Low-Energy Fridays: The permitting reforms in the debt limit deal are a match made in purgatory
In a classic case of D.C. politics, Congress and the president struck a debt limit deal at the eleventh hour. Notably, the bill raising the debt limit, the Fiscal Responsibility Act (FRA), includes some major reforms to federal permitting under the National Environmental Policy Act (NEPA)—a topic we’ve written on quite a bit at R Street. Overall, the deal contains some significant improvements to the permitting process and is a step in the right direction. But several key provisions are notably absent, and its incompleteness is likely to keep permitting a live issue under this Congress.
The FRA contains some key changes to NEPA and expedites approval for the Mountain Valley Pipeline (MVP). The MVP isn’t a focus of this piece, but it is important to remember that any sort of policy approach in which a project requires approval under must-pass legislation is not a good one. We should avoid having a permitting system where some projects can get blessed by Congress and others are left to fend for themselves. But the more impactful and permanent changes will relate to NEPA.
Regarding NEPA, the bill sets a deadline for agencies preparing permitting documents. Environmental assessments, which determine if more environmental review is needed, are now capped at one year. And environmental impact statements, which are required for final approval of large infrastructure and energy projects, are now supposed to take no longer than two years (the average is 4.7 years).
If an agency fails to meet these deadlines, project sponsors can take the agency to court, and the agency may have to produce documents explaining why the delays happened. This may seem like a minor issue, but it could be significant because some agencies take much longer to permit than others, and this new system could spotlight troublesome parts of the process that may require further reform.
The NEPA reforms also allow permitting documentation to rely on documents prepared for past assessments, and allows agencies to use categorical exclusions (CXs) that were prepared by other agencies (which could end the problem of some energy types not getting CXs even when they have the same environmental footprint as other types that already secured them).
Project sponsors are also able to support agencies in environmental review, which may help speed things along. Additionally, the FRA narrows NEPA’s definitions to avoid vague interpretations of “reasonable alternatives” and “significant federal action,” which will trim the scope of NEPA a bit. And as a data nerd, my personal favorite is that the government will have to explore the possibility of creating an “E-NEPA data portal” as a one-stop shop for NEPA communications, documents and data sharing, which will hopefully make the permitting process more transparent.
The big things missing from the reform are a shorter statute of limitations for how quickly government agencies can get sued for their permitting decisions as well as the requirement that those bringing the suit must have submitted comments to agencies during the permitting process. These were big components of earlier versions of the BUILDER Act, and ones that R Street has noted would be among the most important, given that litigation is a major reason for project delays.
Interestingly, the FRA’s permitting provisions also lack improvements to the community-engagement elements of the permitting process and to electricity transmission permitting. Both have been permitting priorities for Democrats. The only nod to transmission is a mandate for a study to explore the possibility of regional transmission networks to enable the transfer of electricity to neighboring networks, which is something that R Street has proposed.
Given that the deal mostly kept the green energy subsidies in the Inflation Reduction Act (IRA) intact, one could speculate that President Joe Biden was more focused on preserving IRA subsidies than getting Democrat permitting priorities through. But this also implies that Democrats may still have an appetite for additional reform.
Overall, the permitting aspects of the debt deal are a match made in purgatory. Neither side really seems to win or lose big, but the deal represents progress. We also can’t ignore the context: nobody expected much from the debt deal to begin with, and Republicans managed to get a good chunk of their permitting priorities through—along with some substantial spending caps. It may not be a grand slam, but it’s a step in the right direction. And with so many permitting reform ideas still left on the table, the topic isn’t going anywhere yet.