New NEPA Rules Will Delay Permits and Increase Emissions

Permitting Reforms Championed by House Republicans are the Lone Bright Spots in the Biden Admin’s NEPA Rule

The electric grid is on the cusp of a huge expansion. With a massive amount of new energy demand on the horizon, grid operators are already bracing for huge amounts of growth. The sudden increase in 5-year load growth expectations is driven by a surge in new data centers supercharged by artificial intelligence and cryptocurrency, increased American manufacturing and industrial activity, and new projections for hydrogen fuel plants, batteries and electrified transportation. 

The U.S. will need to build as many as 13,800 new energy projects by 2030 — an average of 7 projects per day — to provide enough clean, reliable, and affordable energy. Given the need to build more energy infrastructure of all types, it is right to question why the Biden Administration’s Phase II National Environmental Policy Act (NEPA) rulemaking is filled with new requirements that make it more difficult to get projects permitted. The U.S. needs to deploy more clean energy infrastructure projects, not fewer, at a faster pace and scale than the status quo.

Instead of revising the proposed rule to account for challenges ahead, the Biden Administration’s final NEPA permitting rule increases uncertainty, adds new requirements to permitting reviews that move the process in the wrong direction and ultimately increases emissions through permitting delays. The Biden Administration’s voluntary actions prioritize a political agenda rather than build upon the newly enacted changes to NEPA.

The most favorable parts of the rulemaking actions to implement permitting reforms championed by House Republicans, including key provisions passed in H.R.1, the Lower Energy Costs Act and codified on a bipartisan basis in the Fiscal Responsibility Act (FRA). But beyond those new reforms that Congress mandated, the Administration is actively self-sabotaging its climate goals in this proposed rule. 

Among the reforms championed by House Republicans are new standards to keep reviews on track, including deadlines and page limits. Federal agencies have begun to use a new provision from the FRA allowing them to adopt categorical exclusions from other agencies, as the Bureau of Land Management (BLM) recently did for geothermal exploration activities on federal lands. Beyond BLM, a broad range of agencies from the Defense Advanced Research Projects Agency (DARPA) and NASA to the Department of Energy (DOE) have also used these new authorities to adopt categorical exclusions to accelerate reviews for high-impact projects.

CEQ notes that it received many comments opposing this new categorical exclusion authority, with at least one going as far as to call it a “disastrous policy.” While CEQ was obligated to enforce the law enacted by Congress, CEQ still managed to limit its scope to exclude categorical exclusions that were enacted legislatively rather than through an administrative process. CEQ should have sought to maximize these new bipartisan provisions, not undermine them. 

Failing to maximize new authorities will only increase delays in the years ahead as more energy projects enter the queue. Absent change, these permitting delays are bound to get worse under the status quo as clean energy projects face the same delay tactics and legal risks that can jeopardize financing. 

When the proposed rule was released last August, ClearPath identified five additional missteps from CEQ’s NEPA guidance that actually make the Administration’s emissions reduction goals more difficult. These five issues remain in the final rule announced this week. 

  1. Defaults to the status quo that is making permitting worse 
  2. Creates more confusion and uncertainty for project developers
  3. Allows agencies to base project reviews on unrelated alternatives
  4. Increases bureaucracy and red tape by removing jurisdictional boundaries
  5. Invites more litigation to oppose project permits

Unfortunately, there is little in the final rule focused on fast approvals for projects with limited environmental impacts, reducing litigation risks after permits have been issued, or fundamentally getting more projects built without bureaucratic delay. If anything, the final rule invites more legal challenges to projects before they can even get off the ground.

There are many opportunities to improve the permitting process. Judicial review reforms remain an unaddressed opportunity. As this rule injects new uncertainty and increases litigation risk, Congress could step in to fill the gap to provide more certainty for projects looking to move forward to meet America’s record energy demands.

Modernizing the U.S. Department of Energy for Today’s Energy Challenges

The United States is in the midst of an energy revolution. Demand for new energy will reach all-time highs, breakthrough technologies are beginning to commercialize, and existing technologies are innovating new, cleaner ways to produce more energy. It’s all very exciting.  

