"Permitting Can Really Strangle Our Country If We Don’t Fix It" – U.S. Senator Alan Armstrong

Glad to be here. Thank you all for having me today. It's always nice seeing you, Maynard.

Yeah, I thank you all for having me again. First of all, I would say overall it's been a pretty positive experience. It's a real challenge to go from something that you've done for a long time and you kind of know the plays get a little slower and the same problem comes in every day but it's got different shoes on, but here totally different set of skills required to get things done. And so I find that kind of new challenge as really kind of invigorating frankly. So I've enjoyed that part of it. On the one hand, on the other hand, it has kind of reaffirmed my perspective that while there's a lot of great dedicated talent here within the Senate, the direct expertise a lot of times that we would hope, firsthand experience with some of the challenges is not known all that well. And so the good news is I think because of that I have a lot to offer. The bad news is I would say it's not always just the best ideas that win around here. So a lot of focus on seniority and committee structure and jurisdiction within the committees that tends to stand in the way of getting the very best ideas brought forth into law. But I've been really focused. Love the staff I get to work with. And there's a lot of really well-intended senators on both sides of the aisle. And I'm trying to marshal those folks into support for a bill that would really move the needle for our country on permitting. And I find it interesting. A lot of times people will say, "Well, duh. You're the pipeline guy. Of course, you're going to come in here and want to try to get permitting done for the sake of your own business." And I always kind of remind people and your audience knows this as well as anybody. It's not a bad thing to be an incumbent pipeline company when it's really impossible to build new pipelines. And it tends to drive up the value of a scarce commodity in terms of pipeline capacity. But long-term I think that's a terrible thing for our country and it's ultimately bad for the industry to the point that we drive the cost of our product and the services that we provide beyond what people are willing to pay for them long term. But this really is an effort to take on what I think can really stop our country long term. It's kind of like the public debt. Everybody knows it's bad. Everybody knows it's got to get solved, but it's always kind of gets just pushed down the road one more day. And permitting is kind of that same issue where it can really strangle our country and the competitive advantages that we've had for so long if we don't fix it. But it's not a particularly popular issue because the everyday person doesn't understand how that drives their utility prices higher, how it lessens the competitiveness of our nation. And so it really does take some long-term thinking and frankly somebody like myself that has no political ambition to come in and try to tackle something that's really important for our country but is not a super popular issue, frankly. So I'm glad I'm here and having the chance to try to tackle this and pushing hard on it every day.

You know, I was in the process. Chad Zamron, who's the new CEO, had taken the CEO role back in July and I was super excited about that. He's doing a fantastic job. And July of '25 and I was exec chair. And really this came along and it was one of those things where the governor asked you to do it and I thought, wow, I can sit around and gripe about this the rest of my life and blame everybody else for not getting anything done, or I can take my turn in the ring and give it my best. And so it wasn't any more complicated than that, frankly.

Well, we're certainly trying to drive that home, but again, I think, more than I'd like to admit or more than I probably wanted to know, the issues that are good for our long term for our nation are not necessarily top of mind when it comes to what people are going to focus on, particularly in a right here ahead of the midterm. So, I would just say I've been surprised by how the more topical popular issues tend to grab people's motivation and what they're willing to spend time and what can make it to the floor and what can't. And so that's the answer to your question. It again, it's just like public debt. Everybody knows it's an issue and needs to be dealt with, but it's not necessarily going to get action on it until there's a crisis. And I always tell people that our infrastructure is like bridges. Nobody really cares about a bridge until it falls down. And the weakness that we're building for ourselves by not having adequate infrastructure is starting to show itself into political topics like people's utility bills. And so I would say unfortunately even though I would say that our national security is an even more important thing than people's utility bills, the utility bill aspect of it is the thing that'll catch politicians' attention more if you can connect it. If you can force and really educate people to say, "You want to know why your utility bill is so high? It's because your governor decided or your governor in the state next door decided to not allow infrastructure to be built across the state. That's why your utility bills are high." And trying to connect the Sierra Clubs of the world to why your utility bills are so high. And so I think having to, whether I completely agree with you that it's longer term more important from a national security perspective, but in the short term you have to connect it to something that is going to actually politically motivate people around here unfortunately.

