Ben Schifman is a Senior Technology Fellow at the Institute for Progress, where he focuses on emerging technology policy. His interests include the connection between AI policy and energy, infrastructure, and “physical world” regulatory frameworks.

Previously, Ben served as an Attorney-Adviser at the U.S. Department of the Interior’s Office of the Solicitor, where he advised on energy law and policy. Before that he worked as a Trial Attorney for the United States Department of Justice, Environment and Natural Resources Division where he litigated challenges to infrastructure projects and served as the Department’s National Environmental Policy Act (NEPA) coordinator.

In 2021, after investing tens of millions of dollars and a decade of development, Ormat Technologies received federal approval to build the Dixie Meadows Geothermal Project: a zero-emission, baseload power project located on Bureau of Land Management (BLM) land. Two days before Ormat planned to break ground, a federal judge halted the project; it remains unfinished to this day.

The lawsuit challenging the project alleged (among other things) that the environmental review under the National Environmental Policy Act (NEPA) was not sufficient. From the bench, the Judge was unusually candid about whether he thought the Plaintiffs were likely to prevail on this claim, stating: “I really can’t say as I sit here whether there is a strong likelihood of success on the merits.” He issued a preliminary injunction — stopping the project — regardless.

The Ninth Circuit ultimately stayed the injunction, and Ormat began construction. But the “litigation doom loop” — a cycle of agency review, litigation, judicial remedy, and then more review — had begun. Following the injunction, the Plaintiffs sought an emergency endangered species listing for the Dixie Valley toad in April 2022, which created an entirely new permitting obstacle. Ormat again halted construction, and then downsized the facility to 20% of its original capacity. In 2023 BLM began a supplemental NEPA review. As of late 2025, more than four years after BLM’s original approval, and a decade after Ormat’s permit application, the project remains unbuilt. Ormat is now suing the Fish and Wildlife Service over the toad’s listing, while BLM has attempted to fast-track the project under emergency permitting procedures — which have themselves drawn threats of new litigation.

A single preliminary injunction, issued by a judge who openly doubted the plaintiffs’ ultimate likelihood of success in their lawsuit, triggered a chain of events that may have effectively killed a zero-carbon energy project bringing much needed 24-7 baseload power to the grid — all before any court determined that BLM actually violated the law.

This is an example of the litigation doom loop. And because the SPEED Act, the most significant NEPA reform effort in decades, does not address preliminary injunctions, it doesn’t fully solve it — even in NEPA cases.

What the SPEED Act changes — and what it doesn’t

The SPEED Act’s most consequential provision concerns what happens when a court finds that an agency violated NEPA. As I describe in a longer piece, under current law courts have broad discretion when fashioning remedies for NEPA violations: they can leave the challenged permit in place while the agency corrects the NEPA error (remand); void the permit (vacatur); or issue a specific prohibition or direction (an injunction), to halt some or all of the permitted activity.1

The SPEED Act eliminates that discretion. Under the Act, “the only remedy the court may order . . . is to remand, without vacatur or injunction, the final agency action to the agency.” The agency gets 180 days to fix the problem, during which the project can continue. I have written about how this is not the only possible solution at the final remedies stage, and that it entails significant tradeoffs with NEPA’s goals of informed decision-making.

Regardless, this significant (and controversial) change does not address the full scope of the problem that litigation can pose to federal infrastructure projects. The SPEED Act applies exclusively to final judgments. But as the Dixie Meadows Project painfully demonstrated, projects can be halted by preliminary injunctions long before final judgment.

The blind spot: preliminary injunctions

A preliminary injunction is an emergency court order that is intended to preserve the status quo while litigation proceeds.2 In NEPA cases, plaintiffs often seek preliminary injunctions to stop work while a court decides whether the agency actually failed to conduct sufficient environmental review.

A party seeking a preliminary injunction must establish that: (1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in its favor, and (4) an injunction is in the public interest.3

The Supreme Court has emphasized that preliminary injunctions are meant to be “extraordinary remedies never awarded as of right.”4 But they are not uncommon; courts retain significant discretion in applying them as indeed the decision in Dixie Meadows demonstrates. The project is just one of many delayed or defeated by litigation at this stage of the permitting process.

Judicial review, on SPEED

The SPEED Act has no provisions directly addressing preliminary injunctions. However, the Act could be thought to indirectly limit their effects through its strict litigation deadlines. SPEED requires plaintiffs to sue within 150 days; directs district courts to resolve NEPA claims within 180 days of the administrative record being lodged; and gives appellate courts another 180 days to hear any appeal. If courts actually followed these deadlines, a preliminary injunction that lasted through the resolution of the case on appeal would be in force for 16 months, as demonstrated in the table below.

But will courts comply with these deadlines? History suggests they likely will not.

Congress has tried mandating judicial deadlines before. The Speedy Trial Act generally requires criminal trials to begin within 70 days of indictment — yet courts routinely grant continuances.5 The Antiterrorism and Effective Death Penalty Act (AEDPA) imposed timelines for habeas corpus decisions; courts regularly exceed them.6 The Supreme Court has characterized such statutory deadlines “directives” rather than rigid jurisdictional limits.7

Federal judges have existing dockets and competing priorities — including criminal cases where there is not only a statutory but also a constitutional right to a speedy trial. Judges also have limited resources. District court filings have grown by 30% since 1990 but judgeships increased by only 4% in that time. The number of civil cases pending more than three years has risen 346% in the last 20 years.

Under these circumstances, Congressional deadlines without accompanying resources for the judiciary are unlikely to make a difference. Federal judges have lifetime tenure and Congress has never impeached a federal judge over missed deadlines (indeed, only 15 judges have ever been impeached). Ultimately, nothing in the SPEED Act guarantees courts will adhere to its deadlines. And if they don’t, a preliminary injunction granted at the start of a lawsuit could last for months — or even years.8

Reasonable limits on preliminary injunctions

Preliminary injunctions are an important judicial remedy and a longstanding part of our legal system. Eliminating preliminary injunctive relief — as SPEED does for injunctive relief at the conclusion of a case — is unwise: injunctions are needed in extraordinary cases to prevent irreparable harm resulting from genuine legal errors.

However, Congress should adjust the traditional equitable factors to ensure that preliminary injunctions are brought and resolved quickly, and only in cases where plaintiffs have a strong showing of success on the merits. In the Dixie Meadows case the Judge was unusually candid, admitting that he “really [couldn’t] say” whether the plaintiffs were likely to succeed. But he enjoined the project anyway. Strengthening the traditional equitable injunction factors can ensure the preliminary injunctions serve their intended function — preventing truly irreparable harm during the pendency of a lawsuit in which a plaintiff is likely to ultimately prevail — while limiting those brought for the purpose of delay, disruption, or where the procedural error would not have changed the outcome.

Here are some complementary reforms Congress should consider, which I describe in more detail in a longer piece.

1. Prompt filing requirement

Preliminary injunctions are especially damaging when a plaintiff waits months or years after the challenged decision is made — often after construction has begun — for the purpose of maximizing disruption or leverage.

Existing case law generally recognizes that a plaintiff’s delay in seeking emergency relief undermines a claim of irreparable harm. For instance, in Quince Orchard Valley Citizens Association v. Hodel, the Fourth Circuit held that a plaintiff’s “unexcused delay” in seeking a preliminary injunction is strong evidence that the alleged harm is not actually “irreparable.”9 The logic is intuitive: if an injury is truly imminent and irreparable, a diligent plaintiff would not sit on their rights for months.

But because “promptness” is currently just one of many discretionary factors courts weigh, it hasn’t reliably deterred strategic delay. Congress should codify a rebuttable presumption that any motion for a preliminary injunction filed more than 30 days after the challenged final agency action carries a presumption that the harm is not irreparable. Plaintiffs could rebut this presumption by showing that their delay was not strategic but rather caused by inadequate public notice or significant new information that was not reasonably discoverable within the 30-day window.

This would turn a discretionary judicial factor into a clear legal deadline, motivating opponents to bring challenges forward immediately so they can be resolved more promptly and with less disruption.

2. Multiplicative merit standard

Under current law, to obtain a preliminary injunction, a plaintiff must show a “likelihood of success on the merits.” But courts often evaluate this factor by looking at the plaintiff’s strongest single argument — even when the plaintiff must clear several independent legal hurdles to ultimately prevail.10

The Fourth Circuit identified this problem in the 2025 decision American Federation of Teachers v. Bessent.11 Judge Richardson, writing for the majority, argued that when a plaintiff must prevail on several independent, dispositive issues — such as establishing standing, proving final agency action, and winning on the merits — the overall likelihood of success is not the probability of winning the strongest argument. It is the product of the probabilities of succeeding on every dispositive issue.

As the court illustrated, even if a plaintiff is a 3:1 favorite (meaning a 75% chance) on five distinct legal hurdles, the probability of running the table on all five is only about 24%. A plaintiff who is likely to win any single issue can still be a 3:1 underdog in the case overall.

Congress should codify this framework, requiring courts to determine the cumulative probability of success across all independent, dispositive issues and issue written findings specifying the estimated probability assigned to each. This ensures that preliminary injunctions — “extraordinary remedies never awarded as of right” — are reserved for cases where the plaintiff is truly likely to prevail on the merits of the case, not just on a single high-profile merits issue the court may never reach.

3. Prejudicial error standard for preliminary injunctions

Under current law, plaintiffs can obtain injunctions to halt work based on procedural errors that likely wouldn’t change the outcome. If an environmental assessment omitted discussion of an issue but the agency would have reached the same decision anyway, what purpose is served by a preliminary injunction halting the project?

Congress should require plaintiffs seeking preliminary injunctions in NEPA cases to demonstrate not just a likelihood of success in showing a NEPA violation, but a likelihood of success in showing the violation was prejudicial — meaning there’s a reasonable possibility the error affected the agency’s substantive decision.

Requiring plaintiffs to show prejudice is consistent with the Administrative Procedure Act and with recent dicta from the Supreme Court in the recent Seven County Infrastructure Coalition case that I have written about here.12 This reform would preserve preliminary relief for cases where the NEPA violation genuinely calls the agency’s decision into question.

Reforming preliminary injunctions in NEPA cases isn’t enough

The reforms proposed above would help prevent issuance of preliminary injunctions that are brought in cases where a plaintiff is unlikely to prevail or where irreparable harm is not likely. But reforming preliminary injunction standards in NEPA cases alone is not sufficient to break the “doom loop” that limits America’s ability to build infrastructure. Most major infrastructure projects that are subject to litigation are challenged under multiple statutes simultaneously: NEPA alongside the Endangered Species Act, the Clean Water Act, the National Historic Preservation Act, and others. The Dixie Meadows lawsuit — which involved numerous claims aside from those brought under NEPA — illustrates this dynamic.

NEPA-specific reforms like the SPEED Act cannot reach injunctions grounded in other federal statutes, and real-world litigation rarely presents pure NEPA claims. Still, NEPA is among the most frequently litigated permitting statutes, and it is the claim most commonly deployed for strategic delay precisely because its procedural nature makes violations easy to allege and difficult to disprove quickly. Reforming preliminary injunctive relief in NEPA cases would narrow the attack surface available to litigants pursuing delay, and provide a blueprint for similar reforms to remedies available through other laws.

While permitting reform efforts like the SPEED Act are wise to focus on final judgments, they should not be blind to preliminary remedies. Imposing reasonable limits at each stage can ensure that NEPA litigation serves its intended purpose — allowing agencies and the public to be informed about the environmental impacts of federal decisions — rather than functioning as a mechanism to delay the infrastructure our country needs to meet the challenges of the coming century.

Ben Schifman is a Senior Fellow at the Institute for Progress, where he focuses on energy, infrastructure, and AI policy. He previously served as an attorney at the Department of the Interior and the Department of Justice.

In this episode, we discuss:

• The FREEDOM Act, Congressman Harder’s new bipartisan permitting certainty bill

• Permitting certainty design choices: contractors, de-risking programs, and more

• The Build America Caucus and its upcoming policy initiatives

Thomas Hochman: Welcome to Right of Way, a podcast about energy policy, energy politics, and above all the upcoming permitting reform negotiations. I’m Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, and I’m joined by Pavan Venkatakrishnan, a policy advisor here at FAI.

Since the summer of last year, a major question has hung over permitting talks: Is it possible to limit the ability of the executive branch to weaponize the permitting process?

It’s not the first time policymakers have asked this question. Indeed, in the middle of the Biden administration, Senator Manchin’s team drafted up an early version of what is now known as “permitting certainty” language in response to the president’s treatment of oil and gas.

But the concept of permitting certainty is now more important than ever. As the partisan pendulum has swung back in the Republican direction, the current administration has leveraged delays and a variety of executive tools to halt, slow, and cancel wind and solar projects across the country. In this environment, key Democrats have announced that they will not engage or advance permitting reform talks without legislation to curb these abuses.

So over the last few months, a growing industry coalition – from wind and solar to oil and gas to manufacturers and hyperscalers – has called for greater permitting certainty. And now, we may have a legislative answer in The FREEDOM Act.

Congressman Josh Harder, a California Democrat who heads up the Build America Caucus, is leading a bipartisan group of Congressmen in introducing the bill.

And on that note, we’re very lucky to have Right-of-Way’s first member of Congress joining us today to discuss all of this: Congressman Josh Harder. Congressman, thanks so much for joining us.

Congressman Harder: Thanks for having me.

Pavan: So to begin, Congressman: At a high level, what was the inspiration for this bill? What issues does the FREEDOM Act try to address?

Congressman Harder: This bill makes it a lot harder for politics to kill energy projects. Over the past couple of administrations, we’ve seen time and time again that presidents and administrations want to overwhelm good projects.

Republicans were frustrated by what they saw the Obama administration do to the Keystone Pipeline, and now Democrats are pretty upset with what they’re seeing the Trump administration do to wind and solar projects – trying to cancel projects that have already been approved, trying to block projects that are really necessary, and heaping more red tape on projects that would be a major value add.

And so what this bill is meant to do is cut through all of that and try to make it easier to get shovels in the ground, lower our energy prices, and ultimately help us be a more pro-growth, prosperous, successful country.

Pavan: So the FREEDOM Act has a very bipartisan coalition behind it – a number of Democrats and Republicans alike on this bill. How did that coalition come together, and what does it tell us about where there’s common ground on permitting?

Congressman Harder: It tells us that nobody likes having their projects get canceled. I think that both parties have experienced the frustration of watching administrations weaponize permitting against their preferred energy sources. Republicans want to know that a future Democratic president can’t use these tools against oil and gas. Democrats are obviously seeing this right now with wind and solar being canceled.

And I also think that this is a reflection of the broader abundance coalition that’s emerging – Build America is really trying to unite pro-growth members of the Democratic and Republican parties and folks who want to see things get built regardless of partisan affiliation. We’ve seen each side go after different energy sources. All it’s done is spike prices, spike uncertainty, and ultimately make America less competitive. And so we can’t keep permitting in this environment only on one side or the other. We’ve got to be able to have this bipartisan approach if we’re going to get it actually solved.

Thomas: Makes sense. When we talk about permitting certainty, we talk about permitting abuses as a one-way ratchet, where every single administration pushes out the boundaries a little bit further in treatment of disfavored energy sources, and then the next administration will just push it out a little bit further.

To your point, the FREEDOM Act is a tech-neutral bill – the permitting certainty language applies to all technologies equally. Can you speak a little bit to that structure? You got at it a little bit, but would love to hear a bit more.

Congressman Harder: This is all about a level playing field. We shouldn’t let politicians pick their preferred energy sources. We should let the market figure that out, especially because there’s so much really fantastic research and development going into energy products that aren’t necessarily hitting the mainstream yet. Think about all the great growth that we’ve seen in geothermal, all this exciting new nuclear development that we hope is able to hit the mainstream, which is also a big part of some of the permitting discussions that we’ve had.

And so the job of Congress and any administration should be creating that competitive enabling environment to let any form of energy succeed or fail based on its own merits. Whenever I talk to developers, they tell me the one thing they need is permitting certainty. Projects are getting held up across the board under months, years, decades of administrative reviews, only to see political vendettas snatch defeat from the jaws of victory. Making sure that level playing field allows every energy project to compete, I think, is ultimately going to help benefit everybody.

Thomas: So this is a big bill. If I remember correctly, it’s upwards of 70 pages.

Congressman Harder: I don’t know if that’s a big bill in Congress anymore. I mean, we’ve got bills that are thousands of pages.

Thomas: That’s true. I guess it’s an amendment to the Energy Act of 2020, which I think was thousands of pages, to your point. So I take it back.

But let’s talk a bit about the specifics here. One of the more novel provisions in the bill is pairing deadlines with a court-approved contractor process. This provision says that once a deadline is missed – that’s three months for routine authorizations like categorical exclusions and road permits, a year for complex authorizations like NEPA reviews and Endangered Species Act reviews – the developer can go to court and get a court-approved contractor to complete the permitting process. Can you walk us through how that interacts with the bill’s deadlines and why the FREEDOM Act opts for that structure?

Congressman Harder: The North Star here is making sure that projects can stay on time. And so the problem we’re trying to solve is agency inaction. There’s a lot of reasons for missed deadlines. But what this act does is set clear deadlines for administrative approval, empowering developers to get what they need when agencies miss those deadlines.

What we don’t want is the approval process getting skipped altogether, which is another way to think about this. You can imagine by-right development where if the agency can’t make up its mind or can’t actually hit a deadline, a project just goes through. We think that would cause other big issues, especially when you’re dealing with the federal government and some of the size of these energy projects.

And so what we opted for instead is a bit of a middle ground where there’s some accountability, there’s some consequences if an agency misses its deadline. What we’re doing here is authorizing qualified, court-approved contractors to complete some of that administrative work that the agencies can’t do on their own – because the agencies are telling us they’re swamped, they can’t do it. The developers are telling us this work is pretty simple, we have folks that do it already. Third-party contractors are already quite common in energy development. They’re already preparing environmental analysis for these federal permits. So hopefully allowing them to do some of this work is going to both save agencies time without actually compromising the approval process that we want to make sure still has that credibility, so folks are being kept protected.

Thomas: Right, you don’t want a situation where the consequence for the agency missing a deadline for a Clean Air Act permit is that there is no Clean Air Act permitting at all. So it makes sense how this helps you get around that issue.

Pavan: The bill also creates an insurance-style de-risking program wherein developers pay premiums and can file a claim if the government breaks the rules – unreasonable delay, or pulling or materially altering a permit in an illegal or unlawful manner. Can you explain why that structure was chosen?

Congressman Harder: This is travel insurance for the energy industry. If you book a flight and it gets canceled, the airline pays the price. New energy projects need that same kind of assurance that they’re not going to have the rug pulled out from under them if the federal government misses a paperwork deadline. These projects require enormous upfront capital investment – billions of dollars in many cases for large projects.

And so what this de-risking insurance is about is making it clear: if the government revokes a permit, if it misses a deadline, there’s some path to compensation. And hopefully by putting some skin in the game for the government – not a subsidy, because developers are paying into this fund – we’re going to see those incentives be more aligned towards speed.

Thomas: Makes perfect sense. So we’ve talked a little bit about the prospective stuff – all the projects that are currently in the permitting pipeline or about to begin the permitting pipeline. But there’s also a retrospective piece here: This bill has language limiting the government’s ability to issue stop work orders and to revoke permits for projects that are already substantially permitted. Can you speak to that?

Congressman Harder: This is about stopping the referee from changing the rules after the game has already been played. Imagine if after the game, the referee changed the rulebook and said actually that game went from being 2-0 to 10-0, or to 0-10. We have to make sure that there is a full permitting process and that when construction begins, the confidence from the market is that the rug isn’t going to be pulled out from under them.

If you just look at what’s going on with the offshore wind industry right now – these fights with the current administration trying to revoke approvals – one of these projects is 87 percent built already. So this bill allows agencies to halt projects only in extreme circumstances where there’s clear immediate safety issues or if the permit was actually illegal. We want to make sure that safety net continues and raises the bar significantly. The idea here is making sure that when you actually put a shovel in the ground, you’re going to be able to continue to build that project and the community and taxpayers are going to reap those benefits.

Pavan: Got it. So just stepping back here for a moment: the issue of the day politically is affordability. We’ve heard it mentioned in many recent gubernatorial campaigns by Democrats and Republicans alike, and in Congress. How do you look at the ways in which the FREEDOM Act and permitting reform more broadly interact with the affordability issue?

Congressman Harder: The best way to lower energy prices is to finish more energy projects. That feels like pretty common sense. If you look at some of the projects that have been canceled – you think of Esmeralda 7 in Nevada that would have produced enough energy to power two million homes – there are projects like that all across the country that are getting canceled.

And that’s not even counting all the projects that haven’t even started because of just how tense this political vendetta against solar and wind has gotten. Ultimately, if you care about energy prices, if you care about making life more affordable, then we have to stop blocking the development of some of our quickest-to-deploy resources at a time when demand is skyrocketing. There are folks in my district in Stockton that are paying more for electricity to keep the lights on and the AC on in the summer than they’re paying in rent or their mortgage every single month. That’s absolutely unacceptable, and we need to do better.

Thomas: Yeah, it’s remarkable. Particularly in regulated markets, the costs of permitting are passed directly onto ratepayers. I was watching somebody testify to House Natural Resources a few months ago, and they were speaking plainly about how when the cost of permitting goes up, the cost of rates goes up directly with it. You can see it very clearly.

So – you chair the Build America Caucus, also known as the Abundance Caucus. Can you tell us a little bit about what the caucus is trying to accomplish, what it’s set its sights on, and of course how this bill fits into that broader agenda?

Congressman Harder: Build America is a bipartisan effort to build housing and energy better, faster, and cheaper – and really every part of American life that has been held back by red tape. We’ve just made it way too difficult to build projects that 80, 90 percent of the general public wants to get built. And we’ve done that for so many decades that now we’re seeing housing prices that are pricing out folks my age and millions and millions of Americans. We’re seeing energy prices skyrocket. We’re seeing billion-dollar boondoggles like high-speed rail in my home state of California that aren’t actually getting built because it’s so expensive and challenging to build infrastructure.

And so Build America is trying to fix that and trying to be the hub in Congress to make sure that we are getting shovels in the dirt, pushing forward pro-growth policy across party lines, and making the government work better now so hopefully your bills can be more affordable in the future.

Pavan: So having worked on the FREEDOM Act, Congressman, what other priorities do you personally have over the next year for your work in Congress?

Congressman Harder: We’re taking on a lot – everything from innovation and how to make it easier to do good, high-quality science in the United States, how to make it easier to push real important clinical trial breakthroughs through clinical trials, which have become unbelievably expensive. Infrastructure.

But I would say probably after the FREEDOM Act and the work we’re trying to do on energy, the biggest priority that I have and our caucus has is housing – making it easier to build millions of new homes in the coming years. It used to be that you could buy a home in your 20s. And now the median home buyer in the United States is 56. 56! That’s outrageous. Folks have to make incomes of $200,000 or $300,000 a year just to be able to buy a home in my district in California. That’s just out of reach for the vast majority of folks. And it is 100 percent downstream of the fact that we just have not built enough housing in recent decades.

So it’s not just a congressional problem. We’ve got folks working on this, doing great work at a state and local level. But our goal this year is to pass the first major pro-housing bill in Congress that we’ve seen in 50 years – since Congress passed Section 8 and Community Development Block Grants in the 70s. So we’ve got some real good bills coming up here, but ultimately the goal is to build those houses that could have been and should have been built over the last couple of decades and ultimately make housing more affordable for everybody.

Thomas: Okay, so Congressman, we always end our show by asking our guests for an energy policy hot take. So I have to ask you: What is yours?

Congressman Harder: It’s probably not surprising after this conversation, but it’s that climate change is a permitting problem, not a technology one.

When you talk about climate change with folks, they will talk to you about an amazing new startup or a breakthrough on solar or something like that. But it turns out that lawyers can beat engineers every day of the year. And I think it’s important for folks to understand that permitting delays are ultimately just a quiet subsidy for the status quo.

If you love how American life looks today, if you feel like electricity prices should be even higher, then let’s keep the current permitting framework that we have. If you think that status quo is not actually doing what it should, then let’s go out and try to fix it.

Thomas: Congressman Harder, thanks so much for joining Right of Way.

Congressman Harder: Thank you.

Some of the policy levers for growing the domestic nuclear and critical mineral industries are broadly understood at this point: We need permitting and regulatory reform to speed up development timelines and reduce carry costs, for example, and we need federal debt to help get second and third-of-a-kind projects off the ground.

These ideas are all well and good. But when it comes to brass tacks implementation, federal financing in particular runs into a number of lesser-understood policy barriers that will need to be removed if either industry is going to scale and compete successfully.

One particular issue I’ve been hearing quite a bit about lately is the “double dipping” restriction.

Double dipping refers to the practice of receiving multiple forms of federal financial support for a single project. In the context of DOE loan programs (read: the LPO), the core restriction comes from the Inflation Reduction Act’s “denial of double benefit” rule for projects that also receive certain other forms of federal assistance. Related limitations also appear in appropriations riders in the FY2023 Energy and Water bill, the FY2011 continuing resolution, and elsewhere. Taken together, these provisions are commonly referred to as the “federal support restriction” (FSR).

On its face, such a restriction makes a great deal of sense. Federal dollars are taxpayer dollars, and federal loans thus represent risk to those dollars. Doubling up on that exposure with, say, a loan out of one federal program and a grant out of another feels like an inappropriate concentration of taxpayer risk in a single venture.

Yet at the same time, there are cases where the FSR is too blunt a tool, and ends up impeding high-quality projects on a technicality. These cases fall into three buckets:

1. Demand Side

The US Department of War (DoW) is one of the largest energy users in the world, and a major offtaker of electricity. Many of its military installations (read: bases) run on microgrids, which in turn require a strong supply of baseload power. This has led the DoW to pursue a number of contracts with geothermal and nuclear developers alike. Such a construct is helpful for meeting DoW’s energy needs, of course, but also for emerging energy industries at large given the DoW’s sizable demand pull.

The problem is that DoW offtake is considered a “dip” for the purposes of double dipping restrictions. This, in turn, means that the LPO is generally barred from supporting, say, SMR or microreactor developers who plan to sell to DoW. Nuclear companies more or less need federal loan support to get up and running – so this creates a near-impossible coordination problem for the industry.

The problem is even more pronounced on the critical mineral side. Critical minerals face immature markets with volatile pricing and uncertain demand profiles. While DoW procurement typically represents only a small portion of a project’s overall output, even this limited federal offtake could trigger FSR restrictions. This creates a situation where a project serving primarily commercial customers might be precluded from accessing federal loans simply because DoW (or NNSA) wants to secure a minor share of production for strategic purposes.

2. Supply Side

One of the perennial challenges for the nuclear industry is the availability of uranium refining capacity to supply the fuel for our reactor fleet. To remedy this, DOE has stepped in with initiatives like the HALEU Availability Program to purchase or otherwise support the production of high-assay low-enriched uranium (HALEU), while supporting conventional low-enriched uranium (LEU) with other programs.

The problem is that using federally-supported fuel in your nuclear reactor may be interpreted as constituting a “dip”, and could thus preclude accessing an LPO loan for the reactor itself. This theory hasn’t exactly been tested, but it adds uncertainty for developers.

All of this serves to create confusion that ends up bleeding into the third bucket: scoring.

3. Scoring

The scoring issue isn’t a conventional FSR issue, inasmuch as it has less to do with specific legislative restrictions like the IRA’s denial of double benefit rule and instead involves how OMB interprets risk under the Federal Credit Reform Act (FCRA).

When multiple federal loan guarantees support different phases or components of the same project – say, a long-lead items loan followed by a construction loan – credit agencies face a perverse incentive. If OMB treats the second loan as necessary for repayment of the first loan, the office could theoretically treat up to the entire principal of the second loan as part of the subsidy cost of the first. This conservative scoring approach makes multi-tranche financing appear prohibitively expensive to the government, even when each tranche is independently credit worthy.

What To Do

Congress can fix these three issues in a single, relatively light-touch bill.

First, create targeted carve-outs for federal offtake agreements that represent genuine commercial transactions. If DoW is buying power at market rates for its operational needs, that’s fundamentally different from a subsidy, as the government is acting as a customer rather than a benefactor. A reasonable threshold, like limiting federal offtake to 30-50% of a project’s capacity, could ensure projects still need to prove commercial viability while allowing federal agencies to meet their legitimate procurement needs.

Second, clarify that ancillary federal support for upstream inputs – like federally-supported nuclear fuel – doesn’t trigger FSR restrictions on the downstream project. This is particularly important for nascent supply chains where some federal involvement is inevitable as markets mature.

Third, direct OMB to score multi-tranche loan guarantees based on the actual cash flows and risks attributable to each individual guarantee. When multiple Title XVII guarantees support a single project, each should be scored separately based on its own underwriting, rather than automatically rolling the second loan’s principal into the first loan’s subsidy calculation. Each guarantee should be required to be independently creditworthy and finance costs that are reasonably separable in time, scope, or function – ensuring fiscal discipline while enabling the kind of phased financing that large nuclear and critical mineral projects require.

These common-sense refinements would preserve the spirit of the federal support restriction while eliminating unintended consequences that are holding back critical industries. As China consolidates its grip on global mineral markets and our nuclear industry struggles to compete internationally, these technical restrictions are strategic vulnerabilities we can’t afford.

This loan is historic for several reasons, including some LPO-specific novelties that energy wonks in particular may appreciate.

First, while Three Mile Island isn’t the first nuclear reactor to restart in the US – the Palisades plant in Michigan gets that distinction* – bringing back Three Mile Island is hugely symbolic. The Three Mile Island partial nuclear meltdown in 1979 was the worst commercial nuclear accident in US history (though we should note that it had no broadly-verified public health effects), and hastened the decline of the US nuclear industry. Today, many local residents are celebrating the reactor restart. It’s a new era in the political economy of nuclear power.

Second, it’s really the first LPO loan to tackle the issue of AI-driven load growth. Microsoft has signed a PPA with Constellation for 800+ megawatts as part of this deal; such a construct between a Big Tech firm and an energy developer would have been unthinkable just a few years ago, and represents the tech sector’s continued move into the infrastructure space. (Note: A technical but important point of clarification here – Microsoft has a PPA, but this is not a behind-the-meter deal. The electrons from Three Mile Island will flow directly into PJM, benefitting ratepayers and adding extra reserve margin to the grid.)

Third, this is the first ever LPO loan to reach conditional commitment and financial close on the same day. This is a big deal for the office – but more on this later.

Finally, this is the first LPO loan to close under the Trump administration’s revamped Energy Dominance Financing program. Looking back to just a few months ago – to the spring, when DOGE looked to cut LPO’s staff by upwards of 80%, or the summer, when the House reconciliation text tried to rescind nearly the entirety of LPO’s usable (at least for nuclear) credit subsidy – it’s worth reflecting on the fact that there were many moments where this moment seemed unlikely. This administration made a conscious choice to reverse course, and it’s paying dividends.

With all of this out of the way – let’s get to the details.

LPO’s Same-Day Financial Close

How is it that LPO was able to reach conditional commitment and financial close on the same day?

Simply put, LPO is able to move to financial close when all of the “conditions precedent” (CPs) have been met. CPs are, broadly, the legal, technical, due diligence, and other requirements that DOE requires to address outstanding risks – these include requirements like completing permitting or attaining certain manufacturing performance standards, for example.

Constellation already fulfilled all of these CPs – which makes some sense given that this loan was “investment grade” corporate loan (more on that below), which typically carries fewer CPs. That allowed the LPO to execute on the conditional commitment and financial close in quick succession.

Why Hasn’t This Happened Before?

Largely because no one thought to try.

Also, because this sort of construct is not the right fit for every project. One of the reasons that LPO usually takes the conditional commitment → wait a few months → financial close structure is the conditional commitment announcement helps recipients raise more equity for the project. In this case, though, Constellation, Microsoft et al. were not in need of equity, so the concurrent commitment/close structure made sense.

Will This Happen Again?

It seems likely. Obviously, many recipients want to move quickly. What’s more, as we’ve learned over the last year, unclosed conditional commitments sometimes face headwinds when an administration switches over, so quick turnarounds can be helpful.

Given the characteristics of a loan recipient who would want to pursue such a structure – well-capitalized, capable of meeting rigorous CPs in advance, etc – LPO’s utility deals seem like a logical use case. These are the big-billions deals where LPO issues a loan to a major, often vertically-integrated utility to pursue a host of different projects spanning gas, nuclear, batteries, etc. Importantly, these sorts of utility deals are different from the sorts of “project loans” that most people associate with LPO – they’re corporate loans, which go on the recipient’s balance sheet rather than through a special purpose vehicle.

And this is a good segue, because the Three Mile Island loan was unique – because it too was a corporate loan, not a project loan.

“Investment-Grade”

The corporate loan structure with Constellation means that it has the full strength and credit support of Constellation’s balance sheet. This, in turn, has resulted in LPO rating the loan as “investment grade” (shorthand: LPO gets paid back no matter what), which means that the loan is also zero credit subsidy.

I think this is a point worth underlining. A lot of companies don’t like corporate loans, because if the project underperforms, it can affect their credit ratings. Nobody wants to run the risk of getting downgraded, from, say, BBB+ to BBB-. So instead, most companies opt to accept their loans through special purpose vehicles.

But as we can see with the Three Mile Island deal, this is by no means a hard and fast rule. And given that the corporate loan structure drastically reduces the level of required credit subsidy, you can imagine a situation where LPO could shift towards corporate loans in scenarios where their available credit subsidy is low.

What’s Next?

Nuclear is obviously a priority for this administration, and LPO deals are closing. There are lots of rumors flying around about the LPO and its large modular reactor goals, but they are still just rumors, and we won’t speculate on those here.

What I will say is that with loans to help restart Palisades and Three Mile Island both announced, there is a very obvious third reactor to restart in Duane Arnold in Iowa. For my part, I’ll be staying tuned for future announcements.

That’s all we’ve got for now – thanks for reading.

*One of my nuclear friends would come after me if I did not mention that technically, Three Mile Island is the first reactor to start up after “shutdown.” Palisades will be the first reactor to restart after “entering decommissioning status.” So TMI really does have a unique claim here!

