Section 1401 of the Permitting Reform Bill has been described as a stealth repeal of a wide range of federal regulatory laws, extending beyond environmental legislation.
The section’s permit certainty provisions apply when an agency takes an undefined “action” against a similarly undefined “project” that would revoke, rescind, withdraw, terminate, suspend, amend, or alter a federal authorization or permit in effect on or after September 16, 2026. It also covers actions that interfere with or prevent the construction or operation at full capacity of a project that has secured all necessary federal authorizations and permits.
A sweeping change to federal regulation
The definition of “authorization or permit” is broad, encompassing any approval or order necessary for the construction or operation at full capacity of a project. Exceptions are limited to agency actions that interfere with permits or full capacity operation due to a violation of applicable law or a material breach of permit conditions.
However, the agency must demonstrate that this standard is met by “clear and convincing evidence” and faces substantial potential damages if it loses. This shift in the standard for civil enforcement of federal regulatory standards against permit holders marks a significant change, potentially leading to more substantial violations of various federal laws.
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Consider a scenario where an agency identifies a material breach of a permit condition or a violation of federal law by a permit holder. If the agency establishes this violation by a preponderance of evidence in a judicial proceeding, the permit holder can counterclaim using the cause of action established under Section 1401. If the court concludes that the agency has not met the higher “clear and convincing evidence” standard, the agency loses, its action is enjoined, and the permit holder receives large damages.
This provision could also impact laws like the Clean Air Act and the Clean Water Act. This could be seen as a federal action interfering with the operation at full capacity of a project, potentially locking in air quality standards for various facilities, even if it harms public health.
Similarly, under the Clean Water Act, if a water body is severely polluted, and the EPA concludes that it must tighten the standards for state-issued water discharge permits, this could be considered a federal action interfering with the operation of a project. In both cases, the agency would need to provide clear and convincing evidence, significantly increasing its burden.
The provision’s impact extends to other areas, such as the Endangered Species Act. If a new species is listed for protection, and the operation of a federally permitted project would jeopardize the species, federal agencies might require changes in the project’s operation. However, the provision’s requirement for clear and convincing evidence could make it more difficult for agencies to enforce these changes.
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The bill does not define “project.” Does that mean only construction projects count? The dictionary definition is much broader than that. This ambiguity raises questions about the scope of the provision and its potential impact on various sectors.
So does this mean, for instance, that a federally licensed bank can argue that its operations are a “project”? Federal Reserve changes to interest rates, or regulatory changes for reserve requirements, which interfere with “full operation” of the bank’s lending and investment activities, are therefore covered by the provision?
Or perhaps all banks in the US, federally licensed or not, could make that argument? It is a tool for massive deconstruction of federal regulation, far beyond protection of renewable energy projects.
To me, this is a poison pill for this legislation – it sweeps far more broadly than it seems on the surface (and likely more than at least some drafters intended).