The Senate’s bipartisan permitting bill got a manager’s amendment last week — 77 pages meant to answer objections from environmentalists, tribes, and utilities. Daniel Palken of Arnold Ventures returns to walk through what changed: narrower permit certainty provisions, a stronger transmission title, partial wins for tribes, and tighter rules making data centers pay. We also debate whether Democrats, fresh off a landslide, should take this deal or wait for a better one. We recorded Monday, hours before the Senate voted 73–25 to open debate.
In Congress, the “manager’s amendment” to a piece of legislation — an updated version released by sponsors in response to feedback — is usually a matter of housekeeping, small tweaks and corrected typos. But the just-released manager’s amendment to the federal permitting bill, which everyone in DC has been eagerly awaiting, is more than that. It is intended to answer objections that have piled up since September from environmental groups, tribes, utilities, and states.
It was released on Saturday, a 494-page substitute that adds 13 new sections and changes 37 others. Protections for already-permitted projects (like offshore wind) were boosted. Transmission lost a little and gained a little. Data centers will pay even more to connect. And the bill’s authors have tried their best to address the many worries about “permit certainty.”
It arrives mere days after an election that went extremely well for Democrats, who will now dominate the next Congress. Many of them are weighing whether to take this deal or hold out for a better one next year.
Daniel Palken of Arnold Ventures walked me through the original bill in October, in an extremely long podcast that proved to be weirdly popular, so I’ve brought him back today to talk through this manager’s amendment.
What has changed and, given the election, what are its current chances of passing? Let’s get into it.
Chapters
00:00 – Introduction
02:19 – Where the bill stands: the cloture vote
05:55 – Politics 1: who’s for the bill and who’s against it
11:41 – Politics 2: why not wait for a better deal?
18:58 – Politics 3: affordability and the modeling
25:11 – Transmission 1: the planning fix for utilities
29:30 – Transmission 2: the backstop, FERC oversight and PJM
37:10 – Certainty 1: what changed in Section 1401
48:29 – Certainty 2: what’s left, plus 1402 and 1403
56:51 – Tribes 1: the Section 106 changes
1:05:58 – Tribes 2: the vacatur fight and where tribes land
1:11:35 – Data centers: making them pay their way
1:21:03 – Environment 1: ESA and the Clean Water Act
1:25:10 – Environment 2: NEPA and the state-NEPA test
1:31:18 – Odds and ends: nuclear, prescribed burns and more
1:34:57 – What Palken would change
1:38:32 – Politics 4: who moved, and Trump’s endorsement
1:44:15 – Politics 5: the House, and what happens if it dies
Resources
People & Organizations
David Roberts (Substack - Bluesky - Twitter)
Apple Podcasts - Spotify - YouTube - LinkedIn - Instagram)
Daniel Palken
Company & Industry News
Canary Media - Senate permitting bill could greatly expand power lines and clean energy
Latitude Media - Are data centers ready to pay double to unclog the grid?
Axios - Granholm’s permitting warning to Trump and fellow Democrats
Books & Articles Discussed
Congressional Research Service - BAAJA of 2026: Summary of All Sections
Rhodium Group - Estimating the US Energy System Impacts of BAAJA
C2ES - New Nationwide Analysis of the Bipartisan Transmission Reforms
NATHPO - ACHP Advances Sweeping Revisions to the Section 106 Regulations
Related Volts Episodes
Transcript
David Roberts: All right. With no further ado, Daniel Palken, welcome back to Volts. Thank you for coming.
Daniel Palken: Thank you for having me back.
David Roberts: There was a lot last time; now there’s a lot more. Let’s start for people who have not been tracking this as closely as the small band of obsessives on social media. Catch us up with a two-minute backgrounder on what the permitting bill is and where we are in the congressional process.
Daniel Palken: For listeners who want the two-minute version of the two-and-a-half-hour episode we did last time: the original version was a 417-page bill. They added about 77 pages to bring it to 494 pages. It was negotiated in the Senate by Senators Lee and Capito on the Republican side and Whitehouse and Heinrich on the Democratic side. It makes reforms to a number of procedural laws, and to various procedural aspects of some substantive laws. There I’m talking about laws like NEPA and the National Historic Preservation Act, as well as the Clean Water Act and the ESA.
It also has targeted reforms within the Federal Power Act that will make a big difference for building out grid infrastructure, as well as reforms to geothermal, permit certainty, and hydropower, and new nuclear provisions have been added as well.
Where we stand right now is that there’s a procedural vote the day we’re recording. We should note to listeners that we’re recording at 2:00 PM on Monday, November 9th. I’m in Puerto Rico, on Atlantic time, so 1:00 PM Eastern, and we’re expecting a vote at 5:30. So we should know a lot more soon.
David Roberts: And this is a cloture vote, which is just a vote in the Senate to move forward with debating, right?
Daniel Palken: That’s correct. And so this vote—
David Roberts: What are we going to learn from the cloture vote? What do Dems want to happen in the cloture vote?
Daniel Palken: Dems are not fully unified on this, so your mileage may vary depending on the Democrat you ask, and I think we’re going to learn a lot about what they want when they cast their votes. Often, not always, members will treat their procedural vote to advance past debate as a stand-in for the substantive vote they plan to take.
So I think most members are going to take this vote as a vote on the substitute bill, with all the amendments, as they would vote up or down on it. Of course, members have the right to change their answer when it comes time to take subsequent votes toward final passage. We’re likely looking at at least four votes spread out over the next week or week and a half. So this is not the only vote, but it is the first.
David Roberts: What happens if it fails, though? What happens if you can’t get 60 votes for cloture?
Daniel Palken: If this fails, this is probably the end of the road for permitting reform. If it can’t show that it can move past the Senate, which is the chamber in which it was drafted, I don’t think there will be much to be had in the House. I could be wrong on that. You never know; there are always must-pass vehicles, and things can get amended and changed. But the most likely outcome if it can’t clear the Senate today is failure for the product, in my assessment.
David Roberts: Got it. So we are having a vote today, which will be a done deal by the time this pod is released. If it fails, the whole process is probably dead. If it succeeds, that will be a pretty fair indicator that there’s a lot of substantive support for this and it has a decent chance of passage. Is that fair?
Daniel Palken: At least a decent chance. The House of Representatives will have to have its say, and there are a lot of scenarios that are all too easy to imagine where the Senate passes this and it dies in the House. I wouldn’t express strong confidence in either direction if it passes the Senate.
David Roberts: Right. If it passes, that just gives it a chance; it doesn’t guarantee anything. I’m curious, briefly, about political economy. It’s a two-part question. We talked pretty early in the process last time, quickly after the bill came out. We’ve had a couple of months since then to see how the debate has shaped up, so I’m curious about your thoughts on how it has played out so far. Were you surprised in either direction? Were you surprised by any particular person or faction’s stance? And part two: how has that political calculus changed post-election? Do you think we are in a better or worse place for passage?
Daniel Palken: To take the first part: different groups, as you mentioned, have come out for and against the bill. A lot of the energy industry — fossil, renewable, and nuclear, as well as transmission developers — has come out and said, “We like the reforms in this bill. This makes it easier for us to build.”
David Roberts: Yeah, the trade groups are pretty united.
Daniel Palken: Yes. That’s one anchor group of supporters. Another really big group of supporters that’s been very influential is labor. Labor has come out staunchly for the bill. The building trades have all come out for it. Very interestingly, the IBEW, the electrical workers, came out for it. They don’t always do that, because they work closely with their utility partners, and sometimes utility opposition leads them not to. Various other groups: LiUNA; the UA, the United Association of Journeymen and Apprentices of the plumbing and pipe fitting industry, was one of the first to come out. A lot of big labor groups that Democrats listen to, including, interestingly, the Teamsters, have said, “This is helpful for us.”
That’s an important signal to Democrats who just won an election focused on affordability, the economy, and the cost of living: some of the same workers who had drifted away from them in previous elections are saying, “This is a really important priority.”
However, other groups have definitely taken a different position. I would say there are two main camps of opposition. One, a lot of tribes and tribal organizations have raised serious objections to the National Historic Preservation Act provisions in the bill, which I’m sure we’ll talk about later.
Two, a number of environmental groups, especially in response to the initial draft, came out and said, “We have serious concerns with this.” Those concerns focused on a few different areas. The ones that got by far the most attention — and I suspect we’ll spend some time on this too — were concerns around the permit certainty provisions, specifically whether there might be unintended consequences to the way some of the language was written.
We discussed some of that in the previous episode, but in the weeks after we recorded, a lot more smart lawyers war-gamed out hypotheticals of varying likelihood. John Podesta came out at the time and said, “I have concerns about these provisions.”
So that was another nexus of opposition. That has somewhat shifted since the manager’s amendment came out, although not in any perfectly definitive way. Since then, Evergreen Action, the group that came out of Jay Inslee’s campaign, has endorsed the bill. That’s a big mark in the favorable column. NRDC, on the other hand, said, “We still have concerns about this legislation.” So the environmental world leans mostly opposed, with some groups like Evergreen and Citizens’ Climate Lobby supporting.
David Roberts: I might even question that. There are a few key groups that are very loud in opposition, but a lot of the other big groups have either been quiet or neutral, and occasional groups have come out for it. There’s a definite hardcore of environmental opposition, but it seems to me that community is quite split.
Daniel Palken: It is quite split. I haven’t seen — maybe something’s coming out right before or as we’re recording — statements from some of the big groups like EDF, The Nature Conservancy, and a number of others. That silence is interesting. You haven’t always seen that on previous permitting bills. Maybe that’ll change.
What’s notable is that even the groups that have come out opposed often start their statements with, “There’s a lot about this bill that we do like.” It goes to show that there is a split within the environmental movement. Some of the more traditional air-and-water, litigator-type organizations have been the most opposed, and some of the more climate-oriented, emissions-oriented groups less so. Of course, these things are correlated: the same fuels and products that put greenhouse gases into the atmosphere are often the leading sources of particulates and effluents in our air and water.
So on the theory that when you address climate emissions you’re also often helping local environmental quality, a lot of groups, and a lot of individuals within groups, have a more favorable posture. That’s the division you see.
David Roberts: It’s interesting. I was thinking the other day about a piece I wrote for Vox probably 10 years ago, saying that the air-and-water, conservation-oriented environmentalists and the clean energy–focused, climate-focused environmentalists were going to come into increasing tension in coming years. It’s happened here and there, but this seems like that fight flushed to the surface, out in public now.
Before we get into the substance of what’s changed: there is a large faction of people who say something along the lines of, “There’s good stuff in the bill. There’s a lot of bad stuff we really don’t like. We just won a huge election. Democrats are going to dominate the next Congress. Why not wait and get a better deal?” I think that is a very common sentiment. What is your take?
Daniel Palken: We discussed some of this last time, but it has come much more sharply into focus in the wake of the election, which, as you noted, Democrats won in a landslide. The arguments for waiting, I think, often trace to a misunderstanding: that Republicans are eager to take any permitting deal.
