Senate Permitting Reform Bill: If It Passes, Will It Work?

Guests

Experts

Robin Millican

Director of Research Programs and Strategic Partnerships

Experts

Noah Kaufman

Senior Research Scholar

Climate Change Energy Policy Finance & Economics

Experts

Jack Andreasen Cavanaugh

Senior Research Associate

Transcript

Robin Millican:

We need to be realistic about the fact that the energy system takes time, right? And we’re kind of in this very unfortunate moment in time where we’re short supply in some places. We’re also trying to replace all this aging infrastructure. You have inflation in the supply chain, tariffs also raising equipment costs. And in a way, you sort of have to spend money to make money where we have to invest in things like more poles and wires in order to get to that better situation at the end of the rainbow years down the line.

Bill Loveless:

Every permitting bill promises the same thing, build faster. The harder question is what you give up to get there and who ends up paying for it? That question is at the heart of the Bipartisan American Affordability and Jobs Act, the Senate permitting deal introduced last month by the leaders of the Chambers two Energy and Environment Committees. A few weeks ago on this show, we walked through what’s in the bill. Today, we’re asking a different question. If it passes, could it work? This week, the Center on Global Energy Policy is releasing a new analysis of the bill. It describes the bill as fundamentally about speed and certainty. It changes how quickly energy infrastructure gets approved and built, not what gets built. Its central finding is that federal approvals would become faster to obtain, but harder to reverse. Leverage would shift from states, wildlife agencies, and others that review projects to the companies applying to build them, and accountability would shift from before construction to after it.

The report finds lower energy bills are plausible but conditional and could take years to arrive well after households start paying for new infrastructure. Alongside it, the center is launching an interactive tool that estimates where permitting time goes today and how much sooner projects could come online under the bill. Those findings land at a delicate political moment. Some lawmakers are calling for a vote as soon as the Senate returns after next week’s midterms, when the bill will need 60 votes and then agreement with the House. So who wins and who loses under this trade? What can previous energy projects tell us about how this bill would perform? Does it help clean energy more than oil and gas? And can it get through a narrow lame duck window?

This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I’m Bill Loveless. Today on the show, Robin Millican, Noah Kaufman, and Jack Andreasen Kavanaugh. All three are CGEP scholars and along with Vivek Shastri, Tom Moerenhout, Ira Joseph, and Lily Bermel contributed to the center’s new analysis of the legislation. They joined me to discuss what the bill would change in how energy projects are reviewed, approved, and challenged in court, and how it could shift leverage away from states and tribes. We talked about why households may pay for new infrastructure before they see lower bills, what the bill means for transmission, data centers, and the climate, and whether it can pass in a short lame duck session. And Jack walked us through what his interactive tool shows about where the time savings could come from. I hope you enjoy our conversation.

Robin Millican, Noah Kaufman, Jack Kavanaugh, thanks for joining us today on Columbia Energy Exchange.

Noah Kaufman:

Good to be here.

Robin Millican:

Thanks for having us, Bill.

Bill Loveless (00:03:55):

There continues to be more talk than ever in the United States about a new bill in the Senate to reform the permitting process for projects throughout the country. As we know, it’s called the Bipartisan American Affordability and Jobs Act, or BAAJA, and it’s talk that continues rather robustly, even amid the buzz over the upcoming elections in the United States. And thankfully, there’s more fresh insight about the legislation, including this new analysis that the three of you have prepared at the Center on Global Energy Policy. So let’s start by asking, generally speaking, what each of you thinks about the bill. Let’s begin with Robin.

Robin Millican (00:04:41):

Thanks so much, Bill. Well, just in the way of setting the stage, I think it’s really interesting and remarkable in a lot of ways that we have a bipartisan four corners bill from the leaders of the energy and natural resources and environment and public works committees, and ostensibly as of today, it has the endorsement and backing of the White House. In terms of my own personal feelings about it, I think we’ll hear from Jack and Noah and get their take as well. But from my perspective, if you look at what’s happening in the energy system and the grid around us, I think it’s very much incumbent on Congress to do something or anything about the need to build new energy infrastructure. If you look at just this year, what’s likely to happen in terms of electricity in the grid, the energy information administration is forecasting record electricity sales this year, but at the same time, prices are also going up.

(00:05:43):

This is a focal point in a piece of research that I helped with at the center back in June where we looked at drivers of price increases where nationwide electricity prices have gone up more than twice the rate of inflation in the past year. That’s not all data centers. That was something that we mentioned in our research. It’s aging infrastructure, it’s wildfire and storm recovery costs, a number of factors, but data centers are also a part of the grid and a part of that story where right now they’re about four to 5% of electricity consumption on the grid, but forecasts show that they could be triple or quadruple that amount within the next five years. And so in order to meet all of that new demand, we need to build a lot of new supply. We also need new supply for reliability purposes. If you look at what NERC is projecting, they say that they think something on the order of 224 gigawatts of summer peak demand growth will occur between 2025 and 2035.

(00:06:55):

That’s a lot of gigawatts that we need to figure out how to meet. And so if you put all those factors together plus all of the energy security concerns we have out of what’s happening in the world, the strait of Hormuz, geopolitical fragmentation, I think we need a new solution set. And so I think all roads sort of run through energy infrastructure, being able to build and do, and that’s what this bill, the BAAJA Bill, really would make more possible. But building infrastructure also includes impacts and trade-offs, and I’m sure we’ll get into that in this conversation.

Bill Loveless (00:07:33):

Right. There’s so much there. Noah?

Noah Kaufman (00:07:35):

Yeah. Well, so first of all, I was in government when the Inflation Reduction Act came out and I missed all of the making fun of its name. So I’m going to really get my money’s worth this time on the poll tested string of words that they’ve put together for what’s a bill about some pretty boring process issues. More substantively, I think there’s never going to be a right answer on process. You’re never going to get everyone to agree on what the right process should be for federal approvals of infrastructure projects or transmission planning. But like Robin said, I think this bill reflects a really broad consensus that the status quo isn’t working for these processes. In particular, the processes have just become too burdensome, and as a result, we’re not seeing the energy infrastructure that we need, everything from long distance transmission to power plants, to mining and processing critical minerals.

