Building America Again: Senator Alan Armstrong on Fixing Permitting and Energy Policy

We completed what people didn't think could get done, which was a billion-dollar pipeline moving gas out of Pennsylvania into New Jersey. The project got built. It was a great feat by the permitting teams to work with the states, worked with local land owners, worked with school boards that were going to benefit from the ad valorem tax, worked with the unions to have them bringing their voice to the table. So really great grassroots effort to get that project permitted. It got permitted. It was up and running. It was running at near full load during the middle of the winter and a federal court came out and vacated the certificate and said you can no longer operate because the certificate was not issued correctly by FERC because FERC did not look at the greenhouse gas rule. Well, there is not a law about greenhouse gas.

Thank you, David. Glad to be here.

Good. You know, it's been a lot of learning, but I love learning and it's a new challenge. I had been in the CEO role for about, in chairman role for about 15 years. And so this was a big change, but one that I've really found fascinating and challenging and I get to learn something new every day. So it's been good. Been about nine, almost 10 weeks now. So it feels like it's been a long time at this point.

Yeah. Well, I think it was a bit natural to me. I always really liked solving problems. I actually had two uncles that were engineers and I got to see a lot of the interesting work that they got to do. My granddad was a chemist for Phillips Petroleum at the time. So I was kind of around the energy industry growing up to a certain degree. Anyway, but it was fascinating to me to see really large-scale construction and see what humans, when they worked together, what they were capable of accomplishing on a large scale. And so that was really interesting to me from day one. I think learning engineering really is a matter of teaching people to break down problems, taking very large problems, breaking them into smaller ones that can be achieved with groups of people. So that was really interesting to me and continues to fascinate me, and I love a good challenge. Frankly, that's why this job's been so exciting to me is I do see it as a brand new challenge.

Yeah, thanks. Well, the Williams Companies is a large-scale energy infrastructure operator and handles about a third of the nation's natural gas through its pipeline systems and plants. So what it does is basically picks up gas supplies in producing areas and moves it through long-haul transmission lines that go all the way across the United States and delivers it into the key market centers. And so it delivers it to your utility. So if you're a customer of Duke or Con Edison if you're in New York, Williams probably carried that natural gas from a producing area to those utilities, and then the utilities distribute that to the home. So that's basically what Williams does in a nutshell. Today it's gotten into providing more and more for the power for the AI movement and a lot of the gas-fired generation for that. So it's really taken off with a lot of wind in its sails with the AI move right now.

Yeah, you know, I would say it moved from when I was a project manager for the company, I was in the business of having to overcome those obstacles and figure a creative way to move through the regulatory process to get things done. But one of the things I noted about that was your job as a project manager was to just take on that barrier, figure out the quickest way to get around it and to deal with it and solve the problem and move on. It wasn't to say, 'Okay, well, how do we make sure next time the regulation is a little more fitting?' Said another way, your job was just to play whack-a-mole. It wasn't to try to fix the process. And that's part of the problem, frankly, with the way our regulatory process works today. You've got project managers there whose job is to get that project built as soon as they can. They don't have time to wrestle with the regulator to say, 'You know, really this makes no sense at all.' But because you're usually just saying, 'Okay, fine. We'll do it anyway,' and moving on so that you can expedite the project. The regulator themselves doesn't feel like they're doing their job if they don't come up with some new requirement every time a new project's built. How boring would it be to say, 'Hey, we have a really good set of standards that we've been using. As long as you comply with these standards, we'll give you the permit and you can move on.' That's just not what regulators want to do. And if the project manager is not going to push back on that and is just going to say, 'Uh yeah, thank you sir. Can I have another?' Then that's kind of the way the permitting process is built up. And then on top of that, you have the NGOs and the environmental opposition that frankly makes money by fighting and trying to stir trouble up on a project. And that's how they raise their money, frankly, is by villainizing the corporation. So there's not really very many people in that process on the ground floor that are actually saying, 'Hey, how do we actually make this better for our country? How do we actually streamline this process so that we can get the work done?' Because the project manager that actually knows how to do that doesn't have time to deal with that. They're just trying to clear the next hurdle and get on to it, and they're not trying to improve our processes. Not because they're bad people, they just literally don't have time to deal with it. And there's a lot of times where today there's so many regulators, both state and federal, that are duplicative. There's a lot of times where there's mutually exclusive requirements. So a state regulator will say, 'You have to install your soil erosion control on this project this way if you want the permit from me.' And the feds will say, 'No, no, no, no. You have to do it my way.' Sometimes those ways are actually mutually exclusive. And so if you're the project manager, you're sitting there saying, 'Would somebody just pick? I don't really care which way we do it. I just need to have certainty.' But the regulators will just kind of cross their arms and say, 'It's not my problem. You either do it my way or you're not getting the permit.' And both of those are required to move the project ahead. So those are the kind of things that have really made the world of getting big large-scale infrastructure built these days really difficult.