The strongest versions of this — and people say this with sincerity, so I think they should be taken at their word, but the argument should be addressed — are that in a renegotiation next Congress, Republicans would do a transmission-only version of this bill, or a version that cuts out some of the remaining major priorities that live in the NEPA or Clean Water Act sections. As somebody who has worked on permitting reform for the last several years, mostly from within Capitol Hill, I cannot stress enough that both sides have been willing to walk away from deals that don’t meet their criteria, especially when they are out of power.
Republicans in particular largely walked away from the Manchin-Schumer bill that was voted on in the NDAA in 2022. There were something like seven yes votes and 40 no votes. It was put to a vote; we don’t have to wonder. With the Fiscal Responsibility Act, there were some very minor changes to NEPA, but there was a big discussion of whether to go big on judicial review in exchange for something like the Big Wires Act or a big transmission provision. Republicans said no, and Democrats also said no. There wasn’t a willingness to go there, even in exchange for reforms Republicans were very interested in at the time. When it came to EPRA, the Republican House looked at that bill and said—
David Roberts: Spell out EPRA.
Daniel Palken: The Energy Permitting Reform Act, from Senators Manchin and Barrasso in 2024. That was another one that probably had a path through the Senate, but Republicans in the House simply said, “We’re not doing this. We’re not including this in an end-of-year bill.” And those were all in divided government. It’s not theoretical whether Republicans are interested in a transmission-only bill, or a bill with transmission and a lot of other reforms that aren’t the ones they’ve worked hard to negotiate and balance in this package. There just isn’t a strong environment for that.
David Roberts: If I could sharpen that slightly, just for context: you can’t do permitting reform through reconciliation. You have to go through regular order. Unless you’re going to kill the filibuster — which is a whole separate question, and I very much doubt they’re going to do it right now for this — you need 60 votes in the Senate. And that’s even assuming you get a transmission-only bill with 56 Democrats and independents united on it, which I keep telling people is not a sure thing at all. We just elected a bunch of moderates and Blue Dogs.
Daniel Palken: Yeah, John Fetterman and Mary Peltola are not where Jeff Merkley and Ed Markey are. The caucus is diverse.
David Roberts: They don’t necessarily want a clean-only bill. They like oil and gas and want these concessions to oil and gas. So even in the fantastical scenario where you get 56 Democrats and independents on the same page, you then need four Republican senators who will vote for a transmission-only bill to grant the new Democratic Congress a giant historic victory. Who are those four Republicans? I keep asking people over and over again: Who are the Republicans who are going to vote for a transmission-only bill and give Democrats a big win in their new Congress? No one has an answer.
Daniel Palken: There’s actually a fifth, because there’s Donald Trump. Even if you could pass a bill through the Senate, Donald Trump has no interest in signing that, and his administration and White House have said transparently, “We have no interest in signing that or anything close to that.” So even if you abolished the filibuster, it would be an entirely symbolic exercise for the next two years, because there’s still a Republican president in office. If you’re having the conversation about whether Democrats can do it alone, you’re only talking about 2029 and beyond.
David Roberts: Say you get to 2029, everything goes well, and you get more Democratic senators — a filibuster-proof majority, a Dem trifecta, a Dem president. Well, if you have that, you can do whatever you want, including improving whatever you passed this year. You could take anything you don’t like about this bill and revise it. You can do whatever you want if you’ve got 60 votes. But in the meantime, why not get started building?
Daniel Palken: That’s absolutely right. The other thing to flag: even if Democrats had a trifecta in 2029, went the abolish-the-filibuster route, and passed a transmission-only bill, or a bill with only the things core to the left wing of the party, that would carry a serious downside risk. Every one of the most recent administrations has entered office with a governing trifecta. Obama did; he had a filibuster-proof majority for a minute. Trump’s first term did, and passed the Tax Cuts and Jobs Act. Biden did and used it to pass the IRA, and Trump’s second term did and used it to pass the One Big Beautiful Bill.
It would require a big break in the pattern not to expect the next Republican president, or the one after that, to come in with a trifecta. At that point, you could expect anything Democrats did through purely partisan legislation — only the things they liked and none of the things Republicans liked — to get reversed.
That is especially important with permitting reform, the entire point of which is creating certainty, so that industry actors have long time horizons and a stable business environment in which to put money into projects and move them forward. Even the mere threat of reversal matters. Even if you had a crystal ball and knew there would never be a Republican trifecta that would roll things back, you couldn’t convince anybody your crystal ball was functional.
Businesses that have to line up money to build projects under the new permitting regime would say, “Wait, isn’t this regime about to change? Now that the filibuster is gone, a bare Republican trifecta could come in and undo it.” So I really think it’s a mirage to imagine that any permitting reform can pass without true bipartisan consensus. And this bill, for my money, having worked on this for years, is the furthest we’ve gotten: the most significant product that’s been put out, with the most significant buy-in from the conservative and moderate wings of one party and the liberal and moderate wings of the other.
Sheldon Whitehouse and Martin Heinrich have serious climate and environmental credibility with many of their peers, for good reason. They’ve worked on these issues for a long time, and people know where they come from.
David Roberts: The final thing I would add on this point, and then we can get on with it: climate people don’t necessarily like to hear this, but the public likes the all-of-the-above stuff. I don’t like it, but they do. Democrats blocking out oil and gas and elevating only their own forms of energy does not poll well.
There are plenty of ways to make progress under the banner of all-of-the-above that I think will have the effect of elevating clean energy in the future, and I’m all for that. But public opinion matters here, and it should not be assumed that the public is down with a clean-only bill.
The main thing Democrats’ opponents are going to be doing for the next two years, maybe the next six, is trying to brand them as, “You elected a bunch of radical Dems, and now they’re going to go crazy and do woolly-headed stuff.”
Daniel Palken: Let me sharpen that point, because it’s extremely important. Dems just won the biggest election victory any party has won in three decades, and they won it primarily on affordability. This is fundamentally a bill about affordability. It addresses supply-side constraints, and as you learn in Econ 101, price is determined by supply and demand. Freeing up supply — whether you’re talking about fossil, renewable, nuclear, or midstream — helps bring down prices, because it allows supply to keep pace with demand. It also has a bunch of benefits beyond prices: employment, economic growth, and other aspects of the economy that voters really care about.
David Roberts: The modeling on this bill, even the optimistic modeling from Rhodium and others, shows it bringing down energy costs by something like 3 or 4 percent in coming decades — and that’s relative to a counterfactual, to what costs otherwise would have been. I worry whether, even if this passes, we really have the power, the tools, or the will to do the things that would be required to bring down energy costs enough to be visible to ordinary voters. I’m not sure this would do it.
Daniel Palken: No one bill should be viewed as a panacea. Look at the Biden industrial policy agenda. He had major initiatives — the IRA, the IIJA, the CHIPS Act — that were all stalled over permitting specifically. So it’s not just about the effects of this bill. Democrats should update their priors in the wake of this election: the next president is more likely to be a Democrat, and more likely to have a governing trifecta.
The last Democrat with a governing trifecta passed three major laws, all of which were stymied by this. So it’s not just the effect of this law in a vacuum; it’s what other policies it enables to go forward smoothly and effectively.
David Roberts: Yes. This is crucial. This is what I keep telling people: this is not the climate bill. This just lays the groundwork for a climate bill. It makes it so that whatever you pass for your climate bill works. Nothing is going to work to build out clean energy if you don’t solve this problem. But this isn’t it.
Daniel Palken: And I think this bill happens to be good for climate. One can choose semantically how to view it. My friend Noah Kaufman has a lot of thoughts on this, and our friend Jane Flegal as well. It’s a philosophical discussion: Is this a climate bill, or merely a bill that’s good for climate?
Either way, there are compounding effects from enabling a more robust agenda across domains and having success. The other thing to say about the Rhodium modeling, the C2ES modeling, and the others out there is that they are all conservative in very key respects. A lot of those studies only look at some of the provisions of the bill, because there are so many and they’re so hard to model.
So they pick off the one that gets talked about the most — they’ll do transmission — and then they’ll hand-wave and say that maybe they’re also modeling the NEPA changes, because they’ve turned some dials on a NEMS run that make it look like you build more things.
But you’re not capturing nearly the full effects of all the provisions of the bill when you do that, and you’re certainly not capturing tail-end positive effects. We talked last time about how geothermal in this country is either going to be a massive difference-maker or nothing. It doesn’t really matter whether we get five gigawatts or zero gigawatts of geothermal by 2050. What matters is whether it becomes a resource on the scale of solar, wind, gas, and the other big performers in the economy.
We’ve seen with previous permitting bills — with EPAct ’05, which had a legendary categorical exclusion for exploratory oil and gas drilling, which this bill finally copies for geothermal — that small things that make a difference in the exponential development of a technology can have big effects down the road. None of that is captured in the modeling. Some of the data center price effects are not captured either. A Grid Strategies study found that the so-called “and” pricing provision alone, which we discussed last time, would save ratepayers $35 billion just by charging data centers more and passing it directly to them. That hits people’s wallets immediately. You don’t need to wait for new infrastructure.
David Roberts: Even trying to model that provision alone involves a whole stack of assumptions: how big the AI bubble gets, whether it pops, how many data centers there are, whether they stay concentrated or become more distributed, and on and on. And that’s just one part of the bill. Any part of the bill you try to model, you’ve got assumptions upon assumptions.
I think the honest approach to predicting the effect is massive uncertainty bars everywhere you look. But at a certain level, you just have to have faith. We have to uncork, unburden, unleash clean energy. Will it win if it’s unleashed? We don’t totally know. But as I keep coming back to, there’s no victory on climate change that does not involve a massive, rapid build-out of clean energy. If that’s not part of your plan, you don’t have a plan.
Okay, I didn’t want to get too mired in the political economy before we talk about what’s in this bill and what changed in the manager’s amendment. So let’s go through it quickly. We’re not going to do another two and a half hours on this thing — just the big changes. Let’s start with some of the sections that got the most substantive changes.
Let’s start with everybody’s favorite: transmission siting and cost allocation. It seems like there were some good moves here, and the utilities won a couple of battles. It’s a mixed bag. Tell us about the transmission changes.
Daniel Palken: I genuinely think the transmission section got much better. They did it in a way that was very intelligent and that balanced some real concerns the utilities had, which did need to be addressed for actual technical reasons. There’s sometimes lazy thinking where people say, “Well, if the utilities are for it, I’m against it.” But you need utilities to run the system.
Sometimes utilities are against something for parochial reasons and it’s actually good policy, and sometimes they’re against it because they’ve spotted a legitimate issue that would freeze up a lot of investment in building. The issues they fixed for the utilities in this section were, I think, legitimate and deserved fixing. The main one is a provision in Section 2106 called the consolidated planning process. In the previous version of the bill, it required all the different regions of the country, including regions without the organized wholesale markets called RTOs, to embark on a 20-year forward planning process that integrates—
David Roberts: Combined transmission and generation planning.
Daniel Palken: Transmission and interconnection, essentially — and to offer what amounts to fixed-price transmission and interconnection service. That makes a lot of sense in the RTOs; it came from the SPP region. But there are administrative reasons why that policy would not work in the Southeast or the West, reasons that are almost impossible to unwind without totally re-regulating how the non-RTO regions work. In the Southeast and the West, you need to know where you are delivering energy in order to be quoted a price for transmission service.
