For more than a year, the Senate has been deliberating over a sweeping permitting reform package – often in secret, occasionally on the brink of collapse, and replete with the high drama that tends to accompany any major bipartisan negotiation.
Briefings, walk-throughs, and the good old DC rumor mill have started to surface details over the last few weeks, but finally, today, the whole text is out. The bill, dubbed the Bipartisan American Affordability and Jobs Act, is a whopper – at more than 400 pages, it makes the 170-page Energy Permitting Reform Act of 2024 (EPRA) look piddling in comparison. It represents a tremendous effort by members and staff on the Hill and in the White House, with particular credit to the Senate Energy and Natural Resources (ENR) and Environment and Public Works (EPW) committees.
So – what’s in it?
Readers of Green Tape may recall my piece from last year charting out what I thought could be the grand bargain for permitting reform: major changes to transmission planning, siting, and cost allocation under the Federal Power Act in exchange for (or along with, depending on your perspective) some combination of reforms to NEPA, the National Historic Preservation Act (NHPA), the Clean Water Act, and the Endangered Species Act (ESA).
This was more or less on the money – all of these laws are implicated in the deal. However, even before we get to the policy specifics, there were two things the piece missed. First, on the back of the Interior memo slow-walking approvals for wind and solar projects, the concept of “permitting certainty” became central to negotiations, and required its own legislative language. Second, I significantly underestimated the scale of the reforms. On both the grid and conventional permitting reform provisions, the bill is much more aggressive than I expected – in almost entirely good ways.
We’ll walk through the sections of the bill below. This will not be exhaustive, but it will cover the most significant provisions of each.
National Environmental Policy Act
As long-suffering permitting reform wonks know, NEPA was always going to be central to negotiations. It is the “Magna Carta of federal environmental laws” and the most heavily litigated permitting statute, and it has played a starring role in the slow-walking and cancellation of energy projects for more than half a century. (For some data points on the NEPA burden, check out NEPAstats.)
NEPA is burdensome for three main reasons. First, breadth: NEPA review is triggered by any “major federal action”, which has been interpreted to mean just about any federal action, from picnics to federal hiring. Second, the scope of review: NEPA has traditionally required analysis not just of the direct and proximate effects of an action, but also of effects that are “later in time or farther removed in distance” and “cumulative” in nature, creating exceptionally open-ended requirements for agencies. The Supreme Court’s Seven County decision has narrowed this considerably, but the ruling still leaves plenty of room for litigants to test its limits. Third, litigation: NEPA’s breadth and scope make it exceptionally easy to find a hook for a lawsuit. The consequence of NEPA litigation, even when unsuccessful, is immense. Plaintiffs can seek a preliminary injunction that halts a project while the case plays out, causing projects to stall for years or be abandoned altogether. And when agencies do lose in court, the remedy can be remand with vacatur, meaning that the agency’s approval is thrown out and the project is blocked until the agency redoes its analysis – often a years-long process.
On breadth, the Bipartisan American Affordability and Jobs Act (henceforth BAAJA) narrows the definition of major federal action (MFA) such that fewer projects trigger NEPA in the first place. Specifically:
“Lifeline infrastructure”, including telecommunications infrastructure, transmission lines, pipelines, and beyond, is not an MFA for various repair and replacement activities.
Receipt of federal loans or grants (think the “federal financial assistance” trigger) generally does not, by itself, make an activity an MFA, subject to limited exceptions.
Many transmission and pipeline activities within existing rights-of-way are no longer MFAs.
Certain USACE environmental projects with a federal cost share of up to $50 million are not MFAs.
On scope, BAAJA bolsters the Seven County decision, reaffirming NEPA’s procedural nature and requiring that courts reviewing NEPA claims must afford substantial deference to agency decisionmaking.
And now for the big stuff: litigation.
First, BAAJA changes the statute of limitations for NEPA lawsuits from six years to 150 days. This is pretty standard fare, and will not meaningfully limit plaintiffs’ ability to participate in lawsuits, but will bring more certainty to project sponsors.
Second, in order to bring a lawsuit, plaintiffs must allege “direct harm” and, where there was a public comment period, must have submitted a comment specific enough to put the agency on notice of the issue they’re suing over. In other words, they must give the agency an opportunity to address any alleged defects before reaching the courts.
Third and most importantly, injunctions and vacatur are eliminated outright for NEPA-specific claims. These remedies are, of course, preserved when the violation involves an underlying statute such as the Clean Air Act and the Clean Water Act, including when those violations are challenged through the APA. The logic for Republicans and Democrats alike is that purely procedural statutes such as NEPA do not create substantive environmental protections, and thus ought not result in project-stopping litigation.
