Senate Democrats removed language on comprehensive permitting reform from an emergency government funding bill passed late Tuesday in a defeat for Sen. Joe Manchin (D-WV) and the natural gas industry.

MVP

Manchin had voted in favor of President Biden’s Inflation Reduction Act of 2022 (IRA) on the condition that Majority Leader Chuck Schumer (D-NY) include an overhaul of the permitting system in a continuing resolution (CR) to fund the government and avoid a potential shutdown.

Schumer stayed true to his word, but opposition to Manchin’s bill from Republicans and progressive Democrats alike meant it would not receive the filibuster-proof 60 votes needed to survive.

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“Because American families should not be subject to a Republican-manufactured government shutdown, Senator Manchin has requested, and I have agreed, to move forward and pass the recently-filed Continuing Resolution legislation without the Energy Independence and Security Act of 2022,” Schumer said. “Senator Manchin, myself and others will continue to have conversations about the best way to ensure responsible permitting reform is passed before the end of the year.”

Manchin also expressed frustration with his fellow legislators.

“It is unfortunate that members of the United States Senate are allowing politics to put the energy security of our nation at risk,” he said. “The last several months, we have seen firsthand the destruction that is possible as Vladimir Putin continues to weaponize energy. A failed vote on something as critical as comprehensive permitting reform only serves to embolden leaders like Putin who wish to see America fail.”

Manchin’s bill, titled the Energy Independence and Security Act of 2022, would have expedited the review process for fossil and renewable energy infrastructure; ensured the approval of the long-delayed Mountain Valley Pipeline LLC (MVP) natural gas conduit; placed a statute of limitations on court challenges to energy projects; and expanded federal authority to permit and site power transmission lines, among other measures.

Progressives have argued Manchin’s bill would hinder the fight against climate change by rubber stamping fossil fuel development. Republican leaders. who also advocate permitting reform, signaled unwillingness to give Manchin a political victory after he sided with fellow Democrats on the IRA.

What’s Next?

Manchin’s fellow West Virginian, Sen. Shelley Moore Capito, endorsed Manchin’s bill but also introduced a competing permitting reform bill earlier this month that is friendlier to fossil fuels and far more popular with Republicans.

Natural gas and renewable energy groups both have endorsed Manchin’s proposed measures.

The U.S. Chamber of Commerce, for its part, “remains committed to enacting permitting reform this year,” said Chief Policy Officer Neil Bradley. “As a result of the debate that has emerged over the past several weeks, it is now clear that there is substantial, bipartisan agreement that our permitting system is broken and must be fixed.” 

He added, “We believe that the differences that exist today on specific components of legislation are by no means insurmountable, and all sides have a genuine interest in passing reform. We will continue to work closely with Senator Manchin, Senator Capito and other Congressional leaders to forge consensus on a package that can pass Congress and will improve energy security while lowering prices for businesses and consumers.”

Concerns over inflation may give Republicans a leg up if talks continue, according to analysts at ClearView Energy Partners LLC.

Extending negotiations on permitting reform “could help the GOP pursue deeper reform by leveraging high energy prices—not just for gasoline, but also for electricity and natural gas—as a pressure tactic,” the ClearView team said Wednesday. “If energy prices continue to contribute to inflation as mid-term Congressional elections approach, Democrat moderates from swing districts could become increasingly vulnerable to GOP attacks against President Biden’s green-leaning energy policy priorities.”

Capito, meanwhile, reportedly said that a renegotiated permitting bill could be attached to the next annual National Defense Authorization Act. 

Manchin signaled a willingness to continue bipartisan talks on the matter.

“Over the last several weeks there has been broad consensus on the urgent need to address our nation’s flawed permitting system,” Manchin said. “I stand ready to work with my colleagues to move forward on this critical legislation to meet the challenges of delivering affordable reliable energy Americans desperately need.”

In particular, interstate oil and natural gas pipelines such as MVP have proven exceedingly difficult to permit and build amid relentless opposition and lawsuits. New England, for example, relies on liquefied natural gas imports in the winter despite its proximity to the Appalachian Basin, amid a lack of sufficient pipeline capacity.

“We should never depend on other countries to supply the energy we need when we can produce it here at home,” Manchin said. “Accelerating the construction of energy infrastructure is critical to delivering that energy to the American people and our allies around the world. Inaction is not a strategy for energy independence and security.”

The Senate passed the CR on Tuesday, meaning the government will be funded through Dec. 16.