So anything that looks like fixed-price transmission service would require rolling those regions up into something that looks, and is regulated, a lot like an RTO. Many people might say, “Well, I don’t see the issue with that.” But that would be a cataclysmic, seismic change, and it was not the bargain that was struck in this bill. It also wasn’t what the language actually said to do.
What likely would have happened is frozen investment, confusion, and litigation in those regions, which would have slowed down, not sped up, a lot of investment. Credit to the utilities: they brought those points forward, they argued them well, and the negotiators listened and said, “This actually improves the bill.”
So it was a win-win. You made the utilities a lot happier, and you took out something that would have been disruptive while preserving it for the RTOs.
David Roberts: And utilities are now basically supporting the bill. To me, that’s one of the dogs that didn’t bark here. I thought utility opposition was low-key one of the biggest threats to this thing. Partly, I think, because they’ve been weakened by recent events and shifts in public opinion, they got a couple of concessions and now they’re on board with a very strong transmission provision.
Daniel Palken: Let’s also not forget that some of their calculus owes to other provisions of the bill. They have a lot of projects — especially in the West — that are sitting on Doug Burgum’s desk, or projects in the Atlantic that are frozen. If you’re a utility with a multi-hundred-million to multi-billion-dollar project sitting on someone’s desk, you’ll think about transmission later. That project needs to get unstuck.
I think people are narrativizing utility support or opposition around their calculation in this one title. Utilities have wanted NEPA reform for a long time. They certainly want the certainty fixes and things that give timelines to their projects, and we’ll talk more about certainty later. But let’s go through a few other changes in the transmission title that are favorable and important.
One is that they have made the backstop authority a lot more elegant and flexible. They added provisions that allow for partial cost allocation. You might have a line with some obviously monetizable benefits, where you can get somebody to sign up and say, “I’ll pay you money on either side of the line,” to essentially arbitrage power across geographies.
But then there are benefits, like black start capability, that no counterparty is going to pay you for directly. So this bill, for the first time, says you can do partial cost allocation: you allocate the hard-to-monetize parts, which are real benefits you can still demonstrate, and take on voluntary offtakers for the rest.
That takes a lot of pressure off customers who would otherwise have to buy things, or have their utilities sign up for things, involuntarily. So that’s a big plus. Another one, which is really important: if you’re a developer or a utility, you can use the cost allocation tariff filing provision in that section without having received the federal permit.
So if you meet all the same criteria — improving reliability, facilitating just and reasonable rates, benefiting and protecting consumers — you can click the button and say, “I want the same cost allocation treatment.” That’s really important because it provides a balanced incentive: developers don’t have to game out how their line will be paid for based on which siting pathway it ends up using.
That makes the backstop a lot more fluid and workable. They also took out a prohibition on using the backstop on state land. That could matter a lot, because there are many state rights-of-way for existing roads, and with that prohibition you’re forcing the backstop to be used only against private landowners. So this is a win-win, where the backstop becomes as flexible as the Natural Gas Act authority.
David Roberts: Right. So federal eminent domain now extends to state-owned land.
Daniel Palken: And that’s already true under the Natural Gas Act. I think this fix makes a lot of sense from a private landowner perspective, and it makes this authority serve its intended purpose and work well. Some of the other changes have made Republicans happy — some have made both parties happy, and a lot have made transmission advocates very happy. One provision that was genuinely offensive to a lot of state regulators was taken out: it allowed simultaneous processing of a backstop siting application.
I think a lot of people’s initial reaction was to mourn that as a big loss: you can’t submit simultaneously anymore. But there were multiple reasons they took it out. One is that it’s almost impossible to imagine a developer starting off on an antagonistic footing with a state that hasn’t yet taken an antagonistic posture toward it, just to save a year.
Two is a technical reason. Another provision in BAAJA allows the state to submit its record into the FERC docket at any time during the first year it’s processing the application, and FERC then has to consider it under the Administrative Procedure Act. So a state would have every incentive to submit that record on day 364, jam the feds, and force either an inadequate decision or a violation of their own statutory deadline, defeating the purpose of the backstop.
So in my view, taking out simultaneous processing has given a lot of assurance to state regulators — former FERC Commissioner Christie has been vocal in complaining about that provision — without compromising the integrity of the backstop.
David Roberts: His point was basically that the state process is rendered pointless if you can go straight to the feds simultaneously. So now you have to go through the state permitting process for a year before you apply for the federal backstop.
Daniel Palken: And I think that’s fine. The vast majority of the time, states get to yes on transmission lines that are beneficial for their ratepayers. It’s a bit of a myth that states are just out to block these things; the record is clear that they do a good job. In the rare cases where they don’t, having a backstop is really important. It also changes the incentives for utilities as much as for states, since utilities often play the fundamental blocking role when planning is being negotiated.
David Roberts: Then there’s the provision giving FERC oversight of local utility transmission, which was a big deal in the original bill. Now it’s been extended to cover not just new transmission projects but replacement projects too. What’s the significance of that?
Daniel Palken: They’ve made sure to dot their i’s and cross their t’s on covering the different flavors of local builds. Some projects are not modifications or new builds; they’re just tearing down and rebuilding, replacing one for one. If you think about it, that is a suspect category, maybe the most likely to be wasteful spending, because you’re taking something 100 years old and saying nothing new is needed.
David Roberts: So FERC has oversight over that too. And FERC now has jurisdiction over RTO governance. What does that mean? You sent me some exclamation points next to that.
Daniel Palken: This is maybe the most significant addition to the transmission section, and Democrats and Republicans were interested in it in a unified way. A lot of governors in the PJM region — those 13 states along the Atlantic coast, especially the Democratic governors — have had huge problems. Everybody has issues with PJM, and everybody’s issues are slightly different.
But a lot of the issues trace to the way PJM is governed. It has a Byzantine labyrinth — actually, that’s probably unfair to ancient Byzantium. It’s much worse in PJM. It has a labyrinth of committees made up of different stakeholder groups with different voting weights, and utilities show up multiple times in those groups. They make up one group in its entirety, the transmission owners, but they’re also big in the generators group.
So things often grind to a halt in the committees, and then the PJM board has its own problems. There are a lot of criticisms of how the board is composed. Some well-intended rules say board members aren’t supposed to have interests in the region’s grid, but PJM has ended up hiring a lot of people with limited expertise in electricity in general.
Having FERC be able to step in, be the decision-maker, make a hard call, and say, “You need to structure some aspects of this differently,” is something everybody wants, but the current too-many-cooks process prevents it. So that was a huge priority for states like Pennsylvania, Maryland, and Delaware, which have been looking for a number of fixes to how PJM is run.
David Roberts: Okay. Those are the big pieces on transmission, planning, and utility competition. To summarize: transmission was already the strongest part of the bill from the point of view of Democrats and clean energy people. An incredibly strong and impactful transmission section is now, if anything, slightly stronger. Fair?
Daniel Palken: I think even more than slightly. There were real improvements, and they made them in a way that earned the support of folks on both sides, which I think was very deft of the negotiators.
David Roberts: And I’ll just say again, at the risk of belaboring it: whatever climate policy you pass — your carbon tax, your tax incentives, whatever you favor — you cannot spread clean energy at mass scale without more transmission, without the ability to build transmission. That is what this frees up.
Okay. Probably the biggest target of the bill’s opponents, and the biggest worry among environmental groups, particularly lawyers, was the permit certainty sections, 1401, 1402, and 1403 in the original bill.
To recap: Democrats were motivated to write these parts to prevent Trump, or a future Trump, from doing what Trump is doing — capriciously intervening in permitting processes to block clean energy and boost oil and gas. But there were a lot of worries that the way it was written was somewhat sloppy, with a lot of possible unintended consequences. The main worry was that the way some provisions were written, you risked locking in a bunch of bad Trump decisions.
They would become the baseline against which future decisions are measured. So you’d not only fail to prevent Trump from doing stuff, you’d consecrate what Trump does as the baseline. So, 1401: what’s changed?
Daniel Palken: 1401 has changed a lot. It’s one of the most changed sections in the entire bill, and honestly, I would say they really scaled it back. It no longer has the level of ambition it had before. It still serves a purpose, and an important one, which I’ll talk about. But they addressed head-on a lot of the concerns, which took the form of hypotheticals. Could an industry organization file this sort of lawsuit and force courts’ hands to award it damages? Could a federal government act in bad faith and collude with industry actors to get them payouts under the provision? Could bad-faith grants of permits become irrevocable under certain circumstances?
David Roberts: One other thing to toss on your list before you move on: at the end of all legal roads lies the Supreme Court. These days you have to think about what an explicitly ideological, reactionary Supreme Court would do with this language. You have to up-armor your legal language against malicious misuse, maybe more than you used to.
Daniel Palken: I actually think the concern was more with district courts. The Supreme Court is definitely not ideologically aligned with the Democratic Party or the proponents of this bill’s clean energy provisions most of the time. But it has adopted a lot of doctrines that would get in the way of expansive interpretations. They like to say Congress doesn’t hide elephants in molehills, things like that.
David Roberts: Well, they say that when it serves their ideological aims. When they need to, those things go out the window.
Daniel Palken: Fair enough. But a lot of the judicial concerns I heard were about whether you could get a really crazy ruling in, say, the Western District of Texas, or some other district court you could venue-shop to. In any case, there are a few global fixes in this section that address how the whole section applies, and then a lot of targeted fixes that address specific problems people raised.
There are three global fixes. One is that the section now applies, for the most part, only to projects that have secured all — it uses the word “all” — of their federal authorizations or permits for construction or operation. It’s worth noting that most projects, even ones far along in construction, don’t literally have all their permits. In the later stages of a big multi-year project, the Bureau of Safety and Environmental Enforcement might still have to authorize, or not object to, a pile-driving plan.
So as a threshold matter, for this provision to apply, a court would need to rule that “all” means “some” or “most,” which is obviously not what “all” means. There is an argument that you might not be able to show that this provision applies except to projects that really do have all, or something functionally indistinguishable from all, of their federal permissions.
The other two are of a kind, and I think it’s very important that the bill says this in two separate ways, because if it said it once, it would be easier for a court to ignore it. One is a new exception allowing the federal government to revoke, rescind, alter — all those other verbs — a federal permit when it does so pursuant to any applicable law or regulation. Now, the government will claim that most of its actions are pursuant to some applicable law or regulation.
But this also addresses the concern that if you have a new Clean Air Act rule, or a new OSHA rule, or a new tariff, and something has to change, then as long as that rule was lawful and you’re acting pursuant to it — which is a broad phrasing — you are within your rights. You are not going to be stopped by this section. In addition, there’s a savings clause that says nothing limits or modifies any other authority under the law, which is another way of saying the same thing.
David Roberts: Right. This was all about lock-in — the worry that Trump gives a bunch of dirty permits away, and then you change law or regulation, but you can’t go back and do anything about those permits. This just says that if you are implementing an applicable law, you can intervene.