This represents a sea change in the NEPA status quo, and is a truly exciting development. Without the threat of a project-killing injunction or vacatur, NEPA lawsuits lose most of their value as a delay tactic – and agencies will likely limit the “litigation-proofing” of NEPA documents that has driven much of the ballooning page lengths and review timelines over the years.
In return, two new requirements have been added to NEPA. First, BAAJA requires project sponsors to submit with their applications a stakeholder engagement report of no more than 20 pages for EAs and EISs. Second, it codifies existing practice by requiring a comment period of 45 to 60 days following the publication of a Notice of Intent for an EIS. I’m generally not concerned about these changes, though I would note that for certain processes that often receive timely EAs, such as applications for permits to drill (APDs) that don’t qualify for the categorical exclusions discussed below, the new stakeholder engagement report may slow the average permitting timeline. Nevertheless, this is a very minor nit compared to the enormous improvements reflected in this title.
National Historic Preservation Act
The National Historic Preservation Act shares a number of similarities with NEPA. Its Section 106 consultation process is purely procedural in nature, requiring analysis of effects on historic properties. It is triggered by any federal “undertaking” – a concept very similar to “major federal action” – meaning it usually runs alongside NEPA review. Like NEPA (or at least, NEPA up until recently), the NHPA typically requires extremely broad analysis across time and space. And the NHPA, while somewhat less litigated than NEPA, still drives a great number of lawsuits every year.
On breadth, BAAJA newly defines an undertaking as a project, activity, or program that requires a federal permit, license, or approval and is subject to “substantial Federal control and responsibility.” This will somewhat limit Section 106’s reach over projects with only a thin federal nexus. It also creates nine exemptions, including one for certain repairs and similar activities.
On scope, BAAJA uses the Seven County framework to establish that analyzed effects must be “reasonably foreseeable” and directly alter the characteristics of the historic property in a way that diminishes its integrity. There is also a new “small federal handle” clarification – that is, if a 100-mile transmission line crosses just 1 mile of federal land, the review must be cabined to effects attributable to that mile, rather than cover the whole project.
On litigation, BAAJA applies the same core judicial review reforms to the NHPA that it applies to NEPA – a 150-day statute of limitations, similar standing requirements, and limits on remedies. Again, this is a very substantial shift.
Finally, BAAJA creates a firm deadline for review: consultation must wrap up by the time the NEPA document is completed. This deadline is, in my opinion, more important than many of the statutory deadlines proposed in permitting reform packages over the years. That’s because the NHPA requires analysis of properties already on the National Register of Historic Places and properties that are eligible for listing. This often prompts both good-faith actors and project opponents to claim that sites in an NHPA review area are eligible, in many cases leading to an extensive back-and-forth that can include archaeologists, State and Tribal Historic Preservation Officers, and others, regardless of whether the site is indeed eligible. Putting a deadline on this process, then, will create important certainty for project sponsors.
Endangered Species Act
The Endangered Species Act closes out the stack of major reviews kicked off by federal actions. Its Section 7 consultation process in particular, much like NHPA Section 106, creates a substantial paperwork burden, requiring federal agencies to consult with the Fish and Wildlife Service or the National Marine Fisheries Service on any action that may affect a listed species or its critical habitat.
Given the significance of the NEPA, NHPA, and Clean Water Act reforms, I was surprised to see any ESA reforms included in this package at all. These reforms are meaningfully more modest, but still worth celebrating.
First, BAAJA allows states to assume primary responsibility for Section 7 consultation, creating a cooperative federalism approach that more closely mirrors laws like the Clean Air Act. As a safety valve against states slow-walking projects, applicants can always elect to consult with the Secretary instead.
Second, it shortens the basic Section 7 formal consultation period from 90 days to 60 days.
And finally, it establishes a 150-day statute of limitations for challenges to biological opinions, which must be brought in the D.C. Circuit.
Clean Water Act
Two main provisions of the Clean Water Act were under consideration in this deal: Section 401, which gives states the power to certify (or deny) federally permitted projects that may discharge into their waters, and Section 404, which governs permits for dredging and filling wetlands and other waters.
Clean Water Act § 401
I’ve written before about the ways in which Sec. 401 has created yet another veto point, especially for linear infrastructure and hydropower projects. (You can also read a guest author’s description of one Sec. 401 process here.)
In particular, the scope of Sec. 401 has allowed states to turn water quality review into a de facto veto over projects they oppose for other reasons, and the conditions states can attach are often onerous enough to sink a project’s viability on their own.
