R Street Institute
Analysis

BAAJA Blast Part 2: What Does Permitting Reform Mean for the Environment?

by Jordan Nader, Tom Opdyke
Oct 30, 2026
Print
issues: Electricity Policy, Energy and Environment, Federal Government Affairs, Permitting Reform

Recently, we discussed aspects of the Bipartisan American Affordability and Jobs Act of 2026 (BAAJA) related to the Senate Energy and Natural Resources Committee. We covered how the creation of categorical exclusions within the National Environmental Policy Act of 1969 (NEPA) for reconductoring transmission lines and upgrades to pre-existing natural gas pipelines was an appropriate and efficient way forward for projects that had already satisfied NEPA and other substantive environmental laws.

We also discussed the role of local transmission expansion in making electricity more affordable. This included examining how the proposed pathway for the Federal Energy Regulatory Commission (FERC) to review and levy penalties is a balanced measure for system expansion that is not subject to competition.

Finally, we laid out our concerns with the ratepayer protection portions of the proposed bill that direct FERC to revise the 1994 Transmission Pricing Policy Statement, which would require data centers to pay both the incremental direct costs of their connecting to the transmission system and the existing embedded transmission pricing.

Ultimately, we believe that, despite our noted reservations, BAAJA as a whole is a product of serious negotiation between political parties and committees that will benefit the American people and allow electric generation to compete on a level playing field.

Now for Part 2.

The aspects of BAAJA that fall within the bailiwick of the Senate Environment and Public Works Committee are four primary areas: NEPA, the Clean Water Act (CWA), the Endangered Species Act (ESA), and certain modifications that will increase the certainty of permits once granted. Let’s dive in.

What are the impacts to NEPA?

First, what is NEPA? NEPA’s purpose, first spelled out in 1969, is to “encourage productive and enjoyable harmony between man and his environment; to promote efforts which will prevent or eliminate damage to the environment and biosphere and stimulate the health and welfare of man; to enrich the understanding of the ecological systems and natural resources important to the Nation; and to establish a Council on Environmental Quality.”

In practice, NEPA created the process by which federal agencies evaluate, prior to acting, whether their actions will impact the environment. Maybe the Moon landing gave Congress a stronger sense of unity that year since the law passed 372-15 in the House and unanimously in the Senate.

That level of cohesion suggests there was broad public support for its goals.  But as the old saying goes, “the road to hell is paved with good intentions,” and so it is with NEPA.

NEPA’s process involves first evaluating whether the federal action is subject to a categorical exclusion, which would bypass NEPA’s regulations. (For instance, such an exclusion under BAAJA would be the reconductoring of transmission lines and capacity expansion of pipelines within existing rights-of-way we highlighted in Part 1). If the environmental harms are significant enough to exceed categorical exclusion, then an environmental assessment (EA) is prepared to determine if the federal action is so severe that an environmental impact statement (EIS) shall be drafted. Seems simple enough. However, R Street previously found that when projects required an EIS, the whole process took on average 4.5 years to complete, with 25% of all EIS taking more than 6 years and 9.5% of projects waiting over 10 years for approval.

Ostensibly the point of NEPA is to steward the environment for the next generation, and if we accept that development of electric transmission lines and non-fossil fuel generation will benefit the environment, we might expect those projects to be a small percentage of total EAs or EIS in front of the Department of Energy (DOE). Yet, in 2021, 42% of projects under consideration were transmission, clean energy, or environmental, while only 15% were fossil fuel related. Similar trends were identified at the Bureau of Land Management (BLM). In other words, even clean energy projects have been delayed because of NEPA.

This has caused a ripple effect that inevitably distorts the market for where and how projects are built. A 2026 market analysis from CRUX found that over 80% of respondents who are active in solar and wind development (N=50) actively avoided sites and locations that could trigger federal permitting review under NEPA or the substantive environmental laws. This data suggests that renewable projects that have triggered NEPA are more common than fossil projects, and that the universe of projects that could require federal review is likely higher, but renewable developers are self-selecting out of sites that would require federal review.