(00:08:39):

I think China and other countries are showing that these things are very doable, we’re just not doing them. And that has real impacts on Americans. We have an energy system that’s not as high tech that it should be. The energy system we do have, we’re paying too much, as Robin said. Our firms probably can’t compete the way they should in the global marketplace. We’re more vulnerable to security shocks than we should be. So I guess for me, the bottom line is I read the bill and I think it’s a thoughtful good faith effort to at least partially address some of those issues.

Bill Loveless (00:09:16):

Yeah, all issues that are so important. Jack?

Jack Andreasen Kavanagh (00:09:19):

Largely agree with what both Robin and Noah have said, especially on the proximate causes and needs to be able to build energy infrastructure faster in the United States. I think it’s also important to note that we saw the bill text drop a couple weeks ago now and everyone has had a chance to read and digest, but the conversation on permitting reform has been happening for years. There were two different bills under the Biden administration that did not pass. And when those bills didn’t pass, this conversation didn’t go away. There were people working on in DC and there were people coming up with pathways forward. And so although it seems like the bill text just dropped a couple weeks ago, this is the accumulation of an incredible amount of effort by staffers, by the congressional members, the bipartisan senators who put this forward, by folks on the outside helping to understand how we can get to an agreement.

(00:10:16):

So I would echo Robin’s initial sentiment of saying this is incredible that we’re able to get a bill that has support in a bipartisan nature and that has been well received by a number of different important groups across the political spectrum and also outside amongst energy providers. Second to that, I think that we do. We do need to build energy infrastructure faster. This bill allows us to do that. And of course, as Robin said, that there are trade-offs associated with this and we’ll get into that, but I also think outside of just the proximate causes of this, the data center build out, the rapid demand for electrons, we also have to look forward and past that for if you are interested in electrifying and decarbonizing the United States, the relative load of data centers right now is comparatively small. If you’re talking about large scale deployment of heat pumps and EVs and the electrification of industry and all of the sorts of things you would need to do decarbonize the economy, data centers are relatively small overall component of that in the long run.

(00:11:28):

And so this bill is an accumulation of incredible amount of work from folks up until now. And the impacts of this, yes, can help release some of the proximate challenges of rapid load growth, but it will also ease or could ease some of the decarbonization efforts that we may want to encounter going forward.

Bill Loveless (00:11:53):

Jack, I’d like to follow up on that. I think you make a good point in terms of how long permitting reform has been discussed. I would suggest going back even 20 years, I remember Energy Policy Act of what, 2004, 2005 did some of this stuff, right? What has changed, Jack, that makes the sponsors think this trade is worth making now?

Jack Andreasen Kavanagh (00:12:17):

Yeah, I mean, I think that there is a unique political moment right now. And so there are, first, as Robin and Noah have both mentioned, electricity demand is growing for the first time in a generation. Prices have become more of an affordability issue, a political issue, which is why you see affordability in the name’s title. Second, there has been a history of both political parties blocking different energy projects. You obviously have the Keystone XL pipeline, you have the revoking of the wind projects that this administration have done. And so permit durability and certainty is now in the domain and interest of both parties to be able to move forward.

(00:13:06):

And the climate strategy and political climate has changed in the sense that with the One Big Beatiful Bill Act scaling back some of the IRA credits, there are incoming fewer incentives for renewable energy and energy technologies. And so this bill allows for some of the soft costs associated with things like permitting and construction to be removed from those projects, allowing it to be built faster. And so I think even compared to previous permitting reform discussions, you have a unique political moment where it is in the interest of both political parties to come to a deal, which is why I think you have a bipartisan piece of legislation by important members of the Senate coming forward.

Bill Loveless (00:13:53):

Robin, let’s start with the basics. What does the National Environmental Policy Act actually require and what is the core problem BAAJA’s supporters believe it causes for energy projects?

Robin Millican (00:14:08):

Well, first of all, Bill, kudos to you for the innovation of calling it the BAAJA Bill. The popular nomenclature is BAAJA, but I like your version better. Yeah, yeah. Just think Taco Bell. I’m not personally a huge fan of Taco Bell, but there’ve been a lot of good memes out there on it. But you’re right, one of the cornerstone elements of the bill, core centers of gravity is changes that it would purport to make to the National Environmental Policy Act. In the way of a little bit of background on NEPA as the acronym goes, it was enacted in 1970 at a period of time where a lot of other core bedrock environmental laws were also coming into being the Clean Air Act among them, but also you have the Endangered Species Act, the Clean Water Act, et cetera. And what NEPA is supposed to do is organize all of the reviews for those more substantive statutes and provide efficiencies because you don’t want each agency doing its own thing, not coordinating with other agencies, having a proliferation of more paperwork.

(00:15:20):

And so NEPA is a process law meant to provide for those efficiencies and give direction to agencies to work together. It also, just in the way of what it covers, pertains to things that are defined as major federal actions. There have been some disputes about what counts as a major federal action over the years, but it’s everything from projects on federal land to projects that receive financial support from the federal government. So those are the sorts of things that have to go through the NEPA review process or have historically gone through the process. NEPA, because it’s a process law, it doesn’t require any particular environmental outcome. So the agencies are not putting their thumb on the scale and saying this project must reduce CO2 emissions or not. It’s meant to get those impacts on record and allow for public transparency and engagement. So that’s what NEPA does writ large.

(00:16:20):

In terms of what the bill would do, it would do two things. Because NEPA reviews over the years have gotten very extensive, and we can get into why that is, but in some cases it can be 10,000 pages of documentation for the most extensive review, the so-called environmental impact statement. It also for a period of time was taking four to five years for those reviews to be done. More recently, those reviews are down to about two years, which is a good thing. Nonetheless though, lots of uncertainty on the front end about scope of review, timeline, et cetera. And so what the BAAJA Bill would do is it would place firm deadlines codifying what’s already happened in court decisions and executive actions to say there needs to be a record of decision that’s issued by a certain period of time for environmental review. So that’s one thing.