Daniel Palken: And the plain language says that very cleanly. Some people have said, “Well, a court might just choose to ignore that.” There’s always a risk that a court chooses to ignore something, but one, they’d have to ignore it twice, because it also shows up in a different guise in the savings clause. And two — this is the last category — there are a lot of targeted fixes addressing specific problems people raised with the section.
To tick through some of those: one, they added the word “similar” to the types of approvals or orders covered, so exotic things nobody thinks of as permits, like compliance with a FERC tariff, wouldn’t be eligible under this section, if there was ever any risk that they would have been. Two, they changed words like “amend” or “alter” to “materially amend” or “materially alter.”
So even if you cleared the other bars, routine or small changes required under existing law would not be in scope. Three, they changed “full capacity,” which I think was a legitimately problematic phrase. Many projects are not permitted to operate at full capacity. A peaker plant might be permitted to operate 5 percent of the year. So they changed that to “normal capacity,” meaning whatever the project was permitted at, in a sense. That definitely removes the concern that you were expanding existing permits.
They also broadened the ability of agencies to respond to courts. The exception had this passive voice: when an agency is required by a court to take action. Well, a court almost never requires an agency to take a specific action. It says, “We’re remanding this. Come back with the right answer.” So now it says the agency takes such action “in response to” a court, which gives agencies broader scope when responding to courts. They added human health and the environment to the list of immediate and urgent harms that can be grounds for an exception. They limited venue shopping by letting the appellate venue provisions in other sections of the bill govern here.
They removed the clear-and-convincing evidence standard that agencies had to meet in proving their case to a court. And most importantly, they added a bad-faith requirement in order to access the payouts. That is a notoriously hard standard to meet, because you have to show something about what’s in the head and heart of the actors. They also said the case has to reach final judgment, which can include a settlement or consent decree, but it has to be approved by the court, and the judge has to deem it fair, reasonable, and consistent with the public interest.
They also made a lot of similar changes to 1402, the disparate treatment section. So they made it much harder for companies to get their hands on these payments from the government if there was any bad acting.
David Roberts: Just to clarify the payments: if the government blocks my permit, and I think it is treating the category I’m building differently than other categories — disparate treatment — I can sue, and if I win, I can get a payout tantamount to the total cost of constructing the thing. A lot of people worried about that. They thought lawyers would descend on this, sue every time a permit is blocked, and get a bunch of big payouts. So guardrails were put in to make those lawsuits extremely difficult to win: you have to prove the government blocked the permits in bad faith.
Daniel Palken: Extremely difficult to win — and even if you win, getting the payouts requires the judge to deem them in the public interest. And there’s a really interesting thing here. A lot of people have spent a lot of time war-gaming the downside interpretations of all these provisions. What’s interesting is that, the way this is worded, it could actually prevent the sorts of payouts Trump has been making to TotalEnergies and other companies to buy them out of moving forward with certain projects. It says no payment shall be issued under clause one “or from any other source to resolve any dispute related to a Federal authorization or permit.”
That is not limited to the projects covered by the section. It covers any project related to a federal authorization or permit. So it makes those payouts a lot harder. Now, there’s a savings clause that somewhat conflicts with that, so it may be a bit of a jump ball whether it would actually work.
But even the deterrent effect is real. If TotalEnergies, for example, can see that a deal like that might be overturned by a future administration, the incentive to take the money goes dramatically down. So they made some changes with real upside, and they sanded a lot of the edges off the section. I want to be clear: most of the fixes I described were attacking real concerns, but each had a very low probability of manifesting. Just because somebody raised a concern about a potential legal interpretation doesn’t mean the bill as written would have been read that way.
I’m not a lawyer, but I certainly believe most of the concerns raised — not all of them — were very low probability. A few traversed into low-to-moderate probability, the we-really-need-to-fix-this category. In my view, they fixed all of those, often with a belt-and-suspenders approach. So what does the section still do?
David Roberts: One of my questions is whether they have, in some sense, neutered this with the “any applicable law” exception. You can’t intervene and block a permit unless you are implementing some applicable law. Well, Trump was always citing some law or other when he intervened, you know? None of these interventions were just, “I don’t like it.” They always had some law they could cite. So doesn’t that exception just open the door right back up to what Trump was doing?
Daniel Palken: It’s a very astute observation, but I think the answer is: not quite. There are two things — three, actually — that I think this section still does that are vitally important. One is the one I already mentioned: it potentially outlaws things like the TotalEnergies case, which have been able to happen under the status quo. That’s a big deal.
David Roberts: And these were Trump basically paying off companies, giving leases back—
Daniel Palken: Giving leases back, and in the bargain getting them to commit to going off and drilling somewhere instead of spending the money on renewable energy.
David Roberts: Yes. Several such cases.
Daniel Palken: The second is the one you allude to: what is the section doing if the “any applicable law” exception is so broad? On a plain reading of the language, it’s clearly not blocking a lawfully promulgated Clean Air Act regulation from having its intended effect on permits. But an administration can always claim it’s acting under some law, and a judge may find that it’s not. That is often the case with things Trump has done; judges have called his actions pretextual. So the section provides a backstop for truly egregious actions, so a court can say, “Okay, we’re tossing that out.”
There’s a new right of action for people to sue over that. And in truly egregious cases, where there’s obvious bad faith and the judge doesn’t detect any sign of collusion, there is a financial remedy that can be paid to make them whole for the damages they’ve suffered.
So it serves a much narrower purpose, and there’s a much higher bar to reach it. The third thing it does is a specific carve-out for, essentially, the five offshore wind projects Trump has been attacking. If Trump wants to meddle with their permits again, he has to first get permission from a court before anything he does has any effect on them.
In colloquial terms, it’s essentially a restraining order. That was the one big thing Senators Whitehouse and Heinrich said at the press conference was unresolved when they first put out the bill. I think they landed it in a very good place for the certainty of those five projects’ permits and their ability to keep moving forward under construction.
David Roberts: One other thing we should mention: a lot of people were worried about the previous five years of permitting forming the baseline against which disparate treatment would be measured. If three of those five years consisted of Trump vigorously blocking clean energy permits and approving oil and gas permits, that would create a baseline that ties subsequent administrations. I think that worry was a bit overblown, but it’s worth saying that the baseline period has been extended from five to 10 years.
Daniel Palken: So now it’s two and a half administrations long, which, under all recent history, will make sure there are administrations of both stripes in there. Now we’re traversing into 1402. We’ll be a lot quicker on 1402, because a lot of the changes mirror 1401. They make some of the same fixes, like full to normal capacity. Critically, they add the bad-faith standard and the requirement that the judge find public interest and fairness before doling out any payments. They make a number of other targeted fixes, including making sure the government can present its evidence on a more level playing field against a developer alleging disparate treatment.
Candidly, I would say it was about 80/20: the vast majority of concerns, both by severity and by volume, were coming in on 1401, not 1402. But there were certainly some concerns about 1402, and I also think that section is weakened in many ways.
It’s less likely to be used. I didn’t think it was terribly likely to be used at baseline, because of challenges we discussed in the last episode, but a lot of the worries people had about it are out the window. We should also discuss the last certainty section, 1403, which is fully intact. They didn’t change this one at all, and that’s important, because it came with no financial penalties. This section is just about deadlines, and it pairs with Sections 1106 and 1109 in the NEPA title, which combine to create a binding set of deadlines and application-completeness protocols throughout the process.
What 1109 does is say that an applicant basically has to hear back from the federal government within about 60 days on whether its application is complete, and if not, something has to go into the record in writing saying what’s missing. That gives developers a clear route to make sure the clock starts.
Then 1106 sets a bunch of deadlines. Some are the same as the ones originally enacted in the Fiscal Responsibility Act, but now without loopholes. There are deadlines for when you have to start the environmental analysis, how long you have to complete it, and how long you have to make final agency decisions afterward. Crucially, if a department misses deadlines by more than two months on a project, a provision says the head of the department — the Secretary of the Interior, the Secretary of Energy, whoever it is — can’t travel more than 25 miles from their duty station for work.
So without any major risk of corruption or big unintended consequences, this really makes life personally restrictive and miserable for the highest-level officials in an administration if there isn’t a predictable process in which agencies get to yes or no on projects. If you ask a lot of the solar and wind folks, this was always the certainty provision they cared about: “It’s the boring deadlines.” A lot of what this administration and past administrations have done is just sit on the permits of projects they don’t like forever and never give an answer. Part of the bargain of this bill is that we’re not going to do that as a country anymore. You have to get an answer.
David Roberts: So there are forcing mechanisms. To sum this part up: in your judgment, we’ve come out in a good place on providing some certainty for permits of all kinds — they’re going to get a hearing, they’re going to get expeditious action, they can’t be blocked for capricious reasons. And you think the main fears and objections about these sections have been adequately addressed?
Daniel Palken: You can always come up with scenarios with tiny-percentage likelihoods, but it’s not as though all laws under the status quo have been interpreted benevolently with no risk. There are two positive things and one negative thing to say about the changes to certainty. The first positive is that all the major concerns have been meaningfully addressed — whether they’ve been beaten down to absolute zero or are just much, much lower than people thought. Opinions really differed on that, and people will continue to talk about it in the coming days and weeks.
The second positive is that it preserved a lot of the essential core and actually made some enhancements, like for those five offshore wind projects. That essential core is especially the deadlines, the enforcement mechanisms, and the rights of action around them. Those really matter to energy developers, and they did stay intact. The negative is that for folks who liked some of the stronger provisions, and who rated the risk of misinterpretation lower, those provisions are now meaningfully weaker, other than the deadlines and their enforcement.
The provisions around revoking, repealing, and amending permits, and the provisions around disparate treatment, are now harder to access and have higher bars than before. A lot of people will view that as a plus, some as a minus, and some as a mixed bag.
David Roberts: Okay, we need to move on; we’re behind schedule as usual. One of the most significant areas of dispute has been the National Historic Preservation Act and tribes — tribal land, tribal prerogatives, and so on. Although they haven’t always gotten the press, I think tribes are one of the key groups behind the scenes, and their disposition toward this is a big deal in the Dem coalition. Talk a little about what changes have been made to that section.
Daniel Palken: Maybe a tiny bit of table-setting first, because this section was mainly covered in the Peter Jackson director’s cut of our previous episode—
David Roberts: I should say we had a section about this in the original pod. I cut it in a vain attempt to restrain the length of that pod, and for my efforts I got yelled at roundly by about a million different people for ignoring this extremely important issue. So we’re addressing it on the pod for the first time here.
Daniel Palken: The section of that law at issue is Section 106 of the NHPA. It requires consultation for federal undertakings, which is essentially any federal action in the real, physical world that may have an effect on historic properties. Historic properties include ones on the National Register of Historic Places, and then a much, much broader category of millions of buildings, structures, and landscapes; if something is at least 50 years old, it’s presumed to be potentially eligible.
So it’s a law that serves a lot of legitimate purposes. A lot of people have things that matter to them, or are outright sacred to them, and they look to this law to make sure that the effects — both physical effects and the experience of having to look at something, of having the environment around a place perturbed or changed — are considered and mitigated where possible. It matters especially to tribes, but not only to tribes.