In this episode, we discuss:

• Administrative vs. legislative permitting reform

• Risk aversion and litigation-proofing in the agencies

• How this administration’s priorities affect Congress

• Learnings from the Fiscal Responsibility Act negotiations

Thomas Hochman: Welcome to Right of Way, a podcast about energy policy, energy politics, and above all the upcoming permitting reform negotiations. I’m Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, and I’m joined by Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress.

We talk a lot about permitting reform and different policy interventions on this show. But one criticism that folks like us get is that we don’t spend much time up close to the actually-existing permitting process – the tribal consultations, the town halls where local boards and lead agencies host public comment, the scoping meetings, site visits, and months of back-and-forth on mitigation plans.

It’s a fair critique – think tankers work with data and testimonials, of course, but very few of us are really on the ground.

Fortunately, our guest today is perhaps the foremost authority on the brass tacks of the permitting process today. Joining us to discuss what wonks get right and wrong about the permitting process, what reforms will move the needle, how this administration approaches permitting, and where things stand on the Hill – is Emily Domenech.

Emily is the Executive Director of the Federal Permitting Improvement Steering Council, – also known as the Permitting Council– the federal agency responsible for coordinating and tracking federal environmental reviews, improving transparency and predictability, and helping resolve interagency bottlenecks for large infrastructure projects.

As Executive Director, Emily manages a portfolio of nearly $75 billion in large-scale infrastructure projects in 19 different sectors, from energy production to mining, ports and waterways to transmission.

Prior to leading the Permitting Council, Emily held a variety of roles in both the public and private sector, including on the Hill as Senior Policy Advisor to Speaker Kevin McCarthy and Speaker Mike Johnson, where she managed permitting and energy policy for House Republicans. Her key accomplishments include serving as lead negotiator for the House on NEPA reform, resulting in the first-of-a-kind NEPA reforms enacted by the Fiscal Responsibility Act.

Emily, welcome to Right of Way.

Emily: Thanks so much for having me. You’re here to let me talk about my favorite topic.

Thomas: There are so many places we could start. But as a fellow NEPA nerd,

I figured it might be helpful to start with a high-level policy wonk question. There are two buckets for NEPA improvement, I think, in the way that we talk about NEPA as it’s implemented. First, the improvements you can make without an act of Congress – things like better interagency coordination, higher quality applications, digitization, more staff, et cetera. And second, there are the improvements that you really can only make with an act of Congress.

Some people argue that the whole game is in that first bucket – that we just need more capacity in the agencies, basically. Others argue the opposite – that none of this really matters without judicial review reforms and better guardrails on the scope of analysis. You’ve dealt with this question from both sides, first working for the Speaker in Congress and now at the Permitting Council. So when you break things down, how do you see it? How much better – whether that’s by a percentage or a number of years or whatever, can agencies like Permitting Council make things without an act of Congress? And how much is still out there left to be fixed by legislation?

Emily: So I love that you tried to box me into a little percentage game here, but I think it’s a little bit more complicated than that. I always tell people, “In order for permitting to truly change in this country, we need changes on a number of fronts.” And I think you got two out of four.

One is having an executive who’s willing to use every tool in the toolbox, be it a national emergency, redoing regs, or empowering places like the permitting council to really organize and streamline the permitting process. So we’ve got that box checked with President Trump. There’s no question that we’re really leaning into every authority we have.

Then you need to change the legislative stuff that we can’t fix. And that’s things like judicial review, standing, and the kinds of things that tend to derail projects after we’ve already done a really fulsome environmental review process.

The last two things, though, are action by the courts, where I think we’ve made some progress – really truly defining what these bedrock environmental laws mean. The best outcome of the Fiscal Responsibility Act was getting ourselves to the cases that led to defining “reasonably foreseeable” in a way that was more narrow and sort of put us back on track with NEPA. And then that fourth bucket is how do we change the culture of the staff that are doing the permitting on a day-to-day basis, so that the default reaction isn’t a “wait forever, maybe you’ll get a permit, default to the longest review”, but instead a “how do we follow the law, do responsible environmental reviews, and ensure that we’re really meeting the requirements of Congress and allowing developers to move forward.” So I think you really do need action in all four of those areas in order to truly reform this behemoth that is federal permitting.

So it’s hard to break it down into a 50-50 split. But I would say everything we’re doing in the Trump administration – much of that will carry forward to a future administration. I think the action of starting fresh on our NEPA regulations is a big start. Doubling and even tripling the size of the portfolio at the Permitting Council is something that’s going to continue beyond this administration.

But none of that matters if every single one of those permits gets litigated by a frivolous litigant who has no business being involved in that process. So I really do think that while we can make a lot of progress and we can get a lot of things built and we can flood the zone, without that judicial review reform from Congress, it’s going to be really difficult for us to have lasting reform.

Pavan: Yes, so there are some reports out there that tell us that NEPA reviews covered by the Permitting Council end up moving about a year quicker than those that don’t. Are there any variables that come to mind that are the reason for these reviews moving quicker? Is it extra staff? Is it better agency accountability? What’s your take there?

Emily: The Permitting Council really does serve as this – I describe it as like the band-aid to a broken federal permitting system. We come in and we deal with a lot of those interagency conflicts, or lack of communication, or disconnects that make the permitting process not just long and complicated, but confusing for a project developer.

I really believe that some of the things we do that make a difference are the simplest things. What we do for our covered projects is once you come into FAST-41, we’re required by statute that within 60 days we have to identify your lead permitting agency, all of your cooperating agencies, any states and tribes that might have a permitting action for your project, and we convene that whole group with the project developer and develop that permitting timetable. You would be shocked, but that secure action of getting people in the room at the start of a project – within the first 60 days of a project application – makes a massive difference in ensuring that you smoke out every review. So there’s none of those unknown unknowns that tend to exist in the permitting process. You know what you have to deal with and when you need to do it.

And then we also are able to take that permitting timetable and, instead of everything happening in sequence – because that’s just how things typically happen in the federal government – we move as many of those reviews to happen in parallel as we possibly can. On that permitting dashboard, you’ll see our timetables are built out as a Gantt chart because many of these reviews can happen simultaneously. You just need someone to corral the players and get them in one place.

So I would say that kickoff meeting, but certainly the work that we do throughout the permitting timetable to keep people accountable and make sure they meet their milestones – and frankly, for lack of a better word, nag federal agencies to stay on time and nag project sponsors to do that. I really think that kickoff meeting is a huge part of the magic that makes our process faster and more efficient.

Thomas: Let me ask potentially a naive question here, but why is this culturally not something that immediately filters out into all the other agencies who are doing permitting reviews for all the projects that are not covered under the Permitting Council?

Emily: I mean, theoretically, each lead agency is supposed to be following the One Federal Decision guidelines to ensure they’re incorporating input from every other agency. In practice, that can happen very slowly. And it tends to happen only when another federal agency recognizes that they need to come to the table because of some triggering action along the way. What really saves time is we force it to happen at the beginning. Now, do I think that we could eventually get to a place where we could require that of every lead agency? Perhaps. If we incorporated a technology tool or AI into identifying those leading and cooperating agencies, could we potentially do that for far more projects than we can serve at the Permitting Council? Certainly. But we’re not there yet, and I don’t think we’re going to be there anytime soon.

So in the meantime, the Permitting Council can play this really important corralling role to get everybody on the same page. It also allows for an opportunity for our staff – who are all very experienced permitting professionals – to help say, “Let’s think through the process instead of just defaulting to the longest review possible.” So we can say, “Are we really following the law? Is there perhaps a more creative way that we could permit this project appropriately but faster?” Sometimes you need somebody in the room to encourage people to think differently. And that’s where I think that cultural element comes in.

Pavan: Are there any anecdotes or projects that come to mind where the Permitting Council unbottlenecked the process?

Emily: So it’s hard for me to pick an anecdote because it’s what we do literally every day. Multiple times a week I am calling an agency to say, “Hey, did you realize that XYZ field office is sitting on XYZ permit and we need it to move in the next three days or we’re going to miss a deadline?”

It’s wonderful to have partners – both political and career – at the federal agencies who frankly want to build stuff just as much as we do. So they’re good partners. When we flag an issue for them, particularly our Trump appointees are really quick on the draw to go deal with that issue. But oftentimes, they’re managing teams of hundreds of thousands of people. They do not have the time to be in the weeds following every single project and keeping track of every milestone. So without us flagging it, it wouldn’t necessarily happen.

I’m trying to think of a good example. There’s been a number of projects we’ve had recently where our team has helped to facilitate getting the appropriate level of review for a project. So instead of just defaulting to an EIS, we’ve been able to move the project to say, “Hey, let’s really look at the scope. Can we do this with an environmental assessment? Can we do this with a combination of CatExs so that we can save time and be more efficient and frankly save federal dollars? We’ve had a lot of success in that space. But truthfully, most of my time is spent saying, “Hey, we’re going to miss a deadline. You need to get this person to focus on this thing so we can get it done and get it published on time.” And, “Why do we need that 30-day cooling off period? Let’s just move forward and publish the milestones.” So a lot of it is just that day-to-day keeping people on task.

Thomas: So I’m very curious about how this interacts with the litigation side of things that we’ve talked about. It has been a little while since I looked at how the various projects on the Permitting Council dashboard were performing. But the last time I checked, it seemed like the litigation rates for projects that underwent the Permitting Council process were significantly lower – even though they were high-impact infrastructure projects in theory – than other projects undergoing the NEPA process. What do you attribute that to?

Emily: So I think it happens for two reasons. One, it’s important to note that we do have some judicial review limitations in our statute. We’ve got a two-year limit on filing a lawsuit on our actions that are published in the Federal Register. That has only been utilized for one of our projects, but it has been utilized in the past to toss out lawsuits. So we’re happy to see that action come to pass.

But I actually think the biggest deterrent for litigants for our projects is they are very public. Part of the process is that we have this transparent timeline that really does show every federal action along the way. It really does show every point where it’s appropriate for community engagement. We’re not hiding the ball, we’re not cutting any corners. The transparency works both ways – both for the federal agencies to stay on time, but also for project developers to show they really did meet the requirements of a permitting timetable.

So I think that does help, particularly when it comes to more organic potential opposition to a project in your hometown. These projects are not a secret. They’re posted on a federal dashboard. And so those project developers do really have to do their homework to make sure they’re in a good place with their community.

But the reality is that’s how community engagement is supposed to work. You’re supposed to be able to have a project developer who is able to be public and transparent and show that they’re meeting the requirements of the law, and that should be enough to get you through the process. The place where we have problems is when we have litigants airdrop in who aren’t even from that community to try to stop a project for political reasons. And frankly, those tend to take a little longer to matriculate, and in some cases that’s where our litigation protections come in.

Pavan: Makes sense. So one issue we talk a lot about is this issue of litigation-proofing, whereby agencies are including a lot of non-germane information or review because they’re afraid that the review will get contested in court. There was an outgoing NEPA general counsel claim that as much as 90% of the content in NEPA documents was there just for litigation-proofing. So to what extent do you think that issue is a major driver of NEPA document lengths and timelines, and how does that kind of play out in practice?

Emily: I think that’s absolutely true. Where I would say it plays out in practice is that knee-jerk reaction that everything needs to be an EIS. “We need to do the longest, most complete review for every single action taking place on federal land or with a federal impact.” That is not compliant with the law. That is very clearly not Congress’s intent.

And I think, frankly, it does lend itself to far more delays because you’re trying to imagine every possible scenario for how you could be challenged. I want my subject matter experts in the federal agencies to focus on their area of expertise and on doing a thorough job within the time provided for the appropriate environmental review. I don’t want them thinking endlessly about all the possibilities for the ways that some enviro group could come and sue their project.

And unfortunately, that fear of litigation plays into a ton of the work we see in the field, particularly from our career employees. That’s a bad thing, and it’s part of that cultural problem we need to solve.

I also think frankly the idea that we can make anything litigation-proof by making it a longer or more thorough review is kind of nonsense, because most of these cases that are brought against federal permits are frivolous to begin with. Most of them are tossed out. You’ve seen dozens of reports that have shown that 80, 90 percent of cases are frivolous lawsuits from the jump. So no matter how thorough you are, you’re not going to be able to push back against someone who’s just suing you because you’re trying to build something in America. So we have to change that cultural mindset that we can somehow work our way around the litigation issue. Congress really has to fix it.

Thomas: It’s interesting, I find the idea of that decision point as to whether or not to go to EA or EIS in particular as really fascinating. There’s this moment where you have to make a decision: am I going to do the three-and-a-half, four-and-a-half year process, or am I going to do the maybe one-year process? And yet that line, that go/no-go line is sometimes hard to discern.

Emily: It certainly is, but I would just add, I think oftentimes if you’re on that line, folks default to the longer review. And the reality is you’re never going down to an EA if you start with an EIS. But what we should do is say if we think we meet the requirements for an EA and we along the way discover that actually, you know what, there’s a far bigger wetland impact or there’s more endangered species than we anticipated – or whatever issue is going to trigger us to the EIS – we can always expand the review. We’re never going in the other direction. So that’s why we have to think: what does the law say? And as long as we’re following the law, we’re not going to have this problem.

Thomas: Totally. So another question here is how much NEPA timelines are driven by NEPA the statute versus the other underlying statutes that the NEPA process serves as an umbrella for. This is your Endangered Species Act, your National Historic Preservation Act, et cetera. There are some studies out there, some think tanks out there that claim that the main causes of NEPA delays are those underlying statutes rather than NEPA itself. First of all, to what extent do you think this is true? And if it is true to an extent, does that suggest that Congress has been overly focused on the wrong statute? Or that the breadth should be much broader as we think about what we should be paying attention to on the Hill?

Emily: So can I pick all of the above on this one? The reality is NEPA does certainly cause delays. Anytime you’re doing a comprehensive review, it’s most often where you see people do pre-application work that’s going to take forever. But the consultations, particularly for Endangered Species Act and Section 106, are incredibly time-consuming. And I think it’s also where we’re seeing the trend in the frivolous litigants. They’re far more likely to look at an opportunity to sue under a Section 106 review rather than looking at perhaps another statute.

So I think we need to be cognizant that fixing NEPA does not fix every problem in our permitting process. And there is no such thing as one NEPA permit that provides for everything under the sun. It’s by nature a collaborative process that brings in all of these agencies to do their individual parts, referring back to their fundamental environmental statutes.

And I think we have to recognize that, again, fixing NEPA – we’re never close to done. In fact, I hear people say, “We can get a big permitting reform deal that fixes every problem.” And I’m like, “OK, well, we can maybe fix NEPA, we could fix some of our problems with the Clean Water Act, but we haven’t even touched the Endangered Species Act or Section 106.” And the National Historic Preservation Act is a huge challenge, particularly in the West and Alaska. So I think it really is all of the above. And even if we get the most perfect NEPA reform bill out of Congress this cycle, we’re still going to have work to do.

Pavan: So I just wanted to turn for a moment to Congress. As we record this, a continuing resolution has not passed. This is not even the first podcast we’ve recorded with no continuing resolution. The House has introduced a bunch of energy and permitting reform legislation. We’ve got the PERMIT Act covering the Clean Water Act, the SPEED and Reliability Act covering transmission, and the SPEED Act for NEPA – which is undergoing edits, and there’s been lots of rumors. We had an NHPA hearing in ENR, but no legislation there as of now.

I would love to talk about the lessons that you took away working for Speaker McCarthy and Speaker Johnson – from the efforts that worked to enact permitting reform and maybe the efforts that didn’t.

Emily: Yeah, so I like to say I was part of the most boring NEPA reform bill in history. We did all of the really mundane reforms – time limits, page limits, all that good stuff. But it was really critical, frankly, for opening the door to larger reforms in the future and laying a groundwork for the courts.

But negotiating that very boring NEPA bill was one of the hardest experiences of my congressional career. So I do not underestimate how difficult it is to negotiate these bills. And Speaker Johnson certainly will have a challenge corralling his members, much less the Senate.

I think there’s a couple of things that make that challenging. One, every committee in Congress believes that their priorities are the top priorities. And a bill like this that covers three to six committees, depending on how you count it – it’s really hard to have one lead entity leading the charge and corralling the troops.

I think the second thing is that the committee jurisdiction between the House and the Senate doesn’t line up appropriately. So you have differing operations that cover different parts of the jurisdiction in the House and the Senate side. So no matter how you assemble your bill, you’re going to have to take it apart to get the players on the same page when it gets to the other chamber.

My best advice for the folks on the Hill who are working on this now – they’re certainly following some of it – which is to get out ahead of it early. A huge part of what made it possible to do the Fiscal Responsibility Act was that we had been working on the Builder Act and its predecessors for years before that. So we had a lot of time and a lot of legislative hearings under our belt.

I think Chairman Bruce Westerman is absolutely doing that. Chairman Graves is doing that at T&I. I’d love to see the folks in the Senate start to get their bill out in the open and doing some legislative hearings so that we can really, frankly, suss out where everybody is. Because I think doing that in this first year of the Congress is critical, or you’re never going to have enough time to cut a deal.

The biggest takeaway from last year’s bill that didn’t quite make it across the finish line, I think, is that you cannot wait until after the election to start negotiating with the other chamber. There was just never going to be enough time. These are 40- and 50-year-old environmental laws. You’re going to need more than two or three weeks to figure out a landing spot between Republicans and Democrats. So I think you’ve got to put the time in. You need to do that kind of public engagement, even if you feel like it’s redundant. And really, credit to – particularly Bruce Westerman – for getting that process started.

Thomas: Do you happen to remember, during the Fiscal Responsibility Act negotiations, what the most hotly contested pieces were that made it in or didn’t?

Emily: Oh gosh. Well, I would say of what didn’t make it, I spent weeks trying to get the Biden White House team to agree to anything on judicial review limitations or on major federal action. And I was told over and over and over again by my counterpart across the table that the energy they cared about didn’t have trouble with lawsuits and didn’t have trouble with major federal action, which was the funniest thing I’ve ever heard in my life.

So I would love to say if I had had a little bit more to trade from our Republican ideas on some of these critical issues, I think we might have been able to make some progress on judicial review. But we just couldn’t get there because we didn’t frankly have a fulsome enough package to cover the things that mattered to our members.

We could get there on the really basic reforms to NEPA, but in order to go further, we were going to need some big Clean Water Act reforms that the White House was not willing to give us. And frankly, we were not willing to give them anything they asked for on transmission at that juncture. So we were maybe a little ahead of our time on that negotiation.

But I also think there was a real lack of recognition that NEPA causes problems for every type of infrastructure. It does not matter what you are trying to build. NEPA makes it harder to build in America, full stop. And I think that is something that my counterparts on the other side of the aisle did not realize a few years ago that perhaps maybe today they do.

Thomas: So let’s talk a little bit about how the administration’s energy priorities might play into these negotiations. The admin has taken a different approach to, for example, renewables permitting compared to the previous administration, and is mostly focused on other energy sources and on minerals. From where you sit, how do you think that shapes the prospects for a bipartisan deal, if at all? I mean, you just talked about how the Biden White House’s position on permitting played a huge role in the FRA negotiations. So how do you think about it this time around?

Emily: So I hear this a lot – like, “We’re taking this unprecedented stance on how we treat different types of energy.” But every president has their priorities. And I think our charge at the Permitting Council has been to focus on those industries that really were forgotten in the previous administration and frankly long before that.

There’s a reason that we’ve taken our mining portfolio from one project to 47 in the last six months. And it’s because there was a huge line of projects that were waiting to get through the federal permitting process at every stage of mining development. The same is true for our pipeline portfolio. We’re growing that portfolio because it’s one that was neglected by the previous administration.

So I think really the only difference here is that we’re being upfront about our priorities. And our priorities are dispatchable energy, the infrastructure it requires, and ensuring that we can really win the critical mineral and mining race against China. And that’s where we’re going to put our resources and our energy as we go forward.

As far as that goes for impacting the negotiation on the Hill, I don’t think it’s all that much different than our position with the Biden administration. The only difference there is that, frankly, the Biden administration didn’t seem to want to build much of anything. And so they didn’t understand the fundamental challenge that it is hard to build things in America.

I think today we’re at a juncture where everybody accepts that it is harder than it should be to build pretty much everything in America. And if we can start from that point, then we’re looking at these technology-agnostic laws like NEPA or ESA or otherwise. And I don’t think there’s any reason why we can’t approach legislative reforms to those statutes, regardless of the priorities of the president.

Pavan: Yeah, so the president’s AI action plan to us is a document that recognizes the need to rapidly build out the grid to maintain overall reliability and to win the AI race. Obviously, there’s a great deal that the White House can do and agencies can do to help, but what role do you think or expect Congress will play on this issue of transmission policy?

Emily: Yeah, I mean, I think the jury’s still out there a little bit. I haven’t seen transmission legislation from either Energy and Commerce Republicans or from ENR Republicans to date. Folks are working on that language and, as an administration official, we’re happy to respond when we receive it.

From my seat, when we think about how do we build out not just the transmission that’s required, but the pipelines, the energy generation, the additional resources and infrastructure that are necessary to build out data centers across the country – the way we approach that is by thinking about streamlining permitting and doing as much of it in parallel as we possibly can.

That’s why when you look at the AI infrastructure EO that came out back in July, you’ll see a tasker to the Permitting Council to look for ways to list not just data centers, but the accompanying energy projects as much as possible as a grouping. So we’re looking for ways that we can think about the systematic permitting of all of these different pieces that go into winning the AI race. So I’m not wasting my time doing an individual environmental assessment or environmental review for the generation, the pipeline, the transmission line, and the data center. Let’s think about it as a package deal. And how much of this can we do in one fell swoop as opposed to a bunch of individual reviews? Because that also solves your chicken-and-egg problem for when that energy is going to be online for your data center.

So I think changing the way we approach the permitting side of this from the executive branch perspective is going to play a really critical role in making sure the right things come online at the right time. There’s no reason they need to be all thought of as individual projects because we all know they aren’t.

So I think the jury’s still out a little bit on where Congress is going to be on these issues, and we’re ready to respond when they move some stuff through the process. But we have a lot of work to do in the meantime. And frankly, we have a lot of muscle we can put towards this issue from the executive branch perspective. So I would expect to see more of it in the future.

Thomas: What is something that you don’t want Congress to miss during this round of negotiations? Whether that be a certain type of judicial review reform, let’s say, or a certain statute that you think doesn’t get enough attention.

Emily: That’s a great question. I think for me, it’s addressing the standing issue. When we talk about judicial review, for the longest time – and I was part of this – we were very focused on time limits. And the time limits are important too, but determining who has the ability to file a lawsuit I think is really critical. Because if you are not willing to participate actively or you’re not impacted by a project, why do you get to sue to stop it? I think that is a really simple thing that is very accessible to regular people who are not involved in permitting policy, and it’s something that we need to fix. So that would probably be my number one thing.

But I always encourage folks when we talk to our industry partners or to folks on the Hill – I say, think about the things that we can’t fix. Because we’re going to fix every problem we can fix from the executive branch side, and we’re going to do the best we can to build sustainable policies, even through executive authority, by frankly showing that things like the Permitting Council can work. So I think really focusing on that narrow set of issues that we simply cannot fix from the executive side would be my advice.

Thomas: Yeah, it’s interesting. With the standing piece, one of the ideas that’s been floated around quite a bit on the NEPA side is to tie standing to public comment. At the very least, you need to have participated in the public comment process, and hopefully raised the issue you have with specificity. And it’s funny – that often gets hotly contested. But there are a suite of other environmental laws that have this precise standard to bring a lawsuit. Like, the Clean Air Act has an almost identical version of this for litigation – so it’s always interesting to see how it presents itself differently with NEPA negotiations.

Anyhow – we like to end our show by asking our guests for an energy policy hot take. So what is your energy policy hot take?

Emily: Oh, that’s fun. I think my hot take is that we will solve more permitting problems by incorporating AI and technology into the permitting process than we will with any policy or legislative change. The more we can take out the human error and delay from this process, and the more we can allow a project developer to be empowered and really take ownership of their own project application, I think that’s the long-term solution. And we have the ability to really, really change the way the process works by taking advantage of tools that just didn’t exist a few years ago. That’s my hot take.

Thomas: Emily, thank you for joining Right of Way.

Emily: Thanks so much for having me.

As the city of Portland had grown, Route US-26, the regional highway that connects the city to the ski and recreation areas on Mount Hood, had become increasingly congested.

Between the villages of Wildwood and Wemme in particular, these increases had created dangerous driving conditions; in a draft NEPA document exploring highway infrastructure upgrades in the region, the Federal Highway Administration (FHWA) noted that the accident rate on US-26 was twice as high as those in other primarily rural, non-freeway highways.

So, in 1998, over 650 residents, recurrent visitors, and patrons of local business signed a letter to the Oregon Department of Transportation expressing “great concern and fear for their personal safety” due, in particular, to “the lack of a left turn [lane]” between Wildwood and Wemme.

Approximately forty driveways and side streets fed into those 1.26 miles of highway, creating a safety hazard for cars turning onto and off from the highway. Cars turning off the highway had to stop in the fast lane to wait for a gap in oncoming traffic; cars turning onto the highway had no median to enter as they picked up speed.

During the five year period surrounding the letter to ODOT, there were 14 crashes along that section of road – two of them fatal.

In response to the letter, ODOT began scoping solutions, with the goal of widening the road to match the sections of highway to the east and west.

But this project was technically under FHWA jurisdiction, and would thus require NEPA and National Historic Preservation Act (NHPA) review.

The Backdrop

This part of Oregon is, and was, infamous for its public opposition to development. Two decades prior, the FHWA had set off on a NEPA review for a highway widening effort, releasing its Draft EIS a year later (oh, the good old days of a one year timeline to Draft EIS). As part of the review, FHWA had sent out an archaeologist to the project area, who determined that it did not contain any sites “listed in, nominated to, or determined eligible in the National Register [of Historic Places.” That is, it was not a ‘historic property’ under the National Historic Preservation Act (NHPA) and thus didn’t require formal NHPA review.

But after publishing the Draft EIS, FHWA hosted another series of public comments. It primarily received input from an organization named Citizens for a Suitable Highway (CFASH), a local group led by one Michael P. Jones. During a hearing on the project, Jones presented a slide show which depicted photos of “stone pillars” and a “pioneer grave” which he alleged were eligible for protection.

So FHWA sent out an archaeologist to look at the potential pioneer grave. Quoting from an ensuing court case directly:

They found “no subsurface disturbance accompany[ing] the placement of the rock pile on the surface. No skeletal material or other cultural objects were found.” Because the rocky deposit beneath the rock pile had not “been previously disturbed in any way,” the archeologists wrote that they “were in complete agreement that there was no evidence of disturbance of any kind beneath the rock feature, and that the possibility of a burial beneath the stones has been shown to be extremely remote.”

Based upon our investigations described herein,” Archaeologist Richard M. Pettigrew concluded, “I recommend no further investigation of the rock feature, which has no demonstrated archaeological significance and does not in my judgment appear worthy of either protection or mitigation.

The final cultural resources report did not discuss the rock feature. But in early 1986, Pettigrew received a letter from CFASH threatening to sue “if the potential gravesite is further disturbed.”

And the next year, ODOT regional engineer Rick Kuehn spent several months working with Jones and CFASH to address their concerns. Kuehn painstakingly kept a document describing the over 70 issues that they discussed, summarizing the actions to be taken and cost implications for each issue.

Among them: In the Dwyer area, “the north pavement edge [would be] moved 15 feet to the south… by eliminating the left-turn refuge.” Sound familiar?

Finally, in 1991, ODOT again met with Yakama Nation Tribal Council Chairman Wilferd Yallup and representatives CFASH to discuss the project. According to reports:

Yallup opened the meeting by indicating that FHWA had paved over a burial site between Goldendale and Toppenish in Washington State, and that he did not want that to happen again.

When [ODOT Engineer] Bartel asked Yallup, “Are you saying that there is a burial ground on this project?,” Yallup answered, “Yes,” and Jones added, “Rhododendron to the bridge.”

But when Bartel responded, “Where exactly? Can you be a little more specific?,” Jones interrupted, “[W]e’re not going to get down to specifics. If you want like pinpoints, you know, we’re not going to do [that].”

Wildwood to Wemme

So, this was the backdrop in the early 2000s as ODOT began scoping its 1.26 mile Wildwood to Wemme highway safety project.

As court documents note, “Internally, ODOT staff were sympathetic to the safety issues, but an ODOT project manager recounted how the ‘community went nuts when this section of highway was proposed for five lanes in the 1980s. . . . Because of the public uproar, the highway was reduced to four lanes.’”

By 2004, ODOT had determined it would need to prepare an environmental assessment under NEPA. And, citing the 1985 Draft EIS, it determined that it would have to reassess historic resources, and that the project would thus require official NHPA review.

So ODOT sent out another team of archaeologists. This team, too, confirmed Pettigrew’s report that the rock cluster alleged to be a grave did not have historical significance. And ODOT sent out four newsletters and postcards advertising three public hearings. They hosted an open house, and invited Michael P. Jones. Later that year, ODOT hosted another open house to discuss project alternatives. They invited Jones again.

Per reports:

ODOT’s summary of the meeting indicated that “‘people’s lives ahead of trees’ was a common theme.” “Alternative 1: Widen North” received the most favorable public response while the “No Build” alternative received the least favorable response.

Several attendees submitted the same written comments, one of which asked ODOT to disregard those submitted by people who were not “impacted by the current danger to life and property” by the lack of a center turn lane. One person handwrote, “This means Michael P. Jones!” next to this comment.

In 2006, ODOT hosted a third open house. They invited Jones again.

Three months later, ODOT sent postcards and mailers indicating it was focusing on the “Widen to the North” alternative most favored by the public, advertising an upcoming open house and linking to an ODOT website with more information. The mailer included preliminary environmental findings, and allowed people to request copies of the forthcoming Draft EA. Jones requested a copy.

In August, ODOT published the Draft EA. In the fall, they hosted another meeting. Only 16 people attended, and only 5 made public comments. One simply said: “To the folks at ODOT[,] a hearty thanks for all the hard work. Your determination will carry this project through.”

ODOT issued the Revised EA and FONSI on January 25, 2007, selecting the widen-to-the-north alternative. They sent the final project notice to Jones.

It’s Never Over

In January 2008, Jones resurfaced – this time with Carol Logan, an enrolled member of the Confederated Tribes of Grand Ronde who claimed to represent tribal interests. Logan and Jones began bombarding FHWA and the Advisory Council on Historic Preservation (ACHP) with demands for new NHPA reviews.

ODOT reached out to Grand Ronde, who clarified that Logan wasn’t speaking for them. Per their Cultural Protection Coordinator: “Carol is not representing the Tribe... she is working as a private individual in concert with Michael Jones. The tribe’s official position is that ODOT has done and followed the 106 and NEPA process. We have no fault with what they have done.“

By May 2008, Jones had recruited Wilbur Slockish and Johnny Jackson, who identified themselves as “hereditary chiefs” of the Klickitat and Cascade tribes – bands within Yakama Nation that are not themselves federally recognized tribes. They submitted memoranda claiming the Dwyer area contained sacred burial sites.

ODOT determined that it didn’t see a reason for further consultation based on the scope, and concluded it had satisfied its NHPA duties. Construction began in early 2008, and was completed later that year, ten years after scoping began.

In that time, there were tens of crashes, multiple injuries, and at least one death along the section of road. Most of the reported crashes that occurred in the project section were attributed to the lack of a left turn refuge on the highway.

The Aftermath

I’ll note here that this story really never ended. In July 2008, after construction had begun, Jones called an archaeologist claiming the “site” had been vandalized. When she investigated, she found “the rock cluster in scattered and disturbed condition” but concluded it “appears to still have no other associated objects or features such that it could be identified as a cultural resource.”

Jones filed a lawsuit in October 2008. The case dragged on for 13 years. In February 2021, the district court granted summary judgment to the agencies. The Ninth Circuit dismissed the appeal as moot in November 2021. And finally, in October 2023, a final settlement was reached.

What started as hundreds of residents pleading for a left-turn lane to stop fatal crashes in 1998 became a 25-year saga. The safety improvements that should have taken months were delayed by nearly a decade of process, followed by 15 years of litigation over, to quote Archaeologist Richard Pettigrew, a “pile of rocks.” The left-turn lane was built, but at enormous cost in time, money, and unfortunately, human life.

The stone pillars Jones fought to preserve were damaged during relocation. They were then repaired by a contractor – the same contractor, as it would happen, who had previously repaired the pillars after one was struck by a car crash years earlier.

In this episode, we discuss:

• How permitting is constraining manufacturing and data center deployment

• End-users’ permitting wishlists

• How political dynamics have shifted on both sides of the aisle

Thomas: Welcome to Right-of-Way, a podcast about energy policy, energy politics, and above all the upcoming permitting reform negotiations. I’m Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, and I’m joined by Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress.

Pavan: The conversation around permitting reform is so often centered on energy developers, whether it be the geothermal companies running into NEPA out west or the pipeline companies getting blocked by the Clean Water Act in the northeast.

But of course, permitting reform is not just about energy development. It’s also about all of the industries that rely on affordable, reliable and available energy to function – hyperscalers, manufacturers, and electric vehicle companies, to name just a couple.

Thomas: For them, our inability to build and deliver new energy infrastructure is increasingly existential. NVIDIA has said that energy availability is already the most important consideration when siting new data centers. Sam Altman has said the price of AI training will converge to the price of electricity. And companies like Intel have said that the permitting burden sometimes determines whether they choose to build their chip fabs in the United States or abroad.

Simply put, the manufacturing and AI worlds have a major stake in this round of negotiations.

And so we’re lucky to have two movers-and-shakers in the space joining us today in Chris Phalen and Cy McNeill.

Chris is the Vice President for Domestic Policy at the National Association of Manufacturers. He has deep expertise in energy, conservation, agriculture, and global trade challenges facing governments and the business community, and before joining NAM, was Senior Policy Advisor to Senator Kyrsten Sinema working on energy, natural resources, and beyond.

Cy McNeill is the director of federal affairs for the Data Center Coalition, the association serving as the voice for the U.S. data center industry. Before joining DCC, Cy worked in the regulated energy sector and in public service, most recently with Alliant Energy in Washington, DC managing the company’s federal regulatory strategy. Cy also spent time serving in the federal government working for the Department of Commerce and FERC, advising on issues such as tax reform implementation and wholesale gas market policy.

Chris and Cy, welcome to Right of Way.

Chris: Great to be here.