(00:17:17):

It also narrows the scope of what’s considered in those reviews. So it provides for more what are called categorical exclusions to say if you’re a project where the government has a relatively minor financial stake, doesn’t have a controlling interest, like for example, if you give a project a loan guarantee, it would exclude those types of projects from the review. So those are the types of front end efficiencies that the BAAJA Bill would put into place. And then on the back end, there’s also considerable effort in the bill put toward litigation constraints because that’s the other piece of the NEPA puzzle is because NEPA is a process statute, it’s relatively easier to attack projects under the process issues that NEPA introduces rather than to show substantive harms which only come into place after the project is built. And so if, for example, an agency didn’t do a sufficient review, didn’t address a comment that a stakeholder submitted during the review process in sufficient detail, those types of things can be litigated.

(00:18:27):

What the BAAJA Bill would do is it would place number one, a more narrow statute of limitations in place instead of the current six-year statute of limitations that applies under the Administrative Procedure Act. It would say it’s 150 days to file. It would also tighten standing requirements to say you have to have submitted a comment during the review process. It had to have been a substantive comment and you have to be very specific about what the harms are that you are alleging the project would pose. So that’s another piece. And then perhaps the most controversial part of the litigation reform provisions in BAAJA is the elimination of what’s called vacatur as a remedy. So right now courts, if they find a review is deficient, can issue an injunction, halt or stop a project while a review is corrected. What BAAJA would propose is that is no longer a remedy where the issues concern NEPA reviews alone.

(00:19:33):

Vacatur will still be available as a remedy under substantive statutes where there are violations of the Endangered Species Act, the Clean Water Act, et cetera, but not for NEPA reviews alone. So that was a lot. I’ll stop there. But just to sum up, front end process reviews on scope and deadlines, backend process reviews on litigation, and all of that would amount to a shift away from this sort of precautionary principle approach where we’re asking projects to demonstrate compliance upfront to much more of an approach that punishes substantive harms.

Bill Loveless (00:20:12):

Robin, a survey found that most clean energy developers deliberately cite projects to avoid federal review. What does that tell us about how the current system is working?

Robin Millican (00:20:23):

Yeah, what you’re referring to, Bill, is something that we mentioned in our piece. It’s a study that was done by a firm called Crux where they surveyed, I think it was 50 different project developers and asked them questions about how they sort of perceive the federal review processes. And indeed, as you said, 80% of respondents in that survey said that they deliberately try and avoid federal reviews. What that tells me is I think there are considerable issues with the perceived risk, again, not just in that sort of scope of reviews, and Jack can speak to this because he’s been spending a lot of time on this issue, but also just the litigation uncertainty. If you have six years to file a lawsuit and that lawsuit could add on several more years that a lot of developers just decide that the juice isn’t worth the squeeze.

(00:21:20):

There are really interesting debates about how big of a problem this is. Some of the proponents of keeping NEPA in place as is say things like, well, 99% of projects currently get either a categorical exclusion or go through the less extensive environmental assessment review, so is this really that big of an issue? But what that figure doesn’t tell you much about is because that denominator of how many projects are included does currently include a large amount of routine federal actions, you really don’t get a sense of how much of a problem that 1% of reviews is. So that’s problem number one. And then problem number two is what some call the dark matter of NEPA. Daniel Palkin used this when he was on Columbia Energy Exchange recently. Others have called it the sort of silent graveyard of NEPA reviews. You don’t even know how many projects never even decided to get into the pipeline because they just figured that it would be too onerous.

(00:22:25):

And that’s, again, what I think that crux study speaks to is how many projects just don’t even bother.

Bill Loveless (00:22:34):

Yeah, I want to get to Jack in a minute, but Robin, one more question. The bill bars courts from vacating permits or halting projects over a deficient NEPA review alone and sends challenges directly to the circuit courts. If construction continues while the agency fixes its analysis, is there any accountability left?

Robin Millican (00:22:56):

Well, I’ll be careful here because I’m not a legal eagle expert myself, but I think what it comes down to is really a philosophical question. Again, should projects have to prove that they will comply with laws that are already on the books before they start construction, or do we presume that they will comply and if they don’t, they will be sued? For the last few decades, we’ve certainly been operating under the former regime, which again is sort of a precautionary principle toward energy projects. And without question, BAAJA does affect a major shift there where courts would only, under the revised provisions of BAAJA, be able to tell an agency to fix a deficient review while that project moves forward. So it would happen in parallel going forward. I think in terms of the trade-offs there, again, you’re sort of shifting accountability more toward the substantive statutes where vacatur will still be a remedy where unlawful things happen under the Endangered Species Act, Clean Water Act, et cetera.

(00:24:05):

And so it’s just a different way of imposing accountability. But I do want to be fair in acknowledging that that is a very substantial change, and it would mean that some projects can move forward even when reviews might be deficient, and that’s just a trade-off that we have to figure out if we can live with.

Bill Loveless (00:24:25):

Jack, BAAJA, and note Robin, I pronounced it properly, BAAJA reaches beyond NEPA into the Clean Water Act and the Endangered Species Act where states and wildlife agencies hold real leverage. Does the bill shift power away from those actors, and what are the reasons and impacts of doing that?

Jack Andreasen Kavanagh (00:24:45):

Yeah, so I think if you’re looking at this broadly across the Clean Water Act and the Endangered Species Act, it certainly shifts some of the leverage that the states have in both of those cases. I think in taking the first one, the Clean Water Act, the main provision here is around what’s called Section 401, Section 401, which allows a state to certify, condition, or deny any federally permitted project that may result in a discharge into navigable waters and certain connected streams and wetlands. And so under that Section 401, states generally have leverage in two ways, by denying certification outright or by attaching conditions in which a permit must adhere to those conditions in order to be approved. It’s important to note that denials of via Section 401 are relatively rare of about 7,500 state decisions from 2023 to 2025. Less than 1%, about 0.8% were denials and 67% were approvals with conditions associated with them.

(00:25:56):

For the changes, this bill allows a denial only on a clear and convincing evidence that no condition would work, and it’s important to note that the conditions must be the least burdensome option. Second, and unique to two pieces of energy infrastructure for interstate gas pipelines and transmission lines, the review under section 401 is capped at nine months and is also limited to direct discharges. So you’re looking at a more proximate area of the discharge and not a more expansive one.

