June 5, 2023 Article

How Much Permitting "Reform" Comes from the New Debt Ceiling Legislation?

Without fanfare or ceremony, on Saturday June 3rd, President Biden signed the bitterly-negotiated Fiscal Responsibility Act of 2023 (FRA), also known as the Debt Ceiling Limit legislation. While most of the media attention focused on the debt and budgetary conflicts, behind the scenes there were tense negotiations over both “streamlining” changes to the National Environmental Policy Act (NEPA) and to other regulatory processes for transmission infrastructure and energy projects. What ended up in the final law, and what did not, will impact development at all levels across the nation and in Maine.

Turning first to NEPA. That statute is often triggered when a proposed project would impact wetlands of a certain size. In Maine, for example, 25% of its land or over five million acres, is wetlands—that is four times the wetland area of the other five New England states combined. Over five million acres of Maine’s wetlands are freshwater; only 157,500 acres are tidal or coastal wetlands. Many Maine projects have had to undergo time-and-money consuming Environmental Assessments (EA) or, on occasion, Environmental Impact Statements (EIS) under NEPA, which can drag on for years.

Changes to NEPA under the FRA, to address some of those issues, include:

-- The trigger for NEPA review has been whether a proposed activity is a “major federal action,” which has been defined as “effects that may be major and which are potentially subject to Federal control and responsibility.” But under the FRA, the new definition is "an action that the agency carrying out such action determines is subject to substantial Federal control and responsibility”—which new definition does not even contain the term “major.” How the federal agencies implement this revised approach (likely via regulations or guidance) is yet to be determined. However, now excluded from NEPA review are projects that receive "no or minimal Federal funding" or for those "with no or minimal Federal involvement where a Federal agency cannot control the outcome of the project."

-- Categorical exclusions—which allow a project to avoid undertaking an EA or EIS—can now be used more frequently, whereby one agency can use exclusions listed in another agency’s procedures.

-- Statutory deadlines to complete an EIS (2 years) and an EA (1 year) have now been mandated, with page limits of 150 pages for most EIS documents and 75 pages for an EA (although appendices can add to the length of such documents). If an agency misses a deadline, the delayed project’s sponsor may seek a court order requiring the agency to act as soon as practicable, not to exceed 90 days from the date on which the order is issued.

-- For projects that involve multiple federal actions across different agencies, the relevant agencies must designate a lead agency based on the magnitude and duration of each agency’s involvement, as well as its relative expertise concerning the proposed action’s environmental effects. That lead agency then creates a single environmental review document (EA or EIS).

-- The FRA narrows agency NEPA considerations to “reasonably foreseeable environmental effects of the agency action” rather than “the environmental impact of the proposed action.” Thus, an agency or reviewing court may still argue that a project’s greenhouse gas or other emissions are "reasonably foreseeable environmental effects" that must be included in an environmental document.

There were two major non-NEPA environmental changes included in the FRA, one of which attracted the most debate—the Congressional blessing of the pending Mountain Valley natural gas pipeline project championed by West Virginia Senator Manchin. The other, and less-noticed, provision worth mentioning is that energy storage projects now will qualify for an accelerated permitting process originally designed for transportation projects under the Fixing America’s Surface Transportation (FAST) Act.

What changes were pursued in the FRA negotiations but did not end up in the final law? One was a shortening of the statute of limitations for court challenges to an agency’s NEPA actions or documents. Currently that is six years, and clean energy advocates had sought a shorter (two-year) provision, but were unsuccessful.

The second set of changes that largely did not make it into the FRA relate to the critically-needed development of new and upgraded transmission and related electricity infrastructure. Direction to the Electric Reliability Organization to conduct a study within 18 months of enactment into the current total transfer capability between transmission planning regions did survive the negotiations. That study must contain an analysis of the current total transfer capability between each pair of neighboring transmission planning regions as well as recommendations of prudent additions to total transfer capability between neighboring transmission planning regions that would “demonstrably strengthen reliability within and among” neighboring regions.

The former Chairman of the Federal Energy Regulatory Commission, Richard Glick, said that electric transmission was a “net loser” with the FRA, given the failure to include changes to siting or cost allocation processes. While the Edison Electric Institute, a trade group for utilities, opposed “rushing” transmission reforms, environmental groups and Administration officials say that further reform efforts will be made this year.

In sum, while the FRA enacts some changes that will help more environmental and energy projects be developed more efficiently, there remain further changes that need to be made in the near future if meaningful progress is to be made towards the Administration’s climate goals. Thus, attention must continue to be focused not only on Congress, but also on how federal environmental and energy agencies develop the means to implement the new provisions.

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