Cy: Good to be here.

Pavan: Most people listening to this podcast probably know a little bit about permitting laws in general. They’ve heard about NEPA, they’ve heard about the Clean Water Act, the Endangered Species Act, and the National Historic Preservation Act (NHPA).

So when both of you all talk to your members, what is their hierarchy of concerns? Is it NEPA at the top, then Clean Water Act, then ESA, then NHPA? Is it local zoning laws? How do they read it?

Chris: Great question. So, it’s all of them – NEPA definitely being at the top. The judicial review piece of NEPA is probably the most important.

There are definitely also local zoning issues. We don’t really get quite as involved with those because they are just very diverse depending on what industry you are in, where you are in the country, and what local elected officials are like there. Again, it depends on what you are building.

One that comes up a lot is the Clean Air Act as well. There’s quite a bit of difficulty in my home state of Arizona, actually, with non-attainment areas, and that’s impacting the manufacturing sector pretty significantly.

I describe it as “no way out.” Maricopa County is in a non-attainment situation. A lot of that is for ozone and a lot of that is driven by out of state emissions – from China, from Mexico or wildfires and forest fires. And the permitting system of the Clean Air Act – you know, Title V or other smaller permits that you might need – is not designed to allow for the construction of large-scale manufacturing in such a situation. So the semiconductor fabs out there, the data centers – all of those are being significantly impacted.

When I was with Senator Sinema, we tried to address this issue – and it gets into forest management, some of our trade agreements, and how we categorize different pollutants in the air and where they’re coming from. But I think we really need to include the Clean Air Act in this [conversation] and how it’s actually stalling – somewhat ironically – a lot of clean energy developments, such as batteries, critical minerals, and semiconductors.

But to your question: NEPA, the Clean Water Act, and the Endangered Species Act are all really, really critical. It’ll depend on if you’re a mining company, a semiconductor firm, or a steel or aluminum company, but it runs the gamut. They’re all super important, but I think it’s important that we remember the Clean Air Act really does need to be part of these negotiations and hopefully a final deal, because it is in all parties’ interest to see more projects of all kinds get built.

Cy: Yeah, for sure. I agree with Chris here. It’s a bit of everything. For us, the data center industry is definitely heavily involved at state and local levels. We’re seeing things like data center moratoriums popping up in certain markets. So we continue to do a lot of work to be good partners to local communities. And I could probably spend this whole podcast talking about local issues. But at the federal level, our members are laser-focused on transmission permitting reform. We’ve seen real world examples of transmission constraints stopping data center development in its tracks in places like Northern Virginia and more and more around the country.

I don’t think it comes as a surprise to anybody listening to this podcast that the current transmission permitting regime in the U.S. is time-consuming and difficult. If a transmission project crosses state lines, that transmission developer has to get approval from each state, which likely has their own unique process and regulatory timeline. They may also need federal permits, which adds a whole other complexity to this. And Thomas, I’m going to steal a little bit from your HNR testimony. We’re going to need a whole lot more transmission. I think the DOE predicts that the US will need to build 5,000 miles of high capacity transmission each year to maintain reliability and to enable economic growth. And I think we added something like 300 – so a small fraction of that – in 2024, so we’re already behind.

To this end, DCC was supportive of a lot of the transmission reforms laid out in EPRA. Anybody following the permitting world knows that was close to the finish line there. But one recently-introduced piece of legislation that closely mirrors a lot of those sections is the SPEED and Reliability Act from Representatives Peters and Barr.

DCC endorsed that bill. We see this as a bipartisan framework to help alleviate a lot of unnecessary delays in transmission development – things like helping modernize nationwide transmission permitting, cost allocation and planning. I won’t get too far into that because I know you had Daniel Palken on a previous episode of the podcast and he did a great job walking through the three P’s. But it would also help reform the existing backstop siting authority for interstate transmission lines, removing that redundant top-down role of DOE.

And then second to transmission permitting reform is NEPA reform. Our president, Josh Levy, recently testified at the House Natural Resources Committee on the SPEED Act, and he emphasized that any package under consideration to modernize the federal permitting process should encapsulate some of those reforms. Things like focusing environmental reviews on significant direct impacts, setting clear timelines and deadlines for agency decision-making, and then also streamlining judicial review, improving efficiency and clarifying that federal grants don’t constitute a major federal action. There’s low-hanging fruit too – things like the e-Permit Act to digitize the permitting process, for example, we think is smart reform. So for us, comprehensive permitting reform would help unleash investment, lower project costs, and deliver affordable, reliable energy when and where it’s needed.

Chris: I think it’s really important to add: People might be listening to this and thinking that permitting reform equals less stringency, or this isn’t a sustainability story. I was up in New York for Climate Week a few weeks ago, and I think, especially regarding what Cy is talking about for transmission lines, there is no silver bullet that will just allow transmission to be built, no matter what energy source it’s bringing to projects.

I think there’s been a sort of naivete on some people’s parts. I dealt with this in Senator Sinema’s office: There was a giant transmission line bringing five gigawatts of wind energy into central Arizona and California. You’d think it’s a no-brainer. No. It took 15 years. I’m sure you guys know what I’m talking about here. But at the very end, folks tried again to block that project. And it’s a 100% clean energy project into Arizona and California. You’d think that would only happen to a pipeline, right? But no – NEPA, NHPA, all of these really need a common-sense update.

Otherwise, like Cy said, any project that is crossing land or getting close to people is going to face issues. We need to make it fair and easy to at least get to an answer of yes or no in a timely fashion without continued delays 15 years later where someone says, “You’re crossing this river and you didn’t do a review.” It’s been 15 years. Someone looked at this.

We’re going to need that certainty for pipelines, for transmission, for energy generation, and for the facilities that my members are looking to build.

I know we’re going to talk reindustrialization later, but I think permitting reform is really also a good sustainability story, and that shouldn’t be lost for anyone that’s listening and may think otherwise. When we say “all of the above,” we mean it. Nobody gets special treatment right now, and it’s really messed up a lot of projects.

Pavan: Chris, you you bring up a good point on transmission barriers, because one of the things we’ve been trying to do on this podcast is point out that we haven’t seen all of the ways that traditional permitting barriers can block transmission development because we aren’t building quite as much transmission as we need to be building. But all the barriers you kind of see on the pipeline end – if we’re moving a transmission title and it works – transmission will run into those barriers too.

Thomas: Totally. So, Chris, there are all these issues that come along with the construction and operation of manufacturing facilities themselves. You got at some of them with the Clean Air Act, for example. Myfirst ever foray into permitting reform was actually thinking about the Clean Air Act and semiconductor manufacturing. But the reshoring of manufacturing – reindustrialization, if you will – is also very much an energy story, right? So while much of the load growth conversation to date has been focused on AI and data centers, the load growth picture really breaks down into three main buckets: AI for sure, but also electrification and reindustrialization. So can you walk us through what the energy issues are and concerns are for manufacturers?

Chris: Yeah, that’s really important and it’s something I’ve been touching on in public and with our members as well. I think there are issues, concerns, but also opportunities. At the top of my mind is reminding people that data centers are the sexy topic right now, but manufacturing uses about a third of the nation’s total energy. Obviously that’s a little different than electricity – the percentages we can get into in a different forum – but it’s a massively energy-intensive industry across everyone that we represent.

So it’s really important that we don’t get into a situation where there is too much competition for too few electrons. That doesn’t do anyone any good. And it’s going to have knock-on effects for the data center and AI industry as well. If your electricity and energy input costs are going up for the steel, the concrete, the servers, the cooling systems – everything that my members make that builds the building and puts in the servers and makes it run – that isn’t a good situation to be in.

And so, yes, we do need more transmission and distribution. But this also presents major opportunities – from electrical steel, grain-oriented steel, more aluminum. The more we can build this infrastructure out, the more you get a virtuous cycle going, where it’s done sustainably without too much negative competition. And so I view it as – yes, there are some serious issues that we have to address in the generation and the transmission and distribution space. But if we get that right and we are able to do these kinds of reforms that we’re talking about, it will be a major boon to manufacturers in the United States, which will then support AI development and data centers.

So I try to keep an optimistic eye on it. Because I think very often it’s “Oh my God, the sky is falling” with all the massive demand coming online. I also think it’s been interesting to see some folks analyze what the actual load profile is for data centers. And correct me if I’m wrong here, Cy, but it’s not like they’re running at 100% all the time. Neither is a manufacturing facility. Things go on and off based on demand or orders coming in.

So, where can we find positive stories and opportunities to work together rather than having it be such a combative narrative? I think that’s something that we view as an opportunity. And I think it would be great for the country if we think about it more like that.

Cy: Yeah, and for us, I think of it as an opportunity too. On the load shape, there’s still some work being done. Folks like EPRI are doing some work around demand response and flexibility. So I look forward to some of those results as well.

Thomas: Cy, I’m going to bring you in again on the hyperscaler perspective. We’re hearing from pretty much all of the hyperscalers, from NVIDIA to Meta, that energy availability is already the top consideration when identifying where to build new data centers.

So when we’re talking about this permitting package, we’re probably thinking about four pieces. Chris, you were talking about the Clean Air Act too. But for now: NEPA reform, Clean Water Act reform, transmission reform – we have the Peters and Barr SPEED and Reliability Act, proposals like EPRA – and lastly, a limitation on the executive branch’s ability to block or delay permitting projects.

Obviously, it’s hard to get a perfect picture, but in general terms, we hear about the AI race and the need to build as a matter of real urgency. So what’s the difference between this package passing in the next year and a world where it doesn’t? What does it mean for America’s ability to lead on AI?

Cy: Yeah, that’s a great question. I’ll try to play Dr. Strange here a little bit and predict the future. The way we see it is in a world where we don’t get a comprehensive permitting reform package in the next year or so, companies will continue to deploy digital infrastructure for sure. But they’ll do so within a system that is increasingly a bottleneck for infrastructure, right? We’re seeing transmission and generation constraints already slowing down data center development that limits broader economic growth.

Much of that constraint is tied to delays in permitting, siting, and interconnection. So these are no longer just minor bureaucratic headaches. These represent a fundamental threat to US economic competitiveness and national security. If we can’t build infrastructure at the speed innovation demands, we risk falling behind global competitors like China. I mean, we’re seeing the reporting out of there, right? They’re expanding their energy grid, manufacturing base and digital ecosystem.

But I think on a glass-half-full side, with a strong permitting reform package, we can unlock transformative gains. Our members will be able to deploy infrastructure faster in more locations and with greater certainty. And that certainty drives investment, and investment drives jobs, tax revenue, and technological leadership. We are talking about trillions – trillions – of dollars of AI-related infrastructure spending, which is great for our overall economy.

And as Chris touched on too, there’s also the ecosystem – the knock-on benefits of manufacturing facilities being put up near data center developments. There’s a whole broader ecosystem there as well. So when approvals are predictable and streamlined, investment will follow. Where approvals are slow, communities will lose out on economic opportunity, and Americans will generally be at risk of being left behind.

Thomas: So, Cy and Chris, we’ve now name-dropped the term “dark matter” when talking about permitting about eight times on this podcast, and I’m gonna keep the streak running here.

It’s always really valuable to concretize what it means for manufacturers, hyperscalers, whoever, to be making investment decisions or siting decisions in a permitting-constrained or energy-constrained world. And so what does this look like in practice, whether you’re a manufacturer or a data center developer, when you’re running into permitting challenges or energy availability challenges?

Chris: I can jump in here. Shameless plug – we’re actually going to have a little booklet on exactly these specifics, Thomas. So for folks that are listening, maybe it’ll be out by the time this goes live. It’s our AI and Energy Dominance roadmap. And to your question at a high level, we did some survey work. 80% of manufacturers said that the length and complexity of the permitting process is harmful to increasing investment. 87% of manufacturers would expand business operations, hire more workers, or increase wages and benefits if the permitting process were more streamlined.

Now, we obviously represent a lot of different industries. So what this means will depend on your size, your geographic location. For a mining company, let’s say, getting a mine online takes a very long time and is subject to significant judicial review. If we take a step down in the mining ecosystem to rare earths, all of those different elements that we talk about all the time have a specific chemical way of being processed and refined. And so when you think about the Clean Air Act, the various niche regulations that govern different smelting or processing technology, you’re going to have to get different permits for whatever smelting or refining operation – whether it’s graphite, whether it’s molybdenum, whether it’s lithium.

All of these things are going to be different – for steel producers, for an electric arc furnace, for energy generators. Is it going to be a nuclear facility? Is it going to be gas? How do you hook up the pipeline? And for folks that use process heat, how do you get a natural gas hookup? If it’s the paper and plastic industry, the Clean Water Act obviously would impact all of that. The examples are endless, honestly, and I think the mining and critical minerals ones are the most relevant right now and the easiest to understand when you really dig down a little bit deeper.

It’s like, crap, you’re going to need to get a lot of permits that are subject to a lot of input and potentially never-ending review. So why would you really want to set up something that is already not economical to do in the rare earths space when you’re competing with China?

I liken it to tying one hand behind our back and trying to compete with China. I mean, they are setting up just massive, massive infrastructure buildout and energy buildout and manufacturing buildout. We can compete with that, but we cannot tie one hand behind our back in all of these different situations. So it has real, real-world effects on project costs, on timelines, on what your shareholders or your board are going to allow if you’re a large public company. It really can be quite a drain on all forms of energy and manufacturing, and it has real-world consequences.

Thomas: Yeah, I remember when I was looking at the Clean Air Act and semiconductors, there was a flexible permitting program – a pilot program that they ran for Intel called Project XL up in Oregon in the late ‘90s. And Intel said it was the difference between them keeping those production facilities in the US versus going abroad to where they had other operations. And when we see those one-to-one comparisons, I always think it’s valuable for understanding just how much this permitting burden matters.

Chris: Yeah, time is money, and I know we’ll have a little bit more conversation about what some of the contours on both sides of the aisle look like. But again, I don’t want anyone to have the takeaway here that there shouldn’t be any public input. That is obviously not what manufacturers want. We operate in, and our folks live in these communities. But I think just the never-ending opportunity for folks to gum up the works will have a significant impact on what your investment returns can be and your timeline of putting your capital out there. It just is impossible sometimes on the timelines that you can expect in the permitting world nowadays.

Thomas: So, as we mentioned in the intro, policymakers have often thought of permitting reform from the perspective of energy producers. But we’ve seen more efforts, at least recently, to think about the impact of permitting on end users as well, whether that be the successful Building Chips in America Act, which excluded certain semiconductor projects from NEPA and the National Historic Preservation Act, or the AI Action Plan’s executive orders to streamline NEPA and Clean Water Act permitting for data centers themselves.

I want to understand, from a political engagement or political advocacy angle, how this will play a role in the current permitting reform negotiations or maybe ones to come. Google has a major energy platform. OpenAI just endorsed the SPEED Act, the recent NEPA reform bill. Manufacturing and AI are no doubt priorities for a huge number of members, including some who maybe have not been as historically engaged on permitting, at least from an energy perspective.

So do you get the sense that advocacy from and engagement with manufacturing and AI stakeholders has changed the dynamics of permitting reform on the Hill in the last couple of years? Or do you see most members thinking of permitting in more or less the same framing?

Cy: So from my perspective, I think it has changed the dynamic for sure. If you think about much of the traditional thinking on permitting reform, you have NEPA, Clean Water Act – people think of that as an oil and gas industry win. Then you have things like transmission permitting reform, which may be seen as more beneficial for the renewables industry. But the way I look at it is that we’re in a period of load growth that we haven’t seen for decades. So we really do need as much energy as we can get.

We’re not here trying to put our thumb on the scales. We’re not here trying to pick winners and losers, but saying we need to ensure that we can build things again in this country. So for data center developers, there’s a real tension between the timelines of data center builds – it generally can take 18, 24 months, depending on the size – and power infrastructure and transmission development, which can take three to seven years approximately. Again, we’re not seeing the bulk of this time spent on construction, but a lot of it is on the permitting side for the energy infrastructure.

So the delta between data center development and energy infrastructure development significantly stalls the pace at which data center investment, jobs, tax revenues, and other benefits can be deployed. At the end of the day, energy is the pacing challenge for the data center industry. And without energy, we can’t turn zeros and ones into output.

So when we bring this message to the Hill or the administration, we hope that they see this dynamic has shifted. And we also want to bring a big-tent strategy to the permitting reform debate. I’ve seen a consensus from a broad coalition of stakeholders that comprehensive permitting reform is needed that I don’t think was there in the past. To your point, this includes stakeholders that may not have been as active in previous discussions. So I think the more voices that are singing from the same hymnal here, the better chance we have to gain momentum and pass a broader permitting reform package.

Chris: Yeah, I think that advocacy has worked. It is somewhat of a change. The fact that the negotiations are ongoing, at least it sounds like positively, is a good change. I do think that just having come from the Hill, there is some institutional inertia on some of the key parts, NEPA and transmission probably being the biggest ones. But I do think to dovetail on what Cy said, there are tectonic shifts happening here where the traditional narrative around transmission being that, “We don’t want to subsidize energy going to a different part of the country,” is maybe becoming less true where there are data centers or manufacturing facilities located along a “right-of-way”, as it were.

So for local jurisdictions or states that might otherwise feel like, “Well, the easy thing to say is we don’t want to pay for California’s energy” – well, now you have stops along the way where there’s jobs and investment and you are actually able to take some of that energy and electricity off the grid for actual local development. I hope we’re going to see more of that because that’s definitely a piece that is moving the needle.

And I think there’s been a recognition that clean energy investments as well, like I said, need this. It’s just the slow inertia of Congress where folks may realize it behind the scenes, but there are vested interests or just the politics of it make it a little difficult to be out there. But I think the more folks like us manufacturers describe the positive nature of what’s happening here – and that this isn’t just an effort to undermine public input or to be bad actors, it’s in fact the exact opposite – the better.

We want to be leading on building responsibly, competing and out-competing China. Congress is frustrating to see work sometimes, but I think it’s in a good spot right now. The fact that no one has walked away from the table yet is a good sign and a sign that the principals, the folks that matter, recognize that there is a win-win to be had here. And we’re going to keep working on that with the administration and both sides of Congress, because I do think it doesn’t have to be a zero-sum where you’re undermining oil and gas, or we don’t want to see solar and wind built. We need all of them and everyone can benefit here.

Pavan: Chris, you’re totally teeing me up there. So one of the components that I think has to be in this package for it to pass is an element on executive discretion. That is, an effort to prevent this ping-ponging treatment of different technologies from administration to administration.

You had the LNG pause under Biden, some slow-walking of leasing, and now you have an Interior memo from this administration in addition to EOs looking to slow the permitting of wind and solar. So this idea of preventing that swing – it’s hard to quantify, but it’s really, really important.

Obviously, manufacturers, hyperscalers rely on being confident in the permitting process, knowing that they’ll be able to get the generation that they need. So I’d put the question to both of you. Do your members see different treatment under the permitting regime from administration to administration? If so, is that changing how they invest?

Chris: That’s a good question. I came from Congress, so I’m an Article I guy. I do think that some statutory language on executive discretion is definitely needed. Now the devil’s in the details because you don’t want to tie an executive’s hands to the extent where you’re gumming up the works again by trying to stop the ping-pong.

So it is a delicate dance, and that’s how the Constitution is set up, and it works. Sometimes it’s slow, but I do think there needs to be some reining in of the ping-ponging because it really is there. I mean, you mentioned a lot of the greatest hits from the previous administration. But I think it’s also important to remember – under Biden, we also had record oil and gas production. Under Trump, we saw Texas of all places lead the nation in battery development and deployment. So the market does still work to an extent, despite what any given party or executive might be trying to do or impose.

But I do think that there needs to be some restraint put by Congress on the executive to allow and ensure that all types of energy get built out. The LNG pause, I think, was really quite short-sighted. Some of the bans on leasing and things like that – we’re seeing those chickens come home to roost. And similarly, blocking solar and wind development on a whim – that can then swing back quite dramatically and we don’t want to see that. We would like to see everything possible built – the more manufacturing, the better. I don’t have the exact answer for what this looks like, but I do think it’s Congress’s role to do that. And it’s their job to have those deep, thoughtful discussions on how you make sure that you get that outcome.

Cy: Yeah, I would generally agree and people smarter than me can think about what that fix is legislatively. But I generally agree with that. First off, I have to give credit where credit is due. This administration has been super supportive of our industry. OSTP and the White House did great work on the AI Action Plan. DOE is working on opening up federal sites for data center and energy deployment. And then DOE’s Speed to Power Initiative should hopefully yield great results as well.

That said, any uncertainty in permitting regimes just makes it harder to make those long-term investment decisions. The lifespan of energy assets can vary depending on the resource, but it’s generally between 20 to 80 years. And these are also large investments. So when an energy developer makes a decision on an asset that will span multiple administrations, I would say that they expect some certainty in this process.

We’ve seen both Democratic and Republican administrations support their favored resource types. So we try to stay out of those zero-sum policy debates as much as we can. And we are really trying to make the case that every electron and molecule is needed at the moment. While our members vary in terms of their sustainability goals and business models, I can confidently say that each one would appreciate a predictable regulatory climate to ensure that they can make those informed, diligent, long-term investment decisions.

Pavan: So I want to drive more at that hyperscaler perspective a little bit. Because one of the reasons I feel so much urgency around trying to drive towards a package this year and the next year is that it seems like the infrastructure development process, unfortunately, is getting more litigious.

We’re seeing this with data centers. I don’t know if you guys are on Twitter much, but those More Perfect Union tweets are going viral. They’re out there, and data centers are getting a bit of the blame for increasing electricity prices as we struggle to bring online and move new generation.

So, Cy, how are you thinking about this cultural component? And to what extent does national permitting reform help or not help with this?

Cy: Yeah, it’s a great question. It’s a tough question. For us, affordability is top of mind at the moment. It’s a critically important issue. You mentioned what’s going on on Twitter. You can’t open it without seeing data centers and AI somewhere. But I wanted to start off with: our members are committed to paying their full cost of service, which is a technical regulatory term, so I won’t go too deep into it. For the energy that they’re using, including transmission facilities, that’s the expectation.

And we are actually seeing multiple examples from utilities across the country laying out the case for how data centers can actually help lower electricity costs. Georgia Power, for example, has kept rates frozen for the next three years because of load growth. And then we’ve also seen in Pennsylvania, PPL says that for the first gigawatt of interconnected load, they can reduce customers’ transmission costs by 10%. So there are stories around the country of utilities seeing load growth as an opportunity to help with the affordability issue.

And I would say data centers also routinely pay utilities for the infrastructure directly associated with their facilities. I’m in D.C. right across the river from Dominion Energy. Data centers routinely pay for certain pre-connection costs, connection costs, and additional facility costs to provide the appropriate assurances to the utility and protect other customers from the risk of stranded asset development.

Finally, it may not be the sexiest thing in the world, but we’re in an inflationary environment. Costs for everything have gone up, including things to build out our energy system. NRECA did a helpful study and graphic on this. Transformers are up 70 to 100% since 2020. LBNL earlier this year put out a study that said that load growth is not the primary driver of electricity rates. It’s simply inflation. So I just wanted to set the stage with those talking points first.

But to your question on permitting reform, yes, it can definitely help with cost. Red tape and regulatory overlap across multiple federal agencies and sometimes states just creates uncertainty, discourages investment, and ultimately drives up costs for consumers. McKinsey did a great report recently where they estimate that construction costs can increase 24 to 30 percent over project timelines due to permitting delays. They also estimated that 1.5 trillion dollars in capital expenditures is currently suspended in the permitting process. So is permitting reform a silver bullet for energy costs? Probably not. But it does ensure that projects can move forward in a timely manner and developers don’t see unnecessary cost increases due to these permitting delays.

Pavan: Right, I mean, I’ll turn into a little bit of an energy wonk, but I see load growth as good. And it’s good in a way because it’s demonstrating the cracks in an electricity and a permitting regime that’s decades-old. Whether it’s regulators, whether it’s Congress –, government doesn’t like to turn its homework in early.

I think we need a mechanism to make sure that people are really looking at a granular level, what are the barriers to development? It’s easy to find a scapegoat. It’s a lot harder to reform laws to make sure that costs are lower, we can compete, you can bring online generally lower carbon-intensity generation and all that. So I appreciate the points.

Chris: I think, again, there’s this opportunity that we were talking about. We have a number of members who are looking to take advantage of this opportunity, bringing transformer and gas turbine manufacturing back online across the country. We’ve had a number of companies that have announced big things like that. And I think, again, it depends on what the site is, what kind of energy you’re using or what process heat – that’s going to depend on what type of specific permit you’re going to have to get. But I think more broadly, having that culture of certainty in the regulatory and permitting space is going to help because it’s a real problem for what Cy is talking about –and it has those knock-on effects where electricity prices go up for everyone, and we’re not able to get the manufacturing online in time to get what we need in terms of transmission, distribution, generation, the bits and pieces that go into that.

It will make companies and investors and manufacturers feel more comfortable to have that sense of security and stability that if you are starting a project, you’re going to get an answer one way or the other. There’s going to be sufficient electricity for you. There’s going to be affordable electricity for you and you can take advantage when the market is sending these clear signals like, “Hey, we need more transformers.” This has been a problem for three or four years now, back when I was with Sinema’s office. It’s like, why has it taken us so long to do that?

And so that’s just one micro example, but we’re going to need more gas turbines. We’re going to need more rare earths for battery development to smooth the cost curve – again, what Texas has done so effectively this year. And I think to also echo what Cy said, the administration’s AI Action Plan – we were very supportive of that. I think it is a document that seems supportive of all-of-the-above and really big thinking in these spaces. And so we just encourage this administration and whoever may come next to have that in mind, just the stability in the regulatory space. Hopefully we get a permitting reform package that can provide that in the statutory sphere as well. But it really comes down to a vibe – like, is it safe and stable to invest in America for these hundreds of millions, billions, trillions of dollars of investment from the data center all the way down into everything that goes into it?

Cy: Yeah, and just one more point on that too. I think it was Peter who was on a previous episode of your podcast that talked about his clients just completely avoiding the federal nexus because of uncertainty and timelines, right? And I think Chris made this point earlier – a lot of this we don’t know, you can’t prove a negative. There’s so many projects that just avoid the federal nexus because they’re uncertain about what the permitting regime and timelines could be. So I think if there’s legislation that could help fix that, that would be super valuable.

Thomas: Dark matter, if you will.

So Chris, your former boss, Senator Sinema, was a Democrat for 18 years, then became an independent in 2022. She was also quite engaged in a number of permitting reform packages, both in the IIJA and more recently with bipartisan Clean Air Act reforms. What do you make of Democrats’ evolution on issues like NEPA reform? Would you call it an evolution? Is it overrated? Is it understated? Something else?

Chris: Yeah, that’s a good question. One thing that we also worked on with Senator Sinema was the Fiscal Responsibility Act, those NEPA reforms, which I don’t think were correctly implemented by the previous administration. And we’ve seen a bit of a change there, which has been welcome. But I don’t want to speak for my friends who are still on the Hill on the Democratic side, who I worked closely with, and have a lot of respect and successes with.

I think there has been an evolution with the IRA, maybe those tax incentives before they were changed. In the One Big Beautiful Bill Act, I think there was a recognition that parts of those monies were not being as effective because of the delays in getting projects online. And so there’s obviously a huge focus on electric vehicles and that tax credit. There was definitely a boom in them, but I think you saw folks start to realize like, actually, where we are having the most impact from the IRA is in the grid-scale space. So the batteries, the rare earths, the wind energy.

And like we’ve said, to be a broken record here, those are subject to the same exact statutes as a pipeline or a nuclear reactor or other things that may not be traditionally quote-unquote “Democratic”, though there definitely has been an evolution of the Democratic Party for the better on nuclear energy, which has been really great. I think Ranking Member Whitehouse has been a real champion on that. So credit where it’s due for him and Chair Capito on the ADVANCE Act and things like that.

But again, the NEPA reform, there just is an inertia. There can be a difference between what folks say and the advocacy in private versus what is possible in public. I think also to be fair, what the Democratic Party really cares about is making sure that communities are protected. And I don’t think that’s necessarily a bad thing. There should be public input into all of these things.

And so when we were negotiating the Fiscal Responsibility Act – and I think Senator Whitehouse, there’s some reporting about him today as part of these negotiations – we didn’t want to cut the public out. But it can’t just be random people filing a comment just so that they can sue in the future. If there are affected people or communities along a pipeline or near a solar facility or a gas plant, they should have the opportunity in a stable and reliable timeline and process to get through that to make sure that what local people have to say is reflected. And I think there’s probably a fear among some folks in the Democratic Party that some of these reforms would do away with that.

I think telling these interesting stories about clean energy not coming online or being stymied because of these same laws – and it’s often people abusing them – is important. It’s not like a real local concern has come up in the 10th year, right? There’s a lobby for these kinds of things. And it’s important to recognize that and to say, honestly, public input is good. It builds a better product. It builds better projects. You don’t want people protesting or coming at the outside. So you see a lot of companies doing this the right way, making sure that there is that buy-in.

I think if you take away all the layers of the onion and leave transmission by the side, that is the crux of what Democrats want to make sure that they’re protecting. And I don’t think that there is as much disagreement as maybe the “mainstream media”, quote-unquote, says. I imagine Chair Capito would say, “Hey, if you’re building a new coal facility, the folks that live there should have an impact, a say on how it is operated.” And so that cooperative federalism, to take it back to the Clean Air and Clean Water Act space, that’s how it should work. But it should not be an unlimited amount of time for legal groups to take advantage of the very same populations that Democrats want to protect and sort of use them very... what’s the word I’m looking for?

Pavan: As a cudgel of sorts.

Chris: Yeah, use these communities as a cudgel against just any project that they don’t agree with. I think that just really, really needs to change. And there has been an evolution and recognition on NEPA from some Democrats. It’s going to take a while to get everyone there, but you only need seven right now. So that’s the hope here. If you seven are listening, it’s a good idea.

Thomas: So, Cy, you mentioned how big of a priority transmission is for your trade and your members. We were talking about an evolution among Democrats on NEPA. Do you think there’s been an evolution for Republicans on transmission? If you get granular, there are these specific questions of interregional planning, of backstops, of cost allocation. Do you think there’s been a change maybe in the administration, maybe in Congress? We were talking about the AI Action Plan, so I’d love your thoughts there.

Cy: Yeah, first off, we should get shirts that say “We just need seven.” Those would be a hot commodity.

I mean, it’s a good question. When I have discussions with Republicans, I think they understand that for a comprehensive permitting reform package to pass, it’s going to need to include something on transmission.

I think the one dynamic that has shifted is that, my understanding was, historically Democrats’ number one priority was transmission, but given what they’re seeing with this ping-ponging effect, I think that may come ahead of transmission. So I don’t know how that plays politically, whether the horse-trading takes place and transmission gets left by the wayside because of that. It’s just something I’m watching when I’m having conversations.

On some of the specifics, like interregional planning, I would say that there’s a little traction on that front. On the other two, there’s probably still a lot of work that needs to be done from the people downtown on making the case. Cost allocation has long been a sticking point, but I think if we change the narrative a little bit and focus on specific benefits that should be considered, that is probably our clearest path forward on something like that. I mean, there was a letter from a congressional delegation to FERC recently that even somewhat endorsed EPRA’s cost allocation principles, right? So there’s some positives coming out of that as well.

On the administration front, obviously we’ve seen Secretary Wright talk positively about transmission in various venues. I think just this week DOE issued its first Energy Dominance Financing Program loan guarantee to reconductor and rebuild around 5,000 miles of transmission. So if we want to accomplish these goals on transmission that the administration has put out, we’re going to need permitting reform, right? So I don’t know, maybe flipping the narrative and pointing to some of those good things coming out of the admin on transmission may be a way to tackle this with the Hill here.

But I think long story short, there’s still some work that needs to be done to make our case to Congress and Republicans in particular.

Thomas: So we like to end our show by asking our guests for an energy policy hot take. I’m going to ask both of you for one, but Chris, we’ll start with you.

Chris: Yeah, Cy set me up perfectly. I think that there’s going to be some interesting changes happening from the industry side. Now I can’t guarantee this or say exactly who, but I think you’ll start to see some folks in the gas sector become more involved and interested in the transmission piece of things because they want to get their product to as many places as possible. And where we’ve been talking about transmission as a traditional Democratic and renewable energy thing, I could see that shifting pretty significantly here. So to Cy’s point, the strange bedfellow coalitions that you need to break through some of these inertial pieces in Congress – I’m really interested to see what can happen in that space. So stay tuned, everyone. We’ll see if I’m right.

Cy: Okay, I was told I couldn’t give my hottest take here by my comms team. So, trying to stay employed, I’ll give you my second-hottest take. We’ve talked a lot about load growth and the need for permitting reform throughout today’s discussion. In terms of energy demand, one stat that comes to mind is we’re going to need 80 gigawatts by 2030. That’s what McKinsey says. And then from a data center demand side, Goldman Sachs put out a pretty cool study that says basically the delta between capacity and demand in the data center space is 11.4 gigawatts. So just putting in context what we need here.

My second-hottest take, then, is we need to spend less time in this country thinking of ways of curtailing and holding back and more time looking at how we can build the grid and infrastructure of the future. We spend a lot of time, and rightfully so, on very technical issues, but I would like to see how we can all agree on moving infrastructure development forward with smart reforms such as permitting reform. We don’t want to be sitting here three years from now saying, “Man, we should have done that,” right? I think we have a real opportunity.

Thomas: That’s a great place to end it. Gentlemen, thanks for joining Right of Way.

Cy: Thank you.

Chris: Thanks guys.

In this episode, we discuss:

• How the shutdown will affect permitting reform discussions

• What makes this round of negotiations different from past efforts

• The state of play in Congress, from the House to the Senate, from NEPA to transmission, and beyond

Right of Way Ep. 3.5: Special Shutdown Edition

w/ Joshua Siegel

Thomas: Welcome to Right of Way, a podcast about energy policy, energy politics, and above all the upcoming permitting reform negotiations. I’m Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, and I’m joined by Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress.

Up to this point on the podcast, we’ve been doing a lot of scene-setting. We’ve talked about where we are in this broader energy policy moment, and have also taken deep dives into NEPA, the Clean Water Act, and transmission.

But now things are actually moving on the Hill, and we want to make sure that listeners are getting an insight into how this package comes together, as it comes together.