(00:26:32):

Fundamentally, the reason that states used 401 as a veto over interstate pipelines on grounds… Sorry. The reason that few states use 401 as a veto over interstate pipelines on grounds beyond water quality, once FERC, for instance, on the transmission provision has backstop authority, 401 would become the last way for a state to block an interstate pipeline or interstate power line rather. And so the bill closes that path as well. I would say on the Endangered Species Act, this is different than the Clean Water Act, and it’s fundamentally about speed. So the formal consultation under the ESA drops from 90 days to 60 days. Challenges that may go to the DC Circuit Court are within 150 days. And the jeopardy standard, the ability to claim that a project is inflicting jeopardy, that remains untouched. And when we looked at a lot of this data, and I did in a tool we can talk about later, the median formal consultations under ESA generally run about 60 days.

(00:27:47):

And so this is a constant theme amongst the BAAJA Bill is that the changes made in the bill really affect the worst cases, the worst outcomes, the ones that receive an onerous amount of delays and challenges associated with them. And when agencies hit timelines, the relative savings under BAAJA are much less under the analysis that we’ve done than if agencies always hit their timelines. But the point of bringing up BAAJA’s, we don’t always hit timelines on things, and so we want to make sure that BAAJA puts forward a clear pathway for those projects to receive an answer.

Bill Loveless (00:28:26):

How do tribes fare under this legislation? Is their protection any better or worse? I mean, there’s the law, the National Historic Preservation Act, which is important to Native Americans.

Jack Andreasen Kavanagh (00:28:42):

Yeah, so this bill has provisions in it associated with the NHPA, as you noted, which it creates a official federalist of district sites, buildings, and structures deemed worthy of preservation often because of cultural or religious circumstances. There’s just an advisory council on historic preservation. This is an independent federal agency to advise the president in Congress and oversee historic preservation and policy. Related to NHPA, the main provision you’re looking at here is what’s called Section 106, and this is procedural by nature. So before approving a project, a federal agency has to take into account the effects on historic properties and then give the advisory council on historic preservation a chance to comment. There is no veto associated with this consultation. To date, about 120,000 projects are reviewed each year, and about 2,000 of those result in a finding of adverse effects. There is no deadline for this consultation in the statute, so to your question about the effects of this, Within staff at state and tribal preservation offices, a review can run for several years in this case.

(00:30:07):

And I would say that there are provisions within this bill within BAAJA that can help with that sort of staffing. There’s 20 million a year as authorized for tribal databases that the tribes themselves control. The Historic Preservation Fund, which can be used in these consultations, is authorized at up to $200 million a year. Tribes are named themselves in Section 106 for the first time, and culturally significant sites get a statutory definition within this bill. Now, that being said, there are trade-offs here. To your question, consultation on identifying historic properties becomes optional and agencies still have to request and use information the tribes send within 30 days, but anyone missing that 30-day window, any party can then be bypassed if they’re not filing comments within that 30-day window. And then an agency can decide to close one of these reviews under NHPA in two ways. By finding the harm won’t make the property ineligible for the national register or by deciding at its sole discretion that other considerations outweigh preservations.

(00:31:19):

This bill also excludes most visual effects. And then the court remedy that you would go through under NHPA under BAAJA is sending the decision back to the agency itself rather than longer litigation. So the tribes, looking at this, there is a sort of firmer floor, lower ceiling sort of situation as I’m viewing the bill and also important to note, as Robin said as well, and all of us on this pod, not lawyers and understanding that there are different interpretations of this. So the role of tribes is better protected against regulatory rollbacks, but they have less leverage within a single review. And so I think that when I’m looking at the NHPA provisions, it’s important that the 20 million a year authorized for tribal data sets and the historic preservation fund that gets 200 million authorized a year is adequately used so states and tribes have the resources that they need to be able to protect culturally relevant sites.

Bill Loveless (00:32:26):

I want to talk a little bit about affordability in the economy. Noah, as you’ve pointed out to us, a group of very prominent economists recently signed a letter endorsing the bill. Among those who signed it were Janet Yellen, Steve Mnuchin, Michael Pompeo, Leon Pineda. Of the benefits they point to such as lower cost jobs, reliability and growth. Well, first let me ask you, what do you make of their case, the case they made in this letter that’s getting a lot of attention?

Noah Kaufman (00:33:00):

Again, it points out that there is this broad consensus where you get together this group of economists who would agree on almost nothing when it comes to economic policy. These are people from all across the political spectrum, and yet they all seem to agree that when it comes to these process issues for energy infrastructure, the pendulum has just swung too far in such a direction that I read this as saying prominent economists believe that this is having a real effect on the US economy and it’s a drag. And they believe that number one, it’s worth doing something, the types of things that are outlined in this bill. And number two, the very real trade-offs that Robin and Jack have started to go into are not objectionable enough that for any of them it rises to prevent them from endorsing it. So it’s interesting because I think some people see this group and say, “I so strongly disagree with this person who is endorsing this bill that it cannot possibly be good.” But I think everybody who I see at sign this, my sense is that they’re looking at this strictly from an economic perspective and that reflects a consensus that just exists right now that we’ve gone too far in one direction.

Bill Loveless (00:34:33):

Well, of the benefits they point to such as lower costs, jobs, reliability and growth, which do you think is strongest and which depends most on factors outside the bill?

Noah Kaufman (00:34:43):

Honestly, I don’t know because I mean, Robin mentioned the dark matter issues. I don’t think we know the degree to which the specific barriers being addressed in this bill are the ones holding back the energy infrastructure. And the only way we’re going to figure that out is to run the experiment. So I think it’s pretty safe to say what the bill would do is sort of unleash more supply. We’re going to get more energy infrastructure, the wheels will turn faster. But other than directionally saying, “Yeah, you have more supply, that should push down prices over time, that should lead to greater domestic competitiveness and the jobs that come with it,” I think it’s easier to make those directional claims than it is to say anything about the magnitudes of them.

Bill Loveless (00:35:33):

Well, Robin, the supporters sell this bill on affordability. The analysis that you and your colleagues there have conducted calls the gains plausible but conditional and says they could arrive well after the cost due. Why might households pay before they benefit and what would have to be true for the benefits to arrive on time?

Robin Millican (00:35:58):

Thanks, Bill. Well, if you’ll indulge me for a moment, I did want to say one more thing about that letter, which I also thought was very interesting.

Bill Loveless (00:36:05):

Absolutely.

