Last month before adjourning for recess and the campaign trail, Senate leaders introduced The Bipartisan American Affordability and Jobs Act of 2026 to reform the federal environmental review and permitting process.
Sponsored by Senators Mike Lee (R-UT), Shelley Moore Capito (R-WV), Martin Heinrich (D-NM) and Sheldon Whitehouse (D-RI), Chairmen and Ranking Members of the Senate Committee on Energy and Natural Resources and the Committee on Environment and Public Works, the bill includes both energy and water provisions under these committees’ jurisdictions.
Specifically, the legislation amends several major federal laws, including the National Environmental Policy Act (NEPA), Clean Water Act (CWA) and the National Historic Preservation Act (NHPA) among others.
In general, NLC supports federal efforts to improve, streamline and modernize the federal permitting process. Local leaders know that a lengthy, cumbersome process for project approval means project delays, lost economic opportunity and potential increases in the cost or availability of labor and materials.
At the same time, it is important for local leaders to have a seat at the table and maintain local authority and decision-making in the project siting and permitting review process.
In general, four permitting reform provisions stand out as important for local governments:
- Redefines “cooperating agency” to include “county, borough, parish, city and any other political subdivisions of a state,” which ensures that local governments are part of the NEPA review process from the beginning.
- Narrows the definition of “major Federal action” that require NEPA reviews so that projects with no or minimal federal funding, projects that replace life-line infrastructure (such as transportation, water and other public works projects) without substantial changes, and more are not subject to the NEPA process.
- Eliminates duplicative reviews. Clarifies that a federal NEPA document is not needed where a state or tribal review, or compliance with another federal law, serves a similar function.
- Provides certainty for non-federal project sponsors that once a project has obtained a federal authorization, the federal government cannot interfere with or prevent the construction or operation of the project, with a few exceptions. Project certainty is important to communities that have worked and planned for years to bring beneficial projects to fruition — investing time and resources to do so.
Here is an overview of other key provisions (PDF) that are important to local governments.
Water
- Extends National Pollution Discharge Elimination System (NPDES) permits from 5 to 10 years. NLC has long championed this policy change to better align lengthy project design, funding and construction timelines with the permit process.
- Requires the U.S. Environmental Protection Agency to follow a notice-and-comment rulemaking process when developing CWA water quality criteria and would subject final criteria to limited judicial review.
- Limits the scope of state water quality reviews under Section 401 of the CWA to water quality requirements only. Denials of certification can be made only when there is no reasonable modification or condition that would make it possible to grant certification without violating water quality requirements. When a state certification of a project is granted with conditions, those conditions must be necessary for compliance with water quality standards, as well as “least burdensome.” This is a preemption of state authority.
Energy
Transmission
- Aims to advance transmission permitting by expanding Federal Energy Regulatory Commission’s (FERC) “backstop” authority to permit interstate transmission lines if the state has not acted within one year or does not approve a project. In doing so, the bill preserves FERC’s existing requirement to consult with affected states, private property owners and other interested persons. This is a preemption of state authority.
- Directs the U.S. Department of the Interior (DOI) and U.S. Department of Agriculture to establish categorical exclusions for reconductoring within existing rights-of-way. Replacing existing wires with higher-capacity conductors can expand the grid while generally avoiding the land impacts and long development timelines associated with a new transmission corridor.
- Requires public utilities to charge data centers the full cost of energy transmission service to avoid passing costs onto residents, small businesses and communities. This language is more stringent than the Ratepayer Protection Act (H.R. 9340), which passed the House last month and would require state public utility commissions to consider a strategy to make data centers pay for their energy transmission costs.
Planning
- Aims to improve grid reliability, affordability and resilience by codifying an existing FERC order for each region to develop a long-term transmission plan and requires neighboring regions to develop a joint interregional plan within two years (exempts ERCOT).
Permitting
- Aims to advance permitting for renewable energy projects by requiring DOI to notify applicants within 30 days about whether the application is complete and to issue an Environmental Impact Statement within 90 days. Additionally, the bill creates a 150-day statute of limitations for any claim challenging energy, mining or forest management projects, requires courts to expedite any such claim and requires agencies to act on remanded actions within 180 days. The bill also includes additional sections related to geothermal, hydropower, hardrock mining and offshore energy project development and permitting.
- Directs the U.S. Department of Energy to establish a program to support voluntary streamlined state and local permitting of behind-the-meter resources such as rooftop solar and batteries. This program could be similar to the DOE SolSmart program, which helps local governments remove bureaucratic barriers to make it quicker and more affordable for households and businesses to adopt solar energy.
Historic Preservation
- Narrows the definition of “adverse effect” and “undertaking” under Section 106 of NHPA, which requires federal agencies to consider the effects on historic properties of projects they carry out, assist, fund, permit, license or approve. Under the bill, changes must directly alter a property, and visual, atmospheric, audible and temporary effects are excluded.
- NHPA is limited to portions of the project where the federal role is substantial and excludes projects, programs or activities where the only federal involvement is financial, minor restoration projects, surveys, public safety projects, non-discretionary actions or permit renewals.
- Sets deadlines for steps within the review process.
Next Steps
The bill is expected to come up for a Floor vote when the Senate returns in November after the midterm elections. At that time, there could be a Managers Amendment to the package making changes in order to garner votes from Senators. The outcome of the elections could shift the political dynamics of the bill and its prospects for passage.
Last year, the House passed a NEPA reform bill, the Standardizing Permitting and Expediting Economic Development (SPEED) Act (H.R. 4776), with a bipartisan 221-196 vote. If the Senate passes its bill, it’s unclear whether the House will take it up or whether there will be enough time left in the year for leaders from both chambers to work out a conference agreement.
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