Project Development Committee Report

I. NEPA Developments

2024 was a big year for NEPA developments—both in administrative rulemaking and in litigation. In May, the Council on Environmental Quality (CEQ) finalized the highly-anticipated Phase 2 rule overhauling the National Environmental Policy Act (NEPA) implementing regulations. But in November, the D.C. Circuit’s decision in Marin Audubon Society v. Federal Aviation Administration called into question CEQ’s longstanding authority to issue NEPA regulations. And in December, the Supreme Court heard oral argument on the scope of NEPA analyses in Seven County Infrastructure Coalition v. Eagle County, CO, a case examining whether NEPA requires an agency to study upstream and downstream environmental impacts beyond those impacts over which the agency has regulatory authority.

A. CEQ Phase 2 Rule

CEQ’s Final Phase 2 Rule, the “Bipartisan Permitting Reform Implementation Rule” (Phase 2 Rule), went into effect for all actions – beginning the NEPA review process after July 1, 2024. The Final Rule targeted reforms to two Biden Administration priorities that are sometimes in tension: placing more substantive requirements on NEPA reviews—including a more comprehensive review of climate change and environmental justice impacts—and streamlining the NEPA review process consistent with the 2023 Fiscal Responsibility Act NEPA amendments, especially for renewable energy and infrastructure projects.

Major Changes to NEPA Review in the Phase 2 Rule include:

1. Expanded Opportunity for Categorical Exclusions: The final rule implements the NEPA amendments, allowing agencies to establish their own categorical exclusions or adopt another agency’s categorical exclusion. For development projects that require permits from multiple agencies, this change may be particularly useful in reducing permit approval time.

2. Enforceable Mitigation: Where a proposed action’s finding of no significant impact is based on the implementation of the mitigation measure, the final rule requires that the mitigation measure be enforceable and that the agency identify the authority to enforce the measure. Relatedly, where the significance determination is based on the implementation of mitigation measures and the agency incorporates the mitigation measures into its decision document, the lead or cooperating agency is required to publish a monitoring and compliance plan which must include a timeframe for implementing the mitigation measures and consequences for failing to comply with mitigation measures.

3. Increased Consideration of Environmental Justice and Climate Change: The Phase 2 rule implements Biden-Harris Administration priorities to address environmental justice (EJ) and climate change by expanding the definition of “effects” to explicitly include EJ and climate change impacts. Thus, consideration of EJ and climate change effects must occur at multiple stages of the NEPA process. Agencies must also consider conflicting regional, state, tribal, or local plans and policies that address climate change in assessing project alternatives. The final rule also increases emphasis on understanding EJ effects by requiring agencies to identify a “Chief Public Engagement Officer” who is responsible for facilitating community engagement.

4. Page and Time Limits with Court Review: The final rule codifies the page and time limits for environmental review documents. Now, an Environmental Assessment (EA) must be completed within one year and an Environmental Impact Statement (EIS) must be completed within two years. For page limits, an EA must be under 75 pages long and an EIS must be between 150 and 300 pages long.

5. Applicant Drafted Documents: The final rule allows applicants and contractors to draft EISs which the agency will then independently review.

These are just some of the major changes to NEPA review under the Phase 2 rule. A group of states led by Iowa have challenged the Phase 2 rule as unlawful in the U.S. District Court for the District of North Dakota and have asked that the court set aside the rule.

B. D.C. Circuit Ruling Calling into Question CEQ Authority to Issue NEPA Implementation Regulations

In Marin Audubon Society v. Federal Aviation Administration, public interest community groups challenged the Federal Aviation Authority (FAA) and National Park Service (NPS) approval of the Bay Area Parks Plan, a plan to govern air tour operations over four northern California national parks. The groups specifically challenged whether the agencies complied with CEQ’s NEPA regulations in choosing to use a categorical exclusion rather than complete an Environmental Assessment or Environmental Impact Statement on the basis that the new plan would improve environmental impact. In a 2-1 decision, the majority of the D.C. Circuit’s three-judge panel concluded that this challenge need not be addressed because CEQ’s regulations were ultra vires. The court, through Senior Judge Rudolph’s opinion, concluded that CEQ lacks statutory authority to issue regulations implementing NEPA’s procedural requirements that are binding on federal agencies and enforceable by the courts. It explained that, under the principle of the separation of powers, federal agencies have no authority to act absent authorization from Congress. CEQ’s authority to promulgate regulations comes from Executive Order and, the opinion states, “[n]o statutory language states or suggests that Congress empowered CEQ to issue rules binding on other agencies – that is, to act as a regulatory agency rather than as an advisory agency.” Notably, the issue of CEQ’s authority to issue regulations implementing NEPA was not raised by the parties—the court raised this issue sua sponte Both the plaintiffs and federal defendants have petitioned the D.C. Circuit for rehearing en banc.