Robin Millican (00:36:06):

In that it was both economists and national security folks. And one of the things that that letter mentioned is when we passed the CHIPS and Science Act a couple years back, which was meant to invest in indigenous capacity for things like semiconductor manufacturing, the bill waived NEPA by statute, just said, “Does not apply. We want to move quickly. This is important. It’s an essential national security objective that we have some capability if there is a future Taiwan scenario to still get access to semiconductors here in the United States.” So just wanted to double click on that because it speaks to we do have this option where we decide it’s important enough. And I think arguably for energy infrastructure, we’re getting there very quickly. Anyway, back to your question though, Bill, on how we characterize the potential affordability benefits in our piece, what we said was basically that we need to be realistic about the fact that the energy system takes time and we’re kind of in this very unfortunate moment in time where we’re short supply in some places.

(00:37:17):

We’re also trying to replace all this aging infrastructure. You have inflation in the supply chain, tariffs also raising equipment costs, and there just probably aren’t that many good answers, especially at the national level for addressing those near term affordability challenges. And in a way you have to spend money to make money where we have to invest in things like more poles and wires in order to get to that better situation at the end of the rainbow years down the line. What will happen is as we decide to invest more in new infrastructure that will get added to the rate base that will get passed on potentially to households depending on how the cost allocation mechanism works. And so yeah, I think we wanted to make

(00:38:04):

Sure that people have the right expectations about what something like BAAJA can even deliver. And again, this is not a critique of BAAJA. I just think these are circumstances that are inherent to the system today. I do think some of the things that are in BAAJA are very important though. Number one, we do need to build more, not just generation, but transmission lines period, in order to reduce costs over the long run. So that is fully endorsed and accepted as a premise. Number two, it has very good provisions in the bill around trying to foster adoption of grid enhancing technology. So things like dynamic line reading, advanced conductors that studies have shown can do things like reduce congestion costs. There’s one estimate out of the proceedings of the National Academies of Sciences that found that advanced conductors could save something on the order of $180 billion by 2050 if deployed more widely.

(00:39:11):

And so things like that can make a difference even in the short to midterm if we make better use of the grid as it exists today. So I think that’s very good that that’s in the bill. And then number three, just coming back to that cost allocation point, there are provisions in the bill that reflect the sort of Ratepayer Protection Act sort of approach that would assign greater costs for grid upgrades to data centers, for example. So that can also help blunt some of the impact of the investments that we’ll need to make to the grid on households. So all in all, it’s likely net good. Who am I to question Janet Yellen, if she says that this is a good thing for energy costs? But we should just be realistic about when those cost savings might materialize.

Bill Loveless (00:40:01):

Yeah, and it’s important consideration these days because affordability is such an enormous concern, right? We hear it all the time and the election’s going on right now and it’s a cause of concern and worry among everyone from the people who consume energy to those who supply it. You mentioned transmission, Robin. What changes or what is different this time compared with earlier attempts to enable transmission from happening, new transmission?

Robin Millican (00:40:35):

Yes. Well, transmission is also like permitting reform more broadly, sort of Lucy in the football situation where it feels like we keep getting closer to doing something big and then we pull back because it’s really hard. It is true that building linear infrastructure in general is uniquely difficult and unlike natural gas pipelines where there’s stronger siting authority, eminent domain authorities, et cetera, at the federal level, you don’t have that for transmission lines. And there have been attempts over the years to try and give FERC what’s called a stronger backstop siting authority where if a state delays or denies a permit, then they can step in. But that was predicated upon the Department of Energy doing a transmission needs assessment study and then identifying corridors where the transmission line should go. And you’re also relying upon a developer coming forward and proposing a line and being willing to roll their state regulators and their utility partners potentially.

(00:41:38):

And it’s just in practice, it’s become a very unworkable process. And in fact, that’s why that backstop siding authority has never been used. What’s in BAAJA would really improve on the current situation where there’s sort of a patchwork of authorities and a patchwork of things that FERC has done where I categorize the changes in four linked pieces. Number one, it codifies what FERC has already done to direct the RTO ISOs to do regional planning. It goes further to also require inter-regional planning, which FERC has wanted to do, but is a little bit more difficult. So that’s one piece is durable regional and inter-regional planning. Number two is there is a more usable federal siting backstop, and we can get into what that authority looks like where it’s still an applicant-driven process. You still have to have developers come forward, but you can also sort of parallel process what’s happening at the state level with the federal level and it removes that basically corridor designation step in the Department of Energy.

(00:42:49):

So that’s very good. Number three is it provides for clear cost allocation rules specifying what costs and benefits matter and who pays. And then number four, as already addressed, it also includes incentives to get more capacity from existing infrastructure. There are also some really good things about it where in addition to doing regional and inter-regional planning, it would direct a process where you’re trying to put load together both on the demand side and the generation side, and it would do things like create planned interconnection locations where there are upfront estimates of connection costs that are published that developers can look at and figure out where they might want to propose a project.

Bill Loveless (00:43:43):

For all the attempts in the past that you mentioned to try to clarify and enable transmission to continue in terms of what happens at the federal level, many of the delays with projects do not involve federal permitting at all, right? It’s interconnection queues, state siting, local opposition. How much of the real grid bottleneck does this bill reach?

Robin Millican (00:44:11):

Sure. Well, unquestionably it would do huge things for the grid, but it can’t address every grid bottleneck because there are still many choices that are still up to the states. I do think one of the most important steps that it would take is to do that integrated planning where regions would forecast generation, transmission and demand together, and then do that step of publishing locations where new generation can connect with more sort of predictable upfront costs. But one of the big issues is just the interconnection process in general where right now getting in line, you expect a five-year plus delay. FERC has tried to get at this issue with its order 2023, which require things like cluster studies where instead of looking at each project individually, look at projects together. But there’s a lot that hasn’t happened in the way of implementing that rule. And so what BAAJA would do is it would codify that rule to do cluster studies and also require meaningful non-refundable financial deposits to get in the queue where you essentially are just creating more skin in the game for developers.

(00:45:32):

So I think that would really go a long way toward getting projects off the waiting list sooner. Also, what the bill does for better grid data and use of automation, mandating use of AI to do things like standardizing those cluster studies, doing permitting reviews more quickly. I think all those things would be very good. And then it does things like it would exempt some grid upgrades where they occur in existing rights of way. So all those things are great, but at the state level, that’s where you’re still going to have issues with state and local project approvals. You’re also still, as we already discussed, going to have supply chain constraints. There will still be financing challenges. So all in all, I would say these are all very meaningful reforms to transmission planning, permitting, paying, as well as the interconnection queue, but there are still some state level challenges as well as broader economic issues that you have to grapple with.

