Federal Infrastructure Policy and Funding Update: 2023 No. 5

This week’s Policy and Funding Update focuses on the environmental review and permitting of infrastructure projects. You may recall that back in 2022 when the Inflation Reduction Act (IRA) was making its way through congress, Senator Joe Manchin of West Virginia demanded a vote on his modest permitting reform legislation to help advance renewable and fossil fuel fuel-based energy projects. That bill went to the senate floor, failing to pass due to opposition from most republicans and a few progressive democrats. As the administration is implementing the IRA, there seems to be a growing consensus that some sort of permitting reform is necessary to deliver the projects envisioned by the IRA that will support the energy transition to more climate-friendly sources. But how do we tackle an issue that elicits almost irrational reactions from both sides of the aisle? That remains to be seen — but momentum is building.

Last week in Houston, John Podesta, senior advisor to the president, made it clear that permitting reform is not only on the table but necessary to build the projects necessary to deliver on the administration’s clean energy goals. There are no “official” remarks on the White House website, but several articles online quote Podesta as "describ[ing] a permitting process ‘plagued by delays and bottlenecks.’" Another quotes him, saying, “I’ve worked in three White Houses. Permitting has never been a top priority of senior administration officials in the past. Now, thanks to President Biden, it is." This is big news, and it reveals a potential split in the democratic party as some progressives who hold the nation’s foundational environmental laws as sacrosanct must come to terms with the need to revisit the process to achieve their climate goals. 

Republicans in Congress have already leveraged their slim majority in the House of Representatives to start marking up several permitting reform bills that advance energy projects with a preference for fossil fuels:

• H.R. 1 – the Lower energy Costs Act will include the Transparency, Access, Permitting, and Production of (TAPP) American Resources Act (H.R. 1335). The TAPP American Resources Act was marked up in the House Natural Resources Committee and seeks to “restart the leasing process for oil, natural gas, and coal development- and streamline the permitting process for all forms of energy and mineral development on federal lands and waters, reform the National Environmental Policy Act to establish timelines for — and clarify the scope of — environmental reviews….”
• The House of Representatives passed H.J. Res 27 to overturn the Biden Administration’s Waters of the US final rule. Seen by many on the right as an overreach of authority, the Biden Administration’s Final Rule sought to provide greater clarity on how the US Army Corps of Engineers and the Environmental Protection Agency would define waters regulated by Section 404 of the Clean Water Act. This ping-pong back and forth over what are “jurisdictional” waters creates uncertainty for project developers. It adds risk to any project permitted while these standards are being debated (I’m not even sure you can call it a debate at this point).
• The House Natural Resources Committee also held a full committee hearing on the Building United States Infrastructure through Limited Delays and Efficient Reviews (BUILDER) Act of 2023. Initially introduced in 2021, the BUILDER Act would “modernize the outdated NEPA statutes to make project reviews more efficient, reduce project costs, spur economic recovery, and rebuild America.”

Although Democrats have not introduced new permitting legislation in this congress, the Biden Administration continues to take executive action to help increase the efficiency of the environmental review and permitting process. The Office of Management and Budget, the Council on Environmental Quality, and the Office of the Executive Director of the Federal Permitting Improvement Steering Council (Permitting Council) issued new guidance (M-23-14) on implementing the Biden-Harris Permitting Action Plan. The new guidance is structured as question and answer and covers the following:

• Clarifies the role of the Permitting Council as a center for permitting excellence that supports improved coordination among agencies, facilitating sound and efficient permitting and helping to resolve issues consistent with climate, economic, and equity goals.
• Further defines the role and expectations of the sector-specific teams focused on offshore wind energy and transmission, onshore renewable energy and transmission, broadband, production and processing of critical minerals, and transportation. These sector-specific teams should identify for the Permitting Council:
  • general permitting issues that should be addressed to reduce bottlenecks and facilitate successful and timely review of permit applications.
  • large, complex, or significant projects should be considered for posting on the Federal Permitting Dashboard,  
  • dispute resolution strategies or
  • any other pertinent issues.
• Explains how the sector-specific teams should consider “large, complex, or significant projects” on which they should provide updates to the Permitting Council.
  • Size, including total cost, geographic scope, and magnitude
  • Complexity, including whether the project will require the development of an environmental impact statement
  • Significance or importance – including the project’s economic impact and a project’s ability to address the Administration’s goals
• Provides further direction to agencies on preparing and posting project timelines to the Permitting Dashboard — encouraging agencies to reduce duplication, enhance effective, efficient, and informed decision making and reduce environmental harm.
• Encourages agencies to conduct proactive, early, and continuing engagement with the public and Tribal, State, local and territorial partners as infrastructure projects advance.
• Includes Appendix A that further defines the Permitting Council Executive Director’s authority to direct agencies to post projects to the Dashboard “in the interest of transparency” as authorized by the IIJA. Although the Appendix is a little confusing as it lists surface transportation projects as a sector that should be included, but also states that surface transportation projects subject to 23 U.S.C. 139 are excluded and that agencies should not submit such projects for consideration by the Executive Director. I’m hopeful we’ll get a little more clarity on this point as I believe that the transportation exemption is a mistake and a missed opportunity to leverage the Permitting Council to help deliver the generational investment made by the IIJA.

The challenge of moving projects through the environmental review and permitting processes more efficiently so that the full potential of the authorized and appropriated trillions is represented nicely by the recent CHIPS Act Notice of Funding Opportunity. You may recall that the president signed the CHIPS and Science Act in August 2022, providing $52.7 billion for American semiconductor research, development, manufacturing, and workforce development.

Recently the CHIPS Office published a Notice of Funding Opportunity for the CHIPS Incentives Program supporting Commercial Fabrication Facilities. Funding must be used to construct, expand, or modernize facilities to produce semiconductors. Interestingly, the National Institute of Standards and Technology doesn’t have NEPA procedures in place to direct their NEPA analysis of these multibillion-dollar investments — leaving the industry guessing as to how best to comply with NEPA when some sites are already in development and some sites are still being planned, but none of them contemplated NEPA before CHIPS funding became available.

This is an interesting case study in how Congressional intent meets the realities of agency procedures that did not anticipate the substantial funding available on short timelines. The same could be said for the IIJA and IRA programs as well. Without addressing our underlying challenges within the administrative processes to environmentally clear projects funded through these laws, the promise of job creation, energy transition, and economic security may remain out of reach.