Federal permitting reform: five proposed changes that could reshape project development and environmental litigation

On September 30, 2026, the chairs and ranking members of the Senate Environment and Public Works and Energy and Natural Resources Committees introduced the Bipartisan American Affordability and Jobs Act of 2026 (S. 5653). The bill would amend the National Environmental Policy Act (NEPA), the Clean Water Act, the Endangered Species Act, the National Historic Preservation Act (NHPA), the Federal Power Act and other federal land and energy statutes. The proposed bill goes beyond speeding up agency review. Several provisions also target litigation risk and how durable a permit is once issued, including enforceable deadlines, shorter windows to sue and limits on revoking approvals.

For project developers and regulated entities, five provisions stand out. They could affect how long federal permitting takes, when environmental review is required, how easily permits can be challenged and what happens to a project when a challenger prevails.

Change #1: More projects could avoid full NEPA review

The bill would narrow “major federal action” to agency actions subject to substantial federal control and responsibility. It would exclude:

• Non-federal projects with minimal federal funding or involvement
• Certain repairs to critical infrastructure that increase capacity by no more than 20%
• Specified transmission, natural gas, geothermal and other energy infrastructure activities

The exclusions would also reach transmission and pipeline repairs and upgrades within existing rights-of-way and actions whose effects another agency has already evaluated. Reconductoring and other capacity upgrades within existing rights-of-way would be exempt from NEPA and NHPA review. Agencies could use categorical exclusions more widely and adopt each other’s. Qualifying state, tribal or other federal reviews could stand in for a separate NEPA document.

The bill would also answer the threshold question earlier. Agencies would generally have 60 days to decide whether an application is complete. They would then have an additional 60 days to decide whether the project gets a categorical exclusion, an environmental assessment (EA) or an environmental impact statement (EIS). That could cut front-end uncertainty, help with siting and planning and give buyers, lenders and investors a clearer view of permitting risk early in a deal. The bill would also codify that NEPA is procedural and does not require any particular outcome. 

Key takeaway: One of the most consequential reforms may be allowing more projects to avoid lengthy environmental review altogether, rather than just speeding up an EIS once it has started.

Change #2: Agency review would face firmer deadlines and procedural limits

The bill would generally require EAs within one year and EISs within two years. Other deadlines would follow:

• A record of decision within 45 days of a final EIS
• Remaining federal authorizations within 90 days (participating agencies) or 120 days (other agencies) after the review ends
• ESA Section 7 consultation generally finished on the NEPA schedule, with the base period cut from 90 to 60 days
• Public comment periods standardized at 45 to 60 days

Sponsors could take interagency disputes to the chair of the Council on Environmental Quality (CEQ), whose decision would be final and unreviewable.

These deadlines matter commercially. Delays can disrupt construction schedules, financing, supply contracts, tax-incentive timing and overall project economics. Importantly, the bill gives applicants a remedy when agencies miss deadlines. Section 1403 would let applicants sue agencies that fail to meet the deadline for deciding a permit application. More broadly, the bill would create new causes of action for unreasonable permitting delay. How predictable schedules become in practice will depend on agency staffing, CEQ implementation and how courts treat these new claims.

Key takeaway: More predictable federal review timelines could allow developers to assess and price the permitting risk at the start of a project.

Change #3: The window for challenging federal approvals could shrink dramatically

The bill would set a 150-day filing period for many challenges and send NEPA challenges directly to the federal courts of appeals. The 150-day period would also apply to:

• Section 404 permits and verifications
• ESA biological opinions
• Most NHPA challenges
• Federal energy, mining, carbon management and wildfire mitigation permit decisions

Today, the limitations period for many of these challenges can be as long as six years. The shorter period would apply without an exception for permits already issued.

The bill would also narrow who can sue. Standing would be limited to parties that submitted a comment detailed enough to put the agency on notice of the specific issue and that alleged direct harm.