The U.S. Department of Energy (DOE) can play an important role in meeting this challenge, but it must focus on America’s global energy leadership, advancing innovative technologies, protecting national security interests, and supporting fundamental research and science. 

DOE has experienced incremental changes since its inception 50 years ago in attempts to respond to the rapidly changing energy landscape, but those tweaks aren’t fully meeting America’s challenges of today.  

ClearPath has published a new report offering holistic policy recommendations and proposed a new organizational structure to best promote energy innovation in a new administration. 

In recent years, Congress has expanded the Department's energy innovation mission, providing unprecedented funding increases to commercialize new technologies through demonstration programs. These new authorities stem from bipartisan legislation, including the Energy Act of 2020, the CHIPS and Science Act and the Infrastructure Investment and Jobs Act (IIJA). If implemented effectively, these programs could reduce emissions, lower energy costs to consumers, boost domestic manufacturing and allow the U.S. to retain its position as a global energy leader.

DOE Annual Funding in $ Billions - Regular Appropriations Process

Today, the United States faces different conditions characterized by the energy crisis of the 1970s that spurred the Department’s creation, yet the legacy structure of the Department largely persists. In recent years, the U.S. has transformed from an import-dependent country to a net energy exporter since 2019. Most notably, this era of American energy dominance has been marked by the United States becoming the world’s largest oil and gas producer. 

But how can we best promote American technology at home and abroad, advance energy innovation and thwart the influence of foreign adversaries over energy and mineral supply chains?

These challenges demand rethinking. 

The current approach at DOE incentivizes political appointees and career officials alike to advocate for specific technologies rather than promoting an integrated, practical application of technology innovation in the energy sector. 
ClearPath’s proposed structure will empower the next Secretary of Energy with the necessary tools to lead strategically from day one.

Proposed Direct Reports to the Under Secretary for Energy & Innovation (simplified)


Notably, the reforms proposed in this report will maximize impact without requiring new authorizing legislation or amending the Department of Energy Organization Act of 1977.

DOE must remain focused on accelerating innovative technologies from basic research in the lab to commercial deployment.

ClearPath believes that for the U.S. to maintain its global energy leadership, DOE must better align with industry to advance its technology demonstration mission and protect the U.S.intellectual property from foreign adversaries.

Read the full report and recommendations here.

Geothermal Innovation Investments Could Help Meet Electricity Demand

Rapid electricity demand growth is no joke. It’s happening much faster than grid planners anticipated and some estimates show a need to double the U.S. grid by 2050. On top of that demand, most large utilities and producers have commitments to make it all clean. Wind developments are hitting headwinds, solar manufacturers have supply chain challenges, some environmental groups are pulling out all stops to make it harder for coal and gas, and there are still some who aren’t yet sold on clean, reliable nuclear energy.

Could geothermal be a big part of the solution that everyone can get behind? We think so. 

New firm, flexible clean energy generation is heating up. Enhanced geothermal systems (EGS), cutting-edge new generation technologies, could play a major role in achieving the dual goals — increased demand, all clean. The Department of Energy has made its first three awards of $60 million, for the bipartisan geothermal demonstration program Congress has pushed for years to catalyze EGS:

The DOE is expected to also make at least one more initial award for a project east of the Mississippi River, per Congressional direction.

Why it matters: Geothermal is one of the few technologies, including nuclear and fossil generation + carbon capture, that can provide valuable firm, flexible clean power to the grid. Geothermal currently produces more than four gigawatts of power to the U.S. grid, and a recent DOE analysis shows it has the potential to provide upwards of 90 gigawatts by 2050 – enough to power the equivalent of more than 65 million U.S. homes.  

How did it happen? These announcements have been years in the making, originating in bipartisan legislation dating back to the 116th Congress. In late 2019, the top Republican and Democrat at the House Science, Space, and Technology Committee, Frank Lucas (R-OK) and the late Eddie Bernice Johnson (D-TX) teamed up on the Advanced Geothermal Research and Development Act to further geothermal innovation. 

At the same time, Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-AK) and then-Ranking Member Joe Manchin (D-WV) navigated the Advanced Geothermal Innovation Leadership Act through the Senate, with language explicitly calling out a geothermal energy demonstration “earthshot.” Those bills were ultimately reconciled, and key policies, including greenlighting these demonstration programs, were signed into law as part of President Trump’s Energy Act of 2020 in the final days of his first term. 