How then does BAAJA propose to solve this? First, it defines in the law that NEPA is a procedure to be followed and that the outcome is an informational document for consideration in agency decision-making. Second, it narrows the analysis within an EIS by eliminating consideration of alternative ways to carry out projects that do not meet the project’s statement of purpose and need. Supporters of this change argue that alternatives outside of the sponsor’s scope are those that wouldn’t be constructed anyway—and thus considering them is a wasted exercise. By constraining considerations to purpose and need, this reform should provide certainty in litigation, making it faster and easier to assess permit requests.

BAAJA also defines certain dates after which new research or information that is published will not be considered in order to reduce delays. In addition, the bill creates clear deadlines for action by agencies to foreclose the option of intentionally delaying a project or type of project because it doesn’t align with the politics of any given administration. It also standardizes the public comment period for all agencies and places work and travel restrictions on the Chief Environmental Review and Permitting Officer if deadlines are not met. These are not all the modifications included in the text, but these all underscore the focus on expediting reviews in order to make quicker decisions.

Beyond this, the NEPA modifications include changes standardizing when a third party can sue for harm and adjusting the statute of limitations for appealing outcomes of the federal review process. On the issue of standing, the reforms would require anyone who would sue after a decision has been made by the agency to have raised the issue during the public comment period in sufficient detail that the agency would be aware of the particular issue prior to judicial review being sought. They must also allege how the project represents “actual or imminent injury in fact amounting to a direct harm.” As to timing for appeals, current law utilizes the Administrative Procedure Act (APA) statute of limitations, which is six years. BAAJA would modify NEPA to reduce the statute to 150 days from a decision being made public. This will provide project developers certainty that they have cleared sufficient hurdles that they can proceed with lower risks.

But does all this make for good policy? Due to the many components of BAAJA, modeling potential outcomes is challenging. However, the Center on Global Energy Policy at Columbia did identify how the bill will save time for transmission, solar, geothermal, offshore wind, gas pipelines, or onshore wind permits. They estimate that just from the defined deadlines, projects would save up to 7 months depending on the type. When they accounted for delays and judicial challenges that would be mitigated, these estimates grew to savings of 20 to 96 months. These are real savings in terms of the costs of financing large projects, which will go a long way to improve energy affordability, not to mention allowing the public to see the benefits clearly and quickly.

Changes to the Clean Water Act

The Clean Water Act originated in 1948 with the Federal Water Pollution Control Act, and was completely rewritten in 1972 as the Federal Water Pollution Control Act Amendments of 1972. The 1972 vote was 366 to 11 in the House and 74 to 0 in the Senate. It was then vetoed by President Nixon, but overridden 247 to 23 in the House and 52 to 12 in the Senate. Some examples that led to its passage were the Merrimack River in New Hampshire changing colors depending on the nearby textile mills’ discharge on a given day or the Cuyahoga River in Cleveland catching on fire due to oily debris routinely discharged into the river. By creating legal standards to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters,” the legislation did increase costs, but on businesses that were using the waterways as a primary disposal method. 

CWA has turned the tide on point source pollution and improved water quality in our streams and rivers. But under Section 401, states have increasingly begun to regulate water crossings for environmental impacts beyond water quality concerns. Current law gives states broad deference in their consideration of Section 401 permit requests. For example, New York has included in their review whether the end use combustion of natural gas will contribute to climate change as a method of preventing and blocking construction of pipelines through New York State to the rest of New England. This approach therefore creates opportunities for individual states to veto multi-state infrastructure projects, which then increases costs and ties projects up in litigation. The proposed bill would limit state review of Section 401 permits to “water quality requirements” so that the direct impacts of a pipeline or transmission line can be addressed without second- or third-order effects being considered.