Yeah, I think that has absolutely become much less of an issue. And the basic principles, in fact the bill that we put out, one of the primary principles behind it is that it's going to be energy source neutral. And so we're not here to pick winners and losers and we're not here to say that we're not going to allow wind to be built either or solar. So it is truly an attempt to be completely energy source neutral but focused on how do we actually get the infrastructure built in a way that continues to protect the environment but allows some certainty and some time frame that people can count on and invest in. And so that's really what we're trying to accomplish on that front. And I think the concept of the blue versus red issue on this is lessened except for we're going into midterm and there is a real focus and I'm seeing it as I'm gaining bipartisan support for this bill that the leadership of the Dems is saying no way are we going to let anything positive get done in this environment for the Republicans. Now, I find that really strange because from my perspective, it's positive for both sides of the House. It's positive for our country and I don't think it gets the Republicans a big win and I don't think it gets the Democrats a big win in the midterms either way. Hopefully, it's just people saying, "Thank God, we have a Congress that's focused on our country instead of who's going to win." But I would say in terms of the actual individual senators that are key to making this happen, everybody on both sides of the aisle understands how important and there's very little debate around let's don't do what's good for pipelines or let's don't do what's good for transmission. I think we're past that. So I'm encouraged by that. That's come a long ways from where it was a couple of years ago. And one of my pitches to industry has been, listen, we as industry would sit and gripe at the political leaders and say, why can't you guys get together on this? And my position to industry has been why don't you guys speak with one voice about not trying to get subsidy for this or trying to pick a fuel or an energy source. Why don't you be the one saying, "Hey, we want it good for any and all infrastructure." And when you can do that, then you'll actually have a positive motive towards getting permitting done because the issue is 60 votes, period. The House has done great work on bringing bills forward. The bill that we laid out three weeks ago actually is kind of a culmination of a lot of the great work in the House and therefore kind of reduces the amount of resistance to go back through the House in its final form. But we were very careful to try to adopt as much of the good work out of the House as we could possibly pull together.

Yeah, sure. Well, first of all, I think in terms of getting something that can pass and get support from both sides, it does need to be energy source neutral. No subsidies towards a fuel explicit or implied. It needs to incorporate, this is probably from a pipeline perspective, this has always been the tool that's been used by environmental opposition is the state water quality rights under the 401 water quality certificate which is under the Clean Water Act. That has been a loose cannon in the permitting process for a long time because there's no real standards around which a state is obligated to hold anybody to. So they can basically make up their standards to whatever they want them to be. And under the NEPA reform, the judicial standard is arbitrary and capricious. So if you get denied a certificate, you have to go prove that the state wasn't being arbitrary and capricious. So they can always come up with, any general counsel of a DEQ can always come up with something that won't be considered arbitrary and capricious despite being able to kill a project. And so that's a really key element of this is the 401 water quality certificate. We've been working with the renewables industry and the transmission industry to say listen, if you get FERC siting authority which is another one of the key elements here, if you do get FERC siting authority for transmission, you're going to have a red state tool on your hands on the 401 water quality certificate because there's really no definition or standards, it's completely subjective and therefore it makes itself the perfect political tool. And Alan, just so maybe I think everybody follows this, but just to make sure we do. So you have a federally approved project. It's going to come through your state, but it's an interstate situation, transmission line, pipeline, whatever it is. Some state can say even under the current rules, even though it's federally approved and passed all the muster, they can say in our view under the Water Act, we're going to deny it. And I think of this as New York State and pipelines, but I know there's other examples. So not only is it a state-held weapon, it's a hard to fight weapon.

So if you think about, and in fact our solution on this is to make sure that it's concurrent with the FERC process. So today you go do an EIS and you spend four years with all the other agencies, state and federal, figuring out the best path and the best route for linear infrastructure. And then after that's settled and after you have your certificate conditioned on the 401, the state comes back a year after that and says, you know, I don't think I really like that route. You need to change this. Well, if you accept that, you're back to square one in the entire EIS process all over again. And this is where you get the do loop and it kills, it makes what used to be a 10 to 12% return industry into a 30% return industry because the risk is that high of all the development costs on the front end of a project. And so what does that mean? It means that people's bills are going to be three times higher. And so that's really the thing we've been trying to advise people is like you're not killing the big bad pipeline company, you're hurting the utility customer because they're the ones going to pay the bill on this. And so that's really the reason the 401 is such a deadly and effective tool is it really has no standards around it.