A lot of preservationists care about this law. The law requires a process in which the federal government determines whether a project requires review, looks at the so-called area of potential effects, identifies any historic or eligible historic properties that might be affected, looks at the potential impacts, and looks at mitigation.
So I guess it’s five parts. And it’s a procedural law; that’s the important thing to stress. Like NEPA, it requires no particular outcomes in the real world, but it makes the government go through this process. So that’s the baseline. In the background, it’s also important to note that the Trump administration has proposed a pretty harsh rule to redo the 20-year-old regulations on this law. That rule would greatly diminish the role of tribes, states, and other stakeholders in the process, basically turning them into—
David Roberts: That’s the 106 rule—
Daniel Palken: Trump’s rule on Section 106 of the NHPA. He’s proposed a rulemaking through the ACHP, which is the central agency that administers the NHPA in the federal government. That rule has been received very poorly by tribes.
Then this bill came along, which in many ways was an improvement on, and a reversal of, some of the things in that rule. But it also had provisions — especially in the first version of the bill, and to some degree in this new version — that were quite offensive, especially to tribal stakeholders. They really made their voices heard. I’m not here to adjudicate what was or wasn’t the case, but they said, “We didn’t feel appropriately involved in the process, and we wish you had taken more of our input on the changes you’re making to this law,” even notwithstanding the fact that the status quo is changing under their feet because of Trump’s regulations.
David Roberts: One of the fights here is whether you judge what’s in this bill against Trump’s terrible 106 rule or against the pre-Trump status quo.
Daniel Palken: Yes.
David Roberts: I think the perspective of tribes is, “Sure, this is better than the Trump rule, but we want to go back to the status quo before it, and this is worse than that.” That’s one of the arguments.
Daniel Palken: And this is where your earlier point about the Supreme Court comes into play. One of the Supreme Court’s major decisions, Loper Bright, which struck down Chevron deference, makes it much harder to put in place — or to put back in place once they’ve gone away — expansive interpretations of small bits of ambiguous legislative text.
Section 106 of the NHPA is a two-sentence section that basically says you have to consult, look at effects on historic properties, and maybe mitigate them. If Trump succeeds in issuing his new regulations, which he almost certainly will, in whole or at least in large part, then even if a future Democratic administration wanted to put the old ones back, they might very well get struck down by courts under the new doctrines about elephants in molehills and the like. That’s the baseline reality, I would argue. But that argument has not won the day. Tribes have heard it, they’ve considered it, and they’ve said, “We’ll take our chances in court. We really feel like this is a two-front attack, between this rule and this bill, not a case where the bill mitigates the rule.”
I think one has to respect that perspective. What the changes to the legislation did was strike some hard compromises between where Republicans were — they didn’t want to back off most of the provisions in this section, but were open to some of the tribal arguments — and where Democrats were. Other than the certainty provisions, this is where a lot of Democrats wanted to see the most changes. The changes didn’t go as far as a lot of tribal groups wanted, but they went far enough to elicit some meaningful positive acknowledgment, and ultimately a few meaningful endorsements and statements from important tribal individuals, a tribe, and a coalition of tribes.
So let’s talk about what they did and how the politics shook out. One of the biggest changes: they took out a provision that said if a tribe was consistently missing its deadlines for complying with the National Historic Preservation Act, the federal government could take over its roles and responsibilities. They took that takeover provision out entirely. Tribes viewed it as probably public enemy number one in the bill. They viewed the threat of a federal official taking over their job as an affront to sovereignty.
The other change that was maybe most important to tribes: the bill had a bunch of language saying the federal government “may” consult with tribes on various aspects of identifying the area and identifying the effects. That was also very offensive to tribes, who said, “The hell with ‘may.’ You must consult with us. That’s the purpose of the National Historic Preservation Act.” It also says that in Section 101.
So they removed that language, and they added express language that the secretary can’t consult on behalf of tribes; the secretary has to consult with tribes. There were a lot of improvements to the consultation process. There were other things, too. There was a workweek provision, mirroring one in the NEPA title, that said if you’re missing deadlines, you have to spend at least 50 percent of your workweek fixing it. That provision was unconstitutional — the federal government can’t tell a non-federal worker how to spend their workweek — and it was offensive in addition. So that was taken out.
There was a provision about which types of comments would or wouldn’t give you standing to sue down the road, and the word “unique” was in there. It was in a version of the SPEED Act in the House, and it isn’t in the NEPA section of this bill, but it showed up in the NHPA section. What is a unique comment? If two people happen to submit the same comment because they have the same concern, do they cancel each other out? That was the concern, and frankly, I shared it.
I think it was a poor drafting choice. They removed the word “unique” and instead put in a prohibition on form letters, which I think is an acceptable compromise. They also put a number of privacy protections on the grants the bill makes available to tribes to digitize their resources. They exempted that information from FOIA, for example, so people can’t just file requests to create a bunch of inconvenience and get this material as a matter of public record.
So there were a number of things tribes asked for that they got. That was the good, from tribes’ perspective. The bad, from tribes’ perspective, is that their ultimate ask was to remove the section. A lot of tribes, and a lot of tribal groups, including a group called the 106 Strong Coalition, said, “We want you to remove the whole title, and short of removing the whole title, we oppose this bill.” For probably obvious reasons, the negotiators were not able to go there. When I talk to Democratic and Republican staffers on Capitol Hill, they are still hearing a lot of similar opposition from tribes.
There’s usually an acknowledgment that the bill has moved in a positive direction. COLT, the Coalition of Large Tribes, a big coalition whose member tribes represent 50 percent of Native Americans in the country and 95 percent of the tribal land mass, came out and said some balanced things. They said, “We really appreciate the positive changes,” and also that there’s still room for improvement. Other groups have been more negative.
David Roberts: They stopped short of endorsing. If we can narrow down on what I think is the real bone of contention: a lot of these changes improve the consultation process, bring tribes further into consultation, guarantee their consultation, and so on. But ultimately the only remedy is to send the review back and have the agency do it again while construction continues. It’s the same as with NEPA: a court can find that the review wasn’t done right, but it can’t stop construction while the agency does it right.
And that was the teeth of this section. This was the power tribes had: if you don’t do your NHPA review correctly, you have to stop construction while you redo it. Under the bill, courts can’t vacate, and construction doesn’t have to stop; the agency just has to go back and do the review again. That remains in the bill, and I think it’s the main thing tribes object to. Is that fair?
Daniel Palken: That is absolutely fair. There are groups in the strike-the-whole-section camp, and a step short of that are groups in the at-least-strike-that-provision camp. That was a reform Republicans very much prioritized. Striking it wasn’t on the table from the Republican side or the White House’s side, and that was the reality of a bipartisan negotiation.
The thing to say about this is that I think that provision matters a lot less for the NHPA than it does for NEPA. In the NEPA context, it’s the master provision that calibrates our expectations of how consequential the NEPA changes will be. Because the NHPA is, by analogy, the other procedural law, people — Republicans and Democrats — have a false intuition that the provision is of the same importance there.
The reason I think it isn’t — and there’s maybe some empirical evidence for this — is that NEPA’s “major federal action” and the NHPA’s “undertaking” cover a similar scope of government activity. They mean almost the same thing. Yet with the same number of government actions, NEPA generates roughly 10 times as much litigation annually. The NHPA typically isn’t adjudicated through litigation. It doesn’t have the same dynamic.
And I think that in part, even in a no-vacatur world, litigation — especially under the NHPA — still shapes how government and industry actors respond. If you’re an industry actor and you’re sued by a nonprofit whose name no one recognizes, which might be just a few lawyers, that’s a legal problem for you.
If you are sued under the NHPA by a tribe, you look like a very bad, greedy capitalist trampling on the sovereign rights of people who attach real value to the land, whether or not that’s true. So there are human incentives that no change to the law is going to touch, which shape litigation under the NHPA, including the potential remedy.
If you’re the agency and something is remanded to you, you then have to put in a bunch of work and come back with a product that actually goes through the process correctly. If you refuse, you’re in serious territory, and there are consequences. The court can hold the agency in contempt and impose fines. There are all sorts of things a court can do if an agency is truly defying a court order. If, on the other hand, the agency does comply, it has created a whole administrative record that might end up showing violations of other procedural or substantive laws — FLPMA, or other statutes relevant to Native Americans, like the Native American Graves Act, or various treaty requirements.
So there are still remedies with a lot of teeth, both hard and soft, that will matter in the real world. And the 10-to-1 ratio of NEPA to NHPA litigation should tell us, at baseline, that the NHPA mostly has its effects on the world, positive and negative, through channels that are not mediated by litigation to the same degree. That’s my view, at least.
David Roberts: So the reputational threat of litigation is doing a lot of the work here.
Daniel Palken: Candidly, yes — and disproportionately when it comes from a tribe, because, for good reason, people take it seriously when tribes have an issue with a project near land they attach meaning to.
David Roberts: So there was some meaningful movement in the direction of tribes, though not as much as they wanted, because what they wanted was vacatur, and they didn’t get it. So we can move on: what’s your summary of the political economy here? Do you think tribes are going to be a substantial blocker, or is this enough that they’ll be neutral or supportive?
Daniel Palken: I think the situation has meaningfully improved for the Democrats who wanted to see improvement. In the days leading up to the amendment’s release and since, you saw endorsements from the Crow Tribe and from the National Tribal Energy Association. Very interestingly, Sharice Davids, the only Native American member of the House Democratic caucus, came out and said we should move on this bill. On the other hand, there’s still a lot of opposition.
It’s still going to be a very hard vote. I think this is the section of the bill that is going to give Senate Democrats more pause than any other. I don’t want to dismiss that at all. I have substantive reasons, which I’ve articulated, for thinking the changes landed in as good a spot as they could have. But I also don’t want to take away from the fact that people have a range of feelings, positive and negative, about this section, and they’re going to weigh them differently. That’s fair.
David Roberts: Okay, those are the big ones. There are a lot of small ones. Let’s talk briefly about data centers. The original bill has what you call “and” pricing, which means data centers have to pay for the power they need and for the grid upgrades required to deliver that power. One of the weirder attacks on the bill I’ve seen is that it’s good for data centers. To me, the original permitting bill had some of the strongest provisions — not anti–data center, exactly, but forcing them to pay — that you’re ever going to get.
It’s as strong as any state policy, and it would be a federal baseline. It’s just bizarre to take data centers as your reason to oppose this bill. This bill is quite strong policy on data centers. So that was already in the bill. Now, maybe you can clear this up for me, because I’m slightly confused: Congress has declared it national policy that data centers pay the full cost of the grid service and infrastructure they need.
The bill already had that in it, so what further purpose is served by pounding the table and declaring it national policy? Of course it’s going to be national policy if you pass a national bill. What’s going on with data centers?
Daniel Palken: The two main provisions that affect what data centers pay are, first, the “and” pricing provision you mentioned, which we talked about last time. It’s estimated to bring in $55 billion total from data centers over just the next 10 years — $35 billion more than would have happened under the status quo. That’s real money, a direct wealth transfer from data centers to residential and other ratepayers.