In practice –

• Opponents would be required to identify and file challenges much sooner.
• Developers could reach litigation certainty earlier in the project life cycle.
• Financing and construction decisions could become easier once the period runs out.
• Sponsors will need to track the notices and agency actions that start the clock. For energy and related projects, agencies would have to make permitting decisions public within three days.

A shorter limitations period would not end environmental litigation. It would, however, sharply shorten how long a project is exposed to a new challenge.

Key takeaway: For developers, shortening the period of uncertainty after a federal approval could matter nearly as much as shortening the permitting process itself.

Change #4: Courts could have less ability to halt projects after finding a legal error

Today, a company can spend years obtaining federal approvals and then face major disruption if a court later finds a flaw in the agency’s environmental analysis. The proposed bill would change that. If a court finds that an authorization violates the bill’s NEPA requirements, its only remedy would be to remand the authorization to the agency, without vacatur or an injunction. The court would set a deadline for the agency to act on remand of no more than 180 days, and the authorization would generally remain in effect meanwhile. Similar remedy limits would apply to Section 404 permits – absent imminent and substantial danger to human health or the environment – and to most NHPA challenges. Courts would also owe agencies “substantial deference” on the scope and contents of an environmental document.

Winning a challenge to an agency’s environmental analysis and actually stopping the project would become two different outcomes. Separately, agencies would in general be barred from revoking, suspending or materially changing issued permits except in limited cases, such as fraud, permit violations, court orders or significant newly discovered risks. Courts could reinstate permits and award fees and damages when agencies do not meet that standard. Opponents have criticized these changes as making NEPA enforcement much more difficult, so expect them to be contested as the bill moves forward.

Key takeaway: Changes to judicial remedies could substantially increase permit durability, even when a challenge to an agency’s environmental analysis succeeds.

Change #5: Clean Water Act permitting could become more predictable

Section 401 reviews would be limited to compliance with water quality requirements. States and tribes could not deny certification for broader policy reasons unrelated to water quality. Certifying authorities would have to set formal application procedures and decide completeness within prescribed deadlines. They would also have to show by clear and convincing evidence that a denial or condition is needed to meet water quality requirements. The one-year maximum review period would not change, but certification would be waived if the authority fails to act in time. For interstate natural gas pipelines and interstate transmission projects, the period would drop to nine months.

On Section 404:

• EPA’s 404(c) veto would be limited to the period before the Corps issues a permit.
• Nationwide permits would last 10 years instead of five.
• The bill would limit the scope of 404 environmental reviews and make nationwide permits more available for infrastructure.
• National Pollution Discharge Elimination System (NPDES) permit terms would also increase from five to 10 years.

These changes could matter across energy, manufacturing, mining, real estate, transmission and infrastructure. Home builders, for example, have highlighted the higher acreage thresholds under the Nationwide Permit program. The bill would reduce the risk of sequential and open-ended state certification delays. It would not remove states’ authority to impose conditions that are actually tied to water quality. Substantive federal and state environmental requirements would also generally remain in place.

Key takeaway: For projects that require multiple federal and state approvals, the Clean Water Act changes could remove a major source of permitting uncertainty without eliminating state environmental requirements.

What project developers should be doing now

Companies planning projects that need significant federal environmental review should assess which provisions of the bill, if enacted, would materially change their permitting strategy. Certain factors of projects that are already in development deserve particular attention, including:

• Current permitting timelines and potential bottlenecks
• Whether projects could qualify for new exclusions, substitution of other reviews or streamlined review
• Existing or anticipated litigation exposure, including the new weight on substantive participation in comment periods
• The effect of shorter judicial review periods and changes to available remedies
• The need to keep project schedules flexible while the bill moves through Congress

The legislation could still change. Senate leaders are targeting a cloture vote on November 9, 2026, and amendments are expected. The House path is uncertain. Even if enacted, the bill would set a framework requiring extensive agency rulemaking, and some provisions would likely be tested in the courts. Still, its significance goes beyond making federal permitting “faster.” If enacted largely as written, it would reallocate permitting and litigation risk among project developers, federal agencies, states and project opponents.