So, joining us today to give us a rundown on all things Congress is Josh Siegel. Josh is an energy and climate reporter at Politico, where he covers the frenzy of activity around energy policy on Capitol Hill and beyond.

He’s also the host of the POLITICO Energy podcast, which features breakdowns of the latest energy policy news, as well as interviews with members of Congress, energy executives, and other key stakeholders.

If you, like us, follow Josh on Twitter you will know that he is “The Guy” when it comes to energy reporting. It feels like Josh has had every major scoop and piece of breaking news on permitting reform in particular, so we’re very excited to have him joining us.

Josh, welcome to Right of Way.

Joshua: Thanks guys, appreciate that very generous intro.

Pavan: So as we record this, Josh, on October 8th, we are on day eight with no continuing resolution enacted into law, no clear way out of this mess. But I think it’s worthwhile to kind of consider the implications that this has for energy policy, for permitting on this podcast. So DOE has canceled a number of grants, and I’m curious whether you believe that the resolution—reviving those grants—comes in the course of a permitting reform negotiation, or do you think this is more of an appropriations problem?

Obviously it doesn’t help the political conversation in any way for Democrats who are looking for reasons to engage, but I’d be curious to hear your take.

Joshua: Yeah, I don’t think we’ll see this become really the subject of negotiations to reopen the government. Health care seems to be the top priority when it comes to Democrats engaging on reopening the government. We know that this administration is pretty set in its ways when it comes to energy, and is pretty clear on where its priorities are. So I don’t think this will become subject to broader negotiations.

As far as how it affects permitting, I’ve spoken with senators on both sides this week and last week. There’s not a direct relation in that the current impasse has nothing to do with permitting or vice versa. But I think what the question is—as you hinted at—is that trust between the parties right now is not great. You talk to people on both sides and they say, “When you cancel projects like this”—this is not in the permitting context, but we’ve seen them revoke permits or stall on permits when it comes to the projects they don’t like. It’s clean energy, it’s renewable energy—more specifically, it’s wind and solar. In some contexts it’s transmission. I’m not speaking for all Democrats, but the majority I speak with say, “Look, we’re sympathetic. We want to do something in this space in an ideal world. But this week is just another example—the last couple of weeks with how things are going with the shutdown—of why we can’t really trust this administration.”

And then the other issue is time, right? I mean, we know how Congress works. There’s only so many calendar days. I caught up with Chairman Bruce Westerman on Tuesday, who was over in the Senate for different reasons, but I asked, “How do you feel about the shutdown impacting your efforts to really move your NEPA reform bill, which seems like the clearest path to moving something given that it’s bipartisan?” He said, “We’ve had to adjust our calendar. The committees can’t do hearings right now. They can’t do markups.” So it’s still his top priority. As soon as he’s given the go and the government is back, he wants to move on it. But that’s not there right now. We know these are precious days as you get to the end of the year.

Pavan: Yeah, so the calendar is definitely a problem. Do you think that the impasse has dented the momentum in general for passing a package? Obviously, you’re losing a week, you’re losing two weeks, three weeks as Congress discovers how to pass appropriations or a continuing resolution. But do you think that that urgency remains, or do you think it’s diminished?

Joshua: No, I think the urgency is the same. As you’ve highlighted on your podcast, the context in which permitting reform is happening now is different. I’ve been following this issue for three, four years now. The difference is that you have all the industry groups across the spectrum really wanting to see something happen. AI, the rising power demand—we haven’t seen that happen for decades. All of this is really making it an urgent priority across the spectrum to see projects move. That context is still there. So folks who want to see action are continuing to beat the drum.

It’s more a question of: Will the Trump administration back off at all? How much will they engage? They’re doing a lot at the executive level. What’s their level of involvement, what do they want to see happen? I think that’ll be motivating for Republicans. And, can folks like Capito, Westerman get through, in any way they can: “Hey, what you’re doing on the executive side is maybe not helpful.”

Thomas: So you mentioned the challenges that come with the calendar right now, and I think that’s a good segue. Taking a step back, what is the state of play right now? We have one committee that’s introduced a NEPA bill—that’s House Natural Resources with the SPEED Act. We have a second committee that’s introduced a transmission bill—that’s House Energy and Commerce with the confusingly-similarly-named SPEED and Reliability Act. And we have a third committee that’s introduced a Clean Water Act bill—that’s the House Transportation and Infrastructure Committee with the PERMIT Act.

I would note here that the NEPA and transmission bills were both bipartisan. You have Golden and Westerman on SPEED. You have Peters and Barr on SPEED and Reliability. The PERMIT Act as of right now is Republican-only.

So a few things here: How is the House thinking about run-of-show? When are they hoping to move things to the floor? And also, how are things going more broadly on pulling these two bipartisan bills and this one less bipartisan bill into a more cohesive, coherent package?

Joshua: I am watching the House side, which is surprising if you followed this closely last time—it was really the Senate driving a lot given that Joe Manchin and John Barrasso had a great partnership and were really moving on that. I do think the House is where there’s more activity, at least with progress that we can see as the public.

When you talk to Westerman, he really wants to get a full comprehensive package. So I think it remains to be seen. Let’s say the SPEED Act is marked up, it’s bipartisan, which I think we expect given it was introduced bipartisan. Does he want to go to the floor with it? Does he convince leadership to say, look, “We want to see what we can do on the Energy and Commerce side”?

The question mark there for me is—yes, there is a bipartisan bill that was put out on transmission that I think was surprising to a lot of people to see a Republican, Andy Barr of Kentucky, put his name on. There were a lot of similarities to the Barrasso transmission language there, but the question mark for me is the chairman, Chair Guthrie.

He does publicly speak about transmission and the needs for the grid in a way that the previous chair, McMorris Rodgers, hadn’t really shown much interest or really engaged much on—and ended up not taking any action on. But we haven’t seen Energy and Commerce schedule transmission-specific hearings in this context. So I think Guthrie’s appetite will determine a lot.

But I do think for the folks who are publicly leading this in the House, Westerman is the guy I’m following a lot because he was really active in the last Congress trying to get a deal there at the end of the year with Manchin-Barrasso and locking up the House side.

He does want to do a compromise. He doesn’t view it as, “Let’s just get some NEPA reforms and some judicial review and call it a day.” He really wants Clean Water Act, transmission, NEPA, judicial review reform—he wants it all together and sees it as, I think, a legacy item.

Thomas: So you just named a few key components of what this package almost certainly has to have to get sufficient votes, right? There’s the NEPA, there’s the transmission, there’s the Clean Water Act, there’s this cross-cutting judicial review issue.

One piece that we’ve heard a lot about recently that doesn’t sit in any of those silos is this effort to limit the ability of the executive branch to target disfavored energy sources through delay, whether that be wind and solar with this administration or perhaps in a future Democratic administration with oil and gas. What are you hearing right now on the Hill about efforts to target that fourth issue?

Joshua: Yeah, that’s a little bit unclear to me. I don’t hear anything on specific language or ways they want to go about that. But as far as it being a motivator for the Republicans and the Democrats who want to see something happen—Sheldon Whitehouse is a great example. He’s negotiating with Chair Capito at EPW on NEPA and some other elements that are related to their committee at EPW—offshore wind, some Clean Water Act components. They’re saying that passing permitting reform into law—that benefits all technologies—is how you prevent these kinds of swings between administrations.

But when I put the question point blank to Whitehouse and other Democrats of, “How would you assure that? How do you prevent these kinds of actions?”—there’s not a lot of specifics. Because Senator Whitehouse has made clear that he will not sign off on anything until he has some indication that renewable energy projects will not be treated differently than fossil fuel projects. And I just don’t know what would give him that confidence. Would there be specific language written into this that would put limitations on it? It remains to be seen. I’m sure there’s creative ideas out there. But right now, we’re not getting a ton of specifics on what that would look like or whether it’s more signaling—like Republican good faith, “Hey, we have a good word from the administration that they want to see permitting and are going to be more selective on how they exert their executive authorities.”

Thomas: So you talked a little bit about how this push has some fundamentally different ingredients with AI being on everybody’s minds, as well as there being all these concerns about energy affordability.

We’re trying to think about what the ingredients have to be for this package to work. Because we’ve seen efforts come up short in the past, most recently in 2024 with the Energy Permitting Reform Act of 2024 negotiations. So, if in a year we come back and do another podcast episode and the bill has passed and Pavan and I are celebrating—what will need to have happened, what will need to have changed from previous efforts for this to really come together?

Joshua: When I look at the last go-round, I feel like there were efforts on both sides to blame each other. “Well, it was the left who wasn’t comfortable with NEPA reforms and judicial review.” And, “No, it was the conservatives who wouldn’t engage on transmission.” In reality, I think there was some truth to both of that.

So I think it would be a combination of finding a transmission policy that makes Republicans comfortable. I know the cost allocation issue is contentious, but that bill in Manchin-Barrasso moved out of committee on a very bipartisan basis. If it got to the floor, I think it would have seen bipartisan wide margins as well.

But the House Republicans weren’t comfortable entirely with that concept. So it’ll take Mike Lee, the chair of the Energy Committee, who has been a little bit of a black box for us reporters. He did put out a tweet recently that he wants to see NEPA and broader permitting reform, and I have heard that he and Heinrich have started member-to-member. So that’s something. But, I think it’ll take Lee really showing some leadership on the transmission side and Guthrie as well in a way that we have not seen.

And then, I do think there’s been more progress than maybe is always noted as far as the Democrats engaging on NEPA. Is the SPEED Act language as it is what will make it in a final package? Probably unlikely. But Tom Carper, who was the top Democrat on EPW last Congress negotiating with Westerman on NEPA—he made some concessions that I think surprised some people. They didn’t get all the way there—it wasn’t enough for Westerman who saw that the GOP was going to return to power and wanted to really drive things. He didn’t get to yes there.

But, it’ll take a combination of the Democrats becoming more comfortable with NEPA changes and judicial review. And I do think they’re making a lot of progress on that. Then with transmission—really, it will be about Republicans getting comfortable with taking action.

The third big bucket is the administration. I still think that honestly is the biggest thing. If we were in a different context and they weren’t doing what they’re doing, it would be really ripe, I think, to get permitting done this Congress with the elements that we’ve been discussing. It’s just that element is really the big question mark.

Pavan: Right, just going back to that idea of industry alignment—there was a New York Times story recently talking about oil and gas executives who were deeply uncomfortable with the stop-work orders against offshore wind. It was striking, right? You’ve got Darren Woods, the head of EQT, the head of API, saying this is a real concern for us—looking at a Democratic administration in the future that has unearthed all these authorities. I think that’s another ingredient here and maybe adds to the urgency.

But anyway, we like to end our podcast by asking our guests for an energy policy hot take. So Josh, what’s yours?

Joshua: Yeah, I don’t know if this is a hot take or not, but when it comes to the conversation around whether the parties are ever going to get together on doing policy that addresses climate change, I’ve seen some stories recently on Republicans removing themselves from that playing field.

But it does feel like we’re just in a new context where action that we see in Congress and their messaging around energy is really going to focus on costs, meeting rising demand, and what technologies are best equipped at doing that.

We’re already seeing that in Congress. I don’t hear Democrats talking about climate change as much. You don’t hear Republicans talk about it either. Not that it’s not an important issue, but I do think the debate that we’re going to be seeing going forward is going to be really about how we enable more energy to get online and what types of energy are best equipped.

It’ll be interesting to see where the Republicans go once Trump is not the president, because I do think when you talk to Republicans in Congress, they’re not entirely comfortable with where the president has gone. Openly, his administration is moving away from all of the above. And it’ll be interesting to see if whoever becomes the party’s standard bearer going forward is the same in how they act against renewables or if they embrace everything—as well as how Democrats respond. So, it’ll be interesting.

Thomas: There’ll be no shortage of new stories to report on for the next few years, that is for sure. Josh, thanks so much for joining Right of Way.

Josh: Thank you.

The Clean Water Act has received relatively little attention compared to laws like NEPA. This is in part because its problems have historically been viewed, incorrectly, as just a parochial concern of the pipeline industry.

In particular, Section 401 of the Clean Water Act, also known as the State Water Quality Certification, allows states to “grant, deny, or waive certification for federal permits that may result in a discharge into waters of the United States.” This has allowed (typically) blue states to veto or attach severe conditions to pipeline projects, freezing investment and cutting off entire parts of the country from natural gas access – despite the fact that these projects already require a separate federal layer of water permitting and review.

Most notably, over thirty percent of New England households still use heating oil – substantially dirtier, unhealthier, and more expensive than natural gas – because New York has leveraged Section 401 to block pipelines from crossing the state from Pennsylvania into the northeast.

So as energy prices skyrocket and the country looks to switch away from dirtier fuels, reforming Section 401 barriers for natural gas seems obviously good on bipartisan merits.

But perhaps more importantly, Section 401 is by no means just a barrier to the natural gas industry – consider, for example, the hydropower industry, which has consistently cited Section 401 as a major barrier to deployment. Even further, the structure of the state certification makes it a tech-neutral barrier to all types of interstate linear infrastructure. In other words, if we get major transmission reforms in the upcoming permitting package, transmission lines will be headed for severe Section 401 bottlenecks.

Indeed, advocates often talk about giving transmission lines parity with pipelines – which, unlike transmission, have routine federal eminent domain via FERC. As the reasoning goes, this disparity is the reason that pipelines have been built so much more quickly than transmission in the last few decades. This thesis seems largely correct – but it is also true that, while federal eminent domain helps override one state veto, the Clean Water Act 401 has evolved into yet another. A comprehensive reform package, then, must get at both potential veto points.

One might ask why Section 401 has not yet emerged as a major problem for interstate transmission. This is almost certainly because we barely build any interstate transmission in the first place, so there’s not much to block. But of course, if Congress passes a FERC backstop, some interregional planning requirements, and more, this will change. Broader deployment, combined with the increased political polarization that often accompanies energy buildout, will likely mean opposition from state and local politicians.

That does not bode well for a future grid buildout. While many Democrats have historically opposed pipelines, we’re now seeing a concerning analogue with Republicans and transmission. Senator Josh Hawley has worked to kill the Grain Belt Express line in Missouri; similar opposition has emerged in other states, with local politicos blocking transmission projects on various grounds.

This isn’t just a red state problem, of course. We’ve seen several prominent examples of blue states blocking transmission lines too, including the famous NECEC line in Maine. Either way, in a world where states no longer have siting and eminent domain veto power in their toolkit, it is a near-certainty that Section 401 will become the primary tool for obstruction.

So, while it’s entirely reasonable for transmission advocates to be focused on FERC backstops and other transmission-specific reforms, they should also recognize that Section 401 reform will be critical to enabling the type of transmission buildout we’ll need in the long run.

Valuable Section 401 reforms do not have to take the form of carveouts. In particular, three categories of reform, taken in sum, would go a long way to right-sizing reviews while preserving state involvement:

1. Right-Size Scope: Limit certification to projects that directly result in a discharge, replacing the current practice wherein states can require broad consideration of the entire project’s effects on a range of issues unrelated to water quality

2. Strengthen Timelines: Establish a firm 12-month deadline for states to grant or deny certification starting when the request is received, such that states can no longer abuse requests for withdrawal and resubmission to reset the one-year clock indefinitely.

3. Expedite Judicial Review: Provide fast-track court review for certification actions involving energy infrastructure licenses and FERC authorizations, with final decisions required within a shortened period (eg, 120 days).

The next few months will offer one of the last opportunities to right-size our permitting processes before shifting leadership in Congress sidelines permitting reform for the foreseeable future. Modernizing Section 401 will be a critical piece of the puzzle.

In this episode, we discuss:

• How transmission fits into the broader power system

• The “3 P’s” that make transmission buildout difficult

• Past efforts at reform and why they came up short

• The politics of transmission reform today

Right of Way Ep. 3: The 3 P’s

w/ Daniel Palken

Thomas: Welcome to Right-of-Way, a podcast about energy policy, energy politics, and above all the upcoming permitting reform negotiations. I’m Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, and I’m joined by Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress.

Pavan: During this episode, we’re going to be talking about transmission. Everyone knows that the grid is important: It’s the way that we move electricity around the country, and thus it’s critical to energy reliability, industrial competitiveness, and definitely the AI arms race. And as most people working in energy policy know, the US is really, really bad at building out the grid.

Last year, we built out just 322 miles of interstate transmission capacity. For context, DOE’s conservative estimates say we need to be building out 5000 miles a year – so we’re about 94% short of where we need to be.

Practically, this now means that a, say, geothermal developer can run through the permitting gauntlet, build out a project, and still have to wait through a multi-year interconnection queue to actually begin delivering electricity to consumers. That’s in the context of a moment where the risk of brownouts and rolling blackouts is rising, including in DC, where just earlier this year government buildings were forced to limit AC usage due to a lack of electric capacity. And in the context of our national competitiveness, hyperscalers, struggling to find a spot on the grid for their gigawatt-scale data centers, are already starting to look abroad to build their cutting edge AI infrastructure.

Thomas: So, it’s clear that we need to change something. But, in the already-complicated world of energy policy, grid and transmission policy stands out as some of the most arcane. To quote journalist Robinson Meyer, “In energy circles, the people who work on transmission are feared and respected in the same way a shriveled and reputable local mage might be. They are sorcerers who understand one of the most powerful, corrupted bodies of knowledge in existence—American electricity law—but it has prematurely aged them and led them to scuttle around, muttering incoherent spells: “Ferck and nerck, ferck and nerck, ferck purpa noper.” Strange—lunatic, even? No question. Yet the town would surely be overrun without their protection.”

Thankfully, we are fortunate enough to have one of those feared and respected transmission experts with us today in Daniel Palken. Daniel is the Director of Infrastructure for Energy and Permitting at Arnold Ventures, where he works to address barriers to achieving a lower cost, more reliable, and more sustainable US energy system. Prior to his role at Arnold, Daniel worked as a Professional Staff Member on the Senate Energy and Natural Resources Committee primarily covering electricity sector issues. He has been a lead negotiator on several high-profile bipartisan energy packages, and most recently was the leading voice on transmission during the Energy Permitting Reform Act of 2024 negotiations.

Daniel, welcome to Right-of-Way.

Daniel: Thank you, Thomas and Pavan, and it's great to be on the program.

Pavan: Thanks for coming on. So, that quote from Rob Meyer speaks to just how complicated transmission can be, even for those of us in energy policy. So let's do an overview: How does electricity get delivered from, let's say, a wind farm in the middle of the desert to a household? Who are the different players involved in getting that electricity to the end consumer?

Daniel: Yeah, it's a good place to start. The power system that we have breaks down into three components – of which transmission is the middle child. So you have generation – for example, that wind farm you referenced or a nuclear plant or a gas plant. We really have six or seven generating resources that are at scale on the U.S. grid today. Then you have transmission, which are the big power lines. A transmission line is just a wire. It just is a piece of metal that conveys energy in the form of electricity from where it's generated to near where it's consumed. And then those last miles are taken care of by the distribution system, which are lower voltage, smaller wires that kind of go from the substations to your houses and businesses within cities. So those are the three parts of the system. We have a bit of a hybrid system from a regulatory perspective where generation and distribution – the two ends of the sandwich – are the domain of the states to regulate and govern.

In transmission, this middle part of the system is separate from that. It's the domain of the federal government, primarily regulated by the Federal Energy Regulatory Commission, or FERC, an independent five-member agency that is based in Washington, D.C., and has jurisdiction over transmission across the entire country – other than Alaska, Hawaii, and Texas, which mostly sits on an electrical island of its own.

Thomas: So how did we get to this system – this disaggregated system where there are different levels of control and authority over different parts of the grid? Was it planned to be this way, or did it happen more organically over time?

Daniel: It grew up somewhat organically, then there were big laws and big policies that had major influences. In the 1880s, you had Edison and the invention of electric generation at scale in the United States. You had the Pearl Street station, and you had low voltage direct current wires piping electricity to people's homes and businesses – or really just businesses at that point. Then over time, there was a fight between AC and DC power, and the system we ended up developing was primarily based on AC – alternating current – which is beneficial because it allows you to step up and down voltages more easily. I can get into why that's an important feature of the grid. And over time, the grid grew out and it was decided, for very good reason, that you didn't want this to be a fully competitive space. It was viewed as a natural monopoly.

You didn't want dozens of duplicating wires. You can look at photos from the 1900s where there are dozens of wires strung up practically on top of each other from all the competing companies. That was not viewed as an environmentally or economically desirable outcome. So utilities established territories of their own, and they all sat adjacent to each other all over the country. They grew up that way across the whole country. Some of them were better interconnected than others.

Right now in the US, we have a situation where we really have three distinct grids, which are nominally but not really connected to each other by any significant amount of power flow. So there's the Western Interconnection – picture a line down the middle of the country at roughly the longitude of Colorado, the eastern border of Colorado. You have the Texas Interconnection, which I already mentioned, ERCOT as it's called. And then you have the Eastern Interconnection, which is by far the biggest of the three.

And there's only about a gigawatt or less of power that can flow mutually between each of those three. Then within those, there are regions that also tend to have pretty limited power flow between each other. The system really changed and morphed in the way it was regulated over the course of the late 1900s and early 2000s, where you had these organized market structures called RTOs. This gets into some of the arcane knowledge that Rob was mentioning in his piece. We don't need to get deep into that for the context of this discussion. But now you have a really diverse set of actors. You have independent developers of power. You have transmission that is built by still vertically structured monopoly utilities, and then other transmission that has been bid out competitively. And then these upstart merchant actors that try to come in and voluntarily subscribe people to transmission. So you have all sorts of different business models, all sorts of different regulation.

It varies by parts of the country. We already mentioned the interplay of the states and the federal government – who regulates different overlapping parts of the system. And it all works. I mean, we have a system that provides power 99.9-whatever percent of the time that we need it. It keeps the lights on. America still has some of the lowest cost, most reliable power in the world. And that's something to be very proud of.

But it is simultaneously true that as we seek to grow our power grid because of economic growth – in the form of the AI revolution, in the form of new manufacturing, in the form of electrification, in the form of just population growth – you are going to need to grow out that power system: the generation, the transmission, and the distribution. Transmission is one of these things that we've forgotten how to build in this country.

We have this problem oftentimes in the generation space too. It's become very hard to build plants like nuclear plants. At least when you forget how to build a generation technology, you can relearn to build that generation technology while still building other generation technologies. There is no substitute for transmission. There is just one technology. It is just transmission. It comes in different flavors. So if we forget how to build large-scale transmission, we're really – I think the technical term is hosed – from the perspective that we just can't get the power from where it's generated to where it's needed, whatever the source of generation and whatever the source of need.

Pavan: Right, so we've established that we're pretty bad at building this now. But was there a point in time where the US was pretty good at building transmission? What were the key ingredients there, if so?

Daniel: Yeah, I mean, there was an earlier era where America was better at building a lot of large-scale infrastructure projects. I don't think transmission is unique. You look at everything from the large hydroelectric dams we used to build to nuclear plants – really impressive monuments to man's ability to undertake and build massive complex projects. There was an era in the 1900s when we were churning out the transmission lines that today you can drive all around the country and see everywhere. They're evidence of the fact that we were able to build them.

Transmission lines last 50, 70, 100 years depending on where they're located and how well they were built and designed. So we still have a lot of that first generation of transmission lines around the country. But part of what's driving the need – in addition to the load growth and demand growth we talked briefly about – is the fact that a lot of the transmission infrastructure we have is aging and is going to need to be updated and replaced. So we have a falling off of the stuff we have on the system today and we have an increase in need for new stuff that is coming exogenously. That's creating this perfect storm where transmission is really in the spotlight as something that is an energy imperative for the US to get its act together on.

Thomas: Yeah, so it's obvious we need to build a lot more transmission, but it also seems like we did in fact used to build it faster. So I'm trying to drill down into: have there been policy changes that have made it more difficult to build transmission? Are there economic conditions that have changed? What is it that makes us so bad at building it now?

Daniel: Yeah, so in that earlier era – both of you are very expert on this – we had a simpler system of environmental regulations. NEPA reports, for example, once famously 20 pages, can now span orders of magnitude more than that. There are good reasons for the environmental laws we have, but it's about striking an appropriate balance.

And then there are other barriers that have come into the field of view in transmission. Remember I said earlier that in the simpler times – and I'm simplifying here slightly – you had a bunch of vertically integrated utilities siloed next to each other, tessellating the country. In that system, it's not hard to imagine who builds the transmission lines. It's whichever utility the line is situated in.

Now we live in a much more complicated world where those actors are still there, but some of them are not vertically integrated anymore. Some of them have been required by various state laws or policies to spin out their generation assets. So you have utilities that own transmission, or own transmission and distribution but not generation. Then you have these competitor businesses – these people that come in and try to bid competitively on transmission lines where there's regulatory and market frameworks that support that. And then you have these actors that are the merchants that come in and try to build things on their own initiative.

The fact that there are all these competing factions makes everybody look around and be a little nervous that somebody else might eat the lunch that they want to eat. This is just the reality of competing business models. I think this is a good thing. It's good to have multiple business models constantly contesting with each other for who can deliver the best and lowest cost power. My personal view is: I don't think we would want to collapse into a system where we only have one type of provider of transmission.

But what it also means is that, especially in the era we were just coming out of, which is this era of 20 years of flat load where we had economic growth, but the electricity demand increases were really offset by somewhat miraculous gains in energy efficiency. Think of the switch to LEDs in lighting, which use almost an order of magnitude less power than previous generations of incandescent and fluorescent lighting.

We're coming out of this era where the pie was not really growing. So especially in that era – and right as we went into that era in the early 2000s – was when we made a lot of big regulatory shifts that introduced all kinds of new flavors of competition, not primarily even in the development of transmission, but in generation and in how markets were run in the transmission space.

Thomas: It sounds like the summary here is that there are a few things. One, we have the conventional permitting laws that we've heard a lot about, right? The NEPAs and the Endangered Species Act and the like. Two, there's market liberalization, where in a sense, the vertically integrated utilities had the benefit of just being able to have total control over their domain and thus, in some senses, that actually made the building out of transmission in those areas easier. And then the third piece, of course, is load growth.

Wonks like to refer to the three P's when characterizing the regulatory process and barriers facing transmission. So what are these three P's? Why do they matter? And what's the state of the conversation about how to improve them?

Daniel: Yeah, the three P's that famously stand in the way of transmission development are permitting, paying, and planning. I'll discuss each of them in turn, because they're each pretty distinct barriers. I think to realistically achieve the transmission buildout we're going to need, you're going to have to make sure each of them are addressed in a way that is mutually satisfactory to all parties involved in the sector.

So permitting, to start with, is probably the most familiar to a lot of your audience. It comprises a lot of the conventional types of permitting that you're used to talking about on this show. That's everything from going through NEPA, which a lot of transmission lines, especially in the Western Interconnection where there's a lot of federal land, have to deal with. It comprises all the other environmental laws and land use laws that you're going to have to comply with. And it also comprises state and local permitting. Then often lumped in with this P is the problem of siting transmission lines, which is somewhat distinct from permitting – determining where they go and securing the land rights and all of that.

So that on its own is a big barrier. You have some really famous examples of transmission lines that have stumbled on the permitting hurdle. Many, but not all of them are, again, as I mentioned, in the West. So you have lines like the SunZia line, which famously, if it were a person, would have been old enough to vote by the time this happened to it. It got hit with a National Historic Preservation Act case that has yet again tied this line up in litigation and red tape. You have lines like TransWest, which are about as old as that – verging on two decades or a little more at this point – that only recently got their final permits from the Bureau of Land Management to proceed across the checkerboard that is the West. You have countless examples in the West.

In the East, the way I would put it is that permitting as a whole, especially federal permitting, which is what we're talking about when we're talking about federal permitting reform – laws like NEPA – a significant amount of their burden falls on technologies like transmission. There was a study out of Stanford that looked at every NEPA EIS that was completed from 2010 to 2018. It found that of every EIS – every environmental impact statement – completed by any energy project, fully 33% of them were on transmission. And about 20% of the litigation on all the EISs completed over that nearly decade-long period were on transmission. And about 20% of the project cancellations were transmission.

So that is a high burden of environmental laws falling on transmission. But it is also true that in the Eastern Interconnect – only 20% of our electrical demand is in the Western Interconnect, and Texas is not really germane to the transmission conversation – most of the problem and most of the opportunity falls within the Eastern Interconnect. In the Eastern Interconnect, it is simultaneously true that a lot of the burden of NEPA falls on transmission, but it is not the case that NEPA is the primary thing that is burdening transmission. Those two statements might seem contradictory, but if we're good Bayesians, we'll remember that the opposites of the conditional probabilities do not imply one another.

Thomas: Let me ask one quick question there, Daniel. So obviously the vast majority of the load is in the East, and thus when we talk about transmission challenges, we should be thinking quite a bit about the challenges of building transmission on the East Coast or in the Eastern Interconnect. Maybe this is a naive question, but isn't it also true, though, that a huge amount of our energy potential is out West? And thus if we want to be able to move that energy across the country or deliver it to the Eastern Interconnect, then there is this outsized role of making sure that we can actually build the transmission through federal lands?

Daniel: Yes, I think that's exactly right. I'm not saying anything to dismiss the role of the West and the role of environmental permitting in holding back transmission. I think that's very real. But if you take cases from the East itself – and by the East I mean half of the country geographically, so not just the East Coast – you have the famous MISO multivalue projects, which are probably the most successful example to date of a large-scale portfolio of transmission lines built out by one of the FERC-regulated markets. MISO in the 2000s decided it was going to spend several billion dollars building what ended up being a portfolio of 17 transmission lines. As of 2023, which is the last time I saw a formal cost estimate for those lines, they were originally proposed to cost $6.573 billion, and at the time they were on pace to be completed at $6.570 billion. All of them were on time and on budget on average, except for one, the famous Cardinal-Hickory Creek line, which was tied up in Clean Water Act and NEPA litigation.

So it would definitely have been a better outcome if we had a more rational permitting system where that line could have gotten to the finish line quicker. But at the same time, you have this dynamic, especially in the Eastern Interconnection, of these charismatic megafauna that attract a lot of the attention but are not the full story. The full story is actually not even really exemplified by MISO-MVP. This gets into these other two barriers of planning and paying. The full story is really that – I've heard you refer to the dark matter of NEPA. I did my PhD on dark matter, I love that nomenclature.

Thomas: My work on dark matter is of course far more complicated than whatever you're doing in the field of physics, but...

Daniel: Yeah, so what you have is that when a paradigm gets bad enough for infrastructure development, you have a situation where it is a deterrent to infrastructure coming online in the first instance. The MISO MVP lines, as successful as they were, are the exception, not the rule. Very few other regions have managed to build portfolios of lines on that scale. And what is often the case – and this gets to the second of those barriers, the planning barrier – is that there is not a credible mechanism for developers or utilities to systematically propose transmission lines, have them evaluated by regulators or some mechanism to say, "Are these going to be good for the customers of the electric system?" and then have them built.

So I really think planning connotes a top-down approach – you have some organized system that's doing the planning. I think that is one very good and effective way to generate and propose and approve transmission lines. But I would generalize the planning problem into what I would call proposing – so a different P. There is just not a credible pathway to propose transmission lines in the first instance, whether it is top-down or whether it is industry actors bottom-up. We just really don't have it in much of a systematic way that has proven successful nationwide.

And then paying is: every transmission line that gets built has to be paid for, full stop. It's always paid for by definition by the customers of the electric system, and the customers are who the system exists to serve. We should be doing everything we're thinking about in the electricity space with the ultimate customers in mind. What is going to lower costs for them? What is going to improve reliability and improve the resilience of the system for those customers? So you build these transmission lines, you plan these transmission lines, they come with a dollar figure. Those dollar figures can be in the millions, tens of millions, hundreds of millions, billions of dollars, depending on the scale of the project or portfolio of projects.

Then somebody has to pay for it. For the bigger lines, these are lines that often traverse multiple service territories. So there's an open-ended question of: how do you do the math and how do you calculate who pays and who gets to build the line and charge the people who have to pay?

The system has evolved around that, starting with – it really evolved out of case law. This isn't governed by the existing Federal Power Act; it's governed by court decisions. There's a really seminal one called Illinois Commerce Commission that happened around 2007. Judge Posner, quite prolific at the time, an appellate judge, set up the standard that the costs of these transmission lines have to be allocated roughly commensurate with the benefits. So if you are benefiting from the transmission line, you are the one who is responsible for paying the cost. Not only that, you are responsible in proportion to how much you are benefiting. And not only that, if you don't benefit – as a corollary – or if you benefit by a trivial or very little amount, you shall not be made to pay. So these are the governing principles today around transmission cost allocation.

My view is that those are good principles. We would not want to abandon a principle of essentially user fees, where whoever is benefiting is responsible for paying. That, I think, incentivizes greater accountability. But because we lack a mechanism for transmission lines to get proposed and approved in the first place, we therefore also lack a mechanism that has been systematically and robustly deployed for actually cost-allocating large amounts of these projects. So there's a discussion that crops up around cost allocation. I think it's an often somewhat poorly understood discussion in Congress that you have to address almost necessarily as part of any transmission proposal that is going to, soup to nuts, create a new mechanism or improve an existing mechanism for transmission to get proposed, approved, and ultimately built in a way that is fair and just to ratepayers.

Thomas: So I count myself among the people who don't understand cost allocation that well. Is one of the challenges here that – for the lines that cross different service territories – because maybe within service territories they have their own methodology for doing cost allocation? Does this sort of work at a local level, or is it just broken across the board? Even within an individual service territory, can they do cost allocation or can't they do it?

Daniel: So yeah, the answer is it's complicated. Even within service territories, if it can be shown that a transmission line has significant benefits outside of that service territory, there is case law that indicates that the people who are benefiting by a non-trivial amount from those transmission upgrades are made to pay for that. Democratic and Republican appointed judges are actually in fairly good agreement – actually very good agreement – across multiple circuit courts about that. The cost allocation problem, I think, is often talked about as something that is new in the context of transmission.

At its core, it is a tragedy of the commons problem. We're going to build these transmission lines, everybody acting in their own fiduciary interests to their constituencies has an incentive to minimize the amount that they benefit on paper so that they pay less of the cost. There's nothing wrong or malicious about that. But it's recognizing that we need a system that does that with legal clarity and does that fairly. I think the right answer is honestly to just stick with the guiding principles we have rather than to try to open up the debate about "should we change those principles to something new?"

