top of page

How The Debt Limit Act Changes Environmental Review of Projects

Washington D.C.

people standing in front of large construction site with cranes in the background

What does the new federal debt limit deal have to do with the environment? We may not think of federal budget fights as being “environmental” issues. But now that the Fiscal Responsibility Act of 2023 (H.R. 3746) has been adopted, changes are coming to the National Environmental Policy Act (NEPA)’s permit approval process. While project applicants—those people proposing to undertake development—won’t have to do anything different, agencies subject to environmental review requirements within the NEPA framework will.

Under NEPA, a government agency is designated as a “lead agency” and tasked with preparing and reviewing environmental assessments and environmental impacts of proposed projects. Any major federal projects which may cause significant environmental impacts require NEPA review. On a given day, there may be hundreds of these projects, from energy production structures, airports, and military complexes, to issuing permits on federal land. Environmental assessments and environmental impact statements evaluate the likelihood and severity of environmental impacts such as effects on water quality, cultural significance, the economy, air pollution, or health effects.

When it identifies potential adverse impacts, the agency must consider alternatives to proposed projects and the mitigation efforts that may be necessary. The process of creating and analyzing these documents is at the heart of NEPA as they help carry out its goal to prevent the approval of federal projects which may lead to environmental disaster.

Before the Fiscal Responsibility Act, lead agencies were not placed on a strict timeline to complete this process. Often, this has led to projects being delayed, increasing both economic and opportunity costs for project applicants. Now, lead agencies are under a strict and defined timeline. To complete its environmental assessments, the lead agency will have one year to do so. The clock starts running based on the soonest date the agency determines an environmental assessment is necessary, the date the agency informs the project applicant that their application is complete, and the date the agency gives notice of its intent to begin the environmental assessment. Along those same lines, the agency will now have two years to complete its environmental impact statements, based on the soonest date the agency determines an environmental impact statement is necessary, the date the agency informs the project applicant that their application is complete, and the date the agency gives notice of its intent to begin the environmental impact statement.

Overall, this provision aims to reduce the amount of time it takes for projects to get approved. This is a significant win for Congress members who have long sought streamlining of the federal government’s permitting system. Some members of Congress are touting this as the first significant reform on NEPA since its codification over forty years ago. Members of both parties, heads of agencies, and industry insiders have championed the provision as a successful reform to NEPA.

While the Fiscal Responsibility Act was passed with bipartisan support, the provision is not without controversy. The sped-up process of project approval will likely make it easier for projects like wind farms, gas pipelines, and electrical transmission systems to start taking shape. Both fossil fuel and clean energy sites will be positively impacted by the reduction of the amount of time it takes to complete the NEPA process. However, environmental concerns have arisen related to how new projects will impact the surrounding areas, whether alternative project options will be given adequate thought, and what the increase in projects might mean for long term climate consequences. The worry is that with less time to create and analyze environmental assessments and impact statements, lead agencies may not get a full picture when voting on approval for a project’s permitting. This is especially so when some states, like California, may not have completed their own environmental review to fully participate in the comment process before the federal government acts. In addition, some projects may experience faster than anticipated notification of their approval status. The controversial Mountain Valley Pipeline, for example, has now been fast-tracked for approval.

This provision will not entirely wipe out all permitting hurdles and delays faced by project applicants in the approval process. NEPA, a federal law, only governs federal agencies. Most significant projects require federal approval in addition to local and state approval from the jurisdiction of their proposed projects. The Fiscal Responsibility Act’s changes to NEPA won’t affect the time and processes used by local and state agencies in their permitting structure. Moving forward, it will be interesting to experience the real-world impacts created by this provision, especially where the federal government and California once again cross swords on environmental issues.

40 views0 comments
bottom of page