Yeah. Well, I used to spend a lot of time saying, 'Okay, let me please come to the field and let me show you why we can't do both of these.' And we're not trying to cut corners here. We just literally can't do it both ways. And so you'll actually go out to projects these days and you'll see two completely different erosion control setups on the project, and the amount of plastic that gets consumed and thrown away on that. If people really looked at that and thought, 'Wow, if I was really trying to protect the environment, would I really consume all this plastic and produce all this plastic for two different erosion control systems?' So those are the kind of things that if you're a project manager or you're in the business like I've been of watching this, it is super frustrating because we're not protecting the environment any better. We're simply just making it longer and slower to get projects done. Most big operators these days, they are not trying to cut corners. I would tell you that idea hasn't hit people's heads in a long time. They are literally just trying to get it done and get it done in the most environmentally responsive way. But a lot of times there's actually a lot of things that prevent that from happening as I was mentioning.

Yeah, thanks for the question, David. You know, the single most weaponized tool out there to stop a project these days, surprisingly, is the 401 water quality certificate that is issued by states. And most of these big long-haul interstate projects are going across multiple states. Sometimes there's a lot of benefit in that particular state for the project and sometimes there's not. But it's still interstate commerce that's required. To the degree it's not, sometimes you'll see it become a political football and the state has effectively the right to veto a project under what is called the 401 water quality certificate, even though that is completely duplicative to the core Army Corps of Engineers 404 permit. So back when the Clean Water Act was written, the language was written in a way to say, 'Well, the states have at least a right to raise their concerns.' And that right to raise their concerns has over time turned into veto rights for a project. And so if you go and look at all the major big energy infrastructure projects that have been stopped, it has been stopped by the 401 water quality certificate. And so boy is this nerdy, you know? I mean, imagine trying to get people to understand that. But if you don't fix that problem, and believe me, I could go a lot deeper on this, but if you don't fix that problem, you're going to continue to have a country that finds it very difficult to build interstate infrastructure across our nation to move energy from where it's abundant and available to areas where it's constrained. And so today you have places like New England that sit 120 miles away from some of the lowest price natural gas in the entire world. Not in the country, but in the entire world. And yet during the wintertime, it pays some of the very highest prices in the world for natural gas because a 120-mile pipeline across the state of New York can't be built because New York doesn't see a whole lot of benefit into that for them.

Yeah. You know, great work by the House, by the way. The House has been delivering bill after bill that make a lot of sense. Bruce Westerman from Arkansas has done a fantastic job. Congressman Guthrie from Kentucky. A lot of really good work that's gone on over there. And the SPEED Act really dealt with a lot of the judicial reform issues as well, which when you say judicial reform you lose a lot of people there as well. What you're really talking about is not having a bunch of litigation almost built into the process. And people say, 'Well, it's those big bureaucratic federal agencies that are the problem that really cause all this bureaucratic red tape.' And that's actually not the case. The agencies actually work pretty hard, particularly agencies like FERC, actually work pretty hard to try to streamline these processes. The problem is because the judicial reform in there lets anybody and everybody file a suit and stop a project. That gives a lot of leverage to the judicial process. And so putting some judicial reform that puts limits on who can actually file suit and what the remedy is for those suits, that's a really important issue that needs to be taken on. And as well, that bill has some timelines in it. I would tell you that timelines work sometimes, but they are not a cure-all. And the reason that a lot of people that haven't been in the process of actually getting this stuff built don't know is that if you have a shot clock, for instance, that says that an agency has to give you an answer within six months, let's say, that almost always starts when you have a notice of complete application. So in other words, an agency that doesn't want that to happen or feels like they're getting squeezed on time, they just never start the clock. They never give you a notice of complete application, they keep coming up with, 'Well, we want this i dotted or this t crossed.' And so you just never really start the clock. So it has its limitations. And I know people are very well-intended putting those kind of requirements in there, but if you don't have something that independently starts the clock, that causes a problem within those bills. That's a good example of that. But anyway, really good effort. It deals with a lot of the judicial reform issues that need to be dealt with. And I think if we could get language like that passed as part of a larger bill in the Senate, we would be knocking out quite a bit.

Yeah, you know, it's a great question. One of the things that dawns on me in being in the Senate is the huge breadth of issues that a senator has coming at them on a regular basis. And just like in a conversation like this, I'm constantly thinking, 'Oh man, I'm going too deep on this. I'm getting too nerdy on giving this explanation.' You have that issue in great depth around here where people like to, to the degree it really takes hard digging and work, really understanding the details, that's not what this body is all that good at, frankly. They are in spots. I mean, there's some incredible experts in all different fields, and that's great to see. But getting a whole body to understand that, 'Hey, don't just pass a permitting bill and pat yourself on the back and say you got it done. You have to get these details right.' This beast has been growing for a long, long time. And to really take it on effectively, we can't just put some patches on it. And so that I think is the thing that people tend to lean to is just say, 'Just get a bill done to say we got a bill done.' Because if you think about something like permitting, who's going to know in the next two or three years if that was done right or not? It's such a slow, long-term process that it's not going to change gasoline prices tomorrow. So it's not a hot political issue because it's not going to be a snap your finger and immediate gratification kind of an issue. It's a very long-term issue that needs to be dealt with. And so I think that's one of the things that I've learned here is that having the detailed knowledge is great, but you really have to be able to give people examples and compelling examples around how things are not getting done to actually get their attention on the matter. I will tell you one thing that's really been helpful is that the Cabinet, particularly Secretary Wright and Secretary Burgum, have been involved in trying to get some of these projects permitted and they've seen front and center how they actually get stopped. They've seen the 401 water quality certificate get abused. And so it's nice. That's a really good thing when you've been able to drag them alongside some of these permitting battles and they've kind of seen firsthand, and as a result of that they're telling Congress, 'Hey, if you don't fix this part of the problem, don't bother bringing it.' So I think that's really good that they've engaged and their staffs have engaged so heavily in some of those permitting processes.

