Low-Energy Fridays: Where is the goldilocks zone on permitting reform?

The Lower Energy Costs Act (H.R. 1), House Republicans’ major energy and permitting package, contains some of the largest reforms to federal permitting processes ever introduced. The biggest permitting provisions would cut the statute of limitations for challenges to National Environmental Policy Act (NEPA) decisions from six years to 120 days, require plaintiffs to have filed comments during the public comment period, and introduce a slew of clarifications that would allow permitting agencies to rely on existing environmental assessments and permits to improve or alter existing facilities. That said, some critics are concerned this would barely make a dent in the challenges of permitting (mostly clean) energy projects.

Permitting any project at the federal level is extremely complex, primarily due to numerous regulations at both the federal and state level. The Permitting Institute has a lovely flowchart that shows how aneurysm-inducing the process is. R Street’s research has noted that clean energy, which represents the bulk of new construction, is the biggest loser in an overly onerous permitting process.

In the past, R Street has noted that a big problem with permitting is litigation risk, and many of H.R. 1’s permitting-specific proposals overlap with our recommendations to reduce that risk without altering any environmental statutes. Simply, the proposed reforms give agencies clarity on what to provide in permitting documents without rolling back environmental protections. But that delicate dance also creates a problem: NEPA isn’t the only barrier major energy projects must contend with, and some skeptics are concerned that H.R. 1 doesn’t go far enough.

An alternative permitting proposal was put forward by the Aspen Institute in 2021, which focused heavily on either outright automatic approval or at least accelerated approval for projects that are expected to have net environmental benefits. For those in industries affected by permitting delays, this is clearly a preferable approach to reform, and from a policy perspective, the net outcomes would likely be positive.

But it is also worth looking at the opposite side of the coin. While industry may think H.R. 1 is milquetoast, it has drawn political opposition and a more aggressive proposal may not have been viable. Senate Majority Leader Chuck Schumer (D-N.Y.) said, “The package is a wish list for Big Oil, gutting important environmental safeguards on fossil fuel projects.” Granted, that may be more of a political statement than a policy one, especially considering the similarities between H.R. 1 and Democrats’ permitting proposal, but it raises an important question of where the red lines are on permitting reform.

Sen. Schumer also expressed optimism at the prospect of the permitting components of H.R. 1, opening the door for a bipartisan dialogue, which is a credit to House Republicans’ strategy. Perhaps they are in the goldilocks zone, offering a proposal that can still get buy-in from Democrats by keeping the policies narrowly focused on NEPA litigation risks.

But the negotiations are not over, and if senators feel that H.R. 1 does not go far enough, they will soon have an opportunity to put forward their own ideas. Ultimately, H.R. 1 is just an opening salvo and unlikely to please everyone, but the momentum on both sides of the aisle to at least make progress on permitting reform shouldn’t be discounted. It will soon be up to the Senate if they want to steer permitting reform into more contentious waters, but at the end of the day, the challenges remind us that the work will not end after H.R. 1.