House GOP Tax Bill Narrows Window to Challenge Pipeline Projects

House Republican’s broad tax bill heading toward the Senate seeks to speed pipeline permitting by narrowing judicial review, a move legal experts say will undermine the scope of available environmental challenges to such projects.

The bill, approved May 22, says anyone suing under the Natural Gas Act would only be allowed to claim economic harm from the project approval. The US Court of Appeals for the D.C. Circuit would also have original and exclusive jurisdiction over lawsuits against the permitting provisions.

Those provisions would restrict the type of lawsuits environmental groups could bring and prevent those challenges from going to more liberal-leaning circuits.

“By limiting reviewable harm to economic injuries, the bill would shut the courthouse doors to environmental groups, which often bring claims based on aesthetic injury,” said Emily Hammond, former Energy Department deputy general counsel under President Joe Biden and current law professor at George Washington University.

“The Supreme Court has long recognized these kinds of environmental harms as real injuries that can be addressed in court, but this markup tries to close that door,” said Hammond, who uses they/them pronouns.

Expediting pipeline permits and trying to nudge suits against them to just one circuit plays into the Trump administration’s ongoing push to promote fossil fuels. The president issued several executive orders aiming to unleash American energy, revive the coal industry, and promote industry through deregulation.

Forum Impact

There are various benefits to limiting review to the D.C. Circuit, said Hammond and other legal experts who noted the court has upheld many Federal Energy Regulatory Commission pipeline decisions in recent years.

The move would also “prevent circuit courts located in pipelines’ paths from hearing challenges, though courts in any circuit typically offer some deference to FERC on such matters,” they said.

“A D.C. Circuit precedent has more weight because it’s usually those precedents that are applicable nationally,” said Christine Tezak, senior director at energy research firm ClearView Energy Partners LLC.

She also said that if “all the litigation goes to the D.C. Circuit,” that mitigates “the risk” of a circuit split that could wind up before the US Supreme Court.

Lawsuit Options

Though conservation groups can still bring lawsuits under the Clean Air Act, the Endangered Species Act, and other such laws, a different part of the House bill seeks to constrain options under the National Environmental Policy Act.

That section seems to say “if you’re going to bring a case saying that there’s a problem with conformance with one of these laws, you’re going to have to really show it—not just say ‘we don’t like the way you handled it under NEPA’” and its process, Tezak said.

Environmental groups would “have to get creative” by, for example, challenging a permit because a pipeline was crossing a hiking area used for tours, Hammond said.

However, it’s that type of problem-solving that some consider a disingenuous hindrance to the permitting process.

“You’ll get an environmental group, and they’ll get one member to sign a declaration that they hike in the area and enjoy the outdoors, and then that gives them standing to sue,” said Kathleen Sgamma, outgoing president of the Western Energy Alliance—whose members consist of independent oil and natural gas companies.

“I think anything that helps to tighten up the process, to make permitting more certain and less subject to frivolous lawsuits, is a good thing,” she said.

The American Petroleum Institute also supported the proposed permitting reform, saying in a statement that the House bill was “historic legislation” and “a win for our nation’s energy future.”

Repeated Tactics

This most recent reconciliation process isn’t the first time natural gas permitting reform shaped the scope of review allowed in court.

“The Fiscal Responsibility Act signed by Biden in 2023 took away judicial review for the Mountain Valley Pipeline, which provides an example of how this kind of provision might get traded against other policy priorities,” Hammond said.

Mountain Valley was one project, but what the House included has “far-reaching ramifications for both energy law and administrative law, not to mention climate change and environmental justice,” Hammond said.

The push to modify the permitting process has been building up for quite some time, said University of Minnesota energy law professor James Coleman.

“Permitting reform, and NEPA reform in particular, has been a long standing goal of Republicans in Congress” and “increasingly, it’s a goal of at least a significant number of Democrats,” he said.

Congress had taken a few “nibbling around the edges measures at permitting reform,” Coleman said. However, “it really hadn’t addressed any of the substantive problems,” which are “largely tied to judicial review.”

Mountain Valley showed there was a solution—though “somewhat severe"—which is “we’ll just get rid of judicial review entirely,” Coleman said.