Bill Loveless (00:46:38):

Yeah. And one other thing, Robin, data centers, the bill creates a rate payer protection flaw meant to keep data center costs off household bills. Does it accomplish that? And who decides, FERC or the states? I mean, could charging data centers too much push them to build their own generation instead?

Robin Millican (00:46:58):

Yeah. Well, the way I would characterize it is the bill does establish an important floor where under BAAJA for covered computational loads, which it defines as loads of more than 20 megawatts, utilities would not be able to pass on the incremental costs of serving those loads. That would include generation, storage, transmission, distribution. So utilities would not be able to pass those incremental costs onto other customers. It also requires things like financial assurances and would impose things like exit fees for costs to be covered if data centers end up exiting early, which is a big concern with stranded assets. Separately, FERC would also be directed to revise transmission pricing so that large loads pay not just embedded costs, but also incremental transmission costs as well. But it’s important to note that there are limitations in the bill. It mainly addresses the utilities’ direct costs, whereas in markets like PJM, data centers can also raise household bills through wholesale energy and capacity prices, which BAAJA’s provisions do not address.

(00:48:18):

The other thing, Bill, that you asked about is there sort of a balance that we need to strike? I would say yes, where because we are asking data centers to pay embedded and incremental costs and that those costs might exceed what in fact the infrastructure costs, we need to be cognizant that we’re not imposing so much of a burden on data centers that they just decide it’s easier to build behind the meter. I know that’s perhaps a controversial thing to say because nobody loves data centers right now, but from a shared investment or shared infrastructure perspective rather, we want the investment that data centers can bring to the bulk grid. It would make it lower cost for everybody to make some of the improvements that we’ve been talking about. It’s also the case that the more data centers go behind the meter and they’re building things like dedicated natural gas, the worse from an emissions perspective it might be.

(00:49:16):

There’s some modeling out there that speaks to this point. And so I do think that we want to try and keep data centers on the grid by making sure that costs are commensurate with what they’re actually imposing on the grid and that we also do things that in fact probably matter more to the data centers than even costs like making sure that they can get out of the interconnection queue quickly. Speed to power is everything. They’re willing to pay a lot if they can connect quickly. And so in totality, I think all the things that BAAJA does will achieve that balance, but it’s something that we all need to keep an eye on.

Bill Loveless (00:49:51):

I’ll talk a little bit about climate, Noah. How do you think this bill affects climate progress both in the near term and over the longer run?

Noah Kaufman (00:50:00):

I mean, BAAJA is not a climate bill by any means, but it’s major energy legislation and climate is a major energy priority. So it’s definitely worth thinking through what it means for climate progress. The way I suggest to policymakers that they think about this is to ask how the bill adds to or subtracts from the climate policy portfolio that they want to see in the future. So I don’t think the bill has the centerpiece of that portfolio. If you imagine that portfolio is a Thanksgiving dinner, the turkey and the stuffing are going to be policies that address emissions. That’s why we need the government to intervene on climate change. Your listeners know we put greenhouse gas emissions up in the atmosphere. They cause harms. Markets don’t reflect that. So we need some kind of government action to address that externality. We don’t have those emissions focused policies at the federal level.

(00:51:08):

Today, we’re not going to have them anytime soon with or without this bill. But BAAJA does address some really important barriers to building and deploying clean energy. We’ve talked about this already, but it has provisions that make it easier to build long distance transmission and geothermal and to deploy technologies like wind and solar and batteries and nuclear and carbon capture at scale. And anyone who has seen a deep decarbonization scenario knows how critical that is, the ability to put steel in the ground. It’s just core to those strategies. These are the mashed potatoes and the cornbread and the pumpkin pie, very important parts of the Thanksgiving meal. And to me, that’s why the bill as a whole is clearly a step forward when it comes to climate progress. Some people disagree, and if I could, just to steel man their case for a second, I think what they would say is we need to decarbonize our energy system very rapidly.

(00:52:19):

The world has committed to doing that, and this bill reflects a vision for the US energy system with a perpetual build out of fossil fuel infrastructure that is arguably just not consistent with that decarbonization vision. So they were invited to the Thanksgiving meal and they’re asking where the turkey is. And I think that’s probably a reasonable point for climate advocates to make. Again, I would still come back to this framing of what does the bill add and subtract to the climate policy portfolio you want going forward? And I just don’t see it subtracting anything of real value to that portfolio. What it does is it makes it harder to flow or block fossil fuel infrastructure projects. And I think we know at this point that those efforts are, number one, really not effective at moving the needle when it comes to global production or emissions.

(00:53:23):

And number two, they impose real costs on people and workers and communities. And in my experience in these communities, really piss off a lot of Americans in the process. So while I think there’s reasonable arguments to oppose this bill, I just don’t see climate as one of those reasons. If your choice is between the mashed potatoes or going hungry, you eat the mashed potatoes.

Bill Loveless (00:53:48):

You go for the mashed potatoes with some butter and salt.

Noah Kaufman (00:53:52):

Right.

Bill Loveless (00:53:53):

Well, Robin, critics warn that the bill creates forever permits that tie the hands of future administrations. Is there merit to that and where would you tighten the language in this bill?

Robin Millican (00:54:06):

Yeah, I mean that’s one of the big sort of debates that’s been happening among the proponents of the bill and skeptics is this forever permits issue. In my estimation, there is a real issue here, although I think the term forever permits overstates what the bill actually does. I do think what’s good in the bill is I do think there’s merit to having tighter constraints around what the executive branch can do to arbitrarily reverse a lawful approval after developers have invested considerable upfront capital. I think that’s sort of a thing that we could all agree on on a bipartisan basis because this has happened in both Republican and Democratic administrations. And what’s in the bill in the so-called Section 1401 is it would restrict things like revocation, suspension, amendment or interference with covered permits, but it would make it subject to specified exceptions such as fraud, a material breach, a court order, or certain urgent harms based on new information.

