Permitting Reform Is Back — and Buried in Trump’s Tax Bill

A powerful House Republican committee has proposed shaking up one of the country’s key permitting laws as part of the ongoing process to write President Trump’s tax bill.

A new bill, drafted by the House Natural Resources Committee would transform the National Environmental Policy Act, or NEPA. Under NEPA as it stands today, the government must study the environmental impact of any “major” federal action. Any time a federal agency adopts a new policy, builds a new project, spends federal dollars, or issues a license or permit, that choice gets a full environmental review.

Crucially, this also means that the federal government must study the environmental impact even of privately developed projects that require some kind of federal sign-off. But the new bill would quicken this process and likely shield it from court review.

The law represents a “big step” for permitting reform, Nicholas Bagley, a University of Michigan law professor, told us. “It’s creative and extremely aggressive.” If it passes, Republicans’ budget measure could speed up the construction of energy projects around the country. But it could also reduce local or environmental groups’ ability to sue to slow down or block development.

What would this proposal do, specifically?

The bill would allow companies to pay a fee to access a faster, more streamlined NEPA process that would not be reviewable by the courts, according to the bill. That means environmental groups would likely have a harder time suing the government for failing to account for various environmental maladies in their study.

Under the draft legislation, companies would pay 125% of the cost of preparing the report to get an expedited review. But avoiding a lengthy court fight is so valuable that many companies would likely take advantage of this new process, Bagley told us.

“You can read it as effectively creating a price for a litigation shield — the federal government is allowing developers to buy themselves out of litigation risk with a flat fee,” he said.

How is this different from what happens right now?

It would change the status quo in two important ways.

First, many federal agencies already require project sponsors to pay the full cost of preparing a NEPA report for a private project, such as a solar farm or geothermal well. The House Republican proposal would increase this cost by just 25% on the front end.

Second, under the law today, agencies take more than four years on average to prepare a NEPA report, which can regularly stretch into the hundreds of pages. Congress has periodically tried to impose tighter deadlines and shorter page limits on the NEPA process — including in a 2023 debt ceiling law — but it hasn’t been successful.

That’s because the threat of lawsuits ultimately drives the NEPA process, Bagley said. Civil servants write lengthy, meticulous NEPA reports not because statute requires them to do so, but because they’re afraid of losing their work in a lawsuit, he said.

“The thing driving lengthy timelines is litigation risk,” Bagley told us. “Unless and until you correct for the threat of judicial review, NEPA reform isn’t going to go that far.” This proposal is the first modern NEPA report to offer protection from judicial review.

What would this mean for clean energy and fossil fuels?

The proposal could help speed up all types of energy projects.

But it could help some more than others. Certain fossil fuel projects — especially those involving fracking — have already received some form of exemption from the NEPA process. But renewables and clean energy projects broadly don’t have such a carve-out. Neither do some other types of natural gas infrastructure, such as pipelines and export terminals. These projects could benefit from a faster and less court-reviewable NEPA process.

Can Congress actually do this under the reconciliation law?

This is the big question. To comply with the strictures of what’s known as the “Byrd Rule,” provisions in reconciliation must be primarily budgetary in nature, i.e. related to taxing and spending.

Provisions that have a budgetary effect but are “merely incidental” to their non-budgetary components can be ruled by the Senate Parliamentarian to be “extraneous” and excluded from the bill.

Parliamentarian rulings helped shape — and narrow — Democratic proposals in 2021 and 2022, including stripping out immigration provisions and minimum wage hikes from various bills that were working their way through the reconciliation process.

So where does overhauling NEPA fit in? The 125% fee makes the provisions of the House language arguably germane to the budgetary purposes of the reconciliation package. Supporters of the language will cite a precedent in the Inflation Reduction Act that waived judicial review for the program’s negotiation of drug prices in Medicare.