Fast forward a year later, a bipartisan group of policymakers worked to include energy innovation funding in the bipartisan infrastructure bill (Infrastructure Investment Jobs Act - IIJA) and the DOE’s geothermal program received an injection of more than $84 million. Now in 2024, the DOE is moving forward on the innovation effort envisioned nearly five years ago.

What’s next: Permitting reform – Unlocking the commercial scale-up of new geothermal. It is not enough to just prove the technology. Policymakers should get the government out of the way of its takeoff.  
Research from the National Renewable Energy Laboratory (NREL) estimates that each final geothermal well on public land invokes NEPA as much as six times, with each Environmental Assessment taking 10 months. This adds up to an average development timeline of eight years.

There has been an uptick of interest on Capitol Hill to pick up and keep pace. The House Natural Resources Committee recently approved bipartisan legislation from Rep. Michelle Steele (R-CA) and Suzie Lee (D-NV). Other legislation, like Rep. Young Kim (R-CA)’s HEATS Act, Rep. John Curtis (R-UT)’s GEO Act and Rep. Russ Fulcher (R-ID)’s CLEAN Act, all make similar reforms. There is also a cadre of Republican and Democratic Senators eyeing a new bill in the coming months. 

Permitting reform remains a hot topic on Capitol Hill - a bipartisan deal could leverage the work energy entrepreneurs like Fervo, Chevron and Mazama are doing, and accelerate geothermal’s contributions to a cleaner and more reliable electricity grid.

Unlocking Carbon Storage Wells in 2024

Carbon storage is carrying momentum into 2024 following big year-end developments, with Louisiana obtaining regulatory primacy for carbon storage and Wyoming permitting its first set of Class VI wells. After years of delays and bottlenecks at the federal level, states are taking the lead to move these projects forward.

Both of these developments help address the main challenge developers are currently facing: unclear project development timelines due to permitting delays. To date, the Environmental Protection Agency (EPA) has permitted just two active wells in Illinois and six pending wells in Indiana and California.

The EPA is charged with implementing the Underground Injection Control (UIC) program as required by the Safe Drinking Water Act (SDWA) to prevent contamination of underground sources of drinking water. In 2011, the EPA created a new well classification, known as Class VI wells, specifically for the geological sequestration of carbon dioxide. This well class was specifically created to store CO2 in “non-usable” aquifers under a layer called caprock, which is a natural seal that prevents CO2 from escaping back out into the atmosphere. Research has shown that CO2 can be securely sequestered underground, particularly within deep and porous rock formations, lasting for thousands of years, and there are natural pockets of CO2 that have existed for millions.

States have recognized the need to accelerate these types of investments and have elected to pursue primacy – the ability to process applications through the state’s environmental regulator rather than the federal Environmental Protection Agency (EPA) — for carbon storage wells.

States have long been critical partners in the UIC program. In each case, the state regulator must demonstrate standards that are no less stringent than the federal requirements. While the EPA has delegated primacy for at least one well class to a majority of states, so far, just three states hold Class VI primacy: North Dakota, Wyoming and Louisiana. The number of states with Class VI primacy is expected to steadily increase as applications from Arizona, West Virginia and Texas are all currently under review. Additionally, the EPA recently made award selections across 25 states and tribes to support state primacy applications as directed by the infrastructure bill.

North Dakota and Wyoming have demonstrated a strong track record of approving permits for carbon sequestration in a timely manner. Whereas the federal EPA process can take years, North Dakota and Wyoming have been able to issue permits in a matter of months, with Wyoming issuing its first three Class VI permits in December 2023 after 10 months of review.

As of January 2024,179 wells across 63 projects are currently under review at the EPA. Creating efficient timelines through state primacy will be critical to approving the deluge of new well permit applications currently sitting under review at the EPA. The long and uncertain timelines at the federal level represent a significant barrier to developing the scale of storage capacity required for future carbon management infrastructure.

Additional recommendations to accelerate carbon storage projects include:

Combined with a growing interest in Class VI primacy applications from states, these policy recommendations will position carbon capture and storage for more breakthroughs in the year ahead. It will be critical for the EPA to demonstrate success by expeditiously reviewing state primacy applications to unlock projects and get more steel (and CO2 emissions) into the ground.

