Congress Considers Comprehensive Permitting Reform With Major Implications for Energy Transition

As part of an ongoing blog series, Arnold & Porter’s cross-practice Energy and Energy Transition team is highlighting key legal and regulatory developments for clients across economic sectors navigating all aspects of the energy transition.  

In the next three months, Sen. Joe Manchin (I-WV) will make his last push for comprehensive permitting reform legislation — an objective he has relentlessly pursued since the Inflation Reduction Act was passed over two years ago. His latest attempt, the Energy Permitting Reform Act (S. 4753), was introduced in July 2024 with Sen. John Barrasso (R-WY) as a cosponsor. Importantly, the bill advanced out of committee after fewer than two weeks in a bipartisan 15-4 vote — reflecting its ability to garner support from both sides of the aisle and making it the most serious, and likely final, attempt at enacting comprehensive permitting reform in the 118th Congress.

Didn’t Congress Already Reform Permitting?

Permitting reform is a high-priority, bipartisan issue, evidenced by over two dozen bills on the topic introduced by both parties in the 118th Congress alone. Many stakeholders agree on the need for reform to achieve the energy transition, as the current patchwork of environmental review and permitting requirements have impeded progress on getting projects off the ground. Democrats and Republicans, however, have struggled to find common ground, including on the scope of projects that should be covered and the appropriate mechanisms to achieve reform.

The 118th Congress managed to amend the National Environmental Policy Act (NEPA) as part of the June 2023 debt ceiling deal — the Fiscal Responsibility Act (P.L. 118-5) — which set judicially enforceable time limits for NEPA reviews, clarified when NEPA applies to private projects that receive federal funding, and expanded agencies’ ability to employ categorical exclusions. Nonetheless, as Sen. Manchin has stated, “there is still much more to do.”

What’s in This Bill?

• Judicial Review: The bill would streamline judicial review processes by accelerating the deadline to file permitting challenges from the typical six years (or two years for FAST-41 projects) to only 150 days, requiring expedited review by courts, and imposing time limits on agency actions to address errors on remand. This proposal is less aggressive than other bills, like the recently released Rep. Bruce Westerman (R-AR) NEPA reform bill, which would impose heightened exhaustion requirements, restrict when agency authorizations can be vacated, modify the court’s standard of review, and narrow the available claims.
• Fossil Fuel Leasing on Federal Lands: The bill seeks to ensure oil, gas, and coal leasing are given equal priority to wind and solar leasing, and eliminates the need for oil and gas federal drilling permits where states permits will also be needed (e.g., where the wellbore traverses, but is neither drilled nor produces, on federal lands).
• Renewable Energy Siting on Federal Lands: The bill includes numerous provisions to accelerate and expand renewable energy siting, including by increasing the frequency of geothermal and offshore wind leasing and DOI’s goal for renewable energy generation project permitting from 25 to 50 GWs; setting processing timelines for wind, solar, and geothermal project rights-of-way applications and for geothermal permit applications; and requiring the establishment of new categorical exclusions.
• Electric Grid: The bill also includes numerous provisions to accelerate and expand electric grid projects, including by requiring the establishment of new categorical exclusions for transmission and distribution projects, streamlining the federal backstop authority for permitting national interest transmission projects by eliminating the need for the Department of Energy to first designate national interest electric transmission corridors, and requiring development and continual updating of interregional transmission plans and reliability assessments.
• Mining: The bill amends the “mill site” provisions in the Mining Law of 1872 to provide greater flexibility for mineral development on federal lands — in response to a Ninth Circuit decision related to the Rosemont Copper Mine that upended the mining industry’s longstanding practice of using federal lands without locatable minerals for waste rock storage.
• LNG Exports: The bill requires the Federal Energy Regulatory Commission to grant or deny applications for liquefied natural gas (LNG) export and re-export authorizations within 90 days of issuing a final NEPA environmental review document; otherwise applications are automatically approved.
• Hydroelectric Power: The bill allows for a four year extension of the time to commence construction of hydropower projects. Further amendments to the hydropower provisions are expected to garner support from Sen. Lisa Murkowski (R-AK).

Is the Energy Permitting Reform Act Likely To Pass?

Despite achieving a strong majority vote in committee, there are significant obstacles to the Energy Permitting Reform Act becoming law. With limited legislating days on the calendar before the end of the current Congress, the bill’s best chance of passing is in the lame duck session after the November election as part of a “must pass” package (e.g., a national defense authorization or omnibus government spending bill).

However, support beyond Sens. Manchin and Barrasso remains unclear. Senate Majority Leader Chuck Schumer (D-NY), who controls if and when the chamber will vote on legislation, has expressed pessimism about the prospects of passing any permitting reform bill. House Republican leaders have not yet committed to taking up the bill, and while President Biden has not weighed in, key members of the administration have called elements of the proposal “problematic” — though they have committed to further negotiations.

Arnold & Porter’s cross-practice Energy & Energy Transition team is closely monitoring the rapidly evolving legal landscape concerning energy and energy transition projects, including permitting reform proposals. For questions or additional information, please reach out to the authors. 

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.