The people that it doesn't resonate with are the people that get a lot of their funding from the Sierra Clubs of the world because they know this is the tool that they've weaponized. And so to them, it's easy to just continue to villainize the big bad energy company. And the average consumer isn't smart enough to know that that really isn't the problem, that really is falling back on them. So, I would say people that understand business and care about business, care about consumers, and there's a lot of them that thankfully are getting it. But the people that have kind of made their mark of being the anti-climate change guy and the people that are really aligned themselves with the NGOs on that front, they need a villain and they've done a really good job of making the energy company and the pipeline company the villain. So your understanding of the market is like I don't have to make that pitch to you, but doing that in a political form is a little more difficult.

Yeah. So the water piece, making sure that any and all agencies, there are other agencies that tend to try to operate outside the one lead agency, but one of the key principles and part of this bill is to make sure that there is one lead agency. In the case of pipelines, it's FERC; in case transmission, it would be FERC. But there's other things like wind and other issues that need one lead federal agency to make sure that the entire process is governed and you don't have these concurrent do loops like I talked about earlier. Another thing is we are, as a core principle, no degradation of environmental protections that exist today. So we're not trying to do anything that would actually impact the environment negatively. And then finally, and probably one of the really important final issues here, is making sure that if you are issued a permit in a lawful manner, that a court or an executive branch can't vacate those certificates. And that's happened in a number of circumstances. In fact, Williams had the Regional Energy Access project. The project was up and running for nine months. It was a billion-dollar project. The debt of winter pipeline was nearly fully loaded with use and the DC Court of Appeals came out and vacated FERC's certificate saying that they hadn't required an adequate study of greenhouse gas emissions impact on the project. So nothing Williams had done wrong honestly because we complied with everything FERC told us to do and actually there was no law requiring a greenhouse gas emissions rule, but that's what the DC Circuit came up with. And that's happened in a number of cases where courts have actually vacated a certificate that was issued to do construction after you went through all this morass. So, if you think about the risk, I remember walking into the boardroom after we got that order and the board looking at me like, why in the hell would we ever try to invest in a pipeline project again with this kind of risk? And so that's the kind of icing you get. And if you're Equinor and you got some of your permits pulled on the offshore wind projects, you probably feel the same way. And so we've kind of gone back and forth with the administration on that topic, but I don't think it's a good idea for the executive branch as long as somebody's meeting the conditions of the permit. I don't think it's a good idea for either the executive branch or the judicial branch to be able to jerk a certificate that's been issued.

Yeah. And if it does show up, it's going to have a much higher return expectation. You know, and therefore higher prices to the consumer. So, it's not how we built our great country. It's not why we're so lucky to have such an abundant infrastructure in our country that

drives such a massive economy. It's not how we got here by jerking pulling certificates and not giving people confidence in their ability to, if they do things right and if they comply with the law, that they're going to be able to build things.

I mean, I think it's been a frog in the boiling pot. You know, I started with Williams as an engineer and I remember running into some silly things every once in a while where you'd think, and here's the problem. If you were a project manager and you had somebody ask you to do something silly, you'd be like, 'I don't have time to fight that. Like that's stupid and I know it's going to show up on the next project, but I got to get this project done.' So everybody, a regulator wants to be important. Everybody wants to be important in their life and if they just give you an approval and don't require something different on their project, you know, so I just think we've just seen this regulatory creep that's just gone on and on and on. And then when things started to get litigated, then it became a whole cottage industry to make money off of litigation and get paid. You know, companies get sued all the time now and then you pay off the person that's suing you so you can move on with the project and they know it because they know they stand in between you and a lot of value. And so that in fact, you know, one of the reforms that I didn't mention because I just didn't want to get into that level of detail, but a lot of litigation reform in NEPA that's part of this bill as well that will shut down people's ability to come out. No somebody that has nothing to do with the project, not a land owner, no harm, have the ability to come in and sue on these projects. But I think, you know, that's been a big driver on it. There's a lot of money made because there's enough value once you've got your, you know, once you've got one leg over the fence on these projects, you're pretty vulnerable to have to, you know, pay up on a lawsuit because it's kind of a sunk cost analysis.