Litigation Reform Can Unlock Energy Project Permits

Over the course of this year, Congress wrestled with big permitting questions. House Republicans passed H.R. 1, the Lower Energy Costs Act, earlier this year with bipartisan support and some of the provisions from H.R. 1 were included in the debt ceiling deal codified by the Fiscal Responsibility Act. Yet, after it passed, the Biden Administration’s Council on Environmental Quality (CEQ) released questionable guidance on how to implement those provisions through the National Environmental Policy Act (NEPA). House Republicans and Republican Governors alike rightly questioned CEQ’s plan.

To be clear, energy permitting is still stuck in permitting purgatory and tied up in red tape. Needless to say, the recent CEQ guidance certainly did not fix the problem. Currently, one of the biggest areas to address is how permits for energy infrastructure can be challenged in court. Before construction can begin, these facilities must undergo permitting at the local, state and often federal level. And where there are permits required, court challenges can quickly follow.

There are numerous proposals in Congress to address these well-documented hurdles in the current litigation process. H.R. 1 included two frequently discussed proposals that would raise the bar for entities that wish to file suit, by requiring participation early in the permitting process and then reduce the length of time after permits have been issued for an entity to file a legal challenge. It is important to preserve access for everyone to have an opportunity to be heard in a dispute and to reach a resolution, for or against, but it’s equally important to do this in a timely manner. Specifically, how the U.S. can adapt the current litigation process to reach finality on a predictable timeline.

Another set of potential solutions are included in the Revising and Enhancing Project Authorizations Impacted by Review (REPAIR) Act (S. 3170) introduced by Senator Bill Cassidy (R-LA) in October 2023. The bill would establish new requirements to file a legal challenge to a permit by setting timelines to file challenge, eliminating venue shopping, and empowering the Federal Permitting Improvement Steering Council (FPISC) to mediate permits remanded by a court. These are all tangible actions congress could take to streamline permitting litigation.

Another way to address permit challenges is already in place in many Executive Branch agencies—such as The Environmental Appeals Board (EAB) at the Environmental Protection Agency (EPA) and the Department of the Interior Board of Land Appeals (IBLA) – and can adopted for energy infrastructure projects to provide the same certainty to all in a timely manner.

These quasi-judicial boards are composed of subject matter expert administrative law judges and magistrates review permitting decisions and other federal actions. Furthermore, these existing boards have long track records, with the EAB established back in 1992 as an impartial appellate tribunal within the EPA to resolve administrative appeals of certain environmental disputes arising under the major environmental statutes that the EPA administers.

For the EPA, its Administrator has delegated authority to the Board to hear these appeals. The EAB hears permit appeals related to major environmental laws, including the Clean Air Act (CAA), Clean Water Act (CWA), and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), among others. The EAB has issued over 1,100 final decisions. In most instances, the Board’s involvement has resolved the dispute, thereby promoting efficiency by avoiding protracted and expensive litigation in federal court.

Based on the most recent data from the IBLA, the vast majority of challenges are dismissed before they are ever adjudicated on the merits. For the remaining cases that do move forward, an even smaller share ultimately leads to permits being vacated, reversed or set aside.

Most Appeals to the IBLA Are Dismissed, and Just 4% Change the Agency’s Initial Findings

The benefit to the IBLA model is that the administrative law judges who hear these cases are subject matter experts, narrowly focused on the work of the permitting process. Contrast this with a federal district court judge who may bounce from a capital murder case to a trademark dispute to a narrowly focused permitting question.

It takes substantial time to build the evidentiary record in these cases, which can stretch legal challenges out for an uncertain length of time–often for years when appeals are factored in. By contrast, administrative law judges can serve an effective role in these narrowly focused permitting disputes. By using the agency’s administrative permitting record as the basis for their review, these challenges can be addressed on a more predictable timeline.

Expanding this model to energy infrastructure projects offers an opportunity to leverage these types of decision-making bodies to apply to all permits that are challenged at the federal level. This can be accomplished by creating a new centrally located Permitting Appeals Board, either as a standalone agency or at the Federal Permitting Improvement Steering Council (FPISC).