Because I just don't think the principles we have are broken. I think the beneficiary-pays principle or the cost-causation principle, which have been interwoven in the context of cost allocation, are the right ones. It applies to lines that are built locally. It applies to lines that are built regionally and interregionally. We don't need to go around changing a bunch of that, but it is better to have it clearly spelled out in statute than to have it just existing in case law across dozens of appellate court cases spanning a decade or two.

Pavan: So there was a point where Congress actually realized that our buildout of the grid was not commensurate with need, and that was in the Energy Policy Act of 2005, right? So it provides for these National Interest Electric Transmission Corridors – NIETCs. I see why they came up with the acronym. It's a mouthful. So what are they, are they working, and if not, why?

Daniel: Yeah, so the NIETC corridors as they're called were created in 2005. They were actually one of three policies that were created in EPAct. We can circle back to that point. And they have not been successful to date. So what these corridors are is – they were designed as part of a two-step system that Congress cleverly architected in order to solve the problem that even at the time we were doing a poor job at building out the large-scale transmission system commensurate with what was needed.

The first step in that two-step dance was that the Department of Energy would designate these areas, so-called corridors, where they're national interest corridors. They're areas where there's a lot of congestion or where there's a lot of need to bring on new supply and demand. Then once those corridors were designated, a developer could apply to FERC, the Federal Energy Regulators, and FERC could approve or deny based on a national interest test – whether the transmission line was in fact in the national interest and should be sited in that corridor.

So immediately, you can probably see some problems here. You're involving multiple agencies in a complicated sequence. There's a third actor who I haven't even mentioned at this point, which is that in order to even be able to go to these corridors – and this was a crucial piece – the developer first had to apply to a state for a permit. And only if the state withheld approval – those were the words used in the 2005 law – could the developer then try to access the FERC authority. That's why it's called a backstop authority. It was only there for use in the case where a state said no, but there was a good reason to think that the transmission line would be broadly beneficial in any case.

So this was passed in 2005. In, I'm going to say 2007 – or maybe it was 2009 – a case was decided by the Fourth Circuit that litigated what was actually meant by "withheld approval." You might hear those words and think, "oh, that means to deny a transmission line." But it was actually decided that withholding approval meant not giving an answer. If a state gave an answer and that answer was no, that was not viewed as withholding approval – that was viewed as denial, which is something different according to that Fourth Circuit ruling in 2009. So the NIETC authority was essentially made moot. To add insult to injury, the Department of Energy then stepped in and had proposed to designate two NIETCs. One was like the entire state of New Jersey, another one was like Los Angeles down to Tijuana, the border with Mexico.

The Ninth Circuit, in a case where a bunch of environmental groups and National Historic Preservation groups and state agencies had litigated the designation of the specific NIETCs, nullified those and said, "Actually, Department of Energy, you asserted that you don't have to do a second NEPA review because FERC is going to do a NEPA review on any specific transmission line. But you do have to do a NEPA review just for designating the corridor, even though you're not building any infrastructure in it." So this created the infamous double NEPA problem with the NIETCs. Aside from the fact that they didn't even work legally, you had a problem where if they ever were made to work, you were going to have to do not one, but two whole NEPA reports, which were very likely to be EISs, given the large scale and potential impact of what was being discussed, for a single transmission line. I don't know of any other single piece of infrastructure where just to build the same piece of infrastructure, you have to do not one, but two NEPA EISs.

So in 2021, we revisit this issue as Congress does, and fix the problem by taking out the words "withhold approval," which the court had said wasn't going to count denials, and very clearly put in something to the effect of "does not respond within a year or denies the application." So then that fixed the problem that the Fourth Circuit had identified. The DOE went back to the drawing board on proposing new NIETCs and doing whole NEPA environmental analyses. But as you can see, if you actually game out the full process that exists in statute, it's a nine-year process start to finish: there's a three-year study cycle, there's a year at the states, there's two years apiece for two separate EISs, there's a second year, there's another year buried in there. So you have this very long process, and that's been the history of the NIETCs to date. So that's 20 years since 2005.

I mentioned that there were two other policies in EPACT 2005. There was the section that came right after the NIETCs, which was Section 1222 of EPACT, which created an authority through the power marketing administrations, the PMAs, to site, develop – pretty much every verb you could use in conjunction with a transmission line – those transmission lines, even find ways to help finance them. That authority was once almost used and then through a complicated bureaucratic rigmarole was essentially cast aside on a transmission line in the 2010s. So that authority: also 20 years, also zero transmission lines.

And then the third policy was a permitting policy, which is Section 216H of the Federal Power Act. It's a consolidated environmental review authority, where what was supposed to happen was you were supposed to have nine different agencies that are involved in one form or fashion – not on every transmission line, but on any transmission line – sign a memorandum of understanding, and FERC or DOE to be the lead agency in getting these lines permitted.

There's this whole saga with that authority where in 2006, there was a Bush administration MOU that kind of missed the mark. Then there was another MOU from the Obama administration in 2009. Then there was an executive order in 2013 on it and an RFI in 2016. It was kind of set aside for the first Trump administration. Then the Biden administration did some more RFIs and a new MOU. Finally, it is up and running as what's called the SITEC program. So that's also been 20 years. Also hasn't seen a single transmission line permitted to completion to date. So three policies, 20 years apiece. That's 60 policy years, zero transmission lines was the result of EPACT '05.

This is what I call the "round down to zero" problem. It's when you pass transmission policy, you often pass something that looks good on paper, looks like it moves the ball forward on paper, but in the presence of real-world factors, rounds down to getting zero actual transmission lines built. I think that is the thing – and this has also happened with FERC regulation that has tried to drive more transmission planning and buildout – this is the thing that policymakers need to be most cognizant of: are we passing policy that will look good on paper, but in the real world will round down to zero new transmission lines getting built?

Thomas: Yeah, it's funny, I'm always struck by how much of the world that we're living in, at least with regards to energy policy, was created by the 2005 Energy Policy Act, whether it's the things that were functional, the Loan Programs Office being one example, or the things that are dysfunctional, like basically all of the provisions relating to transmission. But that's great history.

So you played a key role in negotiating transmission provisions during the EPRA negotiations – the Energy Permitting Reform Act of 2024. I think the thing that might be helpful to do is take a step back here and think about the different buckets of transmission reforms that we have on the table, or at least we've had on the table in recent years. The ones that stand out in my mind are interregional planning – we've talked a little bit about where the challenges are right now. A FERC backstop for siting or some form of backstop. And cost allocation reforms – maybe adding clarity to the cost allocation process or just adding additional detail. It would be helpful to run through these. We've talked about what's broken; it would also be helpful to talk about what the reforms or what the shape of the reforms have been like thus far. And also, are there any categories that I'm missing there beyond the three that I just mentioned?

Daniel: There is another category, which is minimum transfer policies. Those have been discussed – when I was a staffer for Senator Hickenlooper, I worked on a proposal that had to do with that. They were not what was moved forward in a bipartisan fashion in the Energy Permitting Reform Act, but that is a bucket that has come under recent attention as well. But the categories you broke down – I would just make a slight distinction, which is that cost allocation is not like a separate policy that one enacts. It is something that one provides legal clarification on: who is going to get to file the tariff, the costs are going to be allocated in a way that needs to protect ratepayers and make sure that the costs are allocated in accordance with benefits – that standard we were talking about from Judge Posner earlier.

But I don't view it as something that is set up separately outside of a policy framework. It is something that, whether you're doing planning, whether you're doing a backstop authority or an applicant-driven process, is clarified in a way that is at its core designed to avoid the "round down to zero" problem, avoid creating some new legal ambiguity that will delay us for another 20 years, and engineered in a way to first and foremost protect ratepayers.

That leaves the two policies you mentioned, which are planning and a backstop authority or applicant-driven process. Those were what were at the core of the Energy Permitting Reform Act (EPRA), which was from Senator Manchin of West Virginia and Senator Barrasso of Wyoming. The bill was very successful within the Energy and Natural Resources Committee. It received in July of last year a vote of 15 in support and four opposed and passed out of committee, but the clock ran out on the end of the last Congress and it was never taken up for full consideration by the Senate or the House. So it was left off where it was.

I want you to think about those two policies – planning and the applicant-driven process. One is a top-down and the other is a bottom-up policy. The top-down process of planning is: each of these regions of the country – there's about 10 of them – get together and collaborate with each other on transmission lines or portfolios of transmission lines, where the instruction of the bill is to prioritize meeting the reliability and affordability needs essentially of the nation. This is all the more relevant in the presence of the load growth we're seeing today. We can talk about that.

This is really the engine of the EPRA bill, right? You have a lot of things happening in parallel. You have a lot of regions planning portfolios of lines in parallel. They're doing so under all these best practices. They're repeating the process every four years. They're considering a set of reliability and affordability benefits which capture the benefits of transmission to the electrical system and leave aside things that the two parties don't agree on politically with respect to what we're looking to get out of transmission. But then, supporting that is this revised backstop authority, which solves this double NEPA problem I was talking about earlier in the existing backstop.

Remember I said that transmission is the only class of infrastructure where if the federal government permits it, it needs to do two NEPA EISs, right? That's because it does one for the NIETC. These NIETCs in practice, the way they're designated today, is they're just wide enough to be useless for considering the environmental impacts of a specific transmission line that goes through them. They might be 5, 10, 15, 20 miles wide. That's not going to narrow it down enough to know where you're going to be placing the towers and structures and disturbing land and water and what have you. So they're just wide enough that you're covering a large area and you're going to have to do this big comprehensive analysis and frighten a lot of people in the process who don't know: is this going to be built in my neck of the woods or in that neck of the woods? So it's kind of a worst of all worlds. The bill solves that in a really elegant way by just taking the Department of Energy – who doesn't really belong in the space in other respects – out of the process and leaving it just to the states and to FERC.

So you then have a backstop authority that actually works. In the design of EPRA, we tried to design it intelligently so that the planning was the engine of getting transmission built, but the backstop authority was a check on that. If the planning was becoming a paper exercise that people repeated every four years, the backstop authority was meant as a recourse for the utilities, for the developers who were struggling to get their lines approved and built, who could then have an independent third party – FERC – they could go to and say, "Hey, take a look at this line. Is it helping the reliability of the grid? Is it helping lower costs for ratepayers? If so, go ahead and approve it and we'll build it."

Thomas: Got it. Yeah, so in short, EPRA gets rid of the NIETC model altogether, right? And it replaces it with: DOE is not involved, it's FERC and the states.

Daniel: Yeah, it's FERC looking at whether transmission lines themselves are in the national interest, not whether they fit into some ill-defined corridor that nobody has really liked and hasn't been really workable.

Thomas: Okay, so let's talk about the politics of this a little bit. We're in the midst of – at least at the beginnings of – permitting reform negotiations, sort of what's shaping up to hopefully be a broader package that will include transmission, it'll include NEPA reform, it may include some other things as well. I think to start here, you mentioned that cost allocation is not really a separate policy bucket. It's sort of an adding of clarity to an existing policy. But at the same time, when I talk to folks, it seems like cost allocation often ends up being a sorely contested discussion when it comes to legislation. Who are the people getting implicated broadly in these transmission reforms, right? Who are the people who come out in support? Who are the industry interests who come out against? And what did we learn from EPRA on that front?

Daniel: So when it comes to the sorts of reforms we're seeing, there's a bunch of different actors in the space and the answer is not a simple one. At a high level, what we saw with EPRA was a lot of customer groups – groups like the Electricity Customer Alliance, CEBA, the data center folks, and a lot of individual companies in the business of consuming large amounts of electricity – send letters of support and voice their support for the sorts of transmission policy being put forward. That to me is a very positive indication because at the end of the day, transmission policy exists to support the customers and they are the ultimate litmus test because they are the ones who are either going to pay more or pay less, depending on everything else. Then you have the developer landscape and you have the utility landscape.

A utility is also a developer, right? The utilities also generally develop transmission lines, but there are ones who might do so on a different model or who might also have a regulated service territory. The short answer is that the sorts of reforms being put forward in EPRA divide to different degrees both of those communities. The secret about permitting reform is we talk about it for political purposes as if it's one thing.

But really it's about a thousand different problems faced by a hundred different industries, and in any given permitting reform bill – and this was certainly true of EPRA – you're going to solve 50 of those problems. Then it's incumbent upon you to figure out a politics that gives assurance to the other 950 problems and the actors behind them that their solutions – that the train is not leaving the station without them. And in fact, that there will be more efforts to fix in fair ways the problems they are dealing with.

So there were some developers who came to the table and said, "Hey, this isn't fixing the specific problem we're dealing with with our transmission line or with the transmission line we were considering building. So we don't want this and we're going to quietly say it's not our thing." And then in the utility space, there were some utilities who had big lines that they're building, particularly in the West, where they saw this as a big advantage. And about a dozen or so large, mostly investor-owned utilities came out in support while others were more skeptical.

The fear – which I think is understandable – is that these are big expensive transmission lines. It is a change in how we do things in a country where we haven't been able to build large numbers of these lines recently. The costs are going to ultimately be allocated to those who benefit. And if their systems are found to benefit, you can have a situation where somebody else is building a line and your ratepayers are ultimately going to be on the hook for it. You want to make sure that they are getting an absolutely fair shake. That is something that we worked really hard to put in – in five or six different ways – to the language of EPRA. And I think we were making progress in building an understanding around that.

But I think especially in the world we were in at the time, which was the world where we were just seeing the early glimmers of load growth on the horizon, was a world where that sort of more zero-sum thinking could take hold. Now we're in a very different world. We're in a world where demand is growing. And I think there's a pretty clear case that if we enact reforms that will get more transmission built, every business model that's out there will have a meaningful increase in opportunities – not decrease – to build more transmission lines, to get more infrastructure on the system, and to do so in a way that helps customers. So I think the politics is improving and has improved even in the short time since that bill was under consideration last Congress in a favorable way for these sorts of discussions.

Pavan: That makes sense. I mean, I'm curious here because we were talking about bottom-up versus top-down approaches. It seems to implicate many of the basic disagreements between the two political parties about what is the role of government in doing a wide variety of things, right? Republicans traditionally would like a more limited government role for national government here. Is that a part of why you see Republicans being less willing to talk about transmission policy? Is it related to – and I think it's an unfair characterization that it's just a renewable problem, right? Like transmission's important for clean firm assets as well – but is it a perception maybe that this is just for renewables? Or are there other problems at play here?

Daniel: Yeah, I think there has been that perception. And I think it's important to unpack that because I think that is an inaccurate perception. But I think it has dogged the transmission debate. I mean, to be clear, transmission is going to help primarily the resources that are getting built. So when you have new resources coming online, almost by definition, those are the resources helped by transmission. Transmission really helps new resources in three ways.

This is going to sound really simple: it connects stuff. So when you systematically upgrade the transmission grid, it's not just that you have a new transmission line that can go access a piece of generation. It's that you are systematically upgrading the transformers, the substations, whatever else that is needed to bring things online. And you are doing so in a systematic rather than a serial way. If every transmission line you build is a one-off project, and then you realize you need something bigger the next time, and then you have to go back out to the transformer – which may cost you millions of dollars – and replace it with a slightly bigger one, you're paying an incredibly inefficient overhead to do the same thing you could have done by building it systematically in the first instance. So this is the first thing transmission does. It systematically upgrades – transmission here being shorthand for policy that systematically upgrades the transmission grid. It allows you to connect more stuff by making a grid that is larger and more robust.

Second of all, it smooths out the idiosyncrasies of the grid. In the case of the variable resources like wind and solar, they're variable. They're on when the wind is blowing and the sun is shining, and over larger areas you can make them behave more smoothly. They're never going to be as smooth as a perfectly baseload nuclear plant, but it's a question of degree. They also do this though for the baseload resources, because if you think of it – in a world where demand were perfectly flat, then you could just meet it with perfectly flat supply.

But demand is actually quite spiky throughout the day, throughout months, throughout the year, seasonally, certainly. So storage is a very analogous technology to transmission. If you look at the storage that came on the grid through the 1900s and most of the 2000s, it was all pumped hydro. And a lot of it was built for large baseload nuclear plants because those large baseload nuclear plants were very well equipped to supply the nearby cities and industries with power during the day. But they didn't want to have to ramp down to 20 or 40% of their output when everything was off overnight. So you would power up a storage facility and shift it there. Transmission does the same thing for space that storage does for time. It allows you to move the power to other places. So that's the second thing. And there's a story with gas too, where gas is uniquely vulnerable to these extreme hot or cold events.

We've seen two in recent years with Winter Storm Uri and Winter Storm Elliott, where gas wells, gas compressors, gas pipelines and gas plants all had freezing issues, as did wind. This is not one resource's problem or another's. But what transmission does is it diversifies you over space so that you can just have a more reliable, resilient system, whatever your resource mix is. And then the third thing it does – after connecting stuff and smoothing variability – is it accesses remote resources. So this is often talked about in the context of renewables because resources like wind are geographically concentrated and are very high quality in certain parts of the country. But this is equally true with a lot of other resources, right? I mean, shale is famously developed in areas where we have it. You're going to need pipelines or transmission lines to get that power elsewhere.

And again, diversification being the cornerstone of resiliency, the optimal world is probably to have some of both. Geothermal especially – if you look at the potential for hot rock geothermal and enhanced and advanced geothermal in this country, it's all in the West, which as we discussed is 20% of the nation's electrical load. So if you were ever going to have any ambition of having geothermal not be ceilinged at a 20% solution for the US, but really be something that can be an engine of 21st century growth, you're going to need more than the pittance of 1.3 gigawatts that we can currently transfer across the East-West Seam. That's going to be achieved by definition through interregional transmission. Same with nuclear plants – can be hard to site because of all sorts of local opposition. You're going to need transmission to get them from point A to point B and spread out the often large amounts of power they generate over areas. So it's this connecting of stuff – just the raw capacity of the grid. It's the smoothing of variability and it's the accessing of remote resources.

Each one of those, I think in a naive telling, is a story that was imagined to be – and is imagined in some of the popular narrativizing to be – about wind or solar. In actuality, I think the arguments apply across resources, especially as we see the resource mix shifting to something that has more different technologies being built and more potential ones like advanced nuclear and geothermal coming on in the not-so-distant future – something that is going to benefit whatever resource needs to be built. And we need to start building the transmission now in order to be ready, especially for some of those resources like geothermal and nuclear that we really want to start coming on at scale in the next 10, 15 years.

Pavan: Right, I mean what I'm hearing here is obviously what we've talked about – the different political moment you're in even relative to EPRA. And the policy moment: you have increased strain on the grid, people are demanding more power.

The administration, Republicans have outlined an interesting vision which implicates clean firm resources as well as core to their ambitions of what energy needs to look like in the US, and obviously transmission's key for that too. So maybe it avoids or gets around that traditional limited government perception of how the grid needs to be built, which I think is more of a national asset and in the public interest. And obviously the President's AI action plan identifies the need to build out transmission to meet this data center demand to win the AI race. So those are key observations for sure.

Daniel: Yeah, and I think if you look at the rhetoric of the administration, they've been increasingly – they were already being clear on this. I mean, Chris Wright in his confirmation hearings talked about the importance of transmission for resilience and reliability, but it's really coming from the White House as well, where you had Jared Isaacman, who's the director of the NEDC, the National Energy Dominance Council, a few days ago – at the time of recording this – was quoted in Politico saying, "pipelines and transmission lines, those are probably our top two priorities in getting those built." And again, as you mentioned, it features heavily in their AI action plan. I don't think this is a small government or big government question. I don't think transmission is something that, when you really drill into it, neatly tracks along – the fundamentals of the issue don't neatly track along either party's partisan preferences.

And I think that's a good thing. I think this is something where – transmission is not a trade-off-free zone. It's large infrastructure that comes with environmental trade-offs to build and has an upfront cost. But it's also something that we see strong clarity on increasingly from all chambers of government, all branches of government, both parties, that there's going to be a significant need to build more of this stuff. Otherwise we're leaving the generation and the demand side of the picture, which are both so obviously important to everybody involved, stranded – literally stranded from one another.

Thomas: So we like to end our show by asking our guests for an energy policy hot take. So Daniel, what's your energy policy hot take?

Daniel: So I was musing the other day that if you look across the landscape of energy technologies in the generation space, every technology that we actually deploy at scale today is monopartisan and often opposed by the other party. Every technology that we haven't figured out how to deploy at commercial scale today is broadly bipartisan and widely popular. You can probably sense from the way I'm saying this that this is not a good thing. You even have longitudinal case studies, right? Nuclear, back when we used to build it in large quantities, had become a partisan technology. But now that we've gone a while without building it, has become widely adored and broadly bipartisan. So it's not even just a coincidence of what's being built.

Now I do think it is a feature that once things start getting built, they attract controversy. There becomes a natural politics of the two sides wanting to figure out who wants more of it and who wants to pump the brakes a little. But I think that if we're going to achieve an energy system that can really meet the needs of the 21st century and make America competitive and outcompete our peers and rivals, China, we are going to need a system and need a politics where all sides can see technologies that are actually getting deployed at scale and say, "we support that." So I think that is something that transmission helps enable, but it is also my hot take.

Thomas: That is an excellent hot take. We've had a lot of good ones on the show. Okay, we will end it there. Daniel, thanks so much for joining Right of Way.

Daniel: Thank you for having me.

Authorized in 2022 and formally enacted into law by the FY24 defense package, the Department of Defense’s loan office was originally a small shop, with a loan authority of just over $900 million. But Republicans’ One Big Beautiful Bill (OB3) supersized OSC, giving the office $200 billion in loan authority and $1 billion in credit subsidy. It now effectively represents the DoD’s version of the DOE Loan Programs Office.

With extraordinary new resources at its disposal, OSC now has the task of figuring out what to actually do with the money. This will start with staffing up the office, which I’ve been told may still have a single-digit number of employees. But OSC will also have to determine its risk tolerance and remit.

OSC’s authorities were left pretty open-ended by the FY24 NDAA. It was given thirty-one different “strategic technology areas,” and the requirement that its loans go to “dual-use technologies” – that is, technologies with both commercial and defense applications. And OB3 specifically carved out half of the office’s $200 billion for critical minerals, leaving $100 billion to spread across thirty siloes.

With much of OSC’s strategy still up in the air, I thought it would be useful to consult current and former employees of government loan- and grant-making offices about reforms that could help the office become more effective. Here are five consensus picks.

1. Allow for faster and more flexible hiring.

Use the same hiring authorities that the last administration used for administering BIL and IRA programs. In particular, Schedule A and Direct Hiring Authority. OPM can invoke these authorities, but it’s also helpful to write them into statute.

Eg: “The Secretary may appoint, without regard to the provisions of subchapter I of chapter 33 of title 5, United States Code, other than sections 3303 and 3328, such personnel as may be necessary to carry out the functions of the program.”

2. Clarify that there is no prohibition on “double dipping.”

It’s not totally clear whether there’s a restriction on “double dipping” at OSC, wherein OSC loan recipients are not allowed to also sell to DOD. Guidance would suggest that there is some restriction, while some others have told me that there is generally a restriction but that it’s case-by-case.

Double dipping prohibitions represents a real constraint for a number of loan applicants – so Congress should clarify that there is not a restriction.

3. Provide OSC more credit subsidy.

OSC has $200 billion in loan authority but only $1 billion of credit subsidy. There’s no way you can support $200 billion of loans off of that level of credit subsidy. For example, most loans to critical mineral projects have less than 10:1 leverage.

A couple more billion would go a long way.

4. Simplify OSC’s strategic technology areas.

There are 31 strategic technology areas for OSC. Through OB3 the office got $200 billion in lending authority, with $100 billion specifically designated for critical minerals.

That means that there’s an additional $100 billion left for 30 strategic technology areas. That is entirely too many strategic technology areas. So OSC’s many siloes should probably be bucketed, and Congress can help by calling out priorities and the amount of funding (these ten programs will get x%, or whatever).

I don’t have strong opinions here, so I just asked ChatGPT for a mock framework for compressing the 31 siloes. Here’s what it gave me: (1) Microelectronics and Enablers (20%), (2) Energy Storage and Industrial Materials (15%), (3) Space and Resilient Communications (15%), (4) Energy and Fuels (10%), (5) Compute, Data & Autonomy (10%), (6) Frontier Sciences (10%), and then (7) a remaining 15% for cross-cutting equipment financing, etc.

5. OSC needs a director.

   ---

I expect we’ll cover the office in greater detail in the future. More soon!

In this episode, we discuss:

• How NEPA works (or doesn’t), and how reform efforts have shaped outcomes

• The role of the Clean Water Act in stalling major projects

• The politics and political tradeoffs in permitting reform

Right of Way Ep. 2: The Permitting Picture

w/ Richard Meyer and Peter Stahley

Thomas: Welcome to Right of Way, a podcast about energy policy, energy politics, and above all the upcoming permitting reform negotiations. I’m Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, and I’m joined by Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress.

Pavan: Today we're going to dig into the details of permitting. We're going to get into how NEPA works and we'll discuss what other laws like the Clean Water Act may end up in a reform package. Lastly, we're going to talk about the interests that are implicated in these kinds of permitting reform packages from developers to utilities to environmental groups. Joining us today to help unpack all of this are Richard Meyer and Peter Stahley. Richard is the Vice President of Energy Markets Analysis and Standards at the American Gas Association, where he works with over 200 local energy companies delivering natural gas resources across the US. His work focuses on advancing understanding of natural gas utilities' role in an affordable, reliable, and competitive energy economy. I would also note that Richard has one of the strongest graph games on all of energy Twitter.

Thomas: Peter is Senior Vice President at the government relations firm Cassidy and Associates. He also has one of the coolest CVs in the city, having worked for a decade as a civil engineer in Alaska with the National Park Service before coming to DC and joining the Senate Energy and Natural Resources Committee. As a professional staff member on Senate ENR, Peter is responsible for major provisions of both the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, including key IRA tax credits. Given some of the conversations I've had with Peter over the last few weeks, I can also tell you he is a true expert when it comes to NEPA. Richard and Peter, welcome to Right of Way.

Peter: Thanks for having us.

Richard: Thank you.

Thomas: Peter, starting with you, just give us an overview of NEPA. What is it? What sets it off? How long does it take? What are the biggest problems?

Peter: Sure. So first, I guess we get to start like all government conversations with the acronym. Everyone throws around the word NEPA. Some people who live in this world are very familiar with the National Environmental Policy Act (A lot of people throw in protection, but that’s not accurate). And it's a process statute, right? It basically says, hey, government, look before you leap. When you're going to make a decision, make sure you look at all the environmental consequences and look at alternatives. That’s super high level, and I think frankly, when the law was put together, that's sort of what the authors were thinking. And then if you look ahead to where we are now – what are we about 40 years in, give or take? The process has changed dramatically, I think, as a result of case law and a bunch of other things I think we're gonna dig into. So, you have a federal action – let's say that's approving a right of way across federal lands for a natural gas pipeline. Let's say it's a record of decision for a big mining project, you know, most of which are on federal land out west. Maybe it's an offshore wind project. Maybe it's a solar farm. And also, I guess more on the power sector, right? Maybe it's some kind of FERC decision.

Generally speaking, and we can get into the nitty-gritty, that's a major federal action. The government's gonna have to look at it and apply the NEPA process. And without bogging down too much: You sort of have three levels of review, we'll call it. You've got an EIS, the Environmental Impact Statement. That's supposed to be for those projects, those decisions, that have a major impact or potential for major impact on the environment. Those are the big long ones that you usually hear about, that unfortunately are usually several thousand pages, notwithstanding page limits in current law. And those, by statute, are supposed to take two years or less to complete. Maybe we'll get a little bit into whether that's actually happening or not, and if there are any consequences if you don't hit that [deadline].

Then for smaller decisions, there's something called an EA, or environmental assessment. And actually, what an EA is supposed to do is be the review that helps you decide whether you need an EIS or not. But I think some would argue it's turned into a much bigger sort of parallel study.

Then, if you get to the end of your EA and we say we don't need an EIS, you'll hear people throw out the term FONSI, which is not a Jim Henson character – it's a finding of no significant impact, which is basically the legal step that lets you say we're not doing any EIS.

Outside of that, you've got what people call CatExs, categorical exclusions. These are a wide variety of actions that, again, are categorically excluded, meaning you don't really have to run the process. Some of this is super simple administrative stuff, right? Like you can make an argument that a budget affects the environment, but those are excluded. A lot of administrative actions are excluded. Where it gets a little tricky is there are both congressional and regulatory categorical exclusions that say for these types of actions, “we're pretty sure there's not a major impact unless there's special, extraordinary circumstances,” to use the correct legal term. We can do this much quicker. There's a bunch of oil and gas ones having to do with using an existing right of way. Similarly, there's some new exciting geothermal ones about getting some drilling projects going faster. But I will say there: There are also times when the decision to use a CATEX itself can take years. I've got a couple clients running through that right now.

So, long answer there. And then: how long does it take? We talked about it a little bit. Two years by statute on an EIS, one for an EA. The recently enacted One Big Beautiful Bill Act, which is a mouthful, also has a provision where a developer can pay, I think it's 125 % of the estimated cost, and actually cut those timelines in half (how that's going to be implemented, still a little bit up in the air).

But that's how it should work in, we'll say, the ideal world. In practice, I don't know that we've seen those statutory timelines really been fully adhered to yet. So you will still hear stories of four, five, six years. The average is varied – a little bit by industry, a little bit by agency on the big EISs. An EA – sometimes they're six months and it goes great. Other times, year, two years, three years. And again, I'm aware of a couple of categorical exclusions where they're still waiting on permission to use the categorical exclusion a couple of years in. So, long answer, but trying to encapsulate it there.

Thomas: Yeah, from our last guest on the first episode, we learned that all the cool kids are saying OB3 now, by the way. So you don't have to say OB-B-B-A anymore. But yeah – to add a few stats here, we know that the most recent statistics are that EISs take a median of three and a half years, and an average of four and a half years, across agencies. I think upwards of 600 pages, too. But to your point, it sort of also varies across project type – and how you measure those things, it really, really varies as well.

Peter: And if I could add really quick, you asked what are the biggest problems, right? So we just talked now about how you do NEPA, so to speak. Once you're done, most, not most, but a lot of projects go to litigation. And I think we're gonna spend a lot of time unpacking that. But, from my client's perspective, and my experience in the permitting reform fight, I think there's a good argument that the biggest problem is, in fact, once you slog through all of this, you go to the litigation doom loop. Recommend your all's work, and stuff like James Coleman, others, Nick Bagley, on the procedural fetish, where you can end up in court for literally an indefinite amount of time, up to and including needing Congress to act, like with the Mountain Valley pipeline.

Thomas: So Richard, how does this play out in practice, especially for the gas industry? What does this do to costs? What does this do to certainty? What does this do to maybe even the decision to build the project?

Richard: Well, first, gentlemen, it's a pleasure to be talking with you all today. My role at AGA is really to look at energy markets and some of the policy analysis. I am surrounded here by permitting reform experts, so I'll do my best to catch up. I'll reaffirm what Peter started with, is that NEPA was intended to inform agency decisions. It's a process rule. But in recent years, this has been used as more of a roadblock to paralyze vital infrastructure projects. The recent actions by Congress, the Supreme Court, this administration have helped bring NEPA… steering that back to its original statutory intent. Even when NEPA functions as intended, or rather, I should say when NEPA functions as intended, we can get back on track here. We can get the projects built in a timely way. We can meet this demand growth. We can address affordability.

One thing I will say is that the costs are very real. The delays have material implications in terms of lack of energy to the market. That leads to higher costs for consumers. That leads to lower economic output. That leads to fewer jobs. I mean, we're talking billions of dollars of lost GDP. Thousands, if not tens of thousands of jobs in terms of lower employment in the economy. There was a major pipeline CEO in March that talked about the need for permitting reform here, NEPA, and really across the board, and he said today the cost of permitting a pipeline that they’re building is twice the cost of the actual pipe itself. So these [are] some real issues here.

Maybe just a couple of stats here. Litigation on NEPA and across the board on both conventional fuel and clean energy projects, that leads to delays of these projects by almost four years. I think there's 3.9 years on average. So again, this is affecting not just natural gas pipelines, which of course we're focused on, but all energy projects. And that's just not sustainable, especially in the moment we're in in terms of demand growth and so forth. I work with colleagues that are up on Capitol Hill, working with folks like you all to drive a productive conversation on Capitol Hill. We're working with the administration as we do all administrations to course correct within the regulatory processes and open rulemakings that are currently underway, and we'll unpack this some more. We're definitely focused on NEPA reform and some sensible changes there as well as some other statutes that need to be addressed that are of particular concern to the natural gas utility industry and the natural gas industry more broadly.

Pavan: So Richard, kind of follow-up there. You know, gas is going to be really important in meeting this demand from next-generation data centers. Are those impacts already manifesting? Like, we're a little early into building out this infrastructure, but are you already getting an idea of those implications? And how does a law like NEPA interact with meeting data center demand?

Richard: Well, Peter did mention the initial reforms that were passed under the Fiscal Responsibility Act of 2023, setting some timelines on NEPA. I think we're not yet at that two-year period—or we're coming right up against it—where we might start to see some of these environmental impact statements coming out. We're hitting the shot clock here. Let's see what those reforms mean in practice.

Meanwhile, we've got this massive change out there and two key trends. One, this demand growth—and it's being driven by AI and data centers and other strategic manufacturing centers and reshoring of manufacturing back here at home. That's driving more energy demand. Plus all the other organic growth. We're still building homes. We're still constructing new places to do business. And those require energy as well. So we're growing here.

That requires more natural gas, requires more energy, requires more electricity. Is it holding up our ability to build? Almost certainly it is. I can't quantify that for you just yet. But I think we see a lot of market behavior that's looking for the fastest route to scale energy and do it very quickly. One thing I'll say is that in some cases, to get a natural gas connection might be faster than some other pathways. So despite the delays, it may be building an interstate pipeline. If you have gas access in a local area, oftentimes these large facilities are asking for gas service because it's easier than to get an interconnection, for example, for electricity—for a grid connection. So maybe that's a separate issue. But all this is to say, we're really gonna hamstring ourselves if we don't get out of our own way and make a collective choice as a society that we need to build, and we need to do that in a way that, again, ensures transparency of the process, engages the public and relevant stakeholders, but we don't just set up roadblocks and create processes that allow certain groups, select groups, a tactical veto over projects that are in the national interest.

