cover the White House outreach to environmental groups on the Willow oil project and the Senate vote to overturn a Labor Department sustainable investing rule. But first:

House Republicans want to overhaul the nation’s permitting process. What will Democrats do?

House Republicans are racing to pass an energy package this spring that would speed up the nation’s permitting process for new natural gas pipelines, wind turbines and other energy infrastructure projects.

Democrats now have a dilemma: They could agree to work with Republicans on permitting legislation and risk blowback from prominent environmental groups, or they could shun the permitting talks and risk slowing the nation’s clean-energy transition.

“Any final permitting package is going to probably include some stuff we don’t love — but we know we need to do this for our climate goals,” said one House Democratic staffer who, like others interviewed for this report, spoke on the condition of anonymity to describe private discussions.

Lawmakers in both parties agree that it takes too long for energy projects to secure the necessary permits. According to an analysis by the White House Council on Environmental Quality, the average time for projects requiring an environmental impact statement is 4.5 years.

But they sharply disagree over how to address the problem that has threatened fossil fuel and renewable-energy projects alike.

The debate over permitting has been simmering on Capitol Hill for years. Here’s the recent history:

• To secure the vote of Sen. Joe Manchin III (D-W.Va.) for the Democrats’ landmark climate bill, dubbed the Inflation Reduction Act, party leaders agreed in August to pass a follow-up bill that would speed up the permitting process.
• In September, Manchin introduced a controversial measure that sought to expedite the approval of the Mountain Valley natural gas pipeline, among other proposals.
• Democratic leaders then tried unsuccessfully to attach Manchin’s permitting proposal to a government funding bill and the annual defense policy measure.

That brings us to the present moment, when House Republicans are trying to pass a permitting overhaul as part of a sweeping energy package, which they hope to vote on by the end of the month.

The centerpiece of the package would be legislation from Rep. Garret Graves (R-La.) that seeks to modernize the 1970 National Environmental Policy Act, which requires the federal government to analyze the environmental impact of a major project — and to seek public input — before approving it.

‘Sacrosanct and biblical’

Therein lies the rub. Democrats could face fierce blowback from environmentalists if they’re seen as working to weaken NEPA, a bedrock environmental law that has been used to block polluting projects, often in low-income and minority neighborhoods.

“What we don’t need is permitting reform that guts and takes away the protections that NEPA gives to communities like mine,” said John Beard, executive director of the Port Arthur Community Action Network, an environmental justice group, at a House Natural Resources Committee hearing Tuesday.

Rep. Scott Peters (D-Calif.), who has been trying to persuade his party to support permitting legislation, acknowledged the politically explosive nature of reopening NEPA.

“There’s a camp of people who, I think, view NEPA as sacrosanct and biblical,” Peters told The Climate 202. “There’s another group of people who recognize that it’s totally reasonable to adapt environmental laws for the situation we’re facing today. I don’t think in 1970 we would’ve said that we were facing a climate crisis.”

Peters said he has discussed permitting proposals with several Democratic colleagues in recent weeks, although he declined to name them. 

Christian Unkenholz, a spokesman for Rep. Jimmy Panetta (D-Calif.), confirmed that his boss has spoken with Peters about the issue. But other Democratic lawmakers have said they don’t want to be publicly associated with permitting talks for fear of angering major environmental groups, according to one person familiar with the matter. (It could not be learned who those lawmakers are.)

On the other hand, if Democrats don’t work with Republicans to strike a permitting deal, they could jeopardize the central goals of the Inflation Reduction Act: spurring the construction of clean-energy projects and slashing the nation’s emissions.

According to an analysis by Princeton University, the Inflation Reduction Act could cut U.S. greenhouse gas emissions by about 6.3 billion tons over the next decade. But that outcome depends on more than doubling the historical pace of building transmission lines needed to carry clean electricity across the country, the analysis found.

“There’s so much clean energy we could get on the grid right now, if we just had the transmission infrastructure to do so,” Xan Fishman, director of energy policy and carbon management at the Bipartisan Policy Center, told The Climate 202. 

