Congress Passes Environmental Permitting Reform in Bipartisan Fiscal Responsibility Act

Today, Friday, June 2, President Joe Biden is expected to sign into law the bipartisan Fiscal Responsibility Act of 2023 (HR 3746), or FRA, preventing a U.S. debt default. The FRA was passed by the U.S. Senate on June 1 by a bipartisan vote of 63 to 36 and was passed by the U.S. House of Representatives on May 31 by a bipartisan vote of 314 to 177. Secretary of the Treasury Janet Yellen had projected that the U.S. would exhaust its ability to pay its full obligations on Monday, June 5.

The FRA temporarily suspends the U.S. debt ceiling until January 1, 2025, caps nondefense discretionary spending, increases total defense spending, rescinds certain funding for the Internal Revenue Service provided by the Inflation Reduction Act of 2022, repurposes some Internal Revenue Service funding appropriated in 2024 and 2025 for short-term Biden administration priorities, claws back certain unused Covid-19 relief funds, imposes stricter work requirements for food and healthcare program eligibility, resumes federal student loan repayments, and implements a legislative rule requiring savings offsets for increases in mandatory spending. The FRA also amends the environmental review process under the National Environmental Policy Act (NEPA) by streamlining the application and documentation process, sets time limits for agency review, and narrows the scope of agency consideration. Additionally, the FRA commissions studies of the U.S. power grid, makes energy storage projects eligible for a streamlined federal permitting process, and approves the Mountain Valley Pipeline.

From an environmental and energy perspective, clients should be aware of the following key takeaways:

• It designates a single lead federal agency to coordinate with participating federal agencies and supervise the preparation of a single environmental document.
  • Applicable federal agencies must determine which will lead (or jointly lead with applicable state, tribal, or local agencies), based on the magnitude of the agencies’ involvement, approval or disapproval authority, expertise, and duration of involvement, and may jointly lead with state, tribal or local agencies.
• It creates a judicially enforceable public schedule for agency review.
  • The lead agency must develop and publish a schedule (in consultation with cooperating agencies and the applicant) for completion of any environmental review, permit, or authorization. If any review, permit, or authorization will not be completed according to the schedule, the lead agency must notify the agency responsible and request compliance. 
  • The FRA imposes a two-year limit on conducting Environmental Impact Statements and a one-year limit for environmental assessments, and deadlines may be extended only as necessary for completion. 
  • Applicants are granted a right of action if deadlines are missed, and project sponsors are permitted to assist agencies in conducting such environmental reviews to help speed up the process and resolve issues without taking control or authority away from the lead agency. 
• It streamlines environmental documentation by revising the “One Federal Decision” approach to NEPA review, establishing page limits for key documents, and limiting the scope of “major federal action.” 
  • Cooperating agencies must evaluate proposals in a single environmental document if one is required, but the FRA includes threshold considerations for agencies to assess whether NEPA applies to proposed activities. 
  • The FRA also caps Environmental Impact Statements at 150 pages (or up to 300 for statements of “extraordinary complexity”) and environmental assessments at 75 pages. 
  • No environmental document is required if the proposed agency action is not a final agency action, is categorically excluded under NEPA, would conflict with another provision of law, or is a nondiscretionary action for which such agency does not have authority to consider.
  • The proposed legislation exempts from NEPA review certain types of federal financial assistance, such as loans and grants, where federal agencies lack control over the project.
  • In their review, agencies are explicitly permitted to make use of reliable data sources and are not required to undertake new scientific or technical research to make determinations, unless such research is “essential to a reasoned choice among alternatives, and the overall costs and time frame of obtaining it are not unreasonable.”
• It clarifies the scope of agency NEPA review.
  • Agencies must evaluate “reasonably foreseeable environmental impacts of the proposed agency action,” “reasonably foreseeable adverse environmental effects,” and “a reasonable range of alternatives to the proposed action that are technically and economically feasible and meet the purpose and need of the proposed action.” 
• It directs the Council on Environmental Quality (CEQ) to consider a single, governmentwide “e-NEPA” online portal.
  • Within one year of enactment, CEQ will conduct a study and submit a report to Congress on the potential for online and digital technologies to address delays in reviews, streamline communications and data sharing between agencies and applicants, and improve public accessibility and transparency under NEPA Section 102(2)(C). 
• It commissions a study of the total current transfer capabilities in the U.S. power grid.
  • The North American Electric Reliability Corporation will examine a minimum transfer requirement and provide recommendations to strengthen the reliability of the U.S. power grid and meet and maintain transfer capability among neighboring transmission regions.
• It adds energy storage to the list of covered projects eligible for streamlining under the Fixing America’s Surface Transportation Act (FAST Act).
  • The FAST Act, signed into law in 2015, created the Federal Permitting Improvement Steering Council to oversee a streamlined approval process for “covered” infrastructure projects that fall within certain sectors such as carbon capture and sequestration, renewable energy production, electricity transmission, pipelines, and manufacturing. 
  • Adding energy storage as a covered project under the FAST Act should help fast-track approvals for solar and battery storage projects.
• It approves the Mountain Valley Pipeline. 
  • The FRA orders the issuance of permits for the Mountain Valley Pipeline and precludes judicial review of such permits or authorizations.