Pavan: Right. Peter, we have a lot of environmental laws in the US. Why is it that NEPA is the one that people like to talk about the most? We have the Clean Water Act, the Clean Air Act, but we hear NEPA over and over and over again, especially in the context of congressional conversations.

Peter: I think part of it is it makes sense from a—it's sort of an umbrella statute, as people call it, right? It's the procedure, and for good reason, a lot of these other statutes kind of get wrapped up in the study because, having been on the agency side, if you have to look at the impacts of—I'll use a non-energy example here—but a wastewater treatment plant, which is a real thing I worked on for the National Park Service trying to get built, it makes sense to roll up your, say, National Historic Preservation Act review into that same process. Do it all at once. Endangered Species Act, the Clean Water Act, Clean Air Act, and then a host of other smaller, lesser-known provisions. And then I’ll say once you're touching federal land, not only do you have these substantive environmental statutes like the Clean Water Act saying, “don't put XYZ pollutants in water,” which I think everyone can get behind, but on the federal land front, each and every agency, for good reason—again, the Park Service is different than the BLM, is different than the Forest Service, is different than the Army Corps, or say a military base—that landlord, so to speak, just like in the private sector, has their own sort of goals, incentives, and importantly here, statutory guidance for what they can and can't do.

So I think we end up looking at NEPA because it rolls it in. And frankly, that's where the litigation goes. Even if we're really talking about—using Clean Water Act examples—where a lot of times that Clean Water Act analysis is rolled into the NEPA process. And so when you get sued—technically under the Administrative Procedure Act—but for not doing your NEPA analysis correctly, they may be saying, “There's a stream study that didn't happen right as part of your Clean Water Act.” It all kind of rolls together.

And I think the thing to say there too is, like, I'll be optimistic here and say when we do more permitting reform, these substantive statutes I think will pop up whack-a-mole style as our focus necessarily shifts and people say, “We fixed NEPA—why are we still having problems?” Not to say there wouldn’t be massive improvement, even for a purely NEPA-focused approach—but again, each of these statutes just sort of rides under that umbrella, and I think a lot of people don’t look underneath.

Thomas: Yeah, totally. I say this to people quite a bit when they say, well, it seems like we’re only going to have one chance at permitting reform, and so we have to go for everything at the same time. I think the political economy right now of Endangered Species Act, Section 7 consultation reform, for example, is not exactly awesome. But that's in part because of the way that NEPA functions as an umbrella statute. So often there's litigation that's really tied to the Endangered Species Act, but it seems like it's filed or applied on NEPA grounds. But with real and meaningful NEPA reform, all of a sudden, you start to see the way that these statutes that sit under the NEPA umbrella function in practice. So yeah, definitely makes sense.

With all of that said, over the last couple of months, as I've talked to folks in various industries, I've heard quite a bit about the Clean Water Act, and in particular, Clean Water Act Section 401. I’ve heard this not just from folks in the pipeline space, but also really recently from folks in the hydropower space for whom this is really quite a concern. It's a major issue. Richard, can you speak to this a little bit? How does this law work? How does it play into energy permitting more broadly?

Richard: Sure, well you guys probably have explained it even better than I can. Clean Water Act Section 401—this is related to state certification on discharges from permitted activities. What this has meant in practice, however, is that some states with the ability and requirement to issue their permits—and again, let me say 401, as I understand it (again, I'm just playing a lawyer on TV here) is that kind of federalism approach where you've got certain obligations under sections of the Clean Water Act, but then this allows states to also play a part in that process and then sync up with their own state and local laws. What this has meant in practice, however—back to the point—is that certain states can just sit on their permits.

And that has stopped some major infrastructure projects. And really, what this has meant is that what should be a permit based on the merits of the project itself is—that statute is now being used to implement state policy, where you have expansive definitions that go beyond just the point sources and issues at play here. And really, it's meant to stop major infrastructure projects like natural gas pipelines.

We've got a set of issues that we're kind of working through on 401 and ways to kind of constrain what it is that you're looking at. Again, setting shot clocks for the states, other potential criteria that you need to adhere to. And really, this is not meant to circumvent this process, but rather make it work more efficiently and make it work well and make it work with the intent of the original statute.

Thomas: When I talk to people about Clean Water Act 401, I describe it as sort of like a bolt-on layer of review, right? So you already have a federal permit that's being issued by a federal agency—FERC, for example. And then states also have to issue their own certification. And that certification, as of right now, can be based on all sorts of things. It's not just the direct discharge of the project in question, but also upstream and downstream stuff. Sometimes they request a lot of information around endangered species, et cetera.

And then, unlike a lot of permitting processes, 401 allows for an up-or-down vote. You can just veto the project completely. And so you see these situations where a pipeline, let’s say, is built across several states, and one state has this veto power to block the whole project from moving forward. So it's quite interesting.

Richard: And can I just make a general point? We've got a century of experience in building pipelines here—both liquid and gas pipelines—across this country and into other countries as well. We have the same level of experience with more local distribution lines, too. And let me just put a finer point on this: there’s 2.9 million miles of paved road in this country. There's 2.8 million miles of natural gas pipelines. So we know how to do this. We know how to do this well.

Let's get the permitting process fixed so that we can continue to do this as we always have—in an environmentally responsible way, with a transparent and stakeholder-engaged process. So there's no reason that we need to keep the status quo here when it's clearly failing. The intent is to enable environmental review of responsible infrastructure projects.

Can I say one more thing since you asked about the Clean Water Act? There's also Section 404. This is federal permitting for similar issues. And here we have a process that allows nationwide permits. Of particular interest to the oil and gas industry and gas utilities is Nationwide Permit 12. Again, this is like—if you adhere to certain criteria, you can get a permit. And it works really well. There's a rulemaking process right now at the Army Corps of Engineers to update that. We’re engaged and hopeful that that gets reissued so that these projects under that Section 404 of the Clean Water Act can continue. So just want to make sure I mentioned that as well.

Thomas: Yeah, no, absolutely. Okay, so let's talk about solutions here—or what the solution set looks like. And I’ll open it up to either Peter or Richard—but on NEPA first: what should we do? What works, what doesn’t? There’ve been several iterations of attempts at NEPA reform—some successful ones, lots of unsuccessful ones—that have taken several different tacks, right? There’s been everything from judicial review reform to creating page limits and time limits, et cetera, et cetera. So what sorts of things will move the needle, and where should we be heading over the next year?

Peter: It’s easy to think about the politics first. Putting that aside for a second, I think you’re exactly right. I have a lot of scars from Senator Manchin’s efforts trying to meaningfully advance NEPA and just broader permitting reform.

So, I think litigation reform has to be part of the solution here. We need people to be able to rely on decisions that are made, right? By a federal agency, by ideally skilled regulators. And I think it's worth just bringing up the Marin County decision—the D.C. Circuit—that took away, or said that CEQ didn’t have statutory authority to issue regulations, and now followed by Seven County at the Supreme Court, putting a finer point on what even goes into a NEPA review.

And I think that sort of changed, actually, what one might want to put in a statutory reform—for the better, frankly. I think it makes Congress’s job a little bit easier in that they can point to some precedent rather than having this be the kind of thing you’re fighting over in a conference room over in the Capitol.

So litigation—there. Page limits, time limits—I think, helpful. And if you think down to like the practitioner level—someone at some agency doing review—those are helpful, but obviously they don’t solve the problem, or we wouldn’t be having this conversation right now.

Chairman Westerman, Jared Golden just released a bill that does some work in this space. Still early, and I’ll admit, myself and my firm and clients haven’t really dug into it fully yet. There’s some limits to what should an agency be looking at, how should they be going about it. There’s questions of what downstream impacts are—and this gets a little nerdy, so apologies…

Thomas: This is a podcast that's all about permitting reform.

Peter: Yeah, I mean, so here we are. Seven County, at a really simplified level, is actually about a rail line extension. And really, really short-circuiting the summary: basically the kind of unanimous holding there is—the Supreme Court said, “Surface Transportation Review Board, you do train stuff—only look at train stuff.” You don’t have to go all the way downstream and figure out, will this make more refining emissions happen in the Gulf, and yada yada yada. They said, look at the thing.

Which is a big deal, right? I think some of the conservative justices, in one of the opinions, went a bit further and talked about cabining things. I think one of the reforms that maybe makes sense—and again, would help everyone, though—is: it didn’t really speak to what happens when an agency is supposed to be, or is, in charge of [downstream effects]. If you’re the BLM, you’re BOEM, you are actually responsible for something that directly, in that case as a fossil fuel project—or if we’re talking transmission, crossing 18 different federal parcels—that the agency really is directly responsible for, and is something that’s arguably tied to the downstream impacts. And I think that’s somewhere—and I think Chairman Westerman’s bill tries to get at this—where there’s some room for reform.

And then public input is a really tricky space here—both politically and in terms of what the right solution is there. And I’d say, opinions differ greatly about what the right answer is. But I think, yet again, that’s another spot that does matter. In the end, everyone just wants to know that responsible agencies took a hard look at the project, actually considered sort of the totality, and then made a decision.

So again, I always come back to litigation reform. You talk to clients across pretty much any sector you can imagine, and they want to be able to rely on the decision. And frankly, getting a fast no would be preferable to two years of NEPA followed by four years of litigation—and you lose. That capital can go elsewhere. I mean, we want it to be building infrastructure, mines, everything. But that’s sort of the north star, I think, for permitting reform, and NEPA in particular: how do we get to that reliable decision in a timely and predictable manner?

Thomas: Yeah, that makes a lot of sense. Richard, anything you'd add on the Clean Water Act front?

Richard: Well, just on NEPA real quick, I’d just reaffirm that the Seven County decision, I think, does clarify some of the need for Congress to step in and address some of these issues. And I can’t emphasize this enough—the administration’s taken several actions, and we’re moving in the right direction, but we can’t get to where we need to go without Congress here.

And making sure that when it comes to NEPA, we are constraining the scope appropriately to reasonably foreseeable outcomes. That, again, we’re not looking at things that might happen across time and space that are outside of really the intended scope of review here. In other words, we’ve got to have a close causal relationship to the project and the potential environmental impacts.

And Peter also touched on this in the end—I just want to reemphasize how important it is that this regulatory certainty is in place… that it can’t be removed by an administration—just any administration—at any time, including a new one on day one. That lack of certainty leads to a higher cost of capital, project delays… and it’s just going to make this buildout—any buildout that you need—that much harder, that much more costly. That has real impact to consumers, and that has real impact to the economy.

On the Clean Water Act, I’ll just emphasize that we’re looking for. One, on that nationwide permitting that I mentioned, it’s imperative that the Army Corps of Engineers moves quickly to finalize that renewal of the NWP program and ensures that there’s no lapse in the availability of that important program. So that’s one issue.

EPA—kind of going back to the administration and processes there—EPA has opened a public docket seeking stakeholder feedback on the current Section 401 process. We’re hopeful that EPA will take the appropriate steps to reinstate some common-sense reforms there. But again—just a broken record here—we’ve got to have Congress act on several of these fronts.

Peter: And if I could add one more I missed—we’re talking about NEPA. There is a murky thing that some of us call “pre-NEPA,” which is—we have statutory time clocks now, but if you can’t start the clock for any number of reasons, that could be lack of resourcing at the agency who has to physically process it. Or maybe they said your application is complete, but we don’t want to do the public announcement yet because it will start the clock.

And that was sort of a back-and-forth issue I worked on while I was in the Senate—to no avail—but some certainty on how you even start these time clocks, I think, is also important and needs to be part of that reform conversation.

Richard: And we see that—I mentioned Clean Water Act—but that’s another area where states have a lot of discretion. And that can lead to potential abuse of the process, where you’ve got a year to act, but I wait until day 360 to say, “Hey, we’re actually going to need some more feedback on these issues.” And that resets the clock. And now we’re back to square one, where we should have had a decision already by that point.

So I think the shot clock issue—how you define and constrain that—I’ll leave the nuances to other, smarter folks, but I think that’s a critical issue for us and for a lot of different stakeholders and industries.

Thomas: Yeah, a friend of the pod, Aidan Mackenzie, calls this “squeezing the balloon” with the timelines and page limits, right? It’s like, if you don’t actually make the law easier to comply with, it’s really, really tricky to reduce the time overall. And so you see this moving toward pre-NEPA and sitting on paperwork for a year or two years—or I’ve seen four or five years—before actually issuing that notice of intent and officially starting the clock.

Let’s pivot to the politics of this a little bit here. You know, Peter, you were in the Senate for the Fiscal Responsibility Act—the FRA—as well as some of Senator Manchin’s other early permitting reform efforts. I want to frame this in what is perhaps a provocative but I think useful way: If we see a major permitting reform package pass in the next year, will it be because political consensus has meaningfully shifted? Or will it be because we have a better sense of what each side can and can’t stomach, just because we’ve done this enough times, right?

So, like, will this be a victory of the “abundance movement”—right, of supply-side liberalism—or, on the other side, the realignment and growing comfort with industrial policy on the right? Or is it just us having tried and failed a bunch of times and sort of figured out what’s a go and what isn’t?

Peter: So I’m going to be really annoying and say both. I think that’s the overdetermined phenomena situation here.

I will say, there is some political consensus shifting. And I do think, frankly, a lot of the work Senator Manchin did—my old boss—to champion permitting reform helped move the needle, even on where Democrats are on this.

And then part of this also was the reality of COVID, Ukraine, not being able to get things on time—even seeing Governor Shapiro in Pennsylvania fix a highway using emergency powers in like 10 days. Normally people are used to it taking years. And I think there is some of this “abundance liberalism” of just, “Hey, we need to be able to do things faster.” And I think part of that’s even seeing Inflation Reduction Act deployment go way slower than people had thought. I would argue because they didn’t really tackle—or seriously tackle—this question of: how do you get permission to build the thing?

On the other hand, though, I do think some of this is going to be figuring out what each side can and can’t stomach. Part of that will be OB3—to use the cool kid term—took off the table a lot of the things that were sweeteners, for lack of a better word, for Republicans. Oil and gas leasing mandates, sort of building on what we put in the IRA to the next level, some other fossil provisions—those are law now. So, right, that’s not going to help balance the scale.

So I think the tricky part on the “what each side can and can’t stomach” is: the big question will be, where does Senate Energy and Natural Resources Chairman Mike Lee go with Ranking Member Heinrich? House Energy and Commerce, who I think it’s fair to say have not really been as involved in the transmission question—and that remains, I think, the big ask. How do we deploy transmission?

Sort of broadly on the left, and how much of that—going back to this tension of federalism, right—you sort of have the pipeline model over here under the Natural Gas Act. And then you look at the Federal Power Act, and transmission is not really parallel there. And I think that’s, at a very high level, where some people would like to see it. And just—the question to me will be: is there enough that both sides can stomach that moves the needle on transmission?

And there is one other part I think worth mentioning: yesterday—or the day before—some additional executive branch action on offshore wind. What is this, July 30th we’re recording this? Last day or two. And I think that’s going to be a real question for Democrats—is politically, this only works if it’s a tech-neutral thing that lifts the tides of renewable projects as well, right? Because that matters to them and their constituencies.

So then you have to kind of ask yourself—is, interestingly, they’re kind of seeing the flip side of the coin, where you could argue some of the tactics used against pipelines and other things with executive levers are now being mobilized against renewable projects. And is there a solution that kind of makes everyone take a step back?

Chairman Westerman said some great things on this front—of, like, to Richard’s point, that we need certainty. We can’t have a pendulum swing here. So I think the “can and can’t stomach” question is: is there something that threads the needle, that lets everybody say, “Okay, we know how this process works”? And it’s tricky.

Pavan: Yeah, I mention this all the time in relation to the administration’s actions recently. EPRA included that lift of the LNG pause. It’s not unheard of for a permitting reform package to reckon with what’s going on in the executive. But Richard, I’m curious here—you observe, you read environmental groups. They like to pick and choose which parts of permitting reform they like, right? If it deploys the technologies they’re in favor of, they’re okay with it. But there’s been this mentality—and I think it’s changing, particularly in the context of data center demand—that we can meet all of our energy demand through renewables. We don’t need to engage in tech-neutral permitting reform because we can just do it that way.

I think that’s changing. Are you reading that same kind of mentality change? And do you think it kind of drives action toward tech-neutral permitting reform in the next couple of months?

Richard: These are good questions. I like to think about this in terms of what hasn’t changed and what has changed, just in terms of the political and energy and market landscape.

What hasn’t changed is there are still a lot of groups that are reflexively opposed to certain types of energy projects. And that’s a nonpartisan statement, right? There are certain groups that are kind of against one set of projects, and there are other groups that are against another set. And so this concept of fuel neutrality—and getting the rules right for everyone—is really important.

Certainly, from the natural gas pipeline perspective, there are groups that are not interested in seeing any more natural gas pipelines. But you could say that’s probably true for other types of infrastructure as well. So permitting reform, I think, needs to address that—maybe even rise above that—and just get the rules of the road right for everyone, adhering to some of the principles that I’ve mentioned and Peter’s also talked about.

Here’s what has changed. Over the past few years, affordability of energy has become a pretty vital issue. It’s always been a vital issue for a lot of folks, and I think it’s an increasingly salient one. I don’t think that’s going away this year—I think it’s going to be a major issue for quite a while. And that’s probably a separate podcast to talk about the drivers there. But one of those drivers is the inability to build new things—and new infrastructure, energy infrastructure in particular.

I think the load growth conversation is happening in parallel. Load growth might be part of that affordability question, but it’s not necessarily always the key driver. And so—how are we going to build and do so in a way that protects affordability and actually benefits consumers?

One way to do that is reduce the cost and time to build things. And permitting reform is essential there.

So does that shift the conversation? The other aspect that I think is shifting right now is maybe more geopolitical—recognizing that the U.S. possesses an abundance of energy resources. I could tell you all about the abundance of natural gas resources, but we have a lot of other resources as well.

How do we take advantage of that? And how does that enable our ability to reshore our supply chains, reshore manufacturing? How does that affect our defense and readiness posture? So our defense industrial base—and enabling that to work as efficiently as possible. If you run a throughline—we’ve got to be able to build the infrastructure in order to have that readiness from a defense posture as well. I think that’s a shifting conversation. So the national security angle is also maybe part of the conversation and may influence a sensible permitting reform package.

Thomas: Yeah, I think one of the questions we’re interested in is, what does everybody need to get excited enough to fight for this, right? It seems like there’s often an inertia problem, or like a balancing-of-the-equities problem, where maybe the package just doesn’t do enough—or isn’t viewed as moving the needle enough—for certain constituents or stakeholders to show up and fight for the thing.

Maybe in other cases, there’s a concern that if you vote for this thing, the other thing that we want will never be folded into a package that will get 60 votes in the Senate.

So I think this could be a question for either of you, Peter and Richard, but—what is it that folks will want on permitting—whether it be the renewables folks, the mining folks, the oil and gas folks—that will be enough to be genuinely exciting?

Richard: I gotta defer to Peter. He’s talked to more stakeholders. I’m one of those, as you kind of think through the challenges and the balances here.

Peter: Well, I’ll say part of it would be Richard, AGA, folks like them on the fossil side, right? Having this Clean Water Act certainty, some of the other things that we’ve talked about—I think would be part of that.

Mining’s a good example—critical minerals. We have a huge bipartisan push right now. To the extent we can domestically solve some of this… I’ll say, from my work in that space, the litigation part really is truly exciting. There are some narrow provisions having to do with the mining law, which—I think every industry could probably find three or four very niche things that they are focused on. There, I would say judicial is really, really like the thing that makes this worthwhile.

Wind and solar—I think, unfortunately, transmission has only been billed—and maybe that’s a messaging problem—as supporting wind and solar. I’ll say it is incredibly important for wind and solar developers. I think part of the problem is it has only been labeled as good for them, and I think it’s more broadly important.

As Richard talked about, there are good arguments that—both on an affordability and a reliability point of view—that interconnection of regions, all of that… and I am by no means an electricity expert, so would defer to others on the specifics. Interconnection queues and what the right way is to kind of get your project plugged in once it’s built. And again, that’s—you can say primarily wind and solar just because that’s most of what’s in queues right now—but it also affects gas, nuclear, other things that are trying to plug in.

And then I’d say one thing that—because of the dynamics of this permitting reform discussion, which is really energy focused, which is, in a good way, right?—has kind of brought Democrats along, thinking about the emissions side.

But we shouldn’t lose sight of the fact that the highway bill is going to be coming up. A lot of these other infrastructure questions are kind of what I’ll say is “normal stuff that normal people use.” They don’t think about their roads, their wastewater treatment plants, their water treatment plants. If it has a federal nexus, it almost certainly triggers NEPA, and it definitely triggers Clean Air Act, Clean Water Act, manufacturing.

So I think broadening the tent a bit and having some of those folks on board—and that may even just be education, right? National Association of Manufacturers obviously follows NEPA. Your average 100-person manufacturing firm in, say, small-town Pennsylvania—they’re not thinking about this. But having those people onside and actively kind of understanding that there are benefits, if they’re having a federal nexus, is a big deal as well.

Thomas: Okay, final question here. We’ve decided to make a habit out of asking guests at the end for a hot energy policy take. So this can be something you think most people are getting wrong, something you think is severely underrated—take it in any direction you want to. But we’ll start with you, Richard.

Richard: If you care about affordability, you need permitting reform. If you care about reliability—which is another one of those shifting issues that I should have mentioned—you need permitting reform. If you care about climate policy, you need permitting reform.

Blocking pipelines, for example, does not reduce demand. It raises costs on consumers. It increases our dependence on higher-cost and higher-emissions energy resources. And it actually makes it harder to have a reliable and stable grid that enables the growth of renewables.

Permitting reform will also affect other types of infrastructure that enable the types of new technologies and shifting technologies that are going to be required to improve affordability, reliability, and emissions.

Maybe, almost back to the last question—how do we create something where everyone wins? I think you can look at permitting reform through all of these lenses and recognize that there is a benefit, no matter which angle you’re coming at this from—from emissions, from reliability, or from affordability.

So I don’t know if that’s a hot take, but that’s my take.

Peter: The one quick thought that—I don’t know if it counts as a hot take—is just: the fact that you can’t see the projects that never, ever happen, or are sited specifically to avoid a federal nexus, is a massive drag. Hard to quantify.

So that’s one. And I have quite a few clients who wiggle around anything that touches anything federal. So I think that’s under-appreciated—and economy-wide—and huge in the energy sector.

And I think the other is: whatever permitting reform works—because we’re talking about certainty—it’s going to be uncomfortable for both the left and right, broadly speaking.

Because for a decision to stand, right—not only on the litigation side—it means we’re going to have to trust the bureaucrats. Which is not a popular thing, politically, for anyone to say.

Strangely, you sort of have on the right—that’s not the kind of thing your average member wants to say—but it’s going to be the truth, whether it’s a record decision for a mine plan or a natural gas pipeline permit. It means saying, “We actually have to—crazy as this is—trust the government that they did their analysis, and the permit stands.”

And then on the left—the people who you often think of as the party of government—a lot of these public comment processes, a lot of the stakeholder engagement stuff, has been built around the idea that you can’t trust the government. Which some find a little ironic. But similarly, if you don’t want the pendulum swing, you’re going to have to let, say, a Biden administration approval of the Willow oil and gas project stand, just as much as you’re going to have to let an offshore wind project stand.

And that’s going to mean trusting these bureaucratic decisions—the boring thousands of words no one really cares about when we’re up at the political level—but the alternative selection, the question of whether to use this kind of site or that site… and again, “Trust me, I’m from the government, I’m here to help,” is not a cool thing to go say, but it’s weirdly going to be part of the solution.

Thomas: I think it’s a good hot take. Peter and Richard, thanks so much for coming on the show.

Peter: Thanks for having us—and thanks for all the work you’re doing on this.

Richard: Thank you.

In this episode, we discuss:

• The aftermath of the One Big Beautiful Bill

• Foreign entity of concern requirements

• The breakdown in advocacy and political miscalculations

• The path forward for permitting reform

Right of Way Ep. 1: Energy Policy Whiplash

w/ Liam Donovan and Yogin Kothari

Thomas: Welcome to Right of Way, a podcast about energy policy, energy politics, and above all the upcoming permitting reform negotiations. I’m Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, and I’m joined by Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress.

In recent years, permitting reform has come into the spotlight as deregulatory-minded Republicans and Democratic climate hawks have found themselves blocked by the same barrier: a set of environmental laws, passed in the 1960s and ‘70s, which were created with good intent but have since morphed into a years-long paperwork and litigation gauntlet. Whether you're trying to build a natural gas pipeline or a solar farm, the National Environmental Policy Act (or NEPA), the Clean Water Act, and a web of other requirements can stretch projects out for years or kill them entirely. Now, a new round of bipartisan negotiations is underway to reform these processes, and we're expecting things to kick up here in the coming months.

This fight is important on its own merits – but it will be especially interesting because it’ll play out in a particularly weird moment in energy policy.

In the last five years, we’ve seen massive, party-line energy packages from both Democrats and Republicans. Democrats, with the Inflation Reduction Act, or IRA, created a suite of new tax credits for clean energy production, manufacturing, and consumption – from renewables to batteries to electric vehicles. Then, Republicans’ One Big Beautiful Bill, passed earlier this year, cut or phased down many of those credits – but also left or bolstered a number of others, from the so-called baseload carveout for nuclear, geothermal, hydropower and storage to the now-expanded carbon capture credit. All of this has created a great deal of policy whiplash for the energy industry, and has left the US without a clear long-term energy policy vision.

So, on Right of Way, we’re going to talk to experts, advocates, and industry representatives with a stake in this permitting reform fight. And we’re also going to try to understand what this push – whether it fails or succeeds, and regardless of what shape it takes – tells us about where we’re going over the next few years.

Today, we’re going to do a little bit of scene-setting. We’re going to talk about what happened in the reconciliation bill, what the short and long-term outlook for the energy industry is based on that outcome, and how that’s going to drive policymaking efforts – including permitting reform efforts – in the near-term.

Pavan: We’re fortunate to have two legends of energy policy joining us today in Liam Donovan and Yogin Kothari.

Pavan: Liam Donovan is the President of the Risk & Reputation practice at Targeted Victory, a leading political strategy and marketing agency. He has more than two decades of experience at the intersection of politics and policy, having held senior roles at a national trade organization and a global law and lobbying firm. His bylines have appeared in the New York Times, the New York Post, and elsewhere, and he has appeared as a political commentator on CNN, Fox, MSNBC and CNBC. Finally and perhaps most importantly, Liam is a prodigious and prolific Twitter poster, and listeners should go follow him there.

Thomas: Yogin Kothari is the Chief Strategy Officer at SEMA, the Solar Energy Manufacturers for America Coalition. He has a decade of experience serving in both Congress and the nonprofit sector, serving on the staff of the Senate Homeland Security and Governmental Affairs Committee, where he advised on regulatory affairs, the environment, and beyond.

Pavan: Yogin, just to kick us off here, it would be great to have a brief readout of the One Big Beautiful Bill’s energy title. So what did it keep, what did it cut, and what did it add?

Yogin: Hey, first of all, thanks guys. Thanks for having me on. I'm really excited to dig into this with y'all and appreciate all the great work you guys have been doing over the last several months leading up to OB3 (The One Big Beautiful Bill Act) and now in implementation.

So, you know, from where I sit, OB3 made some fairly significant changes in the energy title, right? Most of the modifications significantly impacting solar and wind. I think the headline for most has been solar and wind ending up being treated differently than the quote unquote “baseload” or “clean firm” technologies like storage, nuclear, geothermal, hydro, et cetera, as well as the incorporation of prohibited foreign entity restrictions and material assistance restrictions.

But, for my members and members of the Solar Energy Manufacturers for America Coalition, the headline for us was what was kept the same, and that's section 45X, the advanced manufacturing production tax credit. Bipartisan support for the first time on the record, meaning Republicans and Democrats on the record strongly supporting efforts to onshore these critical technologies. So, was happy to see that.

There were some other changes around the residential credits, EV credits, things like that all being eliminated. I think that was fairly an expectation for anybody who was following these issues and the politics going into the debate. 45V got a little bit of a haircut there as well. And, you know, now I'm excited to focus on implementation now and get past all of the congressional lobbying.

Thomas: So, first of all, I have to say “OB3” is a term that I've not heard used yet, so it's gonna save me a ton of time instead of saying O-B-B-B-A into the future. But Liam, on your end: It seems like the GOP rejected this premise of tech neutral support for energy technologies, right?

It seemed like one of the bets of the Inflation Reduction Act was that by making that investment credit and the production credit tech neutral – meaning that: not just wind and solar, but geothermal, nuclear, hydro, et cetera could be eligible, that it would end up creating durability for all of those sources and the entirety of that credit.

So, why do you think it is that the GOP rejected that premise? And was it fundamentally ideological? Was it budgetary? A combination of both?

Liam: Yeah. I think it's overdetermined in a lot of ways. To understand this bill, even zooming up out of the energy title, you have to understand the dynamics within the Republican coalition right now, which is transitional.

This is not yesterday's party. It is not the 2017 Republican Party that gave you the Tax Cuts and Jobs Act, even though the core of what this ultimately did was extending those legacy policies.

I think the treatment of the energy credit regime owes to a number of things.

Number one, there's a “Willie Sutton” issue of how do you offset the things that they wanted to do. There were only so many pools of cash to go after. It's why you went after mandatory programs, namely Medicaid, got a trillion dollars out of there. There were only so many other pools to go after, and IRA was a ripe target, especially given the fact that every time you went back and had JCT run the numbers, the cost ballooned.

So it went from being a $300 billion tax title in 2022 to a trillion dollars, depending on who you ask, in 2025. So I think that made it a ripe target. I think the politics are certainly – whether or not I'd say it's ideological, there's certainly a partisan lens. Because even though, as we know on this podcast, what IRA became was far different than what the progressive vision had been and what BBB looked like – this is much more of a Manchin-flavored energy package – it was always coded as “Green New Deal,” lefty Biden stuff.

And when Trump and the party of 2025 is very keen on rolling back any traces of Biden-era policy, I think that made it very compelling. And, at the end of the day, even if you think through how Republicans think about tech neutral… because remember Chairman Crapo back when he was just a senior member of the Finance Committee, had his own tech neutral regime, but when he thought about tech neutral, it was meant to reward different things. And so wind and solar wouldn't have been eligible for that because they’d had too much penetration in the market. So I think there's a way to reconcile the concept of tech neutrality, and not going back to the hodgepodge of tech-specific credits, while still preserving what it did and being more punitive in areas where Republicans thought either it wasn't their constituencies or perhaps these are mature technologies that shouldn't need indefinite help.

Pavan: Right, so, relatedly, I want to talk about a little bit about the advocacy here, right? Because part of this is a partisan issue and the other part is like, what were the industries doing here to try and protect their tax credits?

So, just zooming out, looking retrospectively on the advocacy end, was there more that could have been done from renewable technologies? And why is that? Liam, I'll go to you first.

Liam: It's a really tough question, in part because people at this point have to justify what they did, which is a different question.

It's a different question of whether it was a reasonable strategy that was undertaken versus, knowing what we know now, could things have been handled differently? I think there was a number of miscalculations, not least of which: most of Washington expected this fight to come much later. We expected that in July of 2025, there might have been a first bill in the mold of the Senate vision. And that end-of-year was, of course, as ever, when Congress would tackle tax policy. So I think there was a late scramble to catch up to the reality on the ground, which was, oh wait, they're really doing this, and they're really gonna have a second quarter strategy.

The July 4th deadline is not just an aspirational goal; they're dead serious about this. So I think that was a miscalculation. I think there was a strategy or a premise that had operated for the last year – two, three years – since the implementation of the IRA that, of course, because the dollars flowing into these districts disproportionately was going to Republican districts and deep red states that necessarily (this is the old defense base strategy of, well, because of a part is built in every district that couldn't possibly go after these contracts).

I think that for the first time faltered and you had Republicans who either, and perhaps this is a, Biden handcuffing, the Biden administration through their implementation strategy and their regulations didn't allow some of these things to move forward as quickly as you'd need them to be mature enough, shovels in the ground, steel in the ground, jobs in district to where, it just wasn't as compelling as you might have expected if companies went into members and said, “Hey, but I have these billions of dollars being invested in your district.”

As long as that wasn't already actualized, there was little that was seen as risking. I also think the broad handholding that I think papered over some of the risk here, where you had a very good job by industry, building out a broad but ultimately kind of shallow coalition within certainly, the House. If you thought about the Garbarino-Kiggans letters and coalitions, on paper, it looked very strong. If you parsed the language, there was not a firm commitment to much other than, “don't repeal it in its entirety, give some level of certainty and stability because these are important.” But it never identified necessarily what these were.

That's a lot of different credits, a lot of different industries, and at the end of the day, members of Congress are parochial creatures. And so when push came to shove, not only were they interested in different elements of the law and preserving different elements of the law, but also if you're Andrew Garbarino, let's say, or Mike Lawler or a half a dozen of these members who were ostensibly the bulwarks against significant reforms and repeals, they had bigger fish to fry, whether that was the treatment of SALT, whether that was Medicaid. I think that's ultimately the story of “OB3,” if we're calling it that, is you had the same people fighting on really three different issues, and it was a binary fight between the conservatives that just wanted either pat faster or more punitive, and the moderates who wanted accommodations in all three of these areas. And at the end of the day, they indexed more to where their political peril really lied, in the case of certainly SALT on the first go-round, and Medicaid, which they entrusted to the Senate, which I think ultimately proved unwise.

Thomas: So, just quickly to jump in there, I think one of the things that we're really interested in was the “if we just spend money in these districts, there will be a ton of political support for the credits in general.” And then there's now this sort of retrospective, “well, okay, maybe the steel in the ground element of this was really important.”

We've also heard a theory of the case presented that there's this really meaningful distinction between generation versus manufacturing. And, Yogin, I think you can probably speak to this, but to your point: 45X, including 45X for solar components, was maintained, right? Whereas obviously, solar and wind in the tech neutrals were phased out.

How should we understand this, right? As we think about, like, how do you create durable industrial policy, durable energy policy, and, thinking about what the political theory of the case in 2022 got right and wrong, what do we come away thinking about here?