On scope, BAAJA limits review to compliance with water quality requirements – specifically, those set forth in Sections 301, 302, 303, 306, and 307 of the Clean Water Act. It also clarifies that this review must only consider discharge into waters of the United States (WOTUS), preventing review from expanding to impacts on non-federal waters.
For pipelines and powerlines in particular, BAAJA creates an express statutory point-source discharge standard: this means that review is limited to the direct effects of the point-source discharge, rather than the effects of the activity as a whole (i.e., the construction and operation of the entire project). This was perhaps the most important industry ask on Sec. 401 reform, and will meaningfully reduce the ability of bad-faith states to block good-faith projects.
If a state does deny Sec. 401 certification, it must show by clear and convincing evidence that no project modification could allow the project to proceed while satisfying applicable water-quality standards. And the state bears the burden of showing that any certification conditions are the least burdensome conditions available.
I would describe these reforms, in the aggregate, as getting the job done. Everybody I’ve spoken to in industry is happy with this section, and feels that it will appropriately limit bad-faith tactics while preserving the state role in Clean Water Act review.
Clean Water Act § 404
I’ll keep this section very brief. Clean Water Act Section 404 concerns the discharge of dredged or fill material into waters of the United States. These 404 permits are often required when projects – particularly linear ones like pipelines, transmission lines, and highways – cross streams or wetlands.
BAAJA extends the term of Nationwide Permits – a sort of pre-approved general permit for categories of activities with minimal environmental impacts – from five years to ten years. It eliminates EPA vetoes of 404 permits once the permit has been issued (those who remember the early days of permitting certainty will recall the veto of the Spruce No. 1 coal mine’s already-issued permit in West Virginia, which led Joe Manchin to introduce the first-of-its-kind EPA Fair Play Act).
BAAJA adds judicial review provisions similar to those in the House-passed PERMIT Act, creating a 150-day statute of limitations and limiting vacatur and injunctions to cases in which the permitted activity would present an imminent and substantial danger to human health or the environment for which no other equitable remedy is available.
Permit Certainty
I’ve talked a lot about permit certainty on Green Tape and elsewhere, including with Congressman Harder (here) and Senator Manchin (here). The issue has taken on greater salience in the last year given the administration’s various efforts to limit wind and solar development, though unfair administrative treatment of disfavored energy sources is by no means new – the Biden administration took a whole host of actions against the oil and gas industry, from revoking the Keystone XL pipeline’s cross-border permit to pausing new LNG export approvals.
Recognizing that language limiting unreasonable delay and permit revocations would be a critical component of any permitting deal, lawmakers introduced a number of legislative solutions over the last year, including the FREEDOM Act and CERTAIN Act in the House, and a streamlined version of the FREEDOM Act in the Senate.
These bills aimed to do two things. First, limit the ability of any administration to revoke permits unless there is a truly exceptional reason to do so. Second, create enforceable deadlines for every project approval such that projects cannot be “pocket vetoed” via unreasonable delay.
Personally, I was thrilled to see a number of FREEDOM’s proposed constructs reflected in the deal. Like FREEDOM, BAAJA creates deadlines for all federal project permits, and creates a cause of action for applicants to enforce those deadlines. Like FREEDOM, BAAJA substantially increases the evidentiary threshold for revoking permits. And finally, like the House version of FREEDOM, BAAJA authorizes payments to project sponsors for improper revocations and patterns of intentional delay.
On permit revocations, BAAJA establishes that once a project is fully permitted, permits may be disturbed only under limited exceptions: by court order, when the permittee has materially breached the permit or otherwise violated the law, when the permit was obtained through fraud, at the permittee’s request, or when new information shows a specific, urgent, substantial, and proximate threat to national security, life, or property. If the government withdraws or invalidates a permit and the permittee challenges that action, the government bears the burden of proving that one of those exceptions applies. If the permittee prevails, recovery can include attorneys’ fees, costs associated with project delay, and between 25% and 50% of project costs already incurred, escalating based on the degree of government bad faith.
Finally, BAAJA introduces a certainty construct that has not appeared in any of the recent certainty bills, creating a new cause of action where there is evidence of broad mistreatment of a category of projects. In other words, when a project category (like wind projects, or gas pipelines) has historically been permitted at a certain level or under a certain standard and the government intentionally and materially changes that treatment, project sponsors can sue. And again, BAAJA provides for substantial damages intended to create a strong deterrent against this behavior.
Transmission (Federal Power Act)
Here, I am stepping somewhat outside my comfort zone. I’m lucky enough to have some very smart grid wonk friends, though, so for the thorough background on the many headwinds facing transmission in America, you can listen to me (and Pavan) interview Daniel Palken.
