U.S. Regulatory Update: Environmental Permitting Reform

Earlier this month, the Biden Administration finalized its Bipartisan Permitting Reform Implementation rule. The new rule, released by the White House Council on Environmental Quality, directs federal agencies involved in the permitting process to implement amendments to the National Environmental Permitting Review Act (NEPA) that were passed last year by Congress.

The new rules serve to update select provisions of NEPA that have contributed to delays in issuing permits for the development of major infrastructure projects in the United States. These changes to NEPA were passed as part of the Fiscal Responsibility Act of 2023, which raised the U.S. debt ceiling through 2025.

What the new rule includes

Many of the changes under the new rule fulfill the main objectives outlined by the Biden Administration in its Permitting Action Plan released in 2022. The action plan identifies reforms that would speed up the review process for projects by enhancing the transparency of the permitting process, focus project reviews on potential climate impacts, and solicit earlier input by those affected by projects, including tribal groups and environmental justice communities.

The new rule would also require a single federal agency to lead reviews of project applications, allow federal agencies to establish categorical exclusions for projects that meet the administration’s infrastructure priorities, require that agencies hire Chief Public Engagement Officers, and mandate that agencies include assessment of the climate impacts of projects in reviewing applications.

Part of a broader approach

The release of the new implementation rule represents an important step by the Biden administration to codify updates to the NEPA process. In the near-term, this will clear the way for the realization of federal investments in key infrastructure areas such as clean energy, transmission, clean water, high-speed internet, and semiconductor manufacturing projects that were authorized by Biden Administration’s flagship energy packages, the Infrastructure Investment & Jobs Act and the Inflation Reduction Act.

Beyond the implementation of these amendments, the Biden Administration is also considering ways to speed up permitting approval for other critical projects on a case-by-case basis, using existing tools such as the Fixing America’s Surface Transportation Act (FAST-41) authority, which offers an expedited path through the permitting process and by updating relevant regulations through the federal rulemaking process.

Since the Administration’s launch of the Permitting Action Plan, the Biden Administration has implemented the FAST-41 authority successfully to expedite a major off-shore wind energy project and to designate other projects that align with the administration’s infrastructure and climate objectives.

In addition, just this week, the U.S. Federal Energy Regulatory Commission approved a major update to its transmission policy that has been in the works for the last two years. Like the Administration’s new permitting implementation rule, the policy update could serve to speed up transmission projects by adding more clarity and transparency to the planning process.

Responses and opposition

Despite support from environmental groups including the Environmental Defense Fund and the National Audubon Society, the Administration’s new permitting implementation rule has already drawn criticism from Senator Joe Manchin, Congressional Republicans, and certain industry sectors, with many claiming the additional rules will serve to make the permitting process more onerous.

The Administration’s permitting agenda remains a point of contention between both Republicans and Democrats in Congress, as well as between the Biden Administration and Senator Manchin. Manchin previously agreed to support the Inflation Reduction Act and Fiscal Responsibility Act of 2023 allowing both to pass the Senate.

In exchange, Manchin was apparently promised Senate Democrats’ support in advancing his own permitting reform agenda and passage of legislation to help secure the completion of the Mountain Valley Pipeline in West Virginia.

While provisions relating to the completion of the Mountain Valley Pipeline were passed as part of the Fiscal Policy Act of 2023, Manchin’s permitting reform legislation did not advance due to Republican opposition. Unlike the Biden Administration’s approach to permitting reform, Manchin’s legislation seeks to accelerate the permitting process for a wider range of projects, including those involving fossil fuels. This raised concerns among many Congressional Democrats, who believed the legislation would undermine clean energy objectives.

Manchin, who is set to retire at the end of this year, has continued to push his permitting agenda while at the same time working to reverse the Biden Administration’s clean energy agenda, arguing that many of the Administration’s climate policy actions have not been strict enough in incentivizing domestic production of energy resources and reducing the reliance of American industry on Chinese suppliers. On May 13, Senate Majority Leader Chuck Schumer pushed back on Manchin’s permitting agenda, stating that it would be impossible to pass major permitting reforms this year due to GOP opposition.

On May 5, Senator Manchin—along with Senator Dan Sullivan and Congressman Garrett Graves—announced a Congressional Review Act (CRA) Resolution of Disapproval to overturn the new permitting implementation rules. Republicans have previously passed several CRA resolutions of disapproval on Biden Administration rules, but all of them have been vetoed by the President.

What comes next?

With Congress unlikely to take further action on permitting reform before the November 2024 elections, the Biden Administration’s best chance of preserving the achievements of its permitting reform agenda is to encourage federal agencies to begin implementing the provisions of the new permitting reform rule expeditiously.

The greatest risk to the Biden Administration’s permitting reforms remains the possibility of the return to office of Donald Trump who has publicly committed to reverse many of the Biden Administration’s climate policy actions. Were he reelected, Trump would have several different tools at his disposal to reverse or at least curb many of the Biden Administration’s permitting reforms.

The permitting reform agenda for next year will also depend on the outcome of Congressional elections. The Biden Administration has made significant process in implementing its permitting reform agenda through both Congressional and Executive action but it remains to be seen how effective these reforms will prove in expediting approvals for the development of key projects supported by the Administration.