Infrastructure permitting measures in a bipartisan bill to raise the US debt ceiling could have a major impact on the speed and efficiency of energy project reviews, but industry observers had mixed views on the potential effect.

Some industry lawyers and experts said the proposed updates to the National Environmental Policy Act (NEPA) would bolster efforts to shorten review times and free some projects from the law's requirements amid updates to key definitions.

"I think it's a big deal in many ways, and I think a lot of the proof is going to be how it ends up being applied," said Fred Wagner, a partner at law firm Venable LLP who focuses on environmental and natural resource issues.

But others were more skeptical, saying the NEPA revisions might not result in swifter action from agencies and could lead to more litigation if reviews were not adequate due to time constraints.

"Agencies move at the speed that they would like ... so I'm not really persuaded that any of those big changes is substantial," said Peter Whitfield, a partner with Sidley Austin LLP's environmental practice.

Proposal highlights

On May 27, President Joe Biden and US House Speaker Kevin McCarthy (R-Calif.) reached an agreement to raise the US debt limit through early 2025. The resulting legislation, called the Fiscal Responsibility Act, included a set of permitting reforms for energy and other infrastructure projects. The House passed the bill May 31, sending it to the Senate for consideration.

Along with securing authorizations for the Mountain Valley natural gas pipeline, the bill contains a series of updates to NEPA, an over-50-year-old law that requires federal agencies to consider the environmental impacts of their actions. The legislation would give the government two years to complete environmental impact statements, which are required for larger projects, and one year to finish environmental assessments for smaller projects and actions. The legislation would also set page limits for these documents.

In addition, the bill calls for the designation of lead agencies to oversee the reviews and would encourage the use of a single environmental report to avoid duplication.

If an agency failed to meet review deadlines, project applicants could seek legal relief. Courts could direct agencies to complete the documents within 90 days "unless the court determines a longer time period is necessary to comply with applicable law," the bill stated.

The bill would expand the use of "categorical exclusions" from NEPA reviews, including by allowing one agency to use exclusions listed in another agency's procedures.

In a bid to free some projects from NEPA oversight, the legislation also redefined "major federal actions" under the law to exclude projects that receive "no or minimal federal funding" or for which "a federal agency cannot control the outcome of the project."

The Fiscal Responsibility Act would also guarantee that programmatic reviews used to assess the impacts of a certain class of projects were good for five years. The provision could speed the approval of similar projects during those five years, such as offshore wind farms in the same coastal area.

But the bill stopped short of limiting timeframes for judicial review and injunctive relief, policies that some industry groups say are needed to prevent projects from being slowed in court. 

Views from the energy industry

Christi Tezak, managing director of ClearView Energy Partners, said one important change for interstate gas transportation projects is language that would enable project sponsors to play a greater role in the preparation of environmental reports. "Even if the agency is resource-constrained, the sponsor can provide the necessary resources to address a problem," she said.

In addition, the five-year guarantee on programmatic reviews could apply to oil and gas leasing on federal properties, Tezak said. While this would not insulate sponsors from legal challenges, it could help mount an affirmative defense against opponents' requests for repeated analyses, she said.

For gas pipeline projects, Gary Kruse, managing director of research for Arbo, saw the changes in the bill as mostly "window dressing." Interstate gas project reviews generally have been approved more quickly than the timelines that generated complaints, he said.

"The one little tweak here that might help gas pipelines is the one year on [environmental assessments]," since those timelines have stretched out in recent years, Kruse said.

Overall, oil and gas industry groups have praised the NEPA provisions as an important start on meaningful permitting updates, while encouraging bipartisan efforts that could go even further in the Senate.

Gas pipelines have pushed for Clean Water Act changes to limit states' ability to block projects, for instance, and some producers have sought mandatory exclusions from NEPA for drilling projects that meet certain criteria.

'Big deal' versus moderate action

Some of the bill's permitting provisions, including having a lead agency coordinate project reviews, would codify principles and best practices already in place. But other aspects of the bill "are a little bit more aggressive," Venable's Wagner said in an interview. He highlighted the proposed NEPA review timelines and potential for related court petitions and the five-year guarantees on programmatic reviews as potentially impactful.

Wagner also said there is language in the bill that runs contrary to parts of the Biden administration's phase-one NEPA regulations, which required agencies to consider a broader range of alternatives to a proposed project rather than just the developer's stated goals.

"I disagree with people who say this [bill] is a yawn or not a big deal," Wagner said. "A lot of this is going to remain to be seen in terms of how the federal government applies it. But this is not a yawner. I think this is a pretty big day."

Sidley Austin's Whitfield agreed that the programmatic review language could "allow projects to move forward at a much faster pace," but he questioned the significance of other measures.

If agencies rush to finish reviews, that "probably means they're not going to do the most thorough of jobs in the world," Whitfield said. "If your project happens to be one that is controversial ... you just created a whole bunch of litigation risk for your project."

Whitfield agreed that the new definition of major federal action could exempt some projects from NEPA reviews if their only connection to federal agencies is receiving modest financial support from the US government. "But for your major projects that need all sorts of federal permitting review, it's not going to really change those," Whitfield said.

"I see this [bill] as moderate," the Sidley Austin attorney said. "It's not so minuscule as to be nothing."

Transmission a 'net loser'

Although Democrats have pushed for policies to support transmission development to achieve their clean energy and climate goals, the Fiscal Responsibility Act largely avoided specific provisions on transmission. Aside from the NEPA reforms, which apply to all types of infrastructure projects, the bill's only transmission-related provision would require a study of power transfer capabilities among US regions.

Republicans have criticized past proposals to lower permitting and cost allocation barriers for transmission, saying such proposals could trample on state authority. Lawmakers from both parties have said they hope to work on a more comprehensive update to US permitting laws later this year, but some policy experts wonder if the debt ceiling bill will rob momentum from that effort.

"Overall, electric transmission is a net loser, I would think, from how this bill came out," former Federal Energy Regulatory Commission Chairman Richard Glick said in an interview.

The legislation included "some marginal improvement" with respect to NEPA reviews, but "the fact they're not doing anything on siting, not doing anything on cost allocation, not doing anything on transfer capacity is a loss for those that were advocating for transmission," Glick said.

S&P Global Commodity Insights reporter Maya Weber produces content for distribution on Platts Dimensions Pro. S&P Global Commodity Insights is owned by S&P Global Inc.

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