To go a step further, the appeals process could mirror provisions similar to those in the Federal Power Act and Natural Gas Act where any further challenges to a permitting decision must be appealed directly to the appellate courts. This would further empower the decision-making authority of the Permitting Appeals Board and eliminate the repetitive process that currently exists when appeals of EAB or IBLA decisions are brought before district courts.

Simplify Permits and Appeals Into a Clear, Predictable Three-Step Process

Given these boards are not constitutionally chartered courts, Congress would have much more authority to set and enforce timelines and clearly define the criteria for review compared to a coequal branch of government.

By finally making the judicial review process for energy infrastructure in a more streamlined manner — removing the long delays of sending litigation to court — it will allow project financing decisions much easier. Reaching finality on legal challenges on a predictable timeline is the greatest lever Congress can pull to start getting America building again. Unlike the current system when legal challenges can stretch on for a decade or more, implementing proposals like those included in the REPAIR Act and establishing a permitting review board would reliably resolve these challenges in under one year.

America’s Oil & Gas Industry Showcase Leadership in Carbon Management

This year at New York Climate Week, ClearPath partnered with the American Petroleum Institute (API) to host an event showcasing the future of carbon management. The conversations underscored the opportunity for the oil, gas and petrochemical industries to lead the carbon dioxide emissions reductions at scale.

The event brought together top thought leaders, project developers, investors, and senior Department of Energy (DOE) officials to discuss how technologies such as carbon capture, utilization and storage (CCUS) and direct air capture (DAC) are putting America on a clear path to global energy leadership and dramatically reducing and removing carbon dioxide emissions. Conversations also focused on the need for permitting reform to deploy these types of projects on time and at scale.

Providing these technologies with a larger climate platform and bringing key stakeholders together to discuss implementing the largest low-carbon energy investment programs in U.S. history is something we need more often. This is especially true as $12.1 billion demonstration projects authorized by the Energy Act of 2020 and funded through the bipartisan Infrastructure Investment and Jobs Act (IIJA) begin to roll out nationwide, most notably through the DAC and Hydrogen Hubs project selections.

Oil & Gas Companies Leading on Emissions Reductions

The U.S. economy is still feeling the effects of prolonged economic inflation, high gas and electricity prices, post-Covid global supply chain chaos, and Russia’s war in Ukraine. These developments, combined with production cuts from OPEC+ and China’s increasingly transparent efforts to dominate markets have exacerbated the ongoing global energy crisis. All of these factors heighten the need for American clean energy leadership.

The U.S. has both a cost and energy security advantage relative to global competitors when exporting hydrogen produced from natural gas with carbon capture. This is due to abundant U.S. gas supplies and current policy, like the enhanced 45Q tax credit, which has no international equivalent. Additional policy wins, such as the Energy Act of 2020, have positioned the U.S. energy sector as the global leader in CCUS and DAC research and deployment, which is key to global decarbonization goals. America’s largest energy producers, utilities, agriculture companies, financial institutions and other leaders increasingly make carbon management a fundamental pillar of their long-term business strategies.

Fostering Continued Innovation

With more than 60 CCUS projects in various stages of development, two major DAC hub awards announced, and more than 150 Class VI wells currently in the permitting queue, companies are primed to begin to scale clean energy projects. For industry to successfully deploy these innovative projects and reach ambitious targets, private and public institutions must work together to streamline permitting processes and provide regulatory certainty to get steel in the ground. The recent restart of the Petra Nova facility highlights the immediate, real world opportunity for these technologies to reshape the energy landscape.

Counties with Active EPA Class VI Well Applications

The next generation of CCUS projects will accelerate the shift from innovative, bespoke projects to replicable builds that can more easily attract the necessary financing, permits, and related supporting infrastructure necessary to deploy these technologies at scale. CCUS can achieve 14% of global emissions reductions needed by 2050 and is viewed as the only practical way to achieve deep decarbonization in the industrial sector. The Intergovernmental Panel on Climate Change (IPCC) agrees, with fossil energy with CCUS, clean hydrogen, and nuclear energy all playing a significant role in any low-carbon energy pathway.

