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Bipartisan Senate Permitting Reform Deal Contains Changes for Clean Water Act, Endangered Species Act
Senators Shelley Moore Capito (R-WV), Martin Heinrich (D-NM), Mike Lee (R-UT), and Sheldon Whitehouse (D-RI) last week announced a new bipartisan permitting reform bill, called the Bipartisan Affordability and American Jobs Act (BAAJA). The lawmakers comprise the leadership of the Senate Committee on Environment and Public Works (EPW) and the Senate Committee on Energy and Natural Resources (ENR).
The bill proposes sweeping changes to streamline the federal permitting process, and it reduces executive agency authority to block energy projects. It challenges utilities to protect ratepayers from cost increases related to data center consumption. The bill would also modify the Clean Water Act (CWA) and the Endangered Species Act (ESA) in an attempt to cut down on project delays but may also reduce environmental oversight. This 417-page bill is unlikely to reach a vote in the Senate until after the Nov. 3rd midterms.
Among the notable provisions of the proposed legislation are those that contain several changes to Section 401 of the CWA, some of them codifying changes the Trump EPA has proposed. Currently, a federal agency cannot issue permits to a project discharging pollution into a body of water unless the relevant state or tribe conducts an environmental review or waives their right to do so. BAAJA would amend this process to give states and tribes a maximum of one year after they receive a complete certification request to review projects. If states and tribes fail to respond within the timeframe, they automatically waive their review opportunity. If states and tribes waive their right to review, the federal government is not required to conduct their own water quality review. Finally, the bill places a limit on the subject of these reviews: rejections will only be allowed for water quality issues, not air pollution or climate impact concerns.
Similarly, for projects involving interstate transmission or pipelines, the bill directs environmental reviews to only consider direct discharges into water bodies. States and tribes would be barred from considering other indirect environmental impacts. The bill also amends CWA Section 404, which allows the Army Corps of Engineers to grant general permits for projects with “minimally adverse environmental effects,” bypassing a full environmental review. Any project impacting fewer than two acres of navigable water will be considered "minimally adverse."
BAAJA would also change how endangered species concerns are represented in the review process. The bill would amend Section 7 consultation under the ESA so that review occurs within sixty days, instead of ninety days, after formal consultation begins. It also requires consultation to be complete when National Environmental Policy Act (NEPA) review is finished. ESA reviews are capped at 145 days; if that is exceeded, involved federal agencies may be found liable under 706(1) of title 5, United States Code, and compelled by the court to act. BAAJA also excludes projects from endangered species review if they involve “existing right of way.” This means areas that have already undergone ESA review for a previous infrastructure project would be exempt from further ESA consultation for a future project. Finally, the bill would codify a pathway for states to take over Section 7 consultations from the federal government if the associated project is entirely within state borders.
BAAJA contains ratepayer protection requirements for data centers that have been proposed at the state and federal level over the past year. Namely, the bill would require that data centers pay for their electricity generation infrastructure as well as the system upgrades needed to connect them to the grid. It would require that data center developers continue to pay these costs even if the data center is no longer operating before the upgrades are paid off. Data centers would also have to publicly disclose their energy use, allowing policymakers to better understand their impact.
The bill tackles barriers unique to projects that stretch across states and localities. Interstate transmission lines and pipelines are often delayed because developers must receive state and local government approval for each jurisdiction of the project. BAAJA would allow developers to share their proposal with the Federal Energy Regulatory Commission (FERC) while awaiting state and local approval. If local governments fail to rule on the project within a year, FERC can step in and approve any project they believe aligns with the public interest. FERC can also approve who pays for the project, concentrating costs among the consumers who benefit. The bill also aims to promote regional grid integration. It requires regional grid authorities to study how their system could be improved through linking with nearby systems. It also requires regional authorities participating in these studies to adopt the same forecasting and formulas for ease of comparison.
Across parties, administrations have used executive power to delay what they consider undesirable infrastructure projects. Currently, the Trump Administration’s Department of Defense is delaying wind permits due to unspecified aviation concerns. In 2021, the Biden administration acted similarly in revoking the permit for the Keystone XL pipeline. BAAJA would curtail these kinds of actions and would ensure that developers have legal recourse if any administration attempts to unilaterally revoke permits in the future.
Overall, the bill proposes significant changes to federal permitting and regulatory mechanisms that have the potential to boost energy production from both renewables and fossil fuels. The bill has garnered bipartisan support because both parties believe their preferred energy projects and resources will benefit.
Reported by NEMWI Intern Greta Merrill, American University
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