CEQ has been promulgating NEPA regulations for almost fifty years. Federal agencies own NEPA regulations and procedures are often keyed to and incorporate the CEQ regulations. If the Marin Audubon ruling stands, it sets a precedent calling into question CEQ’s regulations. Reflecting that impact, the North Dakota district court, reviewing a challenge to CEQ’s Phase 2 regulation, required supplemental briefing from the parties on the impact of the Marin Audubon decision for the Phase 2 regulation challenge.

C. Supreme Court Takes Up Case on Appropriate Scope of NEPA Reviews

In December, the U.S. Supreme Court heard oral arguments in Seven County Infrastructure Coalition v. Eagle County, Colorado, a case reviewing the D.C. Circuit’s 2023 opinion that held the Surface Transportation Board (STB) violated NEPA in failing to analyze certain downstream and upstream impacts of a rail line project through northeast Utah. Petitioners and Federal Respondents argued that the D.C. Circuit erred in holding that STB needed to consider certain downstream impacts from oil and gas development as reasonably foreseeable indirect effects of the rail line in its NEPA analysis despite the STB’s lack of authority to prevent, control, or mitigate those effects. During oral argument on December 10, many of the Justices seemed skeptical of the D.C. Circuit’s ruling. However, the Justices did not seem to coalesce around an appropriate standard for identifying reasonably foreseeable indirect effects of a project that must be considered in an agency’s NEPA review. The Court will issue its opinion in late spring/summer 2025.

II. Clean Water Act

For decades, the Clean Water Act (CWA) section 404 program has not included the level of state involvement that Congress envisioned. In 1977, amended section 404 to allow States to administer their own permitting programs in certain waters of the United States. Yet, to date, only three states have assumed the 404 program (Michigan, New Jersey, and Florida), and Florida’s program was recently invalidated by the U.S. District for the District of Columbia on Endangered Species Act (ESA) grounds. In December 2024, the U.S. Environmental Protection Agency (EPA) issued new regulations seeking to “facilitate” State and Tribal assumption and fulfill Congress’s goal of transferring permitting authority from the U.S. Army Corps of Engineers (Corps) to the States. However, EPA’s final rule does not resolve some of the key obstacles to State assumption. In light of these developments, and a recent Supreme Court decision narrowing the scope of federal CWA jurisdiction, few States are likely to pursue assumption of the 404 program in the near future.

A. Background

Today, nly two states have successfully assumed the 404 program (Michigan in 1984; and New Jersey in 1994). Although EPA approved Florida’s 404 program in 2020, on February 15, 2024, the U.S. District Court for the District of Columbia vacated EPA’s approval on the ground that EPA’s approval did not comply with the ESA, including the framework underlying EPA’s approval for reviewing impacts to listed species and authorizing incidental take. As a result, in all but two states, the Corps and states operate separately and often overlap, resulting in duplicative, or otherwise inefficient permitting processes, leading to substantial costs and delays for many permit applicants.

B. EPA Rulemaking

On December 18, 2024, EPA published a final rule to modify the requirements for a State or Tribe to assume 404 permitting, including necessary State program elements, EPA responsibilities (e.g., approval and oversight of assumed programs), and requirements for review, modification, and withdrawal of State programs. According to the preamble, "nearly half of States and a few Tribes have expressed some level of interest in assuming the 404 program.” However, the new rule does not resolve several key legal issues important to States (and applicants within those states), including whether, and if so, how EPA will engage in ESA section 7 consultation when approving assumption of a State 404 program and how applicants will efficiently obtain authorization for impacts to federally-listed species under a State 404 program. Also, although some States have expressed a desire to assume the authority to issue 404 permits for just a portion of applicants (e.g., particular industries, impacts to certain waterbodies, or projects of a certain size), the new rule prohibits such an approach. Finally, the rule does not include a default 300-foot administrative federal boundary, leaving it to the Corps, States, and EPA to negotiate where Corps authority ends and State jurisdiction begins in wetlands adjacent to Corps retained waters after a State assumes the program.

