Biden’s Permit Proposal Won’t Set Easy Path for Energy Projects

The White House’s second stab at changing its environmental permitting rules may not spark the kind of clean energy building boom President Joe Biden’s top officials are envisioning, policy analysts say.

In announcing its proposed rule last week, John Podesta, senior adviser to the White House on clean energy, said the changes to the National Environmental Policy Act (NEPA) would “help build clean energy and infrastructure faster,” a key White House goal.

Alex Herrgott, who led the Federal Permitting Improvement Steering Council during the Trump era, said the proposal would yield only a modest impact on permitting times because they don’t address the real problem: the hundreds of laws and regulations governing permitting at the federal, state, and local levels.

Those standards often conflict with one another and leave developers confused, according to Herrgott, now president of the Permitting Institute.

The new suite of proposed rule changes from the White House Council on Environmental Quality is likely to leave project developers with short-term uncertainty, in part because it’s not clear how each agency will implement the changes, said Karen Hanley, CEQ’s former deputy associate director for NEPA.

“Some might be more conservative,” said Hanley, now president of Karen Hanley Consulting. “How far do agencies want to push some of these additional flexibilities, especially where there’s subjective judgment required?”

‘Here We Go’

“If I was a developer right now, my reaction is, ‘Oh boy, here we go. This is going to be a bumpy, unpredictable ride—let’s see how this turns out before we go to Wall Street to finance phase two of this transmission line or hydrogen, battery storage, or carbon capture project’,” said Herrgott.

Many of the biggest changes in the proposed rule allow for wider use of categorical exclusions, which let agencies flag certain projects as not having a significant effect on the environment and therefore excluding them from a more extensive review under NEPA.

Another part of the rule would encourage the use of programmatic environmental reviews for proposed actions that are broad in reach, such as overarching programs and policies.

Trevor Higgins, senior vice president of energy and environment at the Center for American Progress, supported the proposed rule but also said environmental reviews aren’t the problem for some projects.

For example, in the case of transmission lines, the real problems are siting and permit issuance, and the solution rests with the Federal Energy Regulatory Commission, Higgins said.

“The regulatory action FERC is taking, the legislative proposals that empower them to do even better—that’s where the real outcomes for transmission are going to come from,” said Higgins, referring to a recent final rule that speeds up the connection of energy projects to the grid. “The processes here are helpful, but they’re not addressing the part of the law that was the problem.”

Moreover, even if the rule is finalized before the next presidential election in November 2024, agencies will need at least 12 months to issue their own implementation guidance to make the rule’s provisions a reality, Herrgott said.

“Then the Administrative Procedure Act claims under NEPA will be through the roof,” he said. “For this rule to be effective, since the most dramatic changes were not statutory changes, the administration will need to suggest significant new legislative reforms, or else projects that move forward under this rule will be mired in lengthy court actions as they are used as proxies for opponents to challenge the rulemaking.”

Safeguards Against Misuse

Less concerning to environmentalists is that a new administration would use the flexibility offered by the Biden rule to speed up projects Democrats oppose, like fossil fuel infrastructure.

Brett Hartl, government affairs director at the Center for Biological Diversity, said that those kinds of unexpected outcomes are “always a concern,” but the proposal has guardrails to largely forestall what the Biden administration would consider a misuse of its rules.

Hanley agreed, offering as an example the new categorical exclusions rule. While agencies would have greater flexibility to establish and use those exclusions, the proposal also requires “extraordinary circumstances"—including potential substantial effects on sensitive environmental resources—to be evaluated any time a categorical exclusion is applied. That provision should largely prevent improper use, Hanley said.

“The rule essentially sets up an insurance policy against misuse,” she said. “While it provides greater freedom to agencies, the extraordinary circumstances clause ensures this freedom does not translate into dodging more detailed NEPA review where warranted.”

But not every part of the proposal is sealed off against unintended consequences, according to Hanley. For example, the new take on what constitutes a significant effect—which focuses on a weighting of a project’s significant adverse effects against its larger benefits—"may be a double-edged sword” and could be influenced by political considerations, she said.

The proposal’s language “introduces another level of subjectivity,” she said. “How ‘adverse’ is adverse enough? While statutory requirements offer clear benchmarks, policies often fall into a gray zone. I think different administrations could have a different view of that.”

For example, a new administration may consider natural gas to be a green energy source, or determine that, if an energy project is replacing coal, it counts as a net positive even if the new energy source isn’t renewable.

“Much will depend on the factors established by the rule, and how agencies implement them when they develop implementing procedures,” she said. “It’s an opportunity for more litigation all around.”