(00:55:20):

So there are some sort of escape valve situations in the bill. I do think the problem that is not, I don’t think it’s not the result of some conspiracy to create this forever permit regime. I think it’s just inartfully crafted language or if I’m being more charitable, just like everyone’s working really hard and sometimes it’s difficult to engineer a solution like this. I think the concern is that as it relates to section 1401, there’s language in there that says basically the executive branch can’t interfere with a project operating at full capacity. But the way it’s worded, and again, I’m not a legal expert, but other folks like Michael Gerard have put out analysis on this topic. The way it’s worded is you could interpret it to say that things like regulations of methane, air pollution, noise, worker safety would be things that interfere with the project when operating at full capacity.

(00:56:27):

And so there’s a concern that the language is sort of a regulatory immunity, an inadvertent regulatory immunity provision. So that’s thing number one. And then the other section, which is more the teeth of the permit certainty provision, section 1401. So that’s pretty complicated. Won’t get into all the details there, but basically it allows developers and project sponsors to bring court claims based on if they can demonstrate that there’s a pattern of disparate treatment measured by a five-year baseline where a project was delayed or denied disproportionately. And that section also allows for damages to be paid 50 to 100% of construction costs if a court finds that those claims hold up. There’s some issues with that provision as well in that it doesn’t define what makes a denial improper. And so if policy changes where there are different safety considerations for a particular technology down the line or even changed economic conditions, it’s hard to distinguish between what’s a sort of disparate treatment thing versus a legitimate change in policy.

(00:57:53):

So that’s kind of problem number one. And then also just in terms of the damages provision, I don’t know personally that it makes a lot of sense to guarantee 50 to 100% of construction costs subject to an uncapped sort of not subject to appropriation situation is good policy. I think just tying damages to actual demonstrated losses feels like it would also achieve the deterrent effect without exposing the government to massive financial penalties, even if those situations are very unlikely. So that’s another thing that I would flag warrants consideration.

Bill Loveless (00:58:34):

Jack, the permit certainty provisions respond to the administration’s actions against offshore and onshore wind, and those actions are still unfolding. How did current events change the politics of the bill and Democrats’ willingness to support it?

Jack Andreasen Kavanagh (00:58:48):

Yeah. Well, I think the bill as it stands has bipartisan backing in the Senate and that’s how it was introduced and it is fundamentally a compromise. And part of that compromise, whether it’s this bill or any deal you’re making, is a good faith effort on both sides of the deal. And so I think that for this to continue forward as we are a week, less than a couple weeks away from an actual vote on BAAJA, you’ll need to see the good faith on both sides of the negotiating table. And certainly Democrats have already noted the continuation of this administration’s efforts to block offshore wind project as being not a good faith negotiation tactic in this process.

Bill Loveless (00:59:43):

And Senator Capito, the chair of the Senate viral committee, one of the co-sponsors of the bill, wants this to be the first vote when the Senate returns after the November 3rd elections. But the 2024 deal, there was a 2024 deal on permitting. Hid after the election. How realistic is 60 Senate votes plus the House in a short lame duck window? And what are the House’s roots? And lastly, would Trump sign it?

Jack Andreasen Kavanagh (01:00:12):

Yeah. Well, I think as we talked about at the beginning of this, there was a unique political moment here where both sides are motivated to get to a deal. So I am not a person to make political predictions on what is going to happen, but I think that both in the House and the Senate, Democrats and Republicans are working towards what changes need to be made in the bill to get everyone comfortable with it and to get the votes across. And so we’ll see. We’ve got a mountain of time in DC years until this bill gets to a vote and there’s going to be a lot that goes on between now and then. I think if you were to take the other view of this in that there have been suggestions of potentially waiting, seeing how the midterms go and then making a run of this bill under a new Congress, I think if you lay out just sort of a logic tree of what would have to be true or what would need to be true to expect a permitting bill pass under a new Congress is, this idea has largely been proposed by some members of the Democratic Party.

(01:01:23):

You would have to believe first that the Democrats will win the house and the Senate, so they will have total control of the Congress. If that does happen, you then would have to believe that you have 60 votes. So you would need the margin of victory if it was in the Senate, the Democrats would not have 60 votes of just Democrats. And so you would also need Republicans to be able to vote on the Senate side of this. So you would need a bipartisan deal. Then even if that was true, you would have to believe that President Trump would sign it if it was a bipartisan piece of legislation and went through. And then if you’re willing to even push it out even farther, which has frequently happened in permanent reform, it’s like let’s wait until the next large scale opportunity. In this case, what Democrats are talking there about is a trifecta in 2028 where they control the presidency, the House and the Senate.

(01:02:13):

And then you again would have to believe that you have 60 votes in the Senate, whether that’s entirely on the Democratic side of things or through a deal with Republicans, getting rid of the filibuster withstanding, I won’t bore folks with the political theory of that. But then if you were to wait, you would also have to believe that you could come to a deal, that deal would pass and then be administered. And by that time you have essentially lost three years as opposed to this deal because you have two years of waiting and then at least a year of the agencies implementing the rule changes. And then also we have historical precedent of Democrats having a trifecta and not passing permitting reform under that as well. So I’m not here to say which one I think is more likely or not, but those are the things you would have to believe would be true in order to, I think, credibly make the claim that Democrats could wait until there is a “better deal.”

Bill Loveless (01:03:15):

Jack, there’s a lot to hear we’ve discussed and so much when it comes to this legislation, but one big issue is how would we know if the bill worked? I just want to mention, you’ve just completed an interactive tool that shows about permitting time goes today. Could you mention just briefly what your findings from that tool indicate? Because I think that’s an important measure that we could apply to determine would this bill work?

Jack Andreasen Kavanagh (01:03:46):

Yeah, absolutely. And so I would encourage folks to go to CGIP’s website and use the interactive tool that we’ve put together. But the sort of elevator pitch for the tool is that I looked at 144 different projects, 141 of those are historical and have gone through the entire permitting process. Three of them are actually still currently in the permitting process. Of those 144 projects, I looked at gas pipelines, geothermal, onshore wind, offshore wind, solar, and transmission, and looked at how those projects fared in the permitting process under the status quo and given the changes proposed in BAAJA, how they would’ve fared under BAAJA. And so the high level takeaways are that you see the most savings in the bad cases, bad cases where deadlines are not met, there are post permit legal challenges associated with these. So the situations in which BAAJA is proposed to fix things, by this analysis, it would fix things or it would on these previous projects.