C. Implications for Project Developers

State assumption of the 404 program presents benefits and risks for project developers. In some cases, obtaining 404 permits from State agencies (as opposed to the Corps) could improve regulatory efficiency, centralizing permitting within single, knowledgeable State agencies and potentially reducing costs and delays. On the other hand, federal involvement in the individual permitting process may increase under an assumed program where federal agencies take on extensive oversight or review roles. As Florida’s program demonstrated, applicants may experience delays or difficulties as State agencies hire and train staff to implement the program and seek to address uncertainty surrounding legal challenges to elements of a new State program (e.g., the assumed program’s approach to authorizing impacts to federally-listed species).

Although EPA’s new rule seeks to facilitate the process for States (or Tribes) to assume the program by clarifying a number of procedural issues – such as the process for defining the scope of geographic authority retained by the Corps, the procedure for permitting long-term projects, and the transition period to a new program, the rule does not address key obstacles to State assumption. Moreover, Florida’s recent legal troubles, as well as the Supreme Court’s Sackett decision and the narrowing of federal CWA jurisdiction, has made assumption less attractive and likely reduced developers’ support for and States’ desire to pursue assumption of 404 permitting. Absent more comprehensive efforts by Congress or the agencies to resolve these obstacles and provide a streamlined process, states may be less likely to pursue assumption of 404 permitting in the coming years.

III. Takings Under the Fifth Amendment

A. Fees for Conditional Land Use Permits (Sheetz)

In 2024, the Supreme Court of the United States issued a decision in the case of Sheetz v. County of El Dorado, California. that answered whether legislative bodies must apply the Nollan and Dolan tests for regulatory takings in requiring fees as a condition for land-use permits. In this case, George Sheetz was required by the County of El Dorado to pay a $23,420 traffic impact fee as a condition of receiving a residential building permit. This type of fee was issued as a part of a “General Plan” legislatively enacted by the County’s Board of Supervisors to address the increasing demand for public services resulting from new development. Sheetz challenged the fee as an unlawful “exaction” of money under the Takings Clause. The lower courts ultimately held that the Nollan and Dolan tests apply only to permit conditions issued on an ad hoc basis by administrators but not to a fee imposed on a class of property owners by Board-enacted legislation. On appeal to the Supreme Court of the United States, Justice Barrett, writing for the unanimous Court, held that the Takings Clause does not distinguish between legislative and administrative land-use permit conditions, and thus the Nollan and Dolan tests apply even to those conditions enacted legislatively.

Given this clarity by the Supreme Court, municipal legislatures must now ensure that any legislatively imposed land-use permit conditions satisfy the Nollan and Dolan tests in order to comply with the Takings Clause of the Fifth Amendment. Therefore, legislative municipal land-use permit conditions must bear an “essential nexus” between a legitimate state interest and the land-use condition(s) imposed. If an “essential nexus” exists under Nollan, it must then be determined on an individual basis whether, under Dolan, there exists a rough proportionality in the nature and extent of the relationship between the land-use condition and the impact of the proposed development.

However, the Supreme Court did not address whether a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development. Rather, the Court left this issue to be initially decided by state courts.

B. Carbon Pipelines (Summit)

The Iowa Supreme Court issued an important decision on November 22, 2024, upholding carbon pipelines’ statutory authority to survey private property. At issue in Summit Carbon Sols., LLC, v. Kasischke was whether these surveys constitute a taking under the Fifth Amendment for which just compensation is required. Summit Carbon Solutions, one of three companies currently developing a major carbon pipeline in the Midwest, sought access to survey land along its pipeline route.

Iowa Code section 479B.15 permits a pipeline company, after notifying the landowner, to “enter upon private property for the purpose of surveying and examining the land.” However, the pipeline company must pay any “actual damages” that result from “the entry, survey, and examination” of the property. If a landowner refuses, this pre-condemnation survey “may be aided by injunction.” In Summit, when a landowner refused Summit’s survey, Summit sued for an injunction. The landowner counterclaimed, asserting that the survey was a taking of private property and that Summit had failed to satisfy pre-survey procedures.

The trial court entered judgment for Summit. The court enjoined the landowner from interfering with Summit’s survey access. On appeal, the Iowa Supreme Court affirmed. Ultimately, Iowa’s high court held that survey access does not give rise to a taking of private property under the Fifth Amendment. Rather, the Court held to the contrary that “section 479B.15 is a lawful pre-existing limitation on [the landowner’s] title to the land.” The Court recognized that survey access for a public purpose is a longstanding background restriction on private property which existed in early American law and remains throughout Iowa’s statutes.