Yogin: Yeah. Look, I'll be as candid as I can be here. I think the bottom line is, over the last decade or two, we have lost a lot of our manufacturing base across not just these advanced energy technologies, but across the board to China, right? China, Southeast Asia, and we've been living in this whack-a-mole trade regime for the last 10-15 years, especially when it comes to solar.

And it’s pitted the industry against each other in some ways, right? The handful of manufacturers that I would get to work with on a daily basis, versus all the developers. And the way that we like to think about it is: When it comes to solar in particular, do we want to take control of at least our portion of the supply chain? And I think there's a national security imperative to do so.

But unfortunately, the industry – the broader industry, the developers and everyone else – wasn't collectively able to make that case. And you saw the politics of this, and I think Liam to your point: this whole “Hey, if there's something in my district, that person's gonna be for it.”

I mean, there are Chinese companies invested in Ohio building five gigawatts of solar panels, and Bernie Moreno and Jon Husted are not gonna be championing that factory, right? And so there is this distinction, and the writing was on the wall going back to last year when Sherrod Brown introduced one of the first foreign entity of concern pieces of legislation. And so if I was industry, I would be thinking back to at least last year and saying, “Hey, look, this is where the politics are going on both sides of the aisle. And we need to lean in on the manufacturing elements and elevate the non-Chinese manufacturing, and that's the way that we can make the case. And I don't know if the industry did a great job of that. Again, you got to save 45X – but the demand drivers that are associated with that, unfortunately, are gonna get tapered off relatively soon rather than later.

And I think the other technologies, they were a little bit more successful because they were able to separate themselves a little bit, partially with political momentum. I always like to point to Form Energy. They established support for a lot of the energy storage side of things. Their factory is located in this old steel town that lost Weirton Steel, which was one of the largest steel producers in the country at one point. And they're revitalizing those jobs. There's steel in the ground. There's a thousand jobs there now. That all makes a difference. And I think, collectively, the industry may have lost the ball there.

Thomas: Yeah, that makes sense. And I think this is also a good segue to talk about FEOC (foreign entity of concern) more broadly. It seems like in the aftermath of “OB3,” there are really two areas of greatest uncertainty. One of them was the status and position of the loan programs office, or the LPO, which we probably won't talk as much about here today. And then the foreign entity of concern requirements for the tax credits.

So for listeners, these are rules that strip eligibility for any project that's owned or controlled by, or receives, quote unquote “material assistance” from a foreign entity of concern. That's broadly defined to cover companies tied to China, Russia, Iran, or North Korea – China being the most important one here given their control over critical supply chains.

And there's quite a bit of concern that the rules as written – maybe they're unworkable for some companies; maybe they're just exceptionally complicated, making compliance really hard. Maybe they're workable in the long run, but tricky in the short run. How are you reading the tea leaves here? What are you hearing from folks? Is this workable? Is it unworkable? Where are we, and what does it tell us?

Yogin: Yeah. I'm happy to take that on first. Look, I think the base kind of reaction to all foreign entity of concern language in the House and the Senate bill was always, “Hey, this is not gonna be workable.”

And I don't think that was the right position to be in. I think it was – again, to my point earlier, it was clear that this is a direction Congress wanted to vote to go in, both Republicans and Democrats. Going back to Carol Miller, Marco Rubio had a 45X FEOC bill. It was all there. So what the Senate ended up doing – they really threaded the needle here and provided a pathway to allow folks to get into compliance on the manufacturing side and on the deployment side. I think it's a strong compromise.

I would even argue maybe they could have gotten a little further and strengthened FEOC, especially on solar. And again, that's a personal bias of mine. I think my member companies would've liked to see something stronger.

But I'm not gonna sit here and say it's gonna be easy to comply, but I think, once we sit down and take a deep breath and look at the rules and try to find ways to work together, I think there are pathways to get on the right side of this. And frankly, again, it's a national security issue. We should be controlling our solar supply chain. We should be controlling our battery supply chain, our inverter supply chain. Those are huge national security risks. The President's AI actions yesterday highlighted some of that too. Congress, through the appropriations bills and report language is highlighting some of the national security risks associated with this. It's a big deal. And I think the industry at large needs to take [that] a little, probably a little bit more seriously. And that is clearly where the political momentum is going.

Thomas: Yeah. I'm curious, Liam at a high level: How should we be thinking about FEOC stuff, right? Because it seems this general push towards both Republicans and Democrats being comfortable with industrial policy, with onshoring critical supply chains, et cetera.

To Yogin’s point, the writing has been on the wall. This seems to be a direction that we're all comfortable heading, at least in broad strokes. And so we're gonna be looking at FEOC structures for all sorts of industrial policy investments moving into the future.

How do we thread that needle, right? Is this, maybe we went too far? Maybe we didn't go far enough to Yogin’s point for certain sorts of things? Certainly, it was quite a bit farther than the FEOC requirements that were written into a lot of the IRA-era rules.

So, like, what's the general trajectory of things?

Liam: Yeah, to Yogin’s point, I think there was a misstep there by industry seeing this as, “oh, well this is unworkable.” I think that was a feature, not a bug to the people that wrote that. That was very deliberate. And so I think there's a good faith/bad faith version of this.

One is: this is a back door way to ensure that people aren't getting these credits. And I think that was more what was reflected in the ultimate House version. Similar to some of the phase-out rules – it was like, yeah, the unworkability was the point. The Senate was left to pick up the pieces, make it more livable. But to everything that you and Yogin just said, this has directionally been the way we've been going from – what, the advent of the FEOC concept was in CHIPS, right? The original CHIPS. And then, for the EV provisions in the IRA, you built it out a bit.

And I think – while we just eviscerated the consumer credits, I think that's really the model there. And likewise, I think while we don't yet have a coherent worldview among Republicans, because you still have this fractious coalition, everyone is much more comfortable with dealing in this space. And if you think about what the Party is likely to look like in three years, it's much more likely that you have a Vance outlook on the world than going back to anything resembling a pre-Trump version of the Party. So I think it's here to stay, and – particularly for stakeholders, for companies and industries – you need to embrace this. Embrace it to the extent that it fits your model, and you can find yourself skating where the puck's going rather than trying to play catch-up in the way that I think we saw over the last six months.

Pavan: Yeah. So, I want to move to some of the executive actions: the Interior memo, there's been a recent executive order related to “commence construction” for wind and solar. So, Yogin, can you walk us through that EO, can you walk us through the memo, and then overall, wrapping this all together, how do you think this affects overall deployment for renewable technologies?

Yogin: Yeah, the executive order was interesting because I think the initial reaction, and I'm still trying to figure this out, is: it's the first sign of the administration now trying to directly put their thumb on the scale, right, on wind and solar. We've seen some other executive orders and actions and things like that, but this will have, depending on how it's implemented, could have the biggest impact, one of the bigger impacts.

But 45 days is a quick timeline for Treasury, and getting sub-regulatory guidance or any other action like that in 45 days is probably not realistic. So we'll see what comes out, but I think what Treasury can do is send market signals, right? And indicate to developers: “Hey, look, this is where we're going.”

It's not something that only this administration has done; the previous administration did the same thing when it came to domestic content and making sure folks knew that solar wafers were gonna be part of the calculations there. I think, Treasury could say that: “Hey, we're gonna be looking at this material assistance stuff really closely, so don't try to get around it by commencing construction in the next five months and just using a bunch of cheap Chinese stuff.”

And that's not unreasonable, right? It is not unreasonable to say that we need control of our supply chains and we need to control what's going on to our grid. That is a very reasonable position for any elected official to take. And so for the industry, again, to skate where the puck's going, right? That's where we're going. So let's just buy American. Let's buy allied supply chains from the start, right? They could have done a domestic content style restriction, and they chose not to. They want to have an allied supply chain and I think that's where I see things going there.

On the Interior memo, Pavan, I know, like you and I have chatted a little bit about this from when it came out, but it seems to me they're really un-delegating a lot of authorities that have been delegated from the Secretary's office and it could slow projects down, it might politicize them a little bit further. You might have to do some more paperwork or get your members of Congress and other electeds involved in getting things unstuck. I don't see it as a total shutdown, but I think it'll just slow things down, put up some barriers and you might have to be a little bit more engaged and, again, for our industry maybe, it's a, kick in the rear to say, “hey, you need to be better about engaging with Republicans.”

And that's not totally unreasonable, but look, even earlier this week, Secretary Wright was just on Brett Baier like two nights ago, and he highlighted that solar is growing rapidly in the US and he thinks that there's a future for solar in the US. The situation on all this remains really fluid and Secretary Wright’s going out there – and what he said two days ago is very different than what he was saying a month ago – I think there's an opportunity there. And I think with the priority on the data center stuff, look, solar and storage is going to be the bridge to nuclear and all the other technologies that Republicans care about. But in the next two to three years – anything that gets built realistically – it's probably gonna have to have solar and storage as part of the conversation.

Thomas: Let me ask you both one question here, which I'm still trying to wrap my head around. A lot of folks are trying to figure out what is the coherent Republican energy policy vision in the aftermath of “OB3?” And on the one hand, it's notable that there is this “clean firm carveout” for these so-called baseload technologies, also that 45X stuck around.

On the other hand, there's this almost Biblical punishment of generation for wind and solar with the DOI memo and elsewhere. But more than anything, it seemed like there was just such distaste for anything that had the Inflation Reduction Act title slapped on it. When we were working on Loan Programs Office (LPO) stuff, they had to remove all of the LPO money and then replace it with other money because the original LPO money came from the IRA, right?

And so, it’s hard to parse apart what is just real frustration with the way that the Inflation Reduction Act came to be, and what of it represents a cohering positive vision of where energy policy should be going?

Liam: That one's tough because I think this is not a coherent moment for the Party, and this is also not a Party where if you imagine, the folks that make it up among office holders, most of them didn't come here because they were driven by an energy-centric worldview.

I do think that the encouraging thing is with the Administration's leadership on AI and the energy dominance frame, I do think that sort of leadership, rhetorically or otherwise, at least lends a vision to others to fall in line behind. I mean, we should acknowledge this on this podcast, but I think – present company between Thomas and Pavan, you guys leaned in at a very important time to try to take what was out there as a rhetorical frame for energy dominance and [show] how clean firm overlays that.

I think it was there for the taking, and you could imagine it in what Secretary Wright was saying at the time. But there wasn't a lot of energy on the Hill other than people like Senator [Kevin] Cramer speaking about it. You didn't have stakeholders leaning into that the way I might have imagined. But I think the opportunity is there. But I think you have to build it out for people, because it's not intuitive. It's not yet to the point where you have – I think there's really smart staffers, there's really smart thinkers on this, maybe it's people listening to this podcast – but it's a self-selective audience that I don't think this vision has gotten kind of breakaway velocity in the way that it needs to.

And so, the bad news is we're not there yet. I think the good news is there is opportunity to build out a coherent vision that reflects and reinforces an idea of energy dominance, an idea of winning the AI race that really does… I mean there's lip service to all the above. It's inconsistent in this application, but I think there really is an opportunity to build out something more coherent than where we stand right now.

Pavan: Yeah. So going back to the “commence construction” EO, that Interior memo – obviously there's lineage here, right? The Biden administration, they levied some punitive measures against oil and gas. To what extent, Liam, do you think that the recent actions from the administration are informed by maybe the course that the Biden administration pursued if at all?

Liam: I think the tit for tat is so easy to fall into. You can always justify things… this is where the overdetermined piece comes in. These are technologies that are coded as, and, even before Biden, these are things that, despite the fact that they had some Republican and bipartisan DNA they were certainly tainted at some level by the association with the IRA.

But even that wasn't the end-all be-all because, of course, as we know, 45Q and 45Z which are included in the IRA title – those were given different treatments. So it's not as simple as saying, “Oh, this is IRA, so it's bad.” But I do think this is a long history here.

And even going back, let's go back to the PATH Act, right? There've been so many times where industries have come back to the table and say, “We swear, just give us certainty. Give us a long-term phase-down. And we swear this is the last time you'll hear from us.” And of course, that's never been the case.

So I do think there's some residual frustration with the perpetual subsidy there. And all the overlaying Green New Deal rhetoric with obviously, President Trump. I think I may have underrated President Trump's personal determination because by all accounts, when he was speaking privately with members, he wanted this gone. People had different interpretations of whether that means stop it tomorrow, versus just get rid of it in an orderly fashion. But I think I probably underrated how much the President himself just wanted it all gone. So I think it's a little bit of everything, and at some level we should be marveling at how much survived and in a durable way, particularly on the clean firm side.

Pavan: We're talking about perpetual extensions – can't ignore the emergence of Alex Epstein and his influence on the process. There were points in the process where I was talking to people in government affairs and they were afraid of the next Epstein tweet, scared that it might tilt the process in a way that would be unrecoverable. So I'm curious what you all make of Alex Epstein and operationalizing this kind of latent discontent in the Freedom Caucus with the IRA. And in part, I think that's the reason why the “commence construction” for wind and solar was probably the last outstanding element of this overall bill.

So I'll leave it to either of you to take that.

Yogin: Yeah, look, I think Alex probably embodied a lot of where the politics of the moment were, right? If it wasn't Alex Epstein, it could have been Joe Schmo, right? And so he just happened to be the right man at the right moment, I guess, for the Freedom Caucus. Obviously, not something that we were super excited about, and we were definitely frustrated a little bit there, but it is what it is at this point. And he's out there, and we're in this attention economy, and he was able to get the attention. And frankly, he got the attention of the White House, right? He was brought into the Republican Senate lunch with [White House Chief of Staff] Susie Wiles. And that makes a difference. And that's good on him, I guess.

Liam: Yeah, I think there's a lesson here that goes beyond just energy policy, which is we're in a new landscape here where, it goes back to that attention economy point, but – you don't have to have the right pedigree or the right credentials or be associated with the right think tank or what have you to be a player here. And I think that's more important than ever.

And something again, that I think was a miscalculation by some stakeholders, some members of industry that had written him off. “Oh, that's just Alex Epstein, there he goes again” kind of thing, when they should have been probably taking him much more seriously. And in retrospect, I think even outside of this context, you have to take seriously… there are Alex Epstein analogues in every space and taking them seriously, I think, is more important than ever.

Thomas: Yeah. We've long joked about the “posting to policy pipeline,” right? But it has become immanentized in a really real way. We've also seen recently, the name is escaping me, but there's a guy down in Tennessee with a major Twitter following who has been fighting the placement of a gas plant by TVA, such that it's been elevated to the White House level. And then, sure enough, that plant got canceled. This sort of thing is really real. And I think it sounds like maybe a lot of folks underpriced the importance of that sort of thing.

Pavan: Yeah. And I would add, like you, you observed [that] on the public land stuff, right? Where this provision took off on Twitter and there were tweets with tens of thousands of likes calling for that provision to be removed. And it really did move the legislative process.

Thomas: Yeah. Okay, so last piece here. We're trying to get a sense of where we're going here, right? And, recognizing in a lot of ways the incoherence of this moment. But we're also driving towards… ultimately, this podcast is largely about the permitting reform fight. And we want to know, what's next? What's the next Democratic ask on energy policy, right?

We are still in a GOP trifecta, but we're moving towards what's likely a split Congress. And will there be another extenders fight? Will there be an effort to extend the wind and solar credits? Will there be a pivot away from the sort of tax creditification of energy policy? What’s the next big push especially some from the Democratic angle or climate angle on all this stuff?

Yogin: Yeah. Look I think Democrats are letting the dust settle a little bit here, right? I think they need to see what implementation looks like. Let's see what this next 45-day period looks like. I think what comes out August 18th, August 20th, is gonna be indicative of where Democrats might want to go.

We're not getting an appropriations – some kind of full-year appropriations – without Democratic votes. And so what Democrats choose to ask for in that will be important to follow.

If I had a magic wand, my focus would be on manufacturing and leveraging… look, manufacturers need a level playing field to compete with China's subsidies. We all know what those subsidies are. Free land, free electricity, forced labor, all that stuff. But if we want our technologies and our manufacturers to be able to compete, we need to provide that market differentiator. And so, maybe it's not a full extension of a 30% ITC or anything like that, but: Does it make sense to have a 10% domestic content bonus if you're just buying American? You get that 10% and does that level the playing field? It’s like another way to tariff, right, but more of a carrot approach.

But I, I think, [Representative] Scott Peters, the other day talked about permitting reform a little bit and said he doesn't know how he's gonna be able to trust his colleagues across the aisle. And I think that's gonna be the biggest challenge that we're gonna see in the next six to 12 months with just the way appropriations has gone and some of the impoundments and the changes in how the agencies are being run.

I think there is a little bit of a lack of trust and this trust deficit. And I think, as a former Senate staffer, I worked really well across the aisle when I was working for Gary Peters with Rob Portman, Ron Johnson, others, but only because we had that kind of level of trust between the members, between the staff.

And so, I think we'll have to see what that looks like once folks go away for August and then come back in the fall.

Pavan: Yeah. You're getting right into where I was going, which is, there's a world where you can imagine, if you're not gonna see wholesale restoration of a 30% ITC for wind and solar… the best way to bring down costs for renewable projects is permitting reform, regulatory reform. You could imagine Democrats being more motivated to pursue a deal like that, but obviously there's this issue of the EOs and the memos and this feeling of the well being poisoned.

On the flip side, Republicans could feel that they've gotten their anger out at wind and solar and the “Green New Scam,” and now, maybe they're prepared to do tech-neutral regulatory reform. So I’d pose that to both of you.

Liam, I'll begin with you. How do you think this changes the politics of permitting reform – this big reconciliation bill?

Liam: I think it's up to Republicans to begin a good-faith process that makes it hard for Democrats to say no. Because I think there's enough heartburn, there's enough feeling of unfairness throughout all this. Yogin brought up the dynamics of government funding, where, “Why would we make a government funding deal if you're just gonna take it away through the back door?”

So I think there's a deficit of trust that was always there that is now at a low point. But I think that's up to Republicans to make an offer that… even as a political matter, it's probably wiser to make [Democrats] say no rather than giving them an easy out. But I just think, and this is different than the permitting question, but as an outsider, just reacting to the last question.

I just wonder in any kind of bipartisan way or even a partisan way, let's say, flashing forward to a universe where Democrats have full control. If you think about what gave us IRA, it was the tools being circumscribed to what fits within budget reconciliation and a commitment to the carrot, which I think now has been exposed at some level.

And if you think about why we didn't have tax policy happen in the two to three year interim after passage of the IRA, it's because there was a frustration on the left that we were doing so much to give rewards to corporations and not doing enough for working families. So that's what I wonder about, is the big thing that the Democrats ask for, even in the context of, let's say, an extender-type situation. They're gonna want more for working families, they're gonna want more for the child tax credit, rather than over-indexing to anything that could be seen as a carrot.

And quite frankly, when they do come back, I think if they're looking at the balance of carrots versus sticks, they're gonna be much more inclined to force companies to do things rather than try to create incentives that can easily be taken away by Republicans when they're back in power.

Thomas: Let me ask you one quick question here, Liam, and it's something that you and I have discussed before. We've talked about how oftentimes commentators, especially those who are interested in energy policy, over-index on the importance of energy policy compared to other issues.

We were saying that, and then in the last-minute negotiations over “OB3,” it turns out that the

IRA credits were like Chip Roy's number one hang-up with the bill. Is energy policy legitimately rising in terms of individual legislators’ rank of import? Or was this just this one weird moment and maybe the House Freedom Caucus needed to have a certain sticking point and IRA was the easiest place to land?

Liam: Yeah, I think it's more the latter. I think you have to understand the internal logic and dynamics of the bargaining, because the reason it became the thing for the House guys at the end was that they thought they had their first deal. And so it was this tug of war type situation.

Quite frankly, if you think about the trajectory of this thing, there was the House Ways and Means mark, which was one thing. They tugged it even further for what got them the votes to get to the House floor.

And this was even on SALT – this was all with the understanding that the Senate was gonna have a different view of the world, and “those squishes over there were gonna water it down.” So, I just think in a vacuum, I'm not sure that it takes on the same salience, but in the immediate context, they knew that this was actually a stronger political position for them than saying, “No, we need to squeeze that much more outta Medicaid or, further water down the SALT stuff that those guys needed to win their races.”

So I think it's notable, but I also think this is just that context of those three areas that they were duking it out on, I think this was just one that ended up being what made or broke the deal. And at the end of the day, as you said, they needed to make a deal with the Senate moderates to, I guess backfill… the Senate went harder on Medicaid than I would've guessed, and they had to throw in a sop there with the rural funds. But really I think what made the deal was getting the beginning construction safe harbor in there. And I think that's what set these guys off. And quite frankly, like it's why you got the Interior memo. It's why you got the EO because you had to find overlap where really none existed. But that's just a function of the circumstances rather than I think the broader importance of energy in the intellectual framework.

Thomas: So, it's pretty clear that if permitting reform's gonna happen, it's gonna have to originate from the Republican side, with Republicans presenting a good faith structure for negotiations to start.

And it's also pretty clear then that it's gonna have to include some sort of transmission stuff as part of the package. It's long been a key Democratic ask. It was the key thing in the Energy Permitting Reform Act of 2024. And obviously, there is increasing Republican interest in transmission as well.

We're in this weird moment where, on the one hand, the Grain Belt Express loan is getting canceled because Senator Josh Hawley in Missouri is putting pressure on the President and Secretary Wright to cancel that loan. And at the same time, we're hearing that there's increased interest from the executive in grid stuff and transmission stuff. And there may be even executive action to that end coming down the pike.

How tricky is it gonna be to get Republicans to take that first step and put transmission out there? And, where is the Republican Party moving on transmission rhetorically?

Liam: The Hawley experience and the Grain Belt Express experience is certainly a shot across the bow. I think it's complicated by the rhetorical utility of calling things “Green New Deal” and everything else. And this is also one where in a vacuum it's easy for somebody like a Josh Hawley that actually looks for contrarian ways to be out there and make noise and they can do it very effectively.

That vacuum is gonna need to be filled by voice within the administration, setting the tone. Because like I said I think they've laid out some potentially very effective frames that could help to propel this effort. But as we saw even with “OB3” the reason this went was Congress coming up with a critical mass of its vision, but the Administration coming up with its non-negotiables and leading from there.

And so until you get to that point, I think it's difficult. But I think at the end of the day, Hawley is a great example, like the members can talk all they want about things they won't go for, like let's say Medicaid cuts, but at the end of the day, if the Administration's for it, they will find a way to rationalize whatever it is.

And so I think it really comes down to that leadership. And putting out an initial offer that is not just spurned as bad faith by Democrats.

Pavan: Yogin I might add: So, we talk about transmission, but in the context of the last permitting reform deal, Republicans got this lift of the LNG pause under the Biden administration. Do you think there's a world where – obviously, Democrats would like to see that in the context of any permitting reform negotiation — but what executive branch actions that Democrats view as punitive could they plausibly get in the course of a larger permitting deal? And how do you see that playing out?

Yogin: Yeah, again, I think just given where the industry is, I think there's gonna be a lot of focus on tax implementation, right? “OB3” implementation.

And I could see a scenario where Democrats start to leverage “OB3” implementation – to get votes if we get that far – and make sure it happens in a more reasonable way from their perspective in exchange for whatever it is on permitting reform.

From a Democratic perspective, there's no way Democrats can have a conversation on permitting reform that does not have a tech neutral, all the above, every technology, wind, solar, et cetera, is part of the conversation. And so, that to me is probably the Democrats’ red line or non-negotiable.

And I don't think there's as much animosity, across the Republican conference in either chamber on wind and solar as we've seen the rhetoric be, but there's some folks that again, drown out everyone else.

The Republicans that are gonna be leading on permitting reform are all rational actors and reasonable, right? And so I think they all want to see more electrons on the grid. More electrons on the grid, doesn't matter where they come from, they're not tagged as solar electrons or wind electrons. Electrons are electrons. And when you need to power 50 gigawatts of data centers in the next three years, there's not a lot of technologies that are gonna be able to meet that demand.

Liam: One thing that I wanna make sure we think about here, because I think there's the ideological tint to this, and “are things treated fairly?” I think what's been a hangup for getting to deals in the past has been on the industry side not having full alignment. I think we talk in the abstract about transmission, but on the industry side, so much of this is who pays for it, right?

And so I think that's, that has to be brought out in the open. And you need to find a way where developers and utilities and everybody's on the same page here, because until you have industry alignment… like, if utility interests are sniping at the vision for transmission that we're talking about, it's gonna be very hard to get Republicans to go along if their big utilities [are] against this. So I think that's an underrated wrinkle here.

But I think the other thing is, if we're thinking about models for bipartisan success, even amid all the tensions and partisan rancor, watching cryptocurrency have success – both in the stablecoin legislation that's going to the President's desk but also with market structure… these are not things that Democrats are all fully comfortable with, but there's clearly a level of interest in getting things done as long as you don't poison that well. And so I think there at least is a model of, to Yogin’s point, like having leaders at the congressional level that are on the level and have good relationships with their ranking members putting out a product that can be supported.

But again, that only worked because the President and the Administration came out and said, “Hey, this is a priority. We need to do this.”

And I think those two elements are really critical for the future of permitting reform.

Thomas: Yeah. Liam, to your point, I think it's underrated the degree to which the oil and gas industry, too, is not a monolith.

When we look back at EPRA, on the one hand there was the half of the oil and gas industry, which really wanted to focus on the [LNG] pause, right? And then there's another half, which wanted to focus on the conventional permitting reform, whether that be NEPA judicial review or the Clean Water Act or what have you. And I think that split was probably a challenge for getting the across-the-board Republican support, which maybe they could have gotten if there was a coherent ask there.

But just moving to our wrap-up question here. We figured it'd be fun to start ending our podcast by asking each of our guests for a hot take.

So this can be something that people are getting wrong, something you think is severely underrated, or really anything that goes against conventional wisdom in the energy policy space.

Yogin, we'll start with you.

Yogin: Yeah, I'll give you one technology one and then maybe another one.

So, my hot take is: solar is not an old legacy technology, and I'll tell you why. I was just visiting yesterday. I was in Perrysburg, Ohio, visiting First Solar’s three manufacturing facilities. And they're huge. They're amazing. Really really inspiring, and you can see the American ingenuity in that.

But they're looking at the next generation of solar, right? And leapfrogging China. And I think the possibilities there are endless. And I think if we give up on solar now, then we're not gonna be able to leapfrog China in that technology race. And I think there’s a really exciting opportunity here where you can increase the efficiency of solar panels by 25, 30, 40%. And that's… in terms of how efficient solar panels are today and where we could go. That's huge. That's a huge market differentiator, and that's a lot more electricity that we can count on, capturing free energy from the Sun. And I'm excited about that. I'm excited about what the future of solar holds, and I think in tandem [with] this perovskite technology that the First Solars and all these other startups that are in our coalition are developing – a lot of opportunity there.

And so I think when we think of solar, I think we always like to think of it as a legacy technology, but I think, again, there's a lot more innovation there. And if we can crack that code, that's where we really just leapfrog China, and I'm excited about that.

Pavan: Right. Liam? What's your energy hot take?

Liam: Yeah, I think I teased it before, but I think the thing that people aren't thinking about or talking about it so much is, the key to fixing your transmission problem is sorting out cost allocation. Because it's not about… yes, the literal permitting process is important, but at the end of the day, it's about who's paying for the wires.

And so I think that's a sleeper issue, that if you are working for one of the tech giants or for a utility, you understand this. But I think that's a fight that hasn't come out into the open yet, of who is going to be financing. We understand the economics of generation, and we understand at the end of the day how important it is to meet this load growth. But at the end of the day, who is going to be holding the bag when it comes to connecting all these elements?

Pavan: And we might potentially be talking about that in later episodes of this podcast.

Thomas: Liam and Yogin, thanks so much for joining Right of Way.

Yogin: Thanks for having us, guys.

Liam: Glad to be here.

Given this mix, the confusion that has ensued in both the media and policy worlds is understandable. In particular, there appear to be two major areas of uncertainty: first, the workability of the energy tax credits’ “foreign entity of concern” (FEOC) rules, and second, the status of the Department of Energy’s Loan Programs Office (LPO).

The FEOC side of this deserves much more than a blog post – but as a starting point, I would direct readers to Norton Rose Fulbright’s recent podcast episode on these and related issues. I think it gives one of the clearest readouts to date.

In this post, we’ll focus on where the One Big Beautiful Bill Act (OBBBA) left us on LPO’s three major programs: the Advanced Technology Manufacturing Vehicles program (ATVM), the Clean Energy Financing program (1703), and the Energy Infrastructure Reinvestment program (1706).

Where we were, where we are:

The Loan Programs Office has been issuing loans for over fifteen years. The IRA represented by far the largest injection of credit subsidy into LPO, but was by no means the first bill to give LPO substantial loan authority – and while the OBBBA had major implications for LPO’s credit subsidy, it more or less left its loan authority intact. We’ll explain these two concepts here.

Loan Authority:

Loan authority is exactly what it sounds like: it represents the upper limit of how much LPO can issue in loans. LPO’s three biggest programs have had various injections and rescissions of loan authority over the years.

For the 1703 program, the first major changes came in 2009 when the omnibus added $47 billion in loan authority, and again in 2011 when $17 billion was rescinded in appropriations. The IRA added an additional $40 billion of loan authority, and appropriations in 2023 added another $15 billion. The OBBBA did not change 1703’s loan authority, leaving around $70 billion in remaining authority.

For the ATVM program, the Energy Independence and Security Act created $25 billion in loan authority in 2007. The IRA then got rid of the cap, and thus its spending over the last few years left its pre-IRA loan authority unaffected. The OBBBA reinstated the pre-IRA cap (it would seem, anyway – still confirming this detail), and otherwise did not change ATVM’s loan authority, leaving around $17 billion in remaining authority.

For the 1706 program, the Inflation Reduction Act created $250 billion in loan authority. The OBBA did not change 1706’s loan authority, leaving ~$200+ billion intact.

In summary: 1703, ATVM, and 1706 have around $70 billion, $17 billion, and $200 billion of loan authority remaining, respectively.

Credit Subsidy:

Credit subsidy is quite a bit more complicated than loan authority: it represents, in rough terms, the level of default risk associated with an individual loan – that is, how likely the borrower is to be unable to repay the loan. As such, riskier loans tend to require higher credit subsidy, while safer loans tend to require lower credit subsidy.

Credit subsidy values are generally not made public, and as such it’s difficult to communicate which project types require what level of subsidy. In theory, a billion dollar loan could require hundreds of millions of dollars of credit subsidy – or it could require zero. But in general, LPO’s credit subsidy costs are substantially lower than most people realize.

As LPO senior advisor Kyle Winslow noted post-OBBBA, “some Title 17 projects that are creditworthy enough may not require much, or any, credit subsidy, underscoring the importance of OBBBA’s preservation of that IRA Title 17 loan authority.” In other words: some loans, including nuclear loans, use zero credit subsidy. There’s also borrower pay, in which the borrower pays the cost of the credit subsidy. This is relatively common when loans are issued to large investor owned utilities.

To concretize this with some numbers we do have: LPO’s 1703 program only had $170 million in credit subsidy prior to 2022 – and yet it issued upwards of $12 billion in loans. This is certainly the upper bound of how much loan value credit subsidy can support (as this ratio would imply that $1 billion in credit subsidy could support $70B in loans, which is extremely unlikely to be the case moving forward), but it also demonstrates that the sort of modeling which suggests that $1 billion in loans would only support, say, $10 billion in brownfield loans is substantially off base. The true answer is probably somewhere in the middle.

With that out of the way…

For the 1703 program, 2011 appropriations added $170 million of credit subsidy. Then the Inflation Reduction Act came along and added a whopping $3.6 billion of credit subsidy; appropriations rescinded $150 million the next year. The OBBBA rescinded all of the IRA's unobligated credit subsidy, leaving just $11 million in the program.

(An important note here: the House’s appropriations language dropped last week, and would add $150 million of credit subsidy back into 1703.)

For the ATVM program, 2009 appropriations added $7.5 billion in credit subsidy. The IRA added an additional $3 billion. The OBBBA rescinded the IRA's unobligated credit subsidy, but not the prior existing subsidy, leaving around $2.3 billion in the program.

For the 1706 program, the IRA created the program with $5 billion in credit subsidy. The OBBBA rescinded the IRA's unobligated credit subsidy and replaced it with $1 billion (alongside a broader remit, which allows for greenfield energy projects).

In summary: 1703, ATVM, and 1706 have around $11 million (with the near-term possibility of $161 million), $2.3 billion, and $1 billion of credit subsidy remaining, respectively.

Pulling it together:

Where does this leave us?

On loan authority, the Loan Programs Office is in reasonably good shape – $17 billion in ATVM, $70ish billion in 1703, and $200ish billion in 1706. That should be enough for the office to chug along for the next few years.

On credit subsidy, things are more in the realm of “workable.” $1 billion in 1703/1706 and $2.3 billion in ATVM isn’t much compared to the volume of loans that the administration would like to see LPO issue in the next few years (eg, 10 new reactors under construction by 2030). At the same time, as we’ve discussed above, $1 billion can also support quite a bit more than many think – tens of billions of dollars worth of loans in total. In short: It’s a damn shame that the OBBBA rescinded as much credit subsidy as it did – but the LPO is still open for business.

In upcoming appropriations fights and beyond, credit subsidy will need the most attention. I’m hopeful that this round will go the right way for 1703, and am optimistic there will be future funding efforts in the years ahead.

Above all, though, my hope is that everyone recognizes where we were in June when the House package dropped – with every dollar of IRA credit subsidy rescinded and no new dollars to replace it. The fact that there is now new (albeit small) credit subsidy in the program, with a Republican stamp of approval attached, means a great deal for the durability of the office. That, to me, is reason for optimism.

The highway bill is a must-pass legislative vehicle. With the 2021 Bipartisan Infrastructure Law’s highway authorities set to expire next year, Congressional leadership has already started piecing together a new package, making it the most realistic home for a near-term permitting deal.

With the highway bill as the target vehicle, the goal of this piece is twofold: first, to stake out some initial positions that negotiations might begin from; and second, to build out a simple, workable framework for pursuing permitting reform.

With that in mind, we should start with a few theses:

1. Much of this bill will have to feel as if it originates from Republicans, or it will be dead on arrival.

2. At the same time, the nature of leadership-driven negotiations means that it’s not quite as simple as trying to peel off seven Senate Democrats. In other words, this thing will have to be genuinely bipartisan.