Another proposed change within the bill is that National Pollutant Discharge Elimination System (NPDES) permits would be extended to a maximum 10-year renewal cycle instead of the current 5-year cycle. This would improve the regulatory efficiency by lowering costs associated with renewals while still maintaining the rigorous standards in the CWA. Similar to several other titles within BAAJA, a 150-day limitation on seeking judicial review was proposed as a means to avoid litigation being drawn out and increasing costs unnecessarily. This would provide urgency to parties who would appeal, as well as create certainty for developers to know the precise limits on injunctions. It is good policy to resolve litigation and either definitively end or move forward with infrastructure projects.

Finally, as has been proposed in other sections of BAAJA, the courts will only be given the opportunity to remand without vacatur. What is vacatur, you might ask? It is the Latin for “it is vacated” and has previously been a pathway by which the courts could invalidate previously issued permits that contained errors, but were overall not improper to issue. Because of this, an agency acting in good faith could produce an EIS that was thousands of pages detailing key aspects of a project, like environmental and water impacts and corresponding ways to mitigate those impacts. But, due to a small oversight, the entire process would have to start again at square one due to vacatur. Absent imminent and substantial danger, it is reasonable to allow the prior work to stand while the error is corrected by the agency, and thus remanding without vacatur is a good improvement over current practice.

Changes to the Endangered Species Act

The Endangered Species Act of 1973 was enacted to prevent extinction and to recover species to the point where the law’s protections were no longer required. Passed 390 to 12 in the House and 92 to 0 in the Senate, ESA is administered by the US Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS). The law requires that the agencies determine whether a species is endangered or threatened, and if found to be, it must be protected under ESA. The habitat of protected species must also be protected. It also stipulates that endangered species are illegal to take (kill, harm, or harass), while threatened species are not statutorily protected in the same way. Section 7 of ESA states that federal agencies cannot jeopardize listed species’ existence or their critical habitat, which directly affects potential projects’ ability to get a permit if their infrastructure would harm either. One important change to the 1973 passage was the inclusion of plant species in eligibility for protection.

This section of BAAJA proposes to:

Whew. Feel free to stop and catch your breath.

Are there risks with the ESA proposals? Yes. The definition of “best scientific and commercial data” has caused concern that it would allow the inclusion of economic impacts into the determination of biological listings. Historically, this has been barred, and it bears some consideration as to whether inclusion of economic data is prudent. But it may be worth consideration if a pipeline or a transmission line results in more efficient dispatch of renewable generation or the closure of a coal plant.

The provision allowing for states to set up their own Section 7 programs has created worries that you either end up with lots of disparate treatment due to blue states overly applying the law and red states underapplying it when animals and plants do not recognize our state boundaries. And, while there is some vocal consternation about the shortening of timelines, the standards are not being changed. So, a project that is illegal today would still be illegal after BAAJA’s passage. The changes proposed to ESA are measured, and perhaps the state programs might bear the most risk of increasing regulatory lag instead of improving efficiency.

Project Certainty

The energy industry in the United States has seen a rise in the politicization of its projects, whether Keystone XL Pipeline, Offshore Wind installations, LNG Export Terminals, or Solar. When federal administrations change, it should not result in a change to the permit or posture of treatment towards projects that have been under development for decades. The primary driver for energy projects should be based upon the economics for the investor, while respecting all appropriate laws and regulations. And if all laws and regulations have been followed, an energy investment should not be slow-walked, delayed, or interfered with based on the whims of an administration.

Title 4 of Division A “Project Certainty” proposes an entirely new law in an attempt to address these issues. It is broken into three sections: 1401 – Maintaining authorizations, 1402 – No Disparate Treatment, and 1403 – Protection from unreasonable delays. Each brings benefits, and there are some concerns that likely will be remedied by technical changes before a vote.