One way the parliamentarian will try to answer this question is by asking, “‘Is that big policy change necessary in order to achieve the budgetary impact?’ That’s the place where this could fail,” Thomas Hochman, the director of infrastructure policy at the Foundation of American Innovation, told us.

What does this mean for the full scope of environmental laws that are wrapped up in the NEPA process?

NEPA isn’t the only law that requires the government to study the environmental or cultural impact of its decisions. A handful of other laws — including the Endangered Species Act, the National Historic Preservation Act, or the Clean Water Act — mandate their own permitting process, which can also be lengthy.

Many of these laws impose substantive obligations on government decisions. The NHPA, for instance, requires the government to study whether any decisions will affect Native American cultural sites and to reach an agreement about how to mitigate that impact. These decisions can then be reviewed by the courts — NHPA was at the heart of the Dakota Access pipeline and SunZia cases.

Under the law today, the government often satisfies its duties under these laws as part of a broader “NEPA process,” with one agency essentially handling the paperwork for all the federal permitting laws that matter to a project together.

The House Republican proposal wouldn’t weaken or affect any of these laws, Hochman and Bagley told us. The government would still need to satisfy its obligations under all other federal permitting laws, and the courts could still review those decisions. It’s unclear how those laws would fit into the new streamlined NEPA process.

How is this different from previous attempts at permitting reform?

Senator Joe Manchin of West Virginia led two efforts during the Biden years to pass permitting reform legislation through the conventional lawmaking process. The bills tended to combine policy asks from Republicans and Democrats — that is, oil and gas interests as well as green energy and transmission developers — in an effort to build a broad consensus in favor of policy change.

What that looked like in practice was specific carveouts designed to facilitate the building of long-range transmission lines alongside, say, changes in schedules for leases for extracting fossil fuels on public lands.

This time, Republicans alone are driving the permitting reform process, because the reconciliation bill is expected to be approved (or not) on party lines.

The reconciliation language says nothing specific about transmission, for example, but it includes specific provisions favored by the oil and gas industry like mandating lease sales on a quarterly basis. The American Petroleum Institute praised the bill, and the Sierra Club said that “the only way it could be friendlier to Big Oil CEOs would be if they wrote it themselves.”

But the reform to how NEPA is — and isn’t — litigated is a genuine breakthrough in years of drawing up failed permitting reform plans.

“We haven’t yet seen one bipartisan bill on permitting that broadly amends judicial review,” Xan Fishman, senior managing director of the energy program at the Bipartisan Policy Center, told us.

What does this mean for the specific hurdles clean energy projects face?

“One of the difficulties in doing permitting reform is that there isn’t just one problem that needs solving. There are a bunch of things that all add up to a really difficult process that takes a long time and has massive degrees of uncertainty,” Fishman said.

To the extent clean energy projects face sometimes fatal delays due to the specific rigors of the NEPA process, the bill would remove a barrier to their development.

NEPA has proven to be a significant barrier to solar development. About two thirds of solar projects that were assessed under NEPA between 2010 and 2018 faced litigation, as well as almost one third of pipelines and 38% of wind projects, according to Stanford researchers Michael Bennon and Devon Wilson.

Even when agencies win court cases — which can be filed up to six years after a federal agency decision — “litigation overwhelmingly functions as a form of delay,” according to Breakthrough Institute research.

It’s unclear whether the House Republican proposal will ultimately speed up federal energy project approvals, or whether litigants will shift to opposing projects under other permitting laws, such as the Endangered Species Act or NHPA. But permitting reform advocates agree that the proposal nonetheless represents a big step.

“It would be a pretty good shield for persnickety criticisms of [environmental reviews] that are now de rigueur, but it might not provide complete protection from the full run of environmental objections waged against a project,” Bagley said.

“I am firmly convinced that NEPA is a big problem for helping to create and reinforce defensiveness on the part of agency officials. But it’s part of a big web of accountability run maybe too amok,” he said. “One answer is to start clipping parts of the web — it doesn’t fix the whole problem, but it might help you see what else becomes salient.”