These technologies can also greatly reduce emissions in the industrial, transportation, and power sectors. At Climate Week, we heard from companies like Chevron, Exxon Mobil, Enbridge, Baker Hughes, 1PointFive Sequestration, Frontier Carbon Solutions, and others who are pursuing these clean technologies.

To address these big opportunities, the Climate Week event featured remarks from top executives, DOE, and panels covering the landscape of carbon management technologies, the need for carbon storage and transportation infrastructure, regulatory approvals, permitting delays, and expanded financing opportunities.

Thanks to our speakers: David Crane, Under Secretary for Infrastructure, U.S. Department of Energy (DOE); Leslie Rich, Senior Consultant, DOE Loan Programs Office; Doug Schultz, Director of Loan Guarantee Origination, DOE Office of Clean Energy Demonstrations; Lily Barkau, Groundwater Manager, Water Quality Division, Wyoming Department of Environmental Quality (DEQ); Jeff Alvarez, President & General Manager, 1PointFive Sequestration; Shannon Angielski, Executive Director, Carbon Utilization Research Council (CURC); Susan Blevins, Climate Policy Planning Senior Advisor, ExxonMobil; Jeremy Harrell, Chief Strategy Officer, ClearPath; Edward Herring, Co-Founder and Managing Partner, Tailwater Capital; Nigel Jenvey, Executive – Strategy & Growth Initiatives, Baker Hughes; Michael Johnson, Vice Chairman of Investment Bank, JPMorgan Chase and Co.; Balaji Krishnamurthy, Vice President, Strategy and Sustainability, Chevron; Sasha Mackler, Executive Director of the Energy Program, Bipartisan Policy Center; Dustin Meyer, Senior Vice President, American Petroleum Institute (API); Aaron Padilla, Vice President, Corporate Policy, American Petroleum Institute (API); Rich Powell, CEO, ClearPath; Pete Sheffield, Chief Sustainability Officer, Enbridge; Alicia Summers, Chief Development Officer, Frontier Carbon Solutions; and Chris Weber, Head of Climate and Sustainability Research, BlackRock Investment Institute

Clean Energy Permitting Could Go From Bad to Worse

The Biden Administration Doubles Down on a Broken Permitting System

Some estimates say the U.S. will need to double the capacity of our grid by 2050 to meet demand. That means we’ll need to build an incredible amount of new energy projects — like 21,300 to 27,700 new clean energy projects by 2030 which is an average of 10 to 13 projects per day — to meet demand and emissions reduction goals. Some of those projects are ready to go, but currently stuck in permitting purgatory.

Instead of moving forward on breaking ground on clean energy projects, the Biden Administration may have just made it worse. The Council on Environmental Quality (CEQ) released new guidance for implementing the National Environmental Policy Act (NEPA) on July 28, 2023, and it falls dramatically short of the necessary reforms. The new NEPA guidance undermines recent bipartisan permitting reform efforts, increases uncertainty, and adds new requirements to permitting reviews that move us in the wrong direction.

Point-blank, the Administration is actively self-sabotaging its climate goals in this proposed rule. The U.S. needs to deploy more clean energy infrastructure projects, not fewer, at a faster pace and scale than the status quo. The proposed rule will make it more difficult to site and permit projects, increase interagency bureaucracy, and ultimately increase emissions through permitting delays.

Congress took action earlier this year to enact permitting reform changes, largely led by the efforts of House Republicans to put permitting reform front and center this Congress, passing H.R.1, the Lower Energy Costs Act, with bipartisan support. Many of the permitting provisions included in H.R.1 were ultimately included in the final debt ceiling deal codified by the Fiscal Responsibility Act.

With new energy projects expected to dramatically increase in the years ahead, these permitting delays are bound to get worse under the status quo. Clean energy projects face the same delay tactics and legal risks that can jeopardize financing.

While Congress attempted to avert this outcome in the Fiscal Responsibility Act, the Administration seeks to undermine those bipartisan efforts by describing these amendments as “largely codify[ing] long standing principles” related to reasonably foreseeable impacts and merely endorsing “current CEQ regulations and longstanding practice” for environmental reviews.

