Federal energy permitting reform is deadlocked, with state-level and market forces seeking a breakthrough

Despite at least 10 permitting reform bills before Congress, two major federal regulatory initiatives, and a bipartisan House caucus calling for action, progress on energy project permitting reform remains sluggish.

Backlogs in transmission interconnection queues, capacity shortages among system operators, and growing outages from billion-dollar extreme weather events make the need to streamline infrastructure approvals seem indisputable—analysts, developers, and policymakers alike agree.

"Americans are already experiencing the devastating effects of a rising global temperature," the 13 Republicans and 13 Democrats of the Climate Solutions Caucus wrote to House Speaker Mike Johnson (R-La.) and Minority Leader Hakeem Jeffries (D-N.Y.) in November. They said priority should be given to advancing "permitting reform designed to strengthen our domestic energy supply" and expanding "energy transmission."

Outdated environmental regulations, along with their accumulated hundreds of amendments and judicial interpretations, are causing "serious delays in permitting new projects," said Alexander Hergott, president and CEO of the Permitting Institute (TPI). But he added that "real permitting" mechanisms that bring transparency and accountability to project application processing could address "pain points in the process." Observers say proposed legislative and regulatory initiatives—what Hergott calls "window dressing"—are moving slowly.

Areas in Need of Solutions

A 2022 Brookings Institution report noted that all infrastructure projects must obtain permits proving compliance with local laws and zoning regulations. Most state governments also require similar permits, and according to the National Environmental Policy Act (NEPA) website, 20 states require environmental impact assessments.

Brookings reported that large power generation or transmission projects may require regional system interconnection, as well as a federal multi-agency environmental impact statement (EIS) demonstrating broader NEPA compliance.

TPI's Hergott testified to the Senate Budget Committee in July that the design, engineering, planning, and financing of infrastructure projects can take up to three years, and determining the required permits and corresponding issuing agencies can take another two years. Informal pre-application and formal reviews at the federal and state levels can add up to six years, while construction can take three years.

According to Lawrence Berkeley National Laboratory (LBNL), for generation infrastructure projects that began operations in 2022, the median time from "interconnection request to commercial operation" is about 5 years. LBNL energy policy researcher Joseph Rand said this includes local permitting, equipment contracts and delivery, power purchase agreements, and construction.

But the biggest construction obstacle may not be federal review.

"Fewer than 5% of wind and solar projects require comprehensive environmental review or project-specific permits," added David E. Adelman, a law professor at the University of Texas School of Law, in an August study of federal energy infrastructure permitting and review from 2010 to 2021. And a September report from the Natural Resources Defense Council noted that "half of all EIS reviews take 3.5 years or less."

Data show that local opposition, not federal review, is the real obstacle. According to an LBNL developer survey, local opposition led to the cancellation of one-third of wind and solar interconnection applications and half of delays lasting six months or more over the past five years. Cancellations resulted in average sunk costs exceeding "$2 million per solar project and $7.5 million per wind project," and local opposition is becoming more common and expensive, LBNL found.

Although some reforms proposed by federal policymakers target local opposition, most focus on the federal permitting process.

Legislative and Regulatory Reforms

Analysts' consensus on streamlining permitting aligns with provisions in the Fiscal Responsibility Act, signed into law in May. NEPA permitting reforms proposed by the White House Council on Environmental Quality specifically call for implementing the Act's recommendations. One or more of its provisions, including single-agency authority, streamlined reviews, expedited timelines, and community engagement clauses, have appeared in respective bills from Senators Joe Manchin (D-W.Va.), Tom Carper (D-Del.), and Brian Schatz (D-Hawaii), Representatives Raúl Grijalva (D-Ariz.), and Representatives Sean Casten (D-Ill.) and Mike Levin (D-Calif.).

None of the federal bills have emerged from committee, but New York and California have enacted permitting reforms proven effective, according to a November analysis by the Canadian Climate Institute.

New York's 2020 Accelerated Renewable Energy Growth and Community Benefit Act placed permitting authority with a single state agency, required permits for large projects to be issued within six months to one year, set a goal of starting construction within two years, funded community participation in the approval process, and required benefits to affected communities in the form of bill credits.

In 2022, California's Assembly Bill 205 implemented similar reforms. It made a single agency responsible for permitting large projects, limited state environmental impact reviews to 270 days, and addressed local opposition through community benefit plans and labor and wage protections.

The Canadian Climate Institute reported that New York's law has been in effect long enough to demonstrate the value of its reforms. Eight renewable projects processed through its central agency "received permits in an average of less than eight months," and "only one project took a full year."