3. For Democrats to vote for a bill that includes significant permitting reforms, they will have to see transmission reforms.

4. For Republicans to vote for a bill that includes transmission reforms, they will have to see significant changes to NEPA and very likely something else.

We should also note that, while the transmission ask will originate from the Democratic side, grid buildout will be instrumental to any number of this administration’s goals, from AI competitiveness to onshoring critical industries. President Trump has already signed multiple executive orders relating to transmission, while Secretary of Energy Chris Wright has called for affording transmission lines permitting parity with natural gas.

This piece will focus on the permitting component of the upcoming negotiations. For simplicity, we should assume that the transmission ask is similar to the one in the bipartisan Energy Permitting Reform Act of 2024: streamlining FERC’s existing backstop siting authority plus interregional planning, codifying FERC’s existing cost-allocation principles.

A Review of the Permitting Barriers

A reasonable way to push meaningful, coherent permitting reform is to design reforms that make it easier to build linear infrastructure (transmission, pipelines), with the co-benefit being that the permitting processes that most constrain linear infrastructure buildout tend to constrain energy infrastructure in general.

The most burdensome of these laws are the National Environmental Policy Act, the Endangered Species Act, the National Historic Preservation Act, and the Clean Water Act. NEPA is increasingly well-known, but the remainder are not, so an overview may be useful:

National Environmental Policy Act:

NEPA is the nation’s most infamous environmental law. It is entirely procedural: it mandates a process, rather than an outcome, and thus does not provide for substantive environmental protections. Despite not substantively protecting the environment, it consistently drives several-year permitting timelines, high volumes of litigation, and an “invisible graveyard” of projects that never broke ground.

Readers of Green Tape are likely familiar with how burdensome NEPA is for just about everything, and the statistics for energy transportation and generation are exactly as damning as you’d might expect.

More than a quarter of all new transmission line miles from 2010 to 2020 went through an Environmental Impact Statement, the most stringent level of NEPA review. If one were to look just at interregional transmission line miles, this number would almost certainly be substantially higher. And transmission projects undergoing NEPA see 31 percent litigation rates and 12 percent cancellation rates.

Pipelines undergoing NEPA, meanwhile, saw 50 percent litigation and 22 percent cancellation rates. Solar projects undergoing NEPA saw a whopping 64 percent litigation rate and 32 percent cancellation rate.

Endangered Species Act:

The Endangered Species Act (ESA) has long been NEPA’s partner in crime, though its issues are lesser-known since the law tends to be integrated into the NEPA process. Like NEPA, the ESA is kicked off by federal actions.

The most burdensome provision of the ESA is Section 7, which mandates “consultation” with the U.S. Fish and Wildlife Service for any action that is authorized, funded, or undertaken by a federal agency and that may affect a listed species or its critical habitat.

Much like NEPA, this provision has its own lengthy timelines, but the real killer is its litigation and litigation risk, as ESA creates a “private right of action.” A study of environmental litigation from 2001 to 2016 found that 20 percent of claims were ESA-related—a similar volume to NEPA. This has led to the law being referred to as a “lightning rod for litigation” and the “pit bull” of environmental law.

The similarities to NEPA abound. Like NEPA, Section 7 is primarily procedural. And like NEPA, Section 7 consultation does little to actually protect the environment. From 2008 to 2015, just 0.03 percent of the 6,829 formal consultations (that is, two in total) resulted in a “jeopardy” finding, one of which was later overturned in court. There were also over 81,000 informal consultations over this period, which represent a finding that those proposed actions were, from the beginning, deemed unlikely to adversely affect species (somewhat like a categorical exclusion under NEPA).

For transmission in particular, from 2008 to 2016, there were 912 informal consultations and 93 formal consultations. For pipelines, ESA litigation has driven years of delays to projects like the Mountain Valley and Keystone XL pipelines. In one ESA report, the Interstate Natural Gas Association of America noted that 2-year delays translate into costs of around $350 billion of (inflation-adjusted) costs to consumers.

The ESA burden also creates significant barriers to clean energy. The land use requirements of wind and solar, in particular, mean that those projects frequently run into ESA permitting and litigation. ESA lawsuits slowed the development of the 400 MW Ivanpah solar project, for example, as well as the Beech Ridge wind project in West Virginia. The more renewables that are deployed, the greater this tension will become.

National Historic Preservation Act:

The third pillar of the “major federal action” trifecta is the National Historic Preservation Act. This Act requires agencies to consider the effects of any “federal undertaking” on historic properties via the Section 106 Consultation process.

Like NEPA, the National Historic Preservation Act is an entirely procedural law—it contains no substantive environmental protections. In fact, its similarities to NEPA in structure are such that CEQ and the Advisory Council on Historic Preservation (ACHP) released a handbook describing the two laws as “stop, look, and listen” statutes and encouraging their integration.

NHPA is also similarly open-ended in its requirements. Section 106 must include consideration of “adverse effects,” which current regulations note may include “reasonably foreseeable effects caused by the undertaking that may occur later in time, be farther removed in distance or be cumulative.” In this way, NHPA’s analysis requirements may actually be broader in scope than NEPA’s, as the recent Supreme Court ruling in Seven County limited the required scope of NEPA reviews to direct (and in narrow cases indirect) effects analysis.

Broadly speaking, there are “virtually no data and no empirical studies of NHPA consultations.” However, the limited information available suggests that there are approximately 125,000 “undertakings” under the NHPA each year. Each standard review takes around six months to complete. These review times have a long tail, however—consultations for some rail infrastructure projects have taken up to five years to complete. And Section 106 is, unsurprisingly, litigious: one study’s keyword search found nearly 1,000 cases challenging the adequacy of NHPA processes since the law’s passage. This represents roughly one-seventh of the NEPA cases over the same period. In one well-known recent case, the SunZia transmission project was halted on National Historic Preservation Act grounds.

Clean Water Act:

The Clean Water Act has three key regulatory programs: Section 401, which provides for state water quality certifications, Section 402, which regulates point sources, and Section 404, which regulates the discharge of dredged and fill activity.

More simply, Section 402 regulates facilities (factories, plants, etc.) with discrete sources of pollution, while Section 404 regulates physical alterations to water bodies through placement of solid materials like soil, rock, or construction fill. Meanwhile, Section 401 gives states the authority to review and approve (or deny) federal permits to ensure they meet state water quality standards.

For the purposes of developing major energy infrastructure, Section 404 and Section 401 represent the largest impediments, so we’ll focus on them here.

Section 404

The Section 404 process is exceptionally time-consuming. For Nationwide Permits (NWPs), which have been developed by U.S. Army Corps of Engineers (USACE) for certain categories of projects, the permitting timeline has been estimated at around 313 days. For individual (that is, case-by-case) permits, the timeline is around 788 days, or more than two years.

The Clean Water Act has some NEPA-like procedural requirements, including public notice and comment, alternatives analysis, and cumulative effects analysis. This has led to many Section 404-related delays, as well as litigation against various energy projects, including a suit against the Cardinal-Hickory Creek transmission line in 2021.

Another challenge is that the issuance of a Clean Water Act 404 permit is considered a major Federal action, and thus kicks off NEPA. This has resulted in numerous CWA-originating NEPA lawsuits, including challenges to transmission line projects in Sierra Club v. U.S. Army Corps of Engineers.

Section 401

Section 401 is a bolt-on layer of review that every federal license or permit that may result in a discharge to waters of the United States must clear before it can be issued. In practice, that means any 404 permit, FERC hydropower or pipeline certificate can be held up unless the state or Tribal certifying authority signs off or waives its right to do so. Without that sign-off, the federal agency is legally barred from acting.

States have one year to issue certifications. Historically, states have gamed the clock for years by telling applicants to withdraw and resubmit identical requests just before the deadline, restarting the timer indefinitely. As a result, the Clean Water Act 401 process for big energy projects such as hydropower relicensing takes an average of 2.8 years.

Because a state can deny a project outright, or grant the project with conditions, Section 401 has become a favorite hook for lawsuits. New York’s 2016 denial of the Constitution Pipeline halted the project, for example. Transmission lines, too, consistently run into the 401 process, as long-haul lines cross hundreds of water bodies.

What Ties These Issues Together?

The key development bottlenecks consistently arise from these laws’ mandated procedures, rather than their substantive environmental protections. In particular, the core of these laws’ burdens can be traced to two specific issues: open-ended review requirements and never-ending litigation risk.

Open-ended review:

These statutes often demand that agencies chase effects “across space and time” without ever defining where space ends or when time runs out. NEPA’s “cumulative and indirect effects” standard has historically required officials to inventory every past, present, and reasonably foreseeable future action that might interact with the project—even actions the applicant does not control and that may occur years later, hundreds of miles away, or under an entirely different climate regime (the recent SCOTUS decision in Seven County may offer some respite to this end). ESA’s Section 7 pushes the same logic into biology, obliging agencies to imagine how an as-yet-unbuilt facility might combine with every other stressor on a species. NHPA regulations state that adverse effects “may occur later in time, be farther removed in distance or be cumulative.” And CWA’s “least environmentally damaging practicable alternative” test invites endless speculation about hypothetical routes or construction methods.

Because there is no principle for declaring the ledger complete, what should be a finite inquiry morphs into an administrative quest for omniscience, stretching reviews from weeks or months into years.

Endless litigation risk:

Open-ended analysis would be merely inefficient if it ended with the agency’s signature, but all four statutes make the paperwork perpetually contestable. Anyone with broadly defined standing can sue—under the Administrative Procedure Act for NEPA or NHPA claims, and under ESA’s citizen-suit provision (or, for the CWA, usually the Administrative Procedure Act or its own Section 505 provision for ongoing violations)—and they can do up to six years (or in some cases, longer) after the record of decision. Courts can still vacate a permit, then, over what is effectively a technical paperwork flaw. Faced with that threat, agencies try to bulletproof the record by layering on more modeling, more alternatives, and more public meetings. One EPA general counsel estimated that 90 percent of the information in environmental reviews is included purely to “litigation-proof” the document. The cycle feeds on itself: fear of litigation drives longer reviews; longer reviews generate more litigable material; each successful suit sets a precedent for still broader analysis next time. For capital-intensive projects like long-distance transmission, the prospect of years in court often proves fatal long before a judge rules.

Unless Congress narrows both the scope of what must be studied and the ease with which process errors can be weaponized, any new permitting bill will leave this litigation doom loop intact.

What Do We Do?

The common thread running through NEPA, ESA § 7, NHPA § 106, and CWA §§ 401/404 is not substantive environmental protection but an ever-expanding, litigation-driven paperwork regime. Therefore, the path to a workable permitting deal starts by attacking the two mechanics that turn process statutes into project killers: open-ended analysis and open-ended litigation.

Focus analysis:

First, Congress should codify the principles laid out in the Supreme Court’s Seven County Infrastructure Coalition v. Eagle County opinion. Analysis should be focused on direct effects, and open-ended “cumulative effects analysis” should not be required. For indirect effects, agencies should be given discretion over “where to draw the line,” to borrow the Court’s language. If Congress has specific concern about indirect effects analysis in the ESA or CWA, it could consider, for example, directing the Corps to consider indirect effects in narrow cases, such as effects that are downstream from the project footprint within reasonable bounds.

In practice, for NEPA, this would help agencies focus on direct and relevant indirect impacts, rather than far-flung effects over which the permitting agency has no regulatory authority. The same standard would then be mirrored in ESA § 7 consultations (only on-site or truly proximate impacts trigger a jeopardy finding), NHPA § 106 reviews (adverse effects are confined to physical alteration of the listed property itself, not cultural ripple effects), and CWA § 404 alternatives analysis (the Corps evaluates projects or methods the applicant can actually build, not hypothetical projects hundreds of miles away). By focusing these analyses, Congress can limit the pages of speculative modeling that now inflate documents into the thousands and overwhelm agency bandwidth.

Similarly, Congress should put an end to “domino” permitting, whereby one environmental review process is considered a “major Federal action” and thus inherently kicks off NEPA. This is particularly problematic when it comes to Clean Water Act § 404, in which the issuance of individual permits sets off NEPA review. It is unreasonable that one environmental review process, triggered for a discrete, specific environmental purpose, sets off another lengthy, open-ended procedural process. Furthermore, this redundancy has already been recognized by courts via the functional equivalence doctrine, whereby several EPA permitting processes (the Clean Air Act and the Safe Drinking Water Act, for example) have been deemed to be “functionally equivalent” to NEPA and thus not subject to NEPA review. While most Clean Water Act permits issued by the EPA are not subject to NEPA, Clean Water Act § 404 permits are issued by the USACE, and thus require NEPA review.

Finally, Congress should narrow the “trigger” for processes that are set off by a federal nexus. For example, NEPA is set off by any “major Federal action,” which has, over time, come to mean almost every federal action, from picnics to federal hiring. The Fiscal Responsibility Act of 2023 moved to remedy this by changing some of the key definitions of NEPA (for example, noting that a major Federal action does not include actions with “minimal” Federal funding or involvement), but this language has not been fully clarified nor implemented in agency regulations. For NEPA, in addition to the Endangered Species Act and the National Historic Preservation Act, mere federal financial assistance should only be treated as a major Federal action (or “undertaking,” etc) when that assistance clears a certain percentage threshold (say, 75 percent) of the overall project cost. For example, a federal grant to a semiconductor facility under the CHIPS Act would not be considered a major Federal action, as it would represent far less than 75 percent of the overall costs of the private project.

Congress could also go a step further and eliminate purely financial triggers altogether. Energy tax credits do not trigger environmental review, while representing (at times) billions of dollars worth of subsidy for energy projects. Yet when it comes to the federal government’s own Department of Energy, for example, the issuance of grants which are an order of magnitude smaller than a typical production tax credit ends up subjecting the grant recipient to years and millions of dollars worth of environmental analysis followed by years of legal exposure. This imbalance should be fixed.

Right-size judicial review:

Second, Congress should help make permits stick once they clear the review process. Congress can do that without touching the underlying environmental standards by addressing four vulnerabilities that plaintiffs now exploit:

1. A short statute of limitations. All challenges to a final record of decision or permit should be required to be filed within 150 days of the publishing of the relevant agency decision. This would rein in the multi-year statute of limitations, which is currently the norm, while still preserving a significant window to bring a suit.

2. More meaningful standards for stopping construction. Courts typically default to halting a project when they find a defect in an environmental review, without considering whether that defect has the potential to cause any significant effects.

To fix this imbalance, Congress should codify a two-step injunction test: a plaintiff must (a) show a substantial likelihood of prevailing on the merits and (b) demonstrate that the alleged defect would cause concrete, imminent, and irreparable environmental harm during the pendency of the suit. If either prong fails, the default remedy should be remand without vacatur, according to which the agency corrects the paperwork while work proceeds.

Alternatively, Congress could direct courts to treat procedural missteps as “harmless error” unless the plaintiff can show the defect is substantially likely to change the agency’s ultimate decision. (For example, in the case of NEPA, the defect would have to be sufficient for the agency to have selected the no-action alternative.) If that showing cannot be made, the court should remand the record for correction without vacatur and allow work to proceed uninterrupted.

In either case, projects should be allowed to move forward with aspects of construction unrelated to the challenge.

These safeguards would close off the tactic of hunting for trivial clerical faults simply to force a stop-work order, while still preserving full environmental review when an error is truly outcome-determinative.

3. Time limit on injunctions. There must be a clear endpoint for litigation for each individual project, such that obstructionist groups may not continually bring suits against the same project until financing for that project runs out.

One option is to create a “time limit on injunctions.” Congress would set a firm deadline on courts’ ability to halt projects through injunctive relief, starting a clock when project sponsors submit an environmental review application. That clock would run for a predetermined period—say, three years). During this window, legal challenges would proceed normally—but once the time limit expires, courts would lose the ability to halt construction.

This mechanism would preserve the comprehensive environmental review process while protecting against purposeful obstruction.

4. Fact-Based Pleading. Today, plaintiffs can sue on a bare “procedural injury,” filing boiler-plate complaints that allege paperwork defects without tying them to any real-world harm.

Congress should require that any challenge (1) allege a specific, existing, or imminently threatened environmental harm to an identifiable resource and (2) explain how the claimed analytical flaw is likely to cause that harm. Complaints must state with particularity the exact statutory provision allegedly violated, the way the review departed from that requirement, and the factual basis for believing the defect will (or already does) produce the asserted injury, quantified where feasible. This would deter shotgun litigation while preserving full access for those facing genuine environmental damage.

5. Standing Requirements. In challenges for procedural defects, only those with a direct, material, pre-existing stake in the specific resource or activity should be able to bring suit. Organizations may only proceed through named individuals who themselves meet this test; incidental or programmatic affiliations alone should be deemed insufficient. Likewise, litigants should be required to have raised the specific issue they choose to litigate during notice and comment in order to sue.

Looking Ahead

There is a path forward for a meaningful energy and permitting reform bill next year. With transmission representing the big Democratic ask (and perhaps some oil and gas leasing representing a smaller Republican ask), much of the game will be in shaping permitting reforms that will unbind American infrastructure while maintaining environmental protections.

This will look something like the reform structures outlined above:

• Focusing environmental analysis on direct effects and truly proximate indirect impacts rather than open-ended speculation across space and time;

• Ending "domino" permitting where one review automatically triggers another;

• Raising the federal nexus threshold so minor federal involvement doesn't trigger major reviews;

• Shortening the statute of limitations for challenges to 150 days;

• Requiring plaintiffs to show concrete environmental harm before courts can halt construction;

• Imposing time limits on injunctive relief;

• Protecting agencies from liability for harmless procedural errors; and

• Tightening pleading and standing requirements to ensure only those with direct stakes in affected resources can challenge permits.

This grand bargain might finally give America the infrastructure policy it deserves—one that protects the environment through smart regulation rather than endless process, and that allows us to build again.

What a year it has been. Within months of arriving, Republicans secured a trifecta and ideas I cared about suddenly had room to move. With the release of GPT-4 and successive models, the AI boom elevated energy policy in Washington, while the budget reconciliation fight has thrust tax credits and loan programs into the spotlight. One way or another, I’ve ended up working on each of these fronts.

So, at the risk of navel-gazing, I thought I'd share a few things I've learned from one very lively year in The Swamp. Feel free to suggest your own ideas in the comments, or tell me which of my takes you hate the most.

1. There's No Efficient Market For Policy

There can be a huge problem that nobody is working on; that is not evidence that it's not a huge problem. Conversely, there can be a marginal problem swamped with policy work; that's not evidence it's really all that big of a deal.

On the upside, this means there are never-ending arbitrage opportunities in policy. Pick your workstreams wisely.

2. Personnel Really Is The Most Important Thing

The quality of staffers varies dramatically and can make or break policy efforts. Some Hill staffers are just awesome; if they like your idea, they'll take it and run with it, try to find the right cosponsors, understand where it fits procedurally, etc. Other staffers have absolutely no idea what's going on.

Staff quality doesn't always align with the Member's profile. The quality of staffers is lightly, not strongly correlated with the quality of the Member. In general, the Speaker, Majority Leader, and Minority Leader have a lot of talent on staff. But a particularly capable Member doesn't necessarily have the most standout staffers. As a result, you'll often hear that the Member is out ahead of his/her staff, or vice versa.

Staff should be paid more. The lifers know a lot and should really have a bigger team to process everything properly. The best staffers need to be able to handle both technical details and Hill politics—a difficult combination that deserves better compensation.

3. The Hill Is Not For Wonking

The conventional think tank model of Hill engagement is ineffective. It often looks like someone presenting a scholar to a staffer and saying, "Hello, here is a person who knows things." That approach rarely works. You’re pitching yourself, not your white paper.

The think tank ecosystem can be an echo chamber. If you want your ideas to succeed, you should, for the most part, not be focused on coordinating with other think tanks – you should be focused on industry groups, staffers, trades, etc. instead.

Optimize for impact, not panel invites. This may seem obvious, but this is not how most (c)(3)s are set up. Many large think tanks conceive of themselves as a "university without students," instead of a policy shop engaging with day-to-day policymaking. Others want to be a convening organization, spending resources on capital-C Conversations between capital-E Experts in Congress. And at an individual level, many think tankers simply do not like taking Hill meetings. There’s nothing wrong with this – but it is not a great strategy for driving policy change.

Always have draft text. Also, always have a 1-pager. But if there's an idea that you want a staffer to take seriously, you should write it up as mock legislation.

Think tanks can be cool, actually. Think tanks provide more freedom than lobbying firms. The pay may be (a lot) worse, but being able to chart out the policy lifecycle from idea to enactment allows you to pass your ideas into law, not your client’s.

4. There's Alpha In Doing Boring Stuff

My colleague Lars Schönander has had enormous policy success because he sends hundreds (thousands?) of FOIA requests to state and local governments to track malign foreign influence over critical infrastructure. Much of his success comes from being willing to spend hours every day emailing FOIAs to places like the San Jose Port Authority.

Similarly, my summer and early fall were spent on phone lines with state departments of environmental quality, tracking their use of flexible permits. It was objectively soul-destroying work; it also led to an executive order, a bill being enacted into law, and several other bills being introduced.

5. Self-Interest Is Complicated

A lot of powerful companies have no idea how to advocate for themselves in DC. Some of the hyperscalers simply don't lobby, as a rule. Much of the energy industry didn't organize on the IRA fight until late February for a variety of reasons too lengthy to spell out here. And many companies defer to certain public affairs shops or law firms to tell them what's happening, despite the fact that these intermediaries are often completely wrong.

Companies care more about comparative advantage than overall benefit. In general, Company X would rather have a marginal gain and see Company Y take a big loss than have a significant gain and see Company Y also benefit.

People and organizations are territorial. You can be totally aligned on policy, but if you're new on the block or represent a threat to an organization's preeminence, there will often be attempts to freeze you out. That's normal, and you kind of just have to accept it.

Most people in DC do actually believe in something. Contrary to popular belief, most people on the Hill are more motivated by ideology than cash flow.

6. State-Level Policymaking Is Its Own World

State legislators are, generally speaking, true civil servants who want to introduce laws. They're also overworked, part-time, and have no research support. That means they need help.

With technical policy like permitting reform, finding the right champion is crucial. Because state legislators rarely have staffers, you need to find a legislator who fully understands the bill they're introducing.

The policy ecosystem at the state level can be messy. Lobbyists are often allowed on the floor during votes. In some states, the entire legislature is effectively owned by one company. And lots of state think tanks are not particularly effective, with some exceptions (shoutout to the Frontier Institute in Montana).

7. Some Thoughts On Communication

You should tweet, actually. It's still the public square. I've secured interviews, made some of my closest friends, and generally gotten my name out there because of Twitter. If you can teach yourself how to tweet and handle online criticism, you should absolutely spend time on the platform.

Good writing still matters. AI may be getting very good, but the best Claude output still doesn't match the best human writing. If you want to communicate your ideas well, LLMs aren't yet good enough, in my opinion.

AI is very helpful, but only if you know your domain. LLMs can be a great assistant for drafting legislation, for example. But if you don't know what you don't know, you'll end up creating something with basic misunderstandings of how the law works. If you then hand that off to a Legislative Counsel... yikes.

8. Miscellanea

Procedure is more important than policy. It doesn't matter how good your idea is if you don't understand the fine-grained details of how bills make their way through Congress: the committees, the markups, the Rules, etc. Also, most people can't count to 60. The filibuster giveth and the filibuster taketh away.

Most people do not have a good rank order of issues by importance. It’s surprisingly difficult to differentiate between a fundamental change and a flash in the pan that doesn't really mean anything.

The system is more legible than people think.

A lot of numbers in politics are… questionable. The Joint Committee on Taxation doesn't do net present value calculations; the Congressional Budget Office can be pressured to change baseline assumptions. Budget math is many things, but pure math it is not.

The conservative welfare state is real. There is such a thing as a free lunch and it’s served daily on Massachusetts Avenue.

I’m convinced that there’s another big permitting reform opportunity for the upcoming defense package, however: a NEPA carveout for electricity infrastructure on Department of Defense (DoD) land. In short: electricity generation developed on or delivered to military installations should be exempt from NEPA.

The Opportunity

Readers may think this sounds like a niche reform. It is not. The Department of Defense owns 8.8 million acres of land in the United States. More importantly, DoD is the largest consumer of energy in the federal government and one of the largest consumers of energy in the world. Its purchasing power – and thus its ability to bring energy technologies to scale – is enormous.

To add some color, Federal agencies in 2023 used about 51.8 million megawatt-hours (MWh) of electricity, suggesting that DOD uses around 40 million MWh electricity each year. That’s equivalent to the combined annual output of several large nuclear reactors.

What’s more, DOD wants to leverage emerging energy technologies like geothermal. “Next-generation geothermal technologies show potential to produce onsite round-the-clock carbon-free energy year-after-year, increasing resilience and eliminating the need for fuel deliveries during long-term power disruptions,” DoD’s Defense Innovation Unit wrote last year. DoD has initiated seven geothermal projects in recent years at its military installations, working with the likes of Fervo Energy and Eavor Inc.

DOD’s demand potential, then, is enormous – but so too are the permitting barriers. Similar to the challenges faced on BLM land, DoD’s NEPA process often bottlenecks energy development. DoD environmental impact statements, for example, require an average of more than 3 years to complete across the Army, Navy, Air Force, and Marine Corps. For our critical defense infrastructure, these delays are unacceptable.

What To Do

The upcoming NDAA is the perfect opportunity for reform. A targeted NEPA exemption could create a streamlined permitting process for electricity generation facilities and their associated transmission infrastructure on or near military installations.

More specifically, I’m imagining something like this:

• Exempt electricity generation facilities with footprints under 20 acres (or up to 40 acres on previously disturbed land) that are built on DoD land or interconnected at the same transmission node

• Exempt dedicated transmission lines (under, say, 30 miles) that connect off-site generation to military facilities

• Streamline judicial review timelines, shortening the statute of limitations

• Limit remedies that block harmless projects from moving forward, barring injunctions unless the project will create imminent environmental harm that cannot be otherwise mitigated

This approach would offer three key benefits: enhancing military security, accelerating energy deployment, and creating market pull for emerging technologies like advanced geothermal. And, much like our proposal for defense activities, it would preserve substantive environmental laws, such as the Endangered Species Act, the Clean Water Act, and the Clean Air Act.

Simply put, this exemption would maintain environmental protections while empowering DOD to lead on energy security. The result would be a win for national defense and America’s long-term technological leadership.

The NDAA is not typically a great vehicle for permitting reform – it is, after all, a defense bill. But there’s ample room for narrowly-tailored reforms that target our military preparedness. We should seize this opportunity, and create a NEPA exemption for defense activities.

The Problem

Virtually every major environmental statute contains national security exemptions. As we’ve covered on Green Tape, laws such as the Endangered Species Act, Clean Air Act, and Migratory Bird Treaty Act allow the President or the Secretary of Defense to exempt projects in the interest of national security, or contain broader exemptions for certain categories of military activity.

NEPA, however, does not.

And just as NEPA has become a procedural nightmare for infrastructure projects in general, it has become a nightmare for defense projects. The average NEPA environmental impact statement now takes 3+ years for the Air Force and Navy, 5+ years for the NNSA, and 6+ years for the Army Corps of Engineers.

The consequences have been somewhat terrifying. Navy carrier-landing practice fields have been frozen for years after court interventions. Army training expansions have been blocked despite documented shortfalls in maneuver space. Even during Operation Desert Storm preparations in the lead-up to the Gulf War, DoD had to ask CEQ for "alternative arrangements" just to increase flights from a strategic air base.

On military installations nationwide, training exercises get cancelled, postponed, or watered down to navigate NEPA requirements. The Government Accountability Office has found that, “DOD has used adjustments to training events, referred to as “workarounds,” to accomplish some training objectives while meeting environmental requirements.” This is what readiness erosion looks like in real time.

What To Do

All we need is a narrowly tailored exemption focused specifically on readiness activities – the kind of activities that directly impact our ability to fight and win wars. The exemption should:

• Cover combat-related training, weapons testing, mission-critical facilities, and essential nuclear deterrent activities

• Exclude routine infrastructure like administrative buildings, housing, and base amenities

• Preserve other substantive environmental laws like the ESA

• Include common-sense mitigation requirements where feasible

This isn't radical – it's just bringing NEPA in line with other environmental statutes. Congress has already set precedent with the 2003 NDAA (migratory birds exemption) and 2004 NDAA (marine mammals exemption). These targeted reforms enabled critical defense activities while maintaining broader environmental stewardship.

Why Now

The global threat environment isn't getting any simpler. Our adversaries are rapidly expanding their capabilities while our forces navigate a regulatory gauntlet that they don't face. Every day we delay addressing this issue means another day of compromised training, postponed modernization, or half-measures in preparation.

The current NEPA "alternative arrangements" process, used during Operation Desert Storm, isn't cutting it. These arrangements are undefined in statute, rely on regulations that have been rescinded, and create an ad hoc process with no timeline and rising litigation risk. And in practice, they're rarely used outside of immediate emergency scenarios – too little, too late for readiness activities.

A NEPA exemption for defense readiness belongs in the next NDAA. Our forces deserve training and equipment that prepare them for their missions without years of procedural delays. In a world of rapidly evolving threats, we can't afford anything less.

They could be forgiven for thinking this – after all, CXs are what have historically been used to exempt the vast majority of federal actions from the full NEPA process, from CXs for picnics to CXs for hiring.

But in reality, the development of CXs back in 1978 came about after a decade in which NEPA's scope had expanded far beyond its original intent. They represented, in essence, a tacit admission by the Council on Environmental Quality that every Federal action was a "major Federal action" – and that therefore everything should go through NEPA.

CXs, then, are very much still NEPA.

The development of a CX itself can be sued: see Sierra Club v. Bosworth, where the Ninth Circuit struck down the Forest Service's Fuels CX that authorized certain wildfire protection activities.

The application of a CX can be sued, too. This is especially true with "extraordinary circumstances" – conditions that trigger additional environmental review despite a project falling within a categorical exclusion category.

And indeed, even without litigation, CXs can drive lengthy processing times. Many agencies require extensive documentation before approving a CX, including specialist reports, surveys, and analyses to verify the absence of extraordinary circumstances. A geothermal developer recently told me that their CXs were routinely taking 6 months to process.

Comprehensive CX timelines are next-to-nonexistent, but a quick survey of geothermal CXs on BLM's e-NEPA Register seems to confirm this. A recent CX for geothermal temperature gradient wells took at least five months. Another temperature survey CX took nine months. And a CX for a magnetotelluric survey took a whopping twenty months – more than a year and a half.

All of this, despite the fact that the goal of CXs is to exempt a category of actions from NEPA. We should actually achieve this goal – either by redefining what categorical exclusion means, or by designing a more true-to-form NEPA exemption process.

These exemptions could function somewhat akin to a registration permit under the Clean Air Act: you self-certify up front that you meet a few basic standards and thresholds laid out in the exemption, and then proceed. If you're later found to have violated these standards, you should be hit with a lofty fine (it is, of course, still very much the developer's responsibility to not have an environmental impact.)

This approach would maintain environmental protections while significantly reducing procedural delays. True exemptions would establish clear, objective criteria that, if met, would allow projects to proceed without agency review. And of course, all of these projects would still be subject to the many substantive environmental laws that cover American industry.

In short: CXs aren’t quite the permitting reform tool they’re often assumed to be. As we look to streamline NEPA to speed up infrastructure deployment, we need a system that actually delivers the time savings that CXs were intended to provide.

I think this is bad, and that it flies in the face of the President’s energy dominance agenda. But it’s actually quite a bit more backwards than that: by pursuing cuts to the LPO, DOGE is targeting one of the only currently-existing examples of Government Efficiency.

For the unfamiliar, the LPO was established to finance large-scale, high-impact energy infrastructure projects that strengthen America's energy security and economic competitiveness. In particular, the LPO plays a critical role in financing projects that private lenders often consider too large or technically complex. These projects include the likes of the Palisades Nuclear Plant restart, the first nuclear restart in U.S. history, and the Thacker Pass project, one of the world’s largest lithium mines. (Ironically, LPO also counts an early loan to Tesla among its more high-profile investments.)

But in recent months, LPO has come under pressure from DOGE amidst the initiative’s broader push to downsize government. Reporting to date has not surfaced an exact number, but it’s almost certain that DOGE is targeting more than 50 percent cuts to the LPO’s staff.

This would be an enormous own-goal. Government efficiency is a worthy pursuit, of course — hell, I work on permitting reform full time. But it is for this reason, not despite it, that I support the LPO. Because the LPO is unique in government: It operates on a leaner staffing model than private sector finance firms managing comparable portfolios. Most major asset management firms employ approximately 500 staff per $100 billion in assets. LPO currently functions with just around 400 staff managing $90 billion in obligations plus over $40 billion in pending commitments.

In other words, even at its January 2025 staffing levels, LPO would be considered very efficient by private sector standards. Given how many LPO employees have elected to resign in the last few weeks, the office functioning at its current numbers would be remarkable. And if DOGE cuts any deeper, LPO will be rendered useless. It will be impossible to issue new loans, and in some cases close conditional commitments. All this, for the office which has funded every single nuclear project this century, save for one (Watts Bar, which was funded by a different government arm).

In conversations with LPO skeptics, I’ve often heard that the office used to have far fewer staff and was still able to run just fine. This is true, insofar as LPO used to have a smaller team, which still issued loans. But there’s a simple reason for this: As recently as 2022, LPO’s portfolio was just ~$18 billion. At the time, the office had around 100 staff. In the three years since, LPO’s portfolio has grown more than 5x. Its staff size has not grown proportionally with it.

The last great irony is that LPO has strong financial performance, similar to that of commercial banks. Indeed, its overall loan portfolio has consistently turned a profit, returning more money to the Treasury Department than was outlayed. In this sense, the LPO is the furthest possible program from the much-and-often-fairly-maligned Biden-era grant initiatives.

There's a profound disconnect, then, between DOGE's stated mission and its actions toward the LPO. At a moment when America desperately needs every advantage it can get in the global energy race, hamstringing one of our most effective financing vehicles is tantamount to self-sabotage. I can only hope that DOGE recognizes, before it’s too late, that "government efficiency" sometimes means preserving the rare institutions that already embody it.