Rather than fully implement the newly enacted changes to NEPA, the proposed rule prioritizes the administration’s political agenda over getting clean energy infrastructure projects built. The Administration’s lack of follow through on congressional intent furthers the need for broader and bolder congressional action on permitting reform.

One of the most egregious changes in the draft CEQ Rule was completely replacing “impact” with “effect.” This would open up a slew of new litigation. The words seem similar, but let’s go back to grammar school for a second — an “effect” is a change or result. An effect can be positive or negative. “Impact” means something that comes about as the result of something coming forcibly into contact with something else. It has a much more disruptive and negative connotation.

Building a new road near your house might have a positive or negative effect on the traffic around you and your view. Whereas building that new road near your house might impact the trees, wildlife, noise or emissions. Changing this guidance to “effect” opens litigation opportunities for those who just don’t like the road.

ClearPath identified five additional missteps from CEQ’s NEPA guidance that actually make the Administration’s emissions reduction goals more difficult.

1. Defaults to the status quo that is making permitting worse

The proposed rule doubles down on a broken system by reverting to the 1978 regulations that created the current permitting morass and undermines new provisions enacted by the Fiscal Responsibility Act of 2023.

The 1978 regulations spiraled into a system that fundamentally does not work today. Reverting back to these outdated guidelines as the Biden Administration proposes would endorse a system where reviews last four and a half years on average for an Environmental Impact State (EIS) to reach a Record of Decision (ROD). Additionally, a full 10 percent of these project reviews took a decade or more. This is in stark contrast to the policy goals originally set out in 1978 which said reviews should normally be less than 300 pages and timelines should not exceed one year. Since then, federal reviews have spiraled into decade long efforts spanning thousands of pages.

Distribution of EIS Completion Time (NOI to ROD)

All EISs Completed 2010-2018

2. Creates more confusion for project developers

The proposed rule allows agencies to individually set additional requirements for NEPA reviews, eliminating consistency between agencies. These challenges empower cooperating agencies to offer competing standards for the same proposed project to meet. For example, the Fish and Wildlife Service could give the project a greenlight while the Bureau of Land Management could apply an entirely different standard and reach a different conclusion entirely. These inconsistencies have the potential to cause additional interagency disputes that can block a final decision on the project.

CEQ describes this proposal in the rule to say that “while agency procedures must be consistent with the CEQ regulations, agencies have discretion and flexibility to develop procedures beyond the CEQ regulatory requirements, enabling agencies to address their specific programs, statutory mandates, and the contexts in which they operate.” For a project developer seeking a permit, the lack of consistency between agencies will inevitably lead to competing standards and requirements.

3. Allows agencies to base project review on unrelated alternatives

The proposed rule removes the requirement that agencies conduct reviews based on the applicant’s goals and the agency’s statutory authority, which could eliminate some of the best clean energy projects.

The Trump Administration’s 2020 revision to the NEPA guidance ensured that environmental reviews used the proposed project as the starting point. This guaranteed that any alternatives cited during the review were consistent with the applicant’s goals and objectives. By removing this requirement, agencies will be able to consider wholly unrelated alternatives.

4. Increases bureaucracy and red tape by removing jurisdictional boundaries

The proposed rule would allow agencies to comment on areas beyond their jurisdictional boundaries, removing the ability of a lead agency to control the aspects of the review.

Specifically, CEQ proposes to strike the requirement added by the 2020 revision that cooperating agencies limit their comments to matters within their jurisdiction as directed by the lead agency. This will lead to increased bureaucracy and interagency disagreements on the environmental impacts of the project.

5. Invites more litigation to oppose project permits

In addition to the sneaky change from “impact’ to “effect,” the proposed rule adds new community engagement requirements without defining them, and fails to ensure that input is relevant to the project development permit. CEQ proposes to add new requirements related to “communities with environmental justice concerns” without defining them.

CEQ proposes that agencies “generally must include an environmental justice analysis to ensure that agency actions do not unintentionally impose disproportionate and adverse effects on these communities.” But goes on to say that “CEQ is not proposing to separately define the phrase “communities with environmental justice concerns,” but intends that phrase would mean communities that do not experience environmental justice as defined in § 1508.1(k).”

The lack of defined standards make compliance with these new requirements near impossible for agencies during the review process. It invites new legal challenges from both project developers and public interest groups over the presence, content, and factors included or omitted in these environmental reviews.