However, the bigger issue is "a complete lack of coordination of permitting across jurisdictions," said James Hoecker, former chairman of the Federal Energy Regulatory Commission, who is now a senior adviser and energy strategist at Husch Blackwell LLP. The Department of Energy is developing highly anticipated federal reforms to provide that coordination.

DOE's proposed Coordinated Interagency Transmission Authorizations and Permits (CITAP) program would streamline environmental reviews and permitting for transmission. It would also support FERC's ongoing reform process to give FERC more permitting authority over needed transmission.

CITAP's two-year timeline for permit reviews would not circumvent state and local reviews, but would make DOE's Grid Deployment Office responsible for coordinating permits across jurisdictions and require "meaningful engagement" with local stakeholders, the office said in August. Its proposed pre-application process could accelerate permitting by demonstrating compliance with federal protections such as the Endangered Species Act and the National Historic Preservation Act, added R.J. Boyle, policy adviser for the Grid Deployment Office.

But observers say significant permitting reform may require more than legislative and regulatory initiatives.

The Importance of Community Engagement

Analysts agree that all proposed legislative and regulatory reforms are necessary. But according to 75% of developer respondents in a 2023 LBNL survey, reforms that foster community engagement significantly reduced project cancellations. Alex Bond, executive director of clean energy and environment at the Edison Electric Institute (EEI), the trade group for investor-owned utilities, said "the more good ideas, the better," because reforms can enable developers to leverage unprecedented federal clean energy funding. The environmental advocacy group Natural Resources Defense Council is breaking from its past stance to agree. "NRDC has historically said 'no' to infrastructure that threatens the environment," said Karen Howe, NRDC's senior clean energy transmission advocate. But shifting to "yes" by pushing for more efficient permitting reform is "a necessary change," though reforms may force "difficult choices," he acknowledged. Howe continued that "where opposition to clean energy infrastructure is growing, it is also necessary to hear local stakeholders' appeals about impacts on their lives." He added that if developers clearly communicate the benefits of their projects, "it can reduce opposition," though "where opponents are well-organized and well-funded, it can slow the process." Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, said environmental laws were designed for "infrastructure like fossil fuel plants half a century ago." Clean energy project reviews "should be different because they don't create the same problems," but "there's no magic formula to solve all permitting delays," he added. EEI's Bond said that's why committing to better reforms and doing more with existing rights-of-way are important alternatives.

New Solutions

TPI's Hergott and former FERC Chairman Hoecker say current federal legislative and regulatory proposals do not provide real solutions to permitting delays, nor do they leverage existing available solutions, such as building greater transparency and accountability into permitting agencies. "CITAP is window dressing for a solution," and federal bills are also insufficient because they all call for accelerating processes but give permitting agencies little incentive to address obstacles, Hergott said. Faster permitting can be achieved without causing more environmental damage "if permitting agencies have absolute transparency on project applications," but currently "coordination and transparency are the exception, not the rule," he said. "A centrally accessible dashboard could create 'real permitting' by disclosing project status and revealing 'where and why delays occur,'" Hergott continued. The resulting "accountability and transparency would drive reform," he said. "Judicial appeals are the second part of reform," because delays should be assessed by courts "within 30 days," rather than litigation stalling development "for two years and frustrating investors," Hergott said. Congress should also update and clarify "outdated environmental laws that are subject to precedents difficult for federal agencies and courts to interpret," he added. There is also a way to limit permitting needs. Hoecker said using existing rights-of-way, particularly networks like transmission easements, highways, railways, and pipeline routes, could avoid the need for permits altogether. The Champlain Hudson Power Express, bringing Canadian hydropower to New York, "is already under construction, including over 100 miles of rail rights-of-way and some highway rights-of-way," Hoecker continued. The SOO Green transmission line, planned to bring Iowa wind power to Chicago by 2029, though not yet fully permitted, "could have taken years without rights-of-way agreements with railroads like Canadian Pacific," he said. Hoecker said existing rights-of-way could be "a major solution to the transmission development puzzle" and "help meet the enormous challenge of achieving net-zero carbon emissions by 2050." But he added that "DOE vision and coordination from federal and state transportation departments" are needed to achieve it. Hergott added that "a reasoned, mature conversation about the problems inherent in environmental regulations is being forced to the surface like a volcano about to erupt." "With once-in-a-generation federal clean energy funding, now is the time to act, whether or not Congress is willing."