Yeah, the PERMIT Act does take a pretty good swipe at the 401 water quality certificate and attempts to address that. I think there's some more specific things than that, but it really does try to tackle that. I think it's a nice piece of legislation and a really solid effort to get at that. So that's one of the key issues that PERMIT does, as well as it also takes on some of the no-vacatur language as well, saying that this really relates somewhat to certainty. So I'll give you a great example. This is a fascinating example. When Williams built about three years ago now, I guess, we completed what people didn't think could get done, which was a billion-dollar pipeline moving gas out of Pennsylvania into New Jersey. The project got built. It was a great feat by the permitting teams to work with the states, work with local land owners, work with school boards that were going to benefit from the ad valorem tax, worked with the unions to have them bringing their voice to the table. So really great grassroots effort to get that project permitted. It got permitted. It was up and running. It was running at near full load during the middle of the winter and a federal court came out and vacated the certificate. And said you can no longer operate because the certificate was not issued correctly by FERC because FERC did not look at the greenhouse gas rule. Well, there is not a law about greenhouse gas. They were saying that the study wasn't done adequately to show what the indirect impact of greenhouse gas emissions was associated with the project, even though there wasn't a law requiring that. But a very politicized issue. We were explaining to people, 'Listen, you really need to before somebody pulls this trigger, there are going to be people freezing to death. This pipeline is at full load and it's not making ice cream. It's keeping people's homes warm. And you better know what you're doing here.' Thank goodness FERC stepped in and issued an emergency order and allowed the pipeline to continue to operate. But then think of yourself as the CEO of that company going and telling your board, 'Hey, guess what? We just spent a billion dollars, and it may be even though it's contracted for 20 years, it may be off for not because we may not be able to operate this any longer because nothing we did wrong but because of our permitting processes.' And so the PERMIT bill actually was taking a swipe at that issue and it has no-vacatur language in it saying that a court doesn't have the right to vacate a certificate that's been lawfully issued by an agency.

You know, honestly, I've been blessed in ways I never dreamed of when I was growing up on a ranch in Oklahoma. And I really wouldn't want to sit around and gripe about what other people aren't doing, knowing that this is a huge problem for our country. Like if we can't learn to build out the infrastructure that it takes to power our world and grow it, we will get run over the top of eventually. Just a matter of time. And so to sit back and not use the knowledge I have and the passion I have around this for the benefit of our country, frankly, just felt very selfish. And the governor of Oklahoma, who's been a very principled leader, asked me to do it. He asked me to do it, and he's a hard guy, given what he's sacrificed on his part for the benefit, it was kind of a hard person to tell no, 'I'm just going to be selfish and go improve my golf handicap.' So I think it's not much more complicated than that. I keep telling people, 'Please don't make me be a grumpy old man if we can't get this done and done effectively.' Because I'll be very disappointed if I do spend this time and we don't get something effective done. But good news is we've got such a great team around me that is like the reason they're doing this is they know how dedicated we all are as a team to getting this done. And we've kind of almost have a singular mission around this. And so it's kind of nice to have such clear focus and such great expertise around me as a team. And that's really making a difference, frankly, is just being able to be so singularly focused on this issue. AFP's been going around the country talking about permitting reform, highlighting different sites and projects that either stopped because of the government permitting process or are in danger of closing. And it's so many different resources. So it just seems to me so commonsensical that we want to unleash this ingenuity and the resources that are available, and there's so many private entities that want to do it, and the benefit is so clear to all of us. But maybe it's not commonsensical to everyone, and that's why we're happy you're there in the Senate.

Yeah. Well, thank you. I do think that both sides of the aisle have seen enough that they understand that we really do need to get something done. And I think part of my role here is educating people on the particulars of what we think will work and what won't work. And I would just say I'm pretty encouraged. I have a really strong team around me that is equally motivated on this issue. Some people that have spent a lot of time trying to fix this. And so I'm really thankful to have such a dedicated and strong team on the topic. And we have the benefit of being just very narrowly focused on this issue. No campaign to run, no political ambitions beyond this. And so, frankly, it's pretty liberating to have the luxury of being focused on this singular issue, and I remain hopeful that we can make a difference.

Thank you, David. Appreciate it.