Unfortunately, none of these policy goals are oriented toward preclearing approvals for projects with limited environmental impacts, reducing litigation uncertainty after permits have been issued, or fundamentally getting more projects built without bureaucratic delay. Therefore, there is a clear need in these areas for additional Congressional action this year.

The Energy Community maps are here. What’s next for deployment?

Thousands of towns and communities across the country have been providing the power and fuel needed to run America for decades. While many of these “Energy Communities” are still booming, others have experienced plant closures or waning extraction efforts. Congress has passed new financial incentives to encourage investments in these areas, but now we need to fix permitting to allow the developers to build.

Let’s look at where we are today. The U.S. Treasury Department released new guidance in June to define Energy Communities eligible for new increased clean energy tax incentives. These areas include brownfield sites, areas where a coal mine or coal-fired power plant has recently closed, and areas that have high levels of fossil fuel employment. Unsurprisingly, this guidance includes many of the communities across Appalachia, the Gulf Coast, Upper Midwest and the Mountain West.

Official 2023 Energy Communities

So, what does this guidance mean? New clean energy projects located in these communities, covering 48% of the U.S. and Puerto Rico, will now be eligible for a 10% bonus on top of other clean energy tax incentives from the Inflation Reduction Act. This means that some projects will now receive tax incentives as high as 50% of the total project cost. With proper implementation, these incentives are poised to boost investment in domestic manufacturing and clean energy production throughout these newly qualified regions.

ClearPath provided implementation recommendations last year to ensure these new incentives were well-positioned and durable. While the guidance adheres to many of the ClearPath recommendations, clarification of key provisions would help maximize the potential impact of the Energy Communities provision.

For example, in its guidance, the U.S. Treasury Department highlighted numerous areas where the data used to determine an Energy Community could be more clear to assist the private sector in determining the locations that qualify as an Energy Community. The three pieces of data that need clarity were: a lack of centralized data for local tax revenues related to fossil fuel resources, an incomplete inventory of brownfield sites, and incorrect geographic coordinates in the National Mine Safety Administration dataset. Ensuring these are addressed in subsequent guidance can provide greater certainty for developers as they determine where to best site projects.

But even with attractive financial incentives, the arduous permitting process before projects can even begin construction remains a huge problem. Congress created an incentive to build clean energy projects in Energy Communities, yet these projects receive no regulatory relief to allow them to move forward on a more predictable timeline. The success or failure of the Energy Communities program will depend on projects actually being built.

Projects in Energy Communities Still Face Permitting Challenges

In fact, many of these new Energy Communities are areas where heightened local opposition has all but stymied new development through local, county, or state level bans or other forms of onerous regulations designed to stop projects in their tracks.

Nonetheless, the Administration and supporters of the Inflation Reduction Act have been touting these projects. During his State of the Union address earlier this year, President Biden said, “I’ll see you at the groundbreaking,” referring to the clean energy projects that will be built as a result of the law passed without Republican support.

In reality, breaking ground on any of these projects requires a permit. And, the Administration has failed to put forward a meaningful plan to fix the permitting bottlenecks. While the debt ceiling deal enacted through the Fiscal Responsibility Act included some minor changes to the permitting process, much more must be done to deploy projects at scale nationwide.

It is essential that a final deal on permitting includes three principles.

First, we need to identify areas for development where unnecessary bureaucracy should not delay economic and environmental benefits of these projects.

For example, replacing a retiring power plant with a zero-emissions advanced nuclear generator at an existing site or building a battery manufacturing facility on a brownfield site should not require a yearslong permitting process.

A list of precleared geographic areas should include these Energy Communities, previously disturbed locations that are well categorized sites, and areas where new generators can utilize existing infrastructure. The environmental impacts to these locations related to energy deployment are minimal, and in many cases these locations are in or near communities that need the redevelopment most urgently.

Congress could consider ways to pair regulatory incentives with existing financial incentives, either through these newly identified Energy Communities or other tax advantaged areas such as federal Opportunity Zones established by Congress. Together, these areas could accelerate deployment in 54 percent of the country.

Map of Existing Areas Congress Has Designated for Financial Incentives