(01:04:54):

Transmission has some of the largest gains in timeline savings associated with it, and that’s largely due to the FERC authority to cite the transmission lines if states don’t act on them.

(01:05:08):

It also largely shows that today’s deadlines of course exist but aren’t enforced in the way that they’re written. So NEPA has a required environmental impact statement within two years and a bipartisan policy center analysis found that only 39% of those EIAs finished since they had met from 2023 to 2025. So I think a big takeaway from this is the bill is largely set up to speed up the ability for us to build energy infrastructure and what we know of past projects and under the current BAAJA provisions, this would do that. It wouldn’t do that for all projects. It wouldn’t do that… Every single project is unique in the way it’s set up. So this tool is not made to say you can apply it to any individual project. It’s looking at the totality of those projects, but we would see faster timelines across some of these.

Bill Loveless (01:06:07):

And I would encourage people to take a look at this. It’s just fascinating to play with and see what the implications are. Okay. Before we go, quickly, if you could change one thing in the bill before a vote, what would it be? Robin?

Robin Millican (01:06:23):

Well, I think I spoke to the couple things that I would encourage staff to take a closer look at in the permit certainty provision. But I will say on the whole, I think this bill is fantastic. I think it does a lot across the dimensions that we looked at in terms of affordability, security and reliability, emissions reductions. We want to deploy clean energy at scale, clean energy faces, greater barriers than fossil, which is relatively mature as an industry in terms of how we currently extract and use fossil fuels. So I am not making my demands categorical. I think it’s a really great bill. And if we saw some tweaks to those provisions, I think it would be even stronger.

Bill Loveless (01:07:10):

Okay. Noah?

Noah Kaufman (01:07:11):

Can I add a carbon tax? Senator Whitehouse, we would love to add a carbon tax.

Bill Loveless (01:07:15):

Why not?

Noah Kaufman (01:07:16):

There’s no shortage of things that I personally would love to see in a bill like this. And I just want to, plus one, what Robin said about the permit certainty provisions. I mean, I haven’t declared myself not a lawyer yet, so I’m not a lawyer, but I read those sections and some alarm bells went off in my head where I just think there’s some potential for unintended consequences there. And I think creative presidents are going to find ways to veto projects they don’t like. So I question some of that, but I also, I’m cognizant that this is a delicate compromise that was put together and I don’t understand all of the political dynamics it took to get there. So I’m not going to be pounding my fist on the table for anything.

Bill Loveless (01:08:03):

Last word goes to Jack.

Jack Andreasen Kavanagh (01:08:05):

Yeah. Well, I think from a broad angle, I would say that I think that any situations where deadlines are shortened and we’re relying on state agencies or tribal organizations in order to make a decision that those agencies and tribes should have the adequate resources available to them to be able to make a full decision. And so there are provisions in this bill that does that, but if I was to look at something, I would make sure that those are concrete and that states and tribes have access to those resources. And then jumping on to Noah’s point, I would say that any changes that need to take place in order to get this bill over the finish line and for both sides to come together and negotiate and work on something in good faith one another are changes that I can support because I think there is undoubtedly a need to build energy infrastructure faster in this country and such that this bill and future changes to it would help us do that. I think that would be incredibly valuable.

Bill Loveless (01:09:06):

Well, it’s an incredibly important issue to be talking about today and impressive that it’s gone this far. We’ll see what happens. Robin Millikan, Noah Kaufman, Jack Kavanaugh, thanks for joining us today on Columbia Energy Exchange to discuss this.

Robin Millican:

Thank you, Bill.

Jack Andreasen Kavanagh:

Thanks, Bill.

Noah Kaufman

Thanks, Bill.

Bill Loveless:

Thank you again, Robin, Noah, and Jack, and thank you for listening to this episode of Columbia Energy Exchange. The show is brought to you by the Center on Global Energy Policy at Columbia University School of International and Public Affairs. The show is hosted by Jason Bordoff and me, Bill Loveless. Mary Catherine O’Connor, Dara Diamond, and Kyu Lee produced the show. Gregory Vilfranc engineered the show. For more information about the podcast or the Center on Global Energy Policy, visit us online at energypolicy.columbia.edu or follow us on social media at ColumbiaUenergy. And please, if you feel inclined, give us a rating on Apple, Spotify, or wherever you get your podcasts. It really helps us out. Thanks again for listening. We’ll see you next week.

Every permitting bill promises the same thing: build faster. The harder question is what the trade-offs are, and who bears them.

That question is at the heart of the Bipartisan American Affordability and Jobs Act (BAAJA), the US Senate permitting deal introduced in September by the leaders of the chamber’s two energy and environment committees.

A new white paper from the Center on Global Energy Policy finds that the bill would make it meaningfully faster and more predictable to build energy infrastructure of all kinds, especially interstate transmission. But those gains come with a cost. Federal approvals would become faster to obtain but harder to reverse. Leverage would shift from states, wildlife agencies and other reviewers to project applicants. Accountability would shift from before construction to after it. For consumers, lower energy bills are plausible but conditional, and could arrive years after households start paying for new infrastructure.

With supporters pushing for a vote when the Senate returns after the November 3 midterm elections, the bill faces a narrow window. It needs 60 votes in the Senate and then agreement with the House.

So who wins and who loses under this bill? What can past energy projects tell us about how the bill would perform? Does it help clean energy more than oil and gas? And can it pass in a short lame-duck session?

This week host Bill Loveless talks with Robin Millican, Noah Kaufman, and Jack Andreasen Cavanaugh, scholars at the Center on Global Energy Policy who contributed to the new analysis along with Vivek Shastry, Tom Moerenhout, Ira Joseph, and Lily Bermel. They discuss how the bill would change environmental review and litigation, what it means for transmission, data centers, and the climate, and what Jack’s new interactive permitting tool shows about where the time savings would really come from.

Focus Areas

By Topics

By Regions

By Type

Initiatives

Programs

Partnerships

Focus Areas

By Topics

By Regions

By Type

Initiatives

Programs

Partnerships

Guests

Transcript

More Episodes

Relevant Publications

Sign Up Today

Subscribe now

Relevant
Publications