Section 1401 starts by defining a “Federal Authorization or Permit” and then states that, once a project or action has received federal permitting, it shall not be impeded by a federal agency or department unless under certain conditions: the permit holder materially breached the permit or violated applicable laws; the permit was obtained through fraud, concealment, or misrepresentation; there is risk of specific, urgent, substantial, and proximate harm or damage to life, property, national security, or defense based on new information that wasn’t considered previously. It also contains damages if actions are taken by an agency and the courts find they were unwarranted.

The stipulations in this section are a clear (and, in our opinion, welcome) effort to address specific delays under the Trump Administration, such as towards offshore wind projects, as well as a number of wind permits still being held up at the Department of Defense.

There have been some concerns raised about the language potentially obviating the applicability of other existing laws and regulations, such as air permits. The revisions to address this concern could fall under technical modifications—but if they are not, it is unlikely that the courts would read an implication into the law where none is expressly defined. Thus, it is unlikely that a holder of an air permit could simply ignore them after receiving the permits.

Section 1402 creates a standard by which a project developer can sue for disparate treatment in an attempt to recover damages and construct their project. The burden of proof is quite high, as the developer would need to demonstrate a pattern of disparate treatment against similar project types, such as offshore wind or solar. And, even if the developer prevailed at court, they are still on the hook to construct the project as originally permitted. This creates a disincentive for an administration to pursue disparate treatment lest they have to tell the American taxpayer that they now must pay for the construction of a project that was originally backed by private investment. It specifically bars class actions and sets the standards the developer must meet in order to demonstrate the harm.

This language is likely to address situations like the delay to LNG Export Terminal permitting, as well as the wind permits currently held up at the Pentagon. It creates a reasonable stick with which to discipline this Administration and future ones against bad action based on feelings and not the rule of law. Think of it as a collective laying down of arms by both parties and an agreement to allow energy infrastructure to compete on its merits instead of based upon lobbying or favor curried with the party in the White House.

Finally, Section 1403 addresses unreasonable delays and will primarily solve problems for developers surrounding investment uncertainty. It is not cheap to go through permitting, and depending on the balance sheet of the developer, they may have a different tolerance for going through the federal permitting process, even if the federal lands for which the permit is sought are the best for siting their particular energy infrastructure. This is technology neutral and provides a pathway for developers if an agency misses deadlines for projects that don’t require an EA or EIS. Thus again, it creates incentives for agencies to pursue efficiency in approving permits so that projects can know quickly if they are permitted or denied and move along with building or identifying a new location to site their project.

On net, the provisions within Project Certainty appear to be timely and unfortunately necessary due to the political environment in Washington. And while there are valid critiques about definitions in this title, those can be revised in technical edits by the Senate before passage without changing the terms of the entire package that is BAAJA.

Conclusion

BAAJA is an ambitious bill, attempting to solve many problems all at once. It contains risks, some of which may be mitigated prior to passage, and others that may need correction in the 120th Congress. However, based on our review of the bill, the benefits it can provide to speed permitting, create a level playing field, and avoid political or investment uncertainty make it worthy of passage.

Some have proffered an alternative universe where Congress should not pass BAAJA and the new 120th Congress drafts a better piece of legislation that the President will still sign. This is bad advice. Allowing the current permitting scheme to exist even one day longer only serves to slow clean energy deployment and continue to boost projects that make little-to-no economic sense. Plus, we have heard this argument before and, from that, have learned that a new bill won’t materialize overnight, thus putting the country farther behind on the hosts of projects affected by this legislation.

All bills contain unintended consequences, and good legislation will attempt to constrain that, as BAAJA has attempted to do. However, if the 120th or 121st Congress identifies necessary revisions, we will still have a Congress to make those changes and a President to sign the law. On November 9th, the Senate will begin the work of passing BAAJA and, sometime after that, it will go over to the House. There is hard work ahead, but if BAAJA passes all hurdles and becomes a law, it will be time to get to work and build the future of America.