Debt Deal Pares Federal Role in Environmental Permitting Reviews

Permitting changes included in the deal to suspend the debt limit are drawing concern from environmentalists who say many projects would escape federal review under the proposal making its way through Congress.

Efforts to overhaul the federal permitting process under the National Environmental Policy Act began in earnest last summer following Democrats’ passage of the sweeping tax-and-climate package. The proposal would make changes to permitting and federal spending as part of a broader agreement to suspend the debt ceiling until Jan. 1, 2025.

The changes include language that would exempt projects from review under NEPA unless the federal government has “substantial” control and responsibility over them. That change and others have sparked concern that the effort to expedite projects, even those directed at the clean energy transition away from fossil fuels, will have unintended environmental impacts.

Most large projects require dozens of permits, and in many cases only a few of them call for federal involvement, such as an oil and gas pipeline that requires many state and local permits, but only one federal permit. That minimal level of involvement probably wouldn’t meet the “substantial” standard, said Jean Su, energy justice director and senior attorney at the Center for Biological Diversity.

The definition of “substantial” will most likely be decided in court, but a common-language interpretation of the term means “at least more than half—some type of majority,” she said.

Under the current rules, a much smaller federal nexus is enough to trigger a NEPA review.

Natalie Mebane, climate campaign director of Greenpeace USA, pointed to Section 404 permits under the Clean Water Act, which are typically far more important than the multitude of other permits a project requires, as an example.

“Say you’ve got a pipeline that runs through lots of tributaries and waterways, and could contaminate the water of a lot of people if there’s a rupture,” Mebane said. “If we’re looking at a pure numbers game, what if a judge says, ‘Oh, it’s only one permit out of 100, that’s not a lot’? That could set a precedent for similar projects.”

Moreover, the vagueness of the word “substantial” is bound to invite litigation, which will “actually make projects drag on and take longer than if they had just gone through the normal review process,” Mebane said.

Ross Eisenberg, vice president of federal affairs at the American Chemistry Council, downplayed those concerns, saying it “would seem strange to me that a one-word change would upend several decades of case law as to what NEPA applies to.”

Self-Generated Reviews

Another notable change that has sparked concern would let project developers write their own environmental reviews, an idea that Republicans have floated before.

“You have an inherent conflict of interest and a bias to minimize the size of the impacts, or to discuss minimal impacts your project will have,” Su said. “We wouldn’t expect objective environmental reviews. This could do great damage to communities whose voices will be silenced.”

Stephen Schima, senior legislative counsel at Earthjustice noted that private sector developers are legally responsible to their shareholders, whereas federal agencies are responsible to the public.

The bill further excludes from NEPA any international projects whose effects are located entirely outside the US, said Paulo Lopes, senior public land policy specialist at the Center for Biological Diversity.

Under the current rules, the federal government can be sued if it’s investing in a project being built overseas, blocking the funding on the grounds that the NEPA review wasn’t adequate or wasn’t performed at all. Under the change, it would be harder to block an international project on NEPA grounds.

A separate part of the bill would widen the use of categorical exclusions, essentially letting agencies use exclusions that have been developed by other agencies.

That idea is “wildly inappropriate” to Schima. Some agencies, such as the Department of Transportation, have categorical exclusions for projects under a certain financial threshold, but they still have the potential for causing environmental harm, he said.

Other changes in the bill would limit environmental assessments to one year and environmental impact statements to two years. The time limits could put strain on agencies that already say they’re understaffed to perform complex scientific analyses.

Businesses Respond

Industry groups countered that the deal simply cuts out unnecessary bureaucracy and helps projects get built faster—including ones that fit into President Joe Biden’s agenda, such as clean energy and water infrastructure projects.

Anne Bradbury, CEO of the American Exploration and Production Council, called the bill “a positive step toward modernizing our permitting system and streamlining the bureaucratic process, which has been holding back America’s ability to build energy infrastructure for decades.”

She also said the permitting language will cut Americans’ energy bills and maintain environmental protections.

Similarly, Joshua Bolten, president and CEO of the Business Roundtable, said in a statement that the agreement “makes a down payment on permitting reform, helping to clear the path for new energy infrastructure projects.”

“Anybody who looks objectively at the data understands that the federal permitting process just takes way too long—four years, five years, seven years, 10 years,” Eisenberg said.

To illustrate the economic potential that could be unleashed by faster permitting, an American Chemistry Council spokeswoman said the chemical industry has 72 projects, valued at $68 billion, in the planning phase.

The White House Office of Management and Budget on Tuesday said that the deal “would protect and accelerate implementation of the historic clean energy and environmental justice investments in the Inflation Reduction Act.”

But Su said that while the bill would speed through projects the Biden administration prioritizes, it won’t stop there.

“It’ll be good for renewable energy, but it’ll also be fantastic for fossil fuels,” she said.

The deal comes as the White House Council on Environmental Quality works on a set of changes to the NEPA regulations.

Those changes had been expected to significantly unwind many of the tweaks the Trump administration had earlier put in place, but the debt ceiling deal limits expectations for how deeply CEQ will be able to act.

CEQ Chair Brenda Mallory told Senate lawmakers on May 17 that the long-awaited second group of proposed changes to the NEPA regulations would be coming in “a matter of weeks.”