You can call it anti–data center. It is an anti–data center provision. The second is the one previously called the ratepayer protection floor; now it’s called something similar. It basically says you have to do the same thing on the generation side of the grid: make sure you’re paying for all the but-for costs you cause.
What’s interesting is that the numbers there are potentially even bigger. The same Grid Strategies study that found the $35 billion found that if that provision goes into effect in all 50 states, it will result in about $136 billion of additional wealth transfer from data centers to residential ratepayers. They also made a number of surgical changes to that provision. There could have been some real issues with the way it was initially written.
With a true but-for test, you could have a data center that contributes only marginally to the need for some transmission line but happens to push it over the threshold of its benefit-cost test, so it becomes one of many but-for causes of that line. Then maybe that billion-dollar line would have to be paid for entirely by one data center. I’m all for overcharging data centers—
David Roberts: That is how our insane interconnection rules work today. It is insane.
Daniel Palken: But not for big interregional transmission upgrades. Yes, for some pretty big lines that connect you to the grid, but not for regionally and interregionally planned projects. So this was actually even harsher than anything in current law. They brought it in line with what they intended, which is that we’re talking about the network upgrades you are reasonably causing with your ad hoc addition to the grid, not regionally planned transmission lines meant to benefit the entire system and ratepayers broadly.
So I think the section works meaningfully better now. There was a lot of technical feedback from folks, and it is still a very strong provision for making sure data centers pay their way. There’s one other data center provision we never really discussed last time, and it’s pretty much unchanged in the bill.
It’s a reporting requirement: data centers have to give the EIA information about their power use. The EIA previously tried to require that for crypto and lost a court case on something of a technicality, so it hasn’t been able to get that data from data centers, from crypto, or from others in that space.
So one thing this bill will do is give federal and state policymakers, and the general public, much better baseline knowledge of how much power data centers are actually using. That’s a question we should be able to answer, but we don’t have an authoritative government answer. It’s not a protection in and of itself, but it will be very useful in assessing what to do about data centers going forward.
David Roberts: Also, FERC has to act on data centers in 90 days rather than 270. I don’t know how significant that will be. And the 20-megawatt threshold is gone: data centers of 20 megawatts and above were covered; now all data centers are covered. We discussed this briefly last time, but let’s touch on it once more: if anything, this bill tightens what data centers have to pay to connect to the grid. On one hand, that’s great. They’re going to cough up a ton of money that will go toward reducing residential rates; it’s an affordability play.
But doesn’t it also create something of a disincentive to hook up to the grid? Doesn’t it create an incentive to build your own behind-the-meter gas instead of connecting to the grid and taking on all these costs?
Daniel Palken: On the margins, yes, it does. The mitigating factor, which I think is very mitigating indeed, is that data centers much prefer to connect to the grid. More than any amount of money you could impose — even the very large dollar figures here — their main concerns are speed to power and social license, and they would much prefer not to be their own utilities. That is really hard and really expensive.
As expensive as it will be to pay $100 billion-plus as an industry, it is more expensive for every data center to be an island unto itself — to provide the backup generators for the backup generators for the backup generators in case its systems fail on site, and to have unique exposure to whatever single fuel source it’s using. A lot of them would prefer to have clean energy in their mix as well, although we’ve seen that hasn’t proven overriding for them.
So there are a thousand reasons, some quite strong, with not being your own utility the biggest, why they would prefer to have electricity provisioned to them, as almost every industry has since the electric age began. The calculus the bill’s authors are making is that having data centers pay their fair share is an appropriate bargain, and not a financial incentive large enough to scare them off the grid.
It is more likely to have the effect of making sure that the data centers that do get built — which is largely unaffected by this bill — are more likely to be able to go on the grid in the first place, because the transmission provisions build out the grid.
David Roberts: Well, of course: if you’re building more transmission, you’re going to free up more grid capacity and enable more of them. Before we move on from data centers, I want to pound the table a little. Whatever your thoughts about the rest of the bill, it is bizarre to characterize it as some sort of giveaway to data centers.
This is the strongest, tightest anti–data center legislation I’ve seen, including from any state. It makes it a federal baseline that data centers have to pay for all their own power, plus whatever transmission costs and generation costs they cause by coming online. It is going to be, as you say, a huge wealth transfer from the hyperscalers to residential ratepayers.
To me, this is one of the strongest bits of the bill. If you’re trying to ride the anti–data center wave, this disciplines data centers strongly, and it’s also one of the strongest affordability pieces, because the money goes toward reducing residential bills. If you’re an anti–data center person, you should love this bill.
Daniel Palken: Yes, 100 percent. To put those $136 billion and $35 billion figures in context: the renewable energy provisions of the IRA, when originally passed, scored at something like $300 to $500 billion. So we’re talking about a provision that amounts to a meaningful fraction of the IRA’s entire originally estimated spending, in the form of a wealth transfer from data centers to other ratepayers. I do agree with you.
I think some of it comes from people who oppose the bill and figure, “You know what’s unpopular? Data centers.” I want to be clear: I think many of the critiques of this bill are made in good faith, and I don’t like to allege bad faith. Some of the data center critiques may come from people who are misreading the bill, or not reading it, or hearing from people who are just saying things.
But I think some of it comes from a place of: “We’re going to take the most unpopular kid in town, the data center, and allege that this bill is somehow a Trojan horse for data centers,” when it actually has a bunch of provisions meant to constrain them and make them pay their fair share. That is not the case.
David Roberts: That line of attack really irritates me, and it seems pretty dishonest. Okay, moving on. A lot of the environmental objections were about the provisions on NEPA, the Clean Water Act, and the Endangered Species Act. It’s worth saying that there were no major revisions to those parts of the bill, but there were some small ones that are significant, if you want to touch on a couple.
Daniel Palken: Let’s tick through them: the ESA, the Clean Water Act, and then NEPA, in short succession. In the ESA, they made a few changes. They changed a “may” to a “shall,” basically saying the secretary has to terminate states that aren’t meeting the qualifications for the program that lets states take over Section 7 consultations. They amended the Pittman-Robertson Wildlife Restoration Act—
David Roberts: Can we pause on that? I want to spell that one out. Part of what people didn’t like about the original bill is that it allows states, rather than the feds, to run endangered species consultation. The worry, of course, is that lots of states don’t give a damn about endangered species and couldn’t be trusted to run good-faith consultation processes. This strengthens a little the feds’ ability, or willingness, to step in if a state is doing an inadequate job. Is that fair?
Daniel Palken: Yes. It forces their hand: if a state’s program is not up to snuff, if it’s not meeting standards, the secretary has to terminate it. I have always said to that objection: sure, you could have states that don’t want to protect species. But look no further than Doug Burgum’s Department of the Interior. Do you feel it has taken a materially different approach to species? I actually think there’s upside for Democrats in blue states here. In years when there is an adverse secretary, blue states that can prove they’re compliant with the program, which they’d have every incentive to do — California, say — can run their own ESA process.
That’s maybe the major change in the ESA title. There’s another one that makes it easier to get dollars out the door for state wildlife action plans, which I think will matter somewhat. It comes from a bipartisan House bill from Representatives Moskowitz and Donalds. Moving on to the Clean Water Act: my personal view is that some of the bigger trade-offs in this bill are in this section. To be clear, I think those trade-offs are worth it, even just on the narrow dimension of water quality, because water quality is so commingled with the other environmental concerns this bill addresses across its numerous titles.
But it does create new, higher standards for when states can impose conditions on projects. Those are generally preserved, with one important change. It removes language saying that the Section 401 conditions states can impose on a Clean Water Act certification had to be consistent with the requirements of the federal license or permit.
Eric Biber of UC Berkeley — I think that’s how you pronounce his last name — made a legal argument that the provision could be a real poison pill. If a court interpreted it broadly, which he acknowledged was not necessarily the most likely outcome, it could bar states from imposing any requirements more stringent than the baseline federal requirements.
So they struck that provision entirely to remove any chance of that misinterpretation, because I don’t think that was the intent of the Democratic or even the Republican drafters. They also codified Nationwide Permit 27, which covers aquatic habitat restoration. That gives force of law to the requirement that the government provide a general permit making it easier for entities to do aquatic habitat restoration and enhancement. And another important change makes it clearer that states have the right to deny a legitimately incomplete application. There was some question about that in the way the language was previously written.
A lot of the groups that have focused on the Clean Water Act provisions from a negative perspective will still say there are provisions in there they don’t like, and that’s fair. We can discuss those as much or as little as people want, but I suggest we go on to NEPA.
David Roberts: Yeah, let’s go on to NEPA.
Daniel Palken: On the NEPA section, there aren’t too many big changes. They removed federally funded broadband from NEPA. Look at the challenges the Biden administration had outside the energy space in implementing the infrastructure law; broadband was one of them. So that’s advantageous for future administrations that want to do meaningful infrastructure work to get people broadband. It requires deep-sea mining to undergo NEPA. That was an objection raised by Oceana and others, because there was an exception for extraterritorial activities in the previous bill, and it conflicted with the law that governs deep-seabed mining.
So they clarified that — more than clarified it. They said that despite the exception for extraterritorial activities, you still have to do NEPA for deep-sea mining, even in non-US-controlled and international waters. And they brought Department of Transportation block grants, the big grants given out in the five-year highway bills, back into the fold as federal actions under NEPA. Those are the changes. What you will still hear, as with the Clean Water Act, is some groups saying, “NEPA is a big enough issue for me that I oppose the bill, despite things I’ll acknowledge are good in other sections.”
My personal view is that I agree with those arguments much less than I agree with some of the arguments about the Clean Water Act changes. And I think one can get at this with a basic 40,000-foot sanity check. NEPA is an interesting federal law because it applies non-uniformly across the country. Not only do some large infrastructure projects and actions undergo no NEPA review at all, because they don’t require a federal authorization or federal money, but a number of states have their own state NEPAs, passed in the early to mid-’70s, around the same time as NEPA itself.
In other words, they’ve been in effect for 50 years. Rather than making gross comparisons, like Texas versus California — states that differ in culture, politics, political leadership, other environmental laws, labor laws, and economies — you can compare states that are near each other, with similar politics and otherwise similar laws, where some have state NEPAs and some don’t. And it’s worth saying that these state NEPAs are just as big and powerful as the federal NEPA. Many are more powerful. They often apply to any action by the counties or localities within the state, which would be like juicing NEPA to apply to all state-level actions.
That would be a far stronger law, and that’s what these state NEPAs do. So, for example: which of Washington and Oregon would you say has much better environmental quality or participatory democracy?
David Roberts: Well, Washington, of course, out of loyalty.
Daniel Palken: If you were a NEPA apologist, you would say that too: Washington is the one with a state NEPA. But my hypothesis is that you could live an entire lifetime in Washington and Oregon and not detect real differences — signal from the noise — in the aggregate features of the environment, like water quality, air quality, and species, let alone in participatory democracy around projects.