And so the NEPA law today allows for litigation from anybody and everybody. And that I think has driven some of how crazy it's gotten. But I don't think there was any one, to answer your question, I don't think there was any one particular thing that happens. I mean, people always say, 'Well, gosh, you know, it was the Biden administration or Trump administration.' The Constitution project got shut down during Trump because it was a state. It was Governor Cuomo that actually shut it down. So I don't think it's any one catalyst, frankly.

Sure. Why wouldn't you exploit our vulnerability there? Yeah.

Yeah. Yeah. I think the bills that are likely to come forward on transmission will likely be ones that give the state the right to do it first. But if a developer isn't able to get the rights they need across the state, that they can come appeal to the FERC for interstate commerce and eminent domain through that, but as long as it's getting done through the states, then FERC's never involved. So I think that's what you'll see coming forward on transmission bills on this.

Well, I think to the degree that anything related to NEPA and NEPA reform will help the nuclear industry, particularly as it relates to the litigation standards and the no vacancy on C certificates which the nuclear industry is ripe. I mean, talk about an industry that has to spend a lot of money upfront and then is completely vulnerable to a lawsuit that they have to pay off just to keep the project moving. This will curtail that and really take a lot of that. You know, what people have to like, if you're actually doing a project today and you don't put a budget item in there for paying off the cottage industry on a big project, you're kidding yourself. And so I think removing that line item will be pretty important, and it also dramatically reduces delays as well. So yes, I think the nuclear industry would benefit from this.

Great. Thank you.

Yeah, they definitely are. Unfortunately, and they really get this. I mean, they, you know, it's not lost on them that they've become the scapegoat. And I, they're really trying to turn the knobs up on their government affairs efforts. But they've become so negative so fast that, you know, Democrat politicians that lean into a populist point of view are like that, right? Regardless of the fact that if you're an American, you better hope that we win this race. But again, it's this mentality that we all fear from the outside, but I can tell you is alive and real on the inside, which is people will do whatever it takes to get them elected because they think it's so important that I'm in office that I should do whatever's popular in the short term, condemning our country in the long term. And that's unfortunate, and it's a very broad statement, and I agree. But that really is part of the problem. The data centers have gone from being the darlings to the Trump crony crowd that Democrats are not going to support. And yes, first it was the reason your power bill is high is because of climate change and it's gotten hotter and therefore your bill's gone up. That was the first one. Second one was, 'Oh, well, it went up because Trump ended subsidies for wind and solar production and that's killed new investment and that's why your bill is higher all of a sudden.' And now it is the data centers. It's not never going to be because we wouldn't let a pipeline get built across our state.

Yeah. Well, I mean, we saw it here three weeks ago. PJM was shedding loads on an emergency basis up here in this market, and prices went from 90 to $1,569 in a matter of 20 hours. So we've seen instances where that is starting to come up. And as I tell people, don't think that's an anomaly. That's just the beginning. This is going to get a lot worse. All you have to do is fly into the PJM area and see the enormous amount of data centers being built here. And where people think it's going to get better if there's not transmission lines being built at the same time is kind of beyond me how people think that actually works. But it has become, to your point, and it really worries me even in the state of Oklahoma, which I consider to be a very business-friendly environment, even in the state of Oklahoma, people are fighting data centers from getting built. They're fighting an aluminum smelter from coming in. And unfortunately, we have gubernatorial candidates that because it's popular, not because they think it's the right thing, they're coming out against just to get the favorable vote. So really disappointing to see that particularly in a state like Oklahoma. But yeah, the data center negativity is a very real thing, and it really concerns me, but it's a bright light example of people putting their own personal popularity in front of what they know is best for the country long term. I refuse to believe they're that ignorant.

Yeah. Yeah.

Oh, for sure. For sure. Yeah. Yeah. You wonder, to your point earlier, Bill, you wonder where all this opposition just magically appeared from because it's ad valorem property tax in people's school districts. There's a lot of huge positives that come out of that. So anyway, it's a really concerning issue, but I do think that the hyperscalers are really pouring the effort and energy into learning how to go into the communities first and actually be invited into the area, and I think that will work out well for them. So I'm thrilled to see them getting so active in that space.