Dan was intimately involved in drafting the grid sections of EPRA, which, centrally, get at the “Three P’s” of transmission: permitting, planning, and paying.
BAAJA takes a very similar approach to these issues. On permitting, of course, transmission will benefit from the reforms to the environmental laws outlined above. Additionally, it expands FERC’s backstop authority by eliminating the requirement that lines fall within a DOE-designated corridor – for qualifying lines, FERC can step in when a state denies approval or fails to act. On planning, BAAJA requires that neighboring transmission planning regions jointly plan lines that connect them; this will help address the problem of valuable interregional projects falling through the cracks. And on paying, BAAJA follows the practice of “beneficiary-pays,” requiring the costs of lines to be allocated to customers who benefit, roughly in proportion to those benefits. The enumerated “benefits” include improved reliability, reduced congestion and power losses, and access to cheaper generation.
BAAJA also supplements these provisions with some novel mechanisms, including requirements for advanced transmission technologies (ATTs) and grid-enhancing technologies (GETs).
There is one very notable new provision which is bound to, uh, exercise some folks in the regulated utility corner of the energy industry. The provision lets a state ask FERC to police a utility’s spending on local transmission, meaning the lines inside the utility’s footprint whose costs are paid for by its ratepayers. If a state believes the utility is spending inefficiently on these lines, it can refer the utility to FERC, which must open an investigation. If FERC finds that there is evidence of inefficient investment, it can impose remedies that include fines, required changes to the utility’s planning process, loss of the presumption of prudence, and a cut to the utility’s return on equity (ROE).
This is a direct affordability play supported by many stakeholders on both sides of the aisle, but because it touches ROE, it goes, almost definitionally, after the core of the regulated utility business model. I expect this provision to get a lot of attention.
Additional Provisions
Lastly, there are the mining, oil and gas, geothermal, and hydropower provisions.
Mining and Oil and Gas
On mining, BAAJA includes the much-discussed Mining Regulatory Clarity Act, which fixes the legal uncertainty surrounding miners’ use of federal land for waste rock and tailings in the aftermath of the Rosemont decision. It also adds Senator Cotton’s ’MERICA Act, which makes additional federally acquired land available for hardrock mineral leasing. On the oil and gas side, it includes the Mineral Spacing Act, which eliminates the federal drilling permit requirement for certain wells on non-federal land, including “fee-fee-fed” wells and wells in units where federal minerals make up less than half of the oil and gas estate. And it establishes a 150-day statute of limitations for lawsuits under any federal law challenging authorizations for energy, mining, and certain other projects.
Geothermal
On geothermal, BAAJA includes the HEATS Act, CLEAN Act, and STEAM Act (gotta love these names), along with a few other bills and provisions.
The HEATS Act exempts geothermal wells on non-federal land from federal drilling permits (and NEPA review) where the federal government owns less than half of the subsurface geothermal estate and the operator holds a state permit – basically, the geothermal analogue to the Mineral Spacing Act.
The CLEAN Act requires Interior to hold geothermal lease sales every year and puts firm deadlines on geothermal drilling permit decisions, while the STEAM Act extends to geothermal the categorical exclusions that oil and gas drilling already enjoys.
One notable addition: oil, gas, and (now) geothermal activities covered by these statutory categorical exclusions will be defined as not constituting a major federal action. As I’ve written, categorical exclusions, while commonly thought of as exemptions from NEPA, have often become a review unto themselves. Shifting these CatExes to true exemptions is certainly a positive change.
Hydropower
Finally, on hydropower, BAAJA adds a requirement that mandatory Section 4(e) conditions imposed by land management agencies must be reasonably related to the effects of the project. It also includes Senator Murkowski’s FLOWS Act, which establishes that FERC does not need to approve non-substantial alterations or routine repairs and replacements. And it creates a new permitting pathway for micro hydrokinetic projects of 5 MW or less.
What’s Next
All in all, this is a sweeping energy and permitting package, and would be, if passed, the most consequential energy legislation in decades.
So now we have to pass it. This will have to happen in lame duck, as Senators are headed home until after the midterms. First, the Senate will have to vote, then the House, and then the President will have to sign it.
I am cautiously optimistic, but we will see. The stakes are high – with the committee changes that are coming next year, a permitting deal like this is not going to come around again for a while. If you take AI development and/or China competition seriously, this might be our last best chance at unbottlenecking our energy system. And even if you don’t, in this affordability moment, this bill will pay dividends for years – and indeed decades – to come.
Let’s hope policymakers seize the moment.
An exciting bill and a great write-up. Cheers!
Thanks for reading the bill and writing this, Tom, so we don't have to. Congratulations to all my permitting reform pals!!!!