James Hewett, who manages power sector advocacy at Breakthrough Energy, summed up the situation this way:

Senate Majority Leader Charles E. Schumer (D-N.Y.) and several climate hawks in the Senate — including Sens. Brian Schatz (D-Hawaii), Sheldon Whitehouse (D-R.I.) and Tina Smith (D-Minn.) — have voiced support for passing a permitting bill that makes it easier to approve transmission lines.

But several other Democratic lawmakers — including Sens. Jeff Merkley (Ore.), Edward J. Markey (Mass.) and Elizabeth Warren (Mass.) — have raised strong opposition to any permitting bill that weakens NEPA at the expense of vulnerable communities.

It’s unclear whether these factions in the Democratic Party can agree with one another, much less with Republicans, on a permitting deal in the coming months, even as hundreds of projects hang in the balance.

Biden set for first veto on Senate bill opposing ESG investing

President Biden is expected to issue the first veto of his presidency after the Senate on Wednesday passed a bill that would repeal a Labor Department rule on climate-friendly investing, Maxine reports with our colleagues Steven Mufson and Brady Dennis.

The final vote was 50-46, with two Democrats — Sens. Joe Manchin III (W.Va.) and Jon Tester (Mont.) — supporting the measure. Both men are up for reelection next year in deep-red states whose economies rely heavily on fossil fuels. The House version of the bill passed Tuesday.

The Labor Department rule gives retirement fund managers greater freedom to consider climate change and other ESG — environmental, social and governance — factors when making investments. Biden has vowed to veto the bill, but as a messaging tool, the measure adds to Republicans’ attack on what they call “woke” capitalism.

Senate Majority Leader Charles E. Schumer (D-N.Y.) on Wednesday criticized conservatives for seeking to undo the Labor Department rule, which is voluntary for fund managers.

“Republicans talk about their love of the free market, small government [and] letting the private sector do its work,” Schumer said. “But their obsession with eliminating ESG would do the opposite, forcing their own views down the throats of every company and investor.”

Tester defended his vote, saying in a statement that the Labor Department rule “undermines retirement accounts for working Montanans and is wrong for my state.”

Officials offer climate activists possible deal on Alaska oil project

White House officials have told major environmental groups in recent days that they may pair approval of the controversial Willow oil project on Alaska’s North Slope with new conservation measures across the state — but many climate activists are not sold on the compromise, according to three people involved or briefed on the calls, The Washington Post’s Timothy Puko reports. 

The administration is set to make a high-stakes decision on the multibillion-dollar Willow project as soon as Monday. The compromise measures under discussion include a new ban on drilling in the Arctic Ocean off Alaska’s North Slope and more protections for wildlife habitat in other parts of the state, according to two people familiar with the talks, all of whom spoke on the condition of anonymity to discuss confidential communications.

The people added that administration officials are seriously considering shrinking the project to just two approved drilling pads — a size so small that ConocoPhillips, the company behind Willow, could back out.

Still, environmentalists remain convinced that the project would hasten a climate catastrophe. They point to the Interior Department’s own environmental review released last month that estimated that Willow would emit about 9.2 million metric tons of carbon dioxide a year, equivalent to driving nearly 2 million gas-powered cars. 

“Rejecting a project like Willow should be a no-brainer for a climate leader like Biden. And if he doesn’t, it’ll be a stain on his legacy,” said Lena Moffitt, chief of staff at the climate advocacy group Evergreen Action. 

A White House spokesperson declined to comment.

EPA awards $250 million in grants to cut climate pollution

The Environmental Protection Agency on Wednesday announced it will award $250 million in grants for states, territories and cities to slash climate pollution, Zack Budryk reports for the Hill.

The grants mark the first tranche of funding under the $5 billion Climate Pollution Reduction Grants program created under the Inflation Reduction Act. All 50 states, the District of Columbia and Puerto Rico are eligible to receive $3 million in grants, while the 67 most populous cities are eligible for an additional $1 million.

Deputy EPA Administrator Janet McCabe said during a Tuesday call with reporters that the areas are all “at different starting points” on tackling greenhouse gas emissions, adding that the money can be used for new initiatives or to grow existing ones.