Yeah. Well, they are absolutely critical, and you know, one of the things I didn't mention was that one of the main oppositions from the Dems that are trying to be constructive is a lot of the wind power projects that have been held up by the Department of War over radar sensitivities on having to reform radar against drone swarms. And so there's a lot of effort going on on that front, but it is both a piece of leverage and it's also a poison pill to getting anything done right now. And so that's a really important part of getting this done is working with the administration to not... to be fair to the renewables industry, you know, and my point of view on the topic is, hey, as long as there's not subsidies involved, bring it. Why would we not take on... we need all the power we can get. So as long as it's not being subsidized, let's encourage it rather than try to stand in the way of it. But that's going to be a little bit of a shift in the White House that's going to be needed to get this across the line.

Oh, yeah. No, they very much are a big part of supporting. They were in support for our bill when we rolled it out, and they've been pretty vocal. We need all sources of energy right now. I know people are kind of exhausted on permitting reform because it's been a topic for so long with so little progress, but we really need industry right now and the labor unions to really be pounding the table, particularly on the Democrats, that we need to get something done in short order.

Yeah, thanks for that. I think, one is to the degree relationships with Secretary Wright, Secretary Bergam, and they know this issue really well. They're on top of it. But I think making sure they know that they have the industry strong support in allowing wind and renewable projects to go forward as well, because that issue is on the bubble a little bit, and the more confidence they have that the broad energy industry is supportive of that as long as there's not subsidies involved, I think is actually helpful to getting a bill done. And then secondly, I think pushing on all the Democrats, particularly the moderate Dems, on how important it is that we get this done and get it done now. Because I think if the House flips, if you look at who would be leading the key committees in the House on getting permitting reform done, that is not a pretty picture. And if we can't get it done now, I'm not sure when that window of opportunity is going to be. So I think really talking to the moderate Dems out there about the importance of pushing for getting this done now is important as well.

Well, how's your calendar look between now and May? Yeah, it's very busy. And every day something new comes up, some new wrench is thrown in, seems like every day. But I think it's very hard to predict, but Leader Thune has come out and said that he would hope we would be addressing bipartisan issues, and he particularly named permitting reform as one of the top issues in September. So that's a very short work period, but I'm certainly hopeful that we're going to get something done on that. Shelley Moore Capito leads EPW. Mike Lee leads the ENR committee. Those two committees are key. And whether something comes out of those committees or not is questionable. We want to make sure we've got a bill there ready to go that is completely buttoned down, has been scrubbed every way, been scrubbed by industry. We don't want to get surprised by somebody that's against it at the last minute. So we've been really working hard to make sure that the bill is a clean and detailed document that's not going to surprise somebody. And if the committees don't come up with something that is very similar to it, we're hoping that this is ready to adopt very quickly through committee. So that's our goal right now.

No, I appreciate that question. I would say John Hickenlooper from Colorado really understands the energy issue and he's critical. Brian Schatz I think is a critical leader within the Dems that's smart about this. Senator Kim, Senator Slotkin from Michigan has been pretty pragmatic on these issues. Padilla actually I think knows that transmission needs to get done. Martin Heinrich from New Mexico has been really engaged in this. Peter Welch actually showed up for our roll out of the bill and spoke as strongly as anybody about the importance of getting this done. And the good news is his wife is actually a utility commissioner in New England, and so she knows how important this is to get this done. So we continue to work that circle pretty hard, but it's expanding, I'll tell you that. Tim Kaine even, even though he blocked, he's been really interested in getting this done as well.

Well, I'm honored to get the chance to do it. I think it's a great opportunity for me to try to give back to the country, and I feel really good about getting the opportunity to do it. I don't think I'd be the right man to do this for the long term, but I'm glad that I've got the opportunity to contribute here in the short term.

I think the positive side is just all the incredible talent that's here within the capital that's really dedicated to trying to make our country better. That's really impressive to me. There's a lot of talented, smart people, young and old, here that very much focus on trying to make the country better. And that's really been encouraging to me. But it also says, 'Hey, I'm a leader. I better be the guy that can help show that talent how to get something done.' So it kind of puts responsibility on me when you have this much talent that's so capable. In terms of negative, I would just say it's definitely been this concept of the party being more important than our country. And it always really pains me when I see what's best for our country being way down the list of considerations when people are calculating what they're going to do. And so that's disappointing, but I'll caveat that to say that is definitely not everybody. There's some people that act very courageously around here for the benefit of the country. So I'm thrilled to see that.

Very good. All right, guys. Thank you all very much. Enjoyed the visit today.

Thank you.