Similarly, you can compare Massachusetts and Connecticut, which have strong state NEPAs, with Vermont, New Hampshire, and Maine, which don’t. You can compare California, which does, with Colorado, which doesn’t, or Minnesota, which does, with Wisconsin, which doesn’t. I think most normal people who have lived in those states wouldn’t be able to tell you which ones are doing much better environmentally, in any sense a normal person could detect.
To me, that is the smoking gun that NEPA often isn’t serving the purposes it is mythologized to serve. If, after 50 years, we can’t detect any discernible difference in environmental quality between a control case with no NEPA at all and a test case that has had a law stronger than NEPA in place for 50 years, I view that as an interesting indicator. Meanwhile, Oregon has built twice as much solar and wind as Washington over the same period.
David Roberts: Interesting. So your point is that state NEPAs, in our actual experience, are not playing the environmental protection role people build them up to play.
Daniel Palken: I’m not saying NEPA does nothing. There are definitely targeted cases where people can say, “We secured this mitigation as a result of the NEPA process and wouldn’t have otherwise.” But I think it’s telling that the large-scale qualities of the environment are undetectable — or likely undetectable; that’s my hypothesis — to people who have spent a lot of time in the comparison states.
Meanwhile, NEPA’s effects on project development are much less ambiguous. We discussed last time how federal lands make up 21 percent of the lower 48, and yet only 3 percent of wind and solar is on federal land, even though the resource is really strong there, especially for solar. And we discussed how, when developers are asked, “Have you ever avoided federal land because of the NEPA process?” it’s something like 82 percent yes, 18 percent no.
Asked which permitting process is hardest — federal, state, or local — 68 percent say federal, versus 32 percent for the other two combined. These are patterns you observe in the real world, where NEPA has a real downside for land-intensive development, like renewables, transmission, and energy development generally. I think the evidence is much clearer that it has a deleterious effect there than that it has a real, material positive effect in the aggregate. That’s all I’m saying.
David Roberts: Well, we’re probably not going to settle the global argument over NEPA here, but that’s an interesting perspective. A couple of other bits and bobs: distributed energy had a couple of changes. Anything you want to call out?
Daniel Palken: They put a 5-megawatt cap in place, to head off any misinterpretation that the provision might apply to, say, a 100-megawatt or gigawatt-scale gas turbine at a data center. So, yet another anti–data center provision, if you will.
David Roberts: And a couple of nuclear things.
Daniel Palken: Yes, some new nuclear bills they brought over from both the House and the Senate. They took the Efficient Nuclear Licensing Hearings Act, from Kim Schrier, Marc Veasey, and Morgan Griffith in the House, which basically says that for certain permits and licenses that nobody is contesting, the NRC doesn’t need to hold full hearings and can use simpler adjudicatory procedures instead. Another one allows construction to begin on certain projects before licensing — because licensing takes a long time — while preserving the NRC’s right to deny the license when it reaches a decision.
There’s also a little state-capacity Easter egg, one of the themes of our previous episode: the NRC can raise the pay of certain Senior Executive Service employees — the most important career employees, who run departments within the agency — by 10 percent, at its discretion. Nuclear is an area where there’s been a lot of bipartisan legislating, so there wasn’t a ton sitting on the shelf.
But they picked up those and a few other nuclear provisions, which the nuclear industry has been very supportive of. We’ve seen endorsements from nuclear folks in recent days, like the Nuclear Innovation Alliance. The Nuclear Energy Institute had already endorsed the bill. So the new nuclear title has definitely picked up more nuclear interest and support.
David Roberts: Okay, other odds and ends. Collective bargaining was restored for employees of the federal power marketing administrations. Gas pipeline penalties get de novo review in court. What the heck does that mean?
Daniel Palken: The provision you’re referring to shows up in the transmission title. It’s a fix for a problem FERC has had ever since the Supreme Court’s Jarkesy ruling, which basically held that certain actions administrative law judges were taking were unconstitutional: they couldn’t impose certain types of penalties without a court. That traces back to English common law and the current Supreme Court’s view of when agencies can and can’t impose penalties on their own.
This basically says that under the Natural Gas Act, penalties can be imposed for market manipulation; they just have to go through a court process after FERC makes its findings. So it fixes a problem where FERC wasn’t able to enforce its findings of wrongdoing under the Natural Gas Act as it existed. It will hold bad industry actors to better account. That’s a good consumer protection provision.
David Roberts: Any other bits and bobs?
Daniel Palken: Prescribed burns. There’s a bill in here that I think is really smart, which makes it so that emissions from prescribed fires don’t count toward air quality standards and violations. That’s important because, as much of a nuisance as a prescribed burn to thin out a forest is, the nuisance of a large fire that burns down the whole forest and many surrounding towns is much worse.
So a very good climate and forest adaptation policy made it in here. There’s a brownfields revitalization policy that came out of a bipartisan vote in the House Energy and Commerce Committee. There are a number of things speckled throughout the bill, but I think we’ve hit pretty much all the big ones. They expanded the geothermal categorical exclusions slightly. There are a lot of small bits and bobs.
David Roberts: Let’s wrap up with a few procedural and political economy considerations. You and Arnold Ventures are backers of this bill; you’re in favor of it. But as you’ve noted, there are some bitter pills in here. I’m curious which is your least favorite. Which objections do you think have the most substantive merit? What bothers you?
Daniel Palken: It’s a 494-page bill. I’ll be the first to say there are provisions in it that I would not have written if it were up to me, and that, in isolation, I would recommend people vote against. But balanced as part of a big deal, I think they are totally fair things to trade in a package this comprehensive.
The one I like least is the change to Section 401 of the Clean Water Act. It basically says states need to show their work on every condition they impose on projects: they have to show by clear and convincing evidence that the conditions they impose are the least burdensome way to attain water quality standards.
To be clear, that provision has a real use case. Sometimes states do impose conditions that are too burdensome or too unrelated to water quality, both within and well outside the energy space. But a lot of the time, states are imposing fairly routine conditions — like, if a certain endangered species of turtle comes within 50 feet of your dredging operation in the Mississippi River, you have to stop construction until it moves on.
Okay, fair enough. Can a state justify that as the least burdensome condition? I think generally yes, because there’s an applicable law the state has to comply with, and a court isn’t going to second-guess whether it should have been 50 feet or 43 feet. But the provision is going to have the perverse effect of creating more paperwork, not less, in a permitting bill otherwise designed to reduce it. On the margins, it will tax state capacity and probably deter states from imposing certain conditions that we would all agree make sense. If it were up to me, I really don’t like the way that provision is written.
I would have done it differently. On the other hand, once an agency does that once — once it imposes the turtle condition, justifies it, and it survives a legal test, if it’s ever tested — it will be able to copy and paste that text into other applications that look similar enough, I think.
So it’s not as though you’re creating tons and tons of work that never gets easier. But it is a negative provision. I think it may have some bad effects on water quality on the margins, and it will certainly have some bad effects on state capacity. So that’s one I would take out if it were up to me.
David Roberts: What’s your number two?
Daniel Palken: Let’s see. In the ESA provision, the developer can opt out of the state route if it wants to, even when a state has demonstrated that it has the qualifications to take over. Now, once states are habituated to the program — as with the simultaneous processing for the FERC backstop — I think most developers will choose to go with the state rather than spurn it and get on its bad side.
But I would say that if you’re going to do it, and the state has proven it can, just go with the state; don’t have a bifurcated system where the federal government occasionally traverses into a state. Again, in the scheme of this much larger bill, which has a lot of positives, that’s a negative I’m very willing to live with. But there are a number like those that I view as downsides in a vacuum.
David Roberts: Okay, another two-parter, which I meant to get at earlier. I’m curious whether the landscape of support and opposition played out roughly as you thought it would, or whether anything surprised you, like the intensity of some of the green opposition. And second, do you think the manager’s amendment — these changes we’ve been discussing — will materially change the position of any particular faction? Will it do the work of scaring up more votes?
Daniel Palken: I think we’ve already seen the manager’s amendment shift positions. I mentioned Evergreen earlier, which had put out a directionally positive statement but stopped short of endorsing the bill. The second they analyzed the manager’s amendment and felt comfortable with it, they came out and said, “We support it.” That was a big environmental group. Josh Siegel reported that Jennifer Granholm has an op-ed out today supporting the bill, citing the improvements in the manager’s amendment.
So some big figures have come out, and many more in addition, including some of the tribal voices that are in the minority in that community but are nevertheless in the supportive camp. I think that was in large part because they saw movement in the negotiations toward fixes. So a lot of the stakeholder politics have gotten more favorable, especially for Democrats, but also for Republicans. As we talked about earlier, the deft way they handled some of the transmission reforms bought in the utilities. And the fix for collective bargaining you mentioned, plus local prevailing wage rates for the power marketing administrations, brought the IBEW in.
David Roberts: Trump. Don’t forget Trump.
Daniel Palken: Trump. Yeah, that’s a big X factor.
David Roberts: He came out and endorsed it, which makes you wonder: what does that mean? I can’t imagine he cares about or is following the details particularly closely. So, just reading the tea leaves, what does it mean that he came out at this moment to endorse it? It almost seems a little ratfucky to me. Maybe I’m just too paranoid about Trump at this point, but what does it mean?
Daniel Palken: One thing — and you can see this just by reading his Truth Social posts — is that whatever takes up the most space in his brain often takes up the most space in his posts. Here, that’s the ratepayer protection piece. Trump almost never talks about energy compared to certain other topics, and when he does, it’s ratepayer protection: we’re going to make data centers pay their fair share. He has this pledge—
David Roberts: He wants credit for that.
Daniel Palken: Yeah. Let the guy have credit, if that’s the price of passing this. He did put forward an ambitious ratepayer protection pledge, but it had no implementation, and this bill, in many ways, makes sure data centers pay their fair share. If that’s what Trump wants to hang his hat on, I am very happy about that, because I agree with him on the importance of those provisions.
The way he understands the bill is that this is one of its most important provisions, and it is. His support is also very important, because you need this bill to be signed under Trump. Previously, the White House as an entity had taken a supportive position, but Trump himself had made no pronouncements. We have seen the White House take a position before and then Trump come out and say, “What are you talking about? I disagree.” Also, just because Trump supports it doesn’t mean he can’t change his mind tomorrow. That’s a real risk.
David Roberts: Yes. Let’s just put on the record that him saying he supports it is worth a fart in the wind. Who knows?
Daniel Palken: But it’s a good thing for the chance of passage. The president has to support a bill to sign it into law, unless you have a veto-proof majority, which we’re not going to have on this one.
David Roberts: What do you think about the crude heuristic a lot of greens are applying here? They say, “Look, if Trump supports this, and oil and gas companies support it, and big mean hyperscalers support it — they’re not dumb. They must know something. They must know it’s good for them. Why should we support something they support?”
Daniel Palken: With the caveat that I don’t think any hyperscalers have come out in support, for the reasons we’ve discussed, I think the politics of counterindicators is a double-edged sword. The same groups that say that were all too happy to side with Kevin McCarthy and the Republicans when they were united in opposing the Manchin-Schumer permitting bill in 2022. I didn’t hear complaints then of, “I’m on Kevin McCarthy’s or Mitch McConnell’s side. I must be wrong. Let me flip to whatever they’re not doing.”
David Roberts: People apply this heuristic somewhat selectively, let’s just say.
Daniel Palken: And people on both sides do this. I’m sure I have been guilty of it.
David Roberts: Why not say intersectionality requires us to stand by our union brothers and sisters? Why shouldn’t we support what unions support?
Daniel Palken: Exactly. We live in a country of 300 million people. There are three positions you can take on a bill: support, oppose, or neutral. There are going to be people you don’t like who share your position on a proposal for reasons that are not your own. Sometimes you agree with them on things like ratepayer protection, and sometimes you disagree. And as we talked about previously, the core thesis of this bill is a bet: Democrats believe renewable energy will win on a level, open playing field, and Republicans believe fossil energy will win.
As disconcerting as that bet may be to some people, it is better than any conceivable alternative we could imagine for our politicians, given that they disagree so fundamentally on energy in the first place. We want them truly believing in their technologies and saying, “I want the country to prosper with my technologies. But if it can’t, I’m not going to flip the whole board over and stop all of your technologies, come what may — political retribution from voters, high prices, and so on.”
David Roberts: Okay, there’s going to be a cloture vote today. If it fails, this whole thing will be dead in the water, this whole podcast will be pointless, and I apologize to everyone who listened to all two hours of it. If it gets through cloture, there will probably be a series of other votes. But what’s the House going to do? I’m wondering whether the substantive changes are done and it’s just about voting now, or whether there’s a chance that if it goes over to the House, there will be another round of substantive changes. We don’t have a lot of time in the lame duck to mess around. What’s the process from here?
Daniel Palken: They’re voting to advance. It sounds like something Treebeard would say: “We’re just done saying good morning.” If it passes, there are three pathways in the House. The House could pass it by a rule—
David Roberts: Jeffries has said he’s not just going to rubber-stamp what he gets from the Senate. What does that mean? How seriously should we take it?
Daniel Palken: We should absolutely take what the presumptive incoming speaker and current minority leader says seriously. When he said that, it got reported as “Jeffries opposes,” but if you look at the underlying statement, it wasn’t nearly that, in my reading. Maybe he meant to oppose, but going on his words, he was taking issue with the current bill and saying he needed to see improvements — and that was before the manager’s amendment.
And undoubtedly, many of the bills we talked about that were added to this were straight out of the House, some bipartisan and some actually Democrat-only, and supported by his members. In addition, you saw meaningful movement on the two biggest areas of concern his members and Democratic stakeholders had raised: certainty and tribes. The question is whether it will be enough for Jeffries. And he doesn’t necessarily get to control what comes to the floor. So if there are enough other members — and you have members all across the Democratic caucus—
David Roberts: Remember Mike Johnson? He’s still there, I think.
Daniel Palken: Yeah. Like I said, Sharice Davids, the Native American Democrat from Kansas, has expressed support for moving forward on permitting. Nikki Budzinski, the incoming chair of the New Dems, has been very enthusiastic about the bill, and she has very strong ties to labor. Scott Peters has been a longtime champion, and so has Marc Veasey from Texas. A lot of these frontliners, who live in districts where they are in a knife fight for their seats every two years over bread-and-butter affordability issues, are saying, “This is really important. We want to move this.”
So even without Jeffries, there’s a real chance you have a big enough faction of Democrats. Barring either of those, you would have to pass what’s called a rule in the House, and as a general rule, Democrats don’t vote for Republicans’ rules, even when they support a bill. There have been a few exceptions — Jared Golden and Marie Gluesenkamp Perez have voted for Republican rules — but as a matter of House practice, one side doesn’t generally vote for the other’s rules.
What that means is you would have to really limit Republican defections to move this. Defections could come from people who oppose the bill because they don’t like it, or from people who don’t show up because 100 Republican members just lost their seats and might be mad at the president about how the election went.
David Roberts: And might not want to show up just to pass a bill that’s basically going to redound to Democrats’ benefit.
Daniel Palken: Right. I want to say that I think this bill redounds to the country’s benefit. There are a lot of good, legitimate reasons for Republicans to like this bill; this is a positive-sum game, not a zero-sum contest. But there are a lot of challenges to the Republican-only, or near-Republican-only, pathway, though it’s not impossible. And then there’s the third possibility: attaching it to something bigger. The two big things are the NDAA or, more likely, the spending bill that’s due up. Government funding is set to expire on December 11th, so there’s always the chance you could attach it to a continuing resolution or some other funding vehicle.
So there are a lot of different options in the House, and no one of them looks overwhelmingly like, “Yes, that one, let’s do it. It’s going to work.” A lot depends on the threshold question of whether it passes the Senate; there’s not really a ballgame if it doesn’t. Then there’s the question of how strong the showing in the Senate is, and whether the bill will take on further amendments. I’m pretty skeptical, given how much movement there was from Republicans. I think they really did calibrate to, “We just lost this election. Let’s make some of the big changes we’re hearing from Democrats,” knowing there would be a higher bar to clear.
What we’ve been hearing from Republicans is, “We’re not making substantive moves anymore.” Democrats can pressure-test that at their own risk, but I think there is a real risk that if you try to go further, the rug will just be pulled. Given how little legislative time there is, and how many committee chairs and everything else turn over in the next Congress, my view is that Congress should evaluate this bill as it stands in the new manager’s amendment, and people should vote up or down based on how they weigh the negatives. My view is that the positives outweigh the negatives. We should be honest that it’s a big, complicated bill, and there are some negatives to balance against the positives.
David Roberts: If there’s one thing I’ve learned following US politics for 25 years now, it is that things die. That is the default outcome. It is very, very difficult to shepherd something all the way through passage; I’ve learned that again and again. So if it does die, does it just evaporate in a puff of smoke, with the next Congress starting from ground zero? Is there a framework here that will survive? Pieces that will survive? Or if you start again, are you starting from scratch?
Daniel Palken: I think you’re starting from scratch in the sense that the political environment is shattered. Going into the next Congress, you have new chairs and ranking members on almost all the relevant committees of jurisdiction. In an interesting twist of fate, Senator Whitehouse and Senator Lee will likely be joining each other on the Judiciary Committee.
Maybe they’ve become good friends, maybe not, I don’t know, but they won’t be rid of each other. You’ll probably have Dave McCormick on the ENR Committee, and possibly Jeff Merkley or Ed Markey on EPW. In the House, you’ll have Jared Huffman and Frank Pallone taking over as chairs. Westerman is termed out, and he’s been a big champion on the Republican side who has marshaled a lot of support. The politics is gone, and frankly, I just don’t think the Venn diagrams overlap.
Whitehouse and Heinrich are people who, like me, believe that clean energy standing on its own two feet will win, and that the moral arc of the universe will bend toward them in the short, medium, and long run. They’re in the camp of, “Let’s take this bet on permitting reform.” Some of the new folks coming in might not say this during the debate over whether to postpone and renegotiate, and I am sure they mean in good faith to try to negotiate. But I think the gap between them and where Donald Trump and the Republican senators are is too large.
As you say, the default expectation is that any given issue will not pass in any given Congress. So even if we knew nothing about the negotiators, the politics, or the substance of the bill, your prior should be 10 to one that any given topic, including permitting reform — especially starting from a totally new entry point to negotiations — will not pass in any given two years.
That would be sad to me. On our shows together, as masochistic listeners will know, we have talked mostly about clean energy and the puts and takes on the environment, which is appropriate for this show. But this bill is also doing so many other important things: for the nation’s economy, for affordability, for national security, for our geopolitical footing, for reliability and security.
Part of the reason we at Arnold Ventures want to see it pass is that we care about all of those things in tandem.
David Roberts: I’ll just reiterate, because one take on this from some of the green folks confuses me. As we talked about, there’s a lot of different modeling and a lot of different assumptions, and it’s very difficult to predict how this is going to play out. But they point at Rhodium and say, “It only drops emissions by 4 percent. That’s lame. That’s inadequate as a climate bill.”
Daniel Palken: And it’s far from just climate. Think of any other physical-world infrastructure that future Democratic administrations will want to build. Again, the party that will most benefit from this is probably the one seated in 2029, and all of our priors should be updated: that is now more likely than not to be a Democrat, and more likely than before to have a governing majority. Suppose a Democratic administration wants to do a lot of innovative things around multimodal transportation infrastructure, rather than just funding highway expansions.
David Roberts: What was it, the National Transit Association or whatever? I forget the exact name, but they just came out and endorsed it.
Daniel Palken: A number of transportation groups have come out. Stephanie Pollack, who was a big Biden official, wrote a really good op-ed. We’ll link it in the show notes.
David Roberts: Previous Volts guest Stephanie Pollack.
Daniel Palken: Stephanie’s amazing. She wrote a good piece on how the reforms are actually likely to asymmetrically advantage the kinds of projects that are less familiar to DOT in its NEPA process, which tend to be things like bike lanes and public transportation projects. High-speed rail has been a disgrace in this country.
It’s not that the technology doesn’t work. Look at Japan, Europe, or China: the trains move. But the rail doesn’t get built in the US. That is not just a federal permitting problem; it’s also the states. People will often say, “Why are we doing federal permitting when there are also state and local problems?” Go talk to state and local policymakers. The first thing you’ll hear is, “Why would we fix our problems when the federal government makes it so hard to permit?”
One nice effect of this bill, I think, is that it will take away that excuse from states and localities. If you’re a Democratic administration with an agenda that touches the physical world and the prices people pay — whether it’s broadband, housing, transportation, energy, or anything else — you should care about setting up an environment where government can function intelligently, while there are still good checks on government doing things that are harmful or unintended.
What I like about the manager’s amendment is that it addresses a lot of the hypotheticals and legitimate worst cases people raised about the original draft, while keeping, and often strengthening, the things in the original draft that people like me were and are fans of.
David Roberts: As a final political note — maybe this is implicit in everything, but just to draw it out — there’s a lot of free-floating anger and discontent in the world, online and among voters, and a lot of flailing back and forth, punishing incumbents over and over again. The only hope of forestalling that, of Dems actually earning some approval once they take power, is things visibly happening: things getting passed, things getting built, prices coming down.
Only visible things happening have any chance of saving Dems’ bacon with the new power they’re getting, and this bill clears the way, in the physical world, as you say, for things to start getting built visibly. So I just think, politically, that has to be top of mind.
Daniel Palken: That’s front and center. Absolutely.
David Roberts: All right. We did it again. This was fascinating. How long is the lame duck? We’re talking weeks now, right?
Daniel Palken: It goes to the end of the year. They try to get out of session for Christmas, and that’s usually the motivator, but you never know if they’ll be there until December 30th. That happens a lot of years, especially with the NDAA.
David Roberts: So we’ll know in the next couple of months what the fate of this is. Thanks for coming on and walking us through some very complex and subtle changes in this bill. Let’s keep our fingers crossed.
Daniel Palken: Thanks for having me. I know our friends and loved ones are wondering what’s become of us at this point; we should probably go announce that we’re still alive and safe. It’s been a pleasure being locked in this room with you, Dave.
David Roberts: All right. Thanks, Daniel.
Daniel Palken: Bye.