This decision is a victory for carbon-pipeline operators. Summit, for instance, plans to install some 2,500 miles of pipeline, though it reports having voluntary rights for much of that distance. Survey rights will help Summit and others evaluate land suitability along their pipeline routes.

IV. Permit Streamlining

Federal and State governments took meaningful steps toward streamlining the permitting process for energy infrastructure projects in 2024. The bulk of the changes occurred on the federal level, but a handful of states also made inroads into the problem of an overly bureaucratic and protracted permitting process. Some of the most significant developments on the federal level include the following:

• Coordinated Interagency Transmission Authorizations and Permits (April 25, 2024)– The Department of Energy (DOE) issued its final rule to establish the Coordinated Interagency Transmission Authorizations and Permits (CITAP) Program. CITAP establishes the DOE as the lead coordinator for environmental review and permitting activities between all participating federal agencies and project developers and reduces the overall timeline to review transmission projects to two-years, which timeline begins to run after the DOE publishes its Notice of Intent to prepare an Environmental Impact Statemet.
• Bipartisan Permitting Reform Implementation Rule (April 30, 2024) – The White House Council on Environmental Quality (CEQ), which oversees and guides implementation of the National Environmental Policy Act (NEPA) across government agencies, finalized the Bipartisan Permitting Reform Implementation Rule. The rule is intended to simplify and modernize the federal environmental review process under NEPA and is one of the several steps contemplated in the Biden Administration’s Fiscal Responsibility Act of 2023 through which the federal government has pledged to invest hundreds of billions of dollars into national infrastructure projects.
• ADVANCE Act (July 9, 2024) – The Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy Act of 2024(ADVANCE Act) supports deployment of new nuclear reactors, both in domestically and abroad, and will be implemented by the coordinated efforts of the Nuclear Regulatory Commission (NRC) and the DOE. Among other things, the ADVANCE Act supports the recruitment and retention of the nuclear workforce, adds flexibility to the NRC’s budgeting process, and requires the NRC to undertake initiatives to improve the efficiency, timeliness, and predictability of application reviews. The Act supports nuclear research and development by classifying the radioactive materials associated with nuclear fusion as “byproduct material” under section 11e.(1) of the Atomic Energy Act, which presents fewer regulatory requirements than the “special nuclear material” classification associated with fission reactors—i.e., uranium, or plutonium. The purpose of this definitional change is to simplify the regulatory framework for near-term fusion facilities, which are experimental, or demonstration projects designed to advance fusion energy technologies, and demonstrate their predictability and scalability for commercial deployment.
• FERC Order No. 1920-A (November 21, 2024) – The Federal Energy Regulatory Commission (FERC) Order No. 1920-A requires transmission utilities to conduct long-term planning for regional transmission facilities over the next twenty years, which must conclude with three Long-Term Scenarios. Generally, each Scenario must anticipate future transmission system needs and determine how the utilities, developers, states, and other stakeholders are going to allocate the costs of those transmission facilities. In both the initial development of the Plan, and any later amendments to it, utilities must incorporate input from state regulators, to ensure that states have the opportunity to identify how each Scenario will affect each state’s ability to comply with its own specific laws, policies, and regulations.
• FERC Order No. 1977-A (October 17, 2024) – Order No. 1977-A addresses the process applicants must use in the limited circumstances when FERC is the siting authority for transmission projects. Specifically, Order No. 1977-A addresses FERC’s backstop permitting authority, creating a Landowner Bill of Rights and an Applicant Code of Conduct that can be used to demonstrate good faith efforts to engage with landowners in the permitting process. The Order requires applicants to develop engagement plans for outreach to environmental justice communities and Tribes, which plans must specifically describe how the applicant will work with Tribal landowners on right-of-way issues. Additionally, the Order requires applicants to submit an environmental resource report that provides information about how the proposed project will impact air quality and environmental noise; FERC may request additional information about environmental impacts as part of its siting process, on a case-by-case basis.
• Energy Permitting Reform Act of 2024 – While not successful, this legislation introduced by Senators Joe Manchin (I) and John Barrasso (R) is worth remarking upon because it would have imposed clear deadlines for agency decisions of completed applications and judicial review of agency decisions, and would have empowered the Federal Energy Regulatory Commission (FERC) to be the central permitting authority for interregional transmission projects that are in the national interest. It was controversial insofar as it eased permitting strains for traditional energy generation sources in addition to renewable energy generation sources.

