What’s up with the new federal permitting reform bill?

Dr. E.O.F. Hello everyone! Salutations, greetings. This is Volts for October 9th, 2026. What's up with the new federal permitting reform bill? I'm your host, David Roberts. If you are involved in energy discussions, you are almost certainly aware That the long-awaited federal permitting reform bill has finally been unveiled. The Bipartisan American Affordability and Jobs