On the state level, the efforts to streamline the permitting process were many and varied and include, by way of example, the following laws, regulations, and executive orders:

• Alaska Governor Dunleavy issued Administrative Order No. 355, which directs the state’s Department of Natural Resources to conduct a thorough review of current state leasing and permitting statutes and regulations applicable to large-scale renewable energy project development in Alaska, and to hold at least one public meeting with stakeholders, including energy developers. rder articulates goals of lowering energy costs and increasing the state’s global competitiveness by investing in Alaska energy projects and fostering an environment that is conducive to renewable energy project development across the state.
• Colorado passed House Bill 24-1173, which includes improved permitting process for Electric Vehicle (EV) charging facilities and requires the Colorado Energy Office to develop model codes and ordinances for renewable energy projects and to conduct a study of local permitting for renewable energy and transmission projects.
• Massachusetts passed a sprawling new piece of legislation, “[a]n Act promoting a clean energy grid, advancing equity and protecting ratepayers,” which attempts to streamline permitting and siting approvals by consolidating the review process for solar, wind, and battery storage projects. Larger projects (more than 25MW generation or 100MW of storage) previously required approvals from state, regional, and local authorities; those projects now need to seek a single permit from the Massachusetts Energy Facilities Siting Board (EFSB), and the decision must be issued within 15 months. Smaller projects (less than 25MW generation or 100MW of storage) previously had to seek multiple local permits; now those projects need only seek a single permit issued by the municipality, which must be issued within 12 months.
• Minnesota passed the Minnesota Energy Infrastructure Permitting Act, which modernizes the permitting process for transmission lines and renewable energy generation projects. Among other things, the law narrows the definition for high voltage transmission lines and reduces the application requirements. It also adds new exemptions to the certificate of need requirements, including for energy storage systems and reconfigures Minnesota’s Power Plant Siting Act and Energy Infrastructure Act to consolidate the requirements from various statutes into one statute.
• New Hampshire enacted HB 609 ostensibly to streamline energy project siting and provide greater continuity in decision-making. The law does not change the substantive application requirements for siting new energy infrastructure, but it modifies the administrative governance of the decision-making process by reducing the number of members of the Site Evaluation Committee from nine to five and eliminating the use of subcommittees.
• New York enacted the Renewable Action through Project Interconnection and Deployment Act (RAPID Act) to expedite the environmental review and permitting approval for major renewable energy facilities and major electric transmission facilities, to meet the state’s greenhouse gas emissions reduction targets. The RAPID Act creates a unified forum for review and permitting through the Office of Renewable Energy Siting (ORES), establishes a streamlined application review process and new, relatively short regulatory timeframes for initial and final agency determinations. The Act also requires that municipalities receiving notice of an application filing must submit a statement to ORES stating whether the proposed project complies with local laws governing environment, and public safety.
• Oregon passed HB 4015, which is geared towards simplifying the process of siting stand-alone battery energy storage systems. Among other things, the law allows battery storage systems to be built and run without their own site certificates if they are subject to another energy facility’s site certificate.
• Pennsylvania Governor Shapiro signed Executive Order 2024-04, which created the PA Permit Fast Track Program. Modeled on the Federal Permitting Improving Steering Council’s FAST-41 Program, the Program is designed to accelerate the permitting process for critical infrastructure and transformational economic development project. Additionally, the Order directs the Office of Transformation and Opportunity (OTO) to “[d]esign and implement a process to facilitate coordination among permitting agencies and to improve the timeliness, predictability, and transparency of the agency’s review and authorization processes for designated critical infrastructure and economic development projects.”

Not all laws and rules passed this year will have the effect of expediting or streamlining permitting processes. Connecticut, for example, amended its Public Utility Environmental Standards Act, which gives the Connecticut Siting Council jurisdiction over siting various energy facilities (e.g., generation and transmission projects), to add new requirements to the approval process for transmission lines and solar facilities. For example, the law adds requirements to transmission line certificate applications, requires applicants to consult with state legislators and municipal governments for certain applications, increases municipal participation, and adds more factors for the Council to consider before approving an application for a transmission line or solar facility. Likewise, Ohio’s Power Siting Board (OPSB) enacted a final rule governing the siting of power generation, particularly solar, to encourage more public involvement in the siting process, establish new application fees, codify technical siting criteria, and improve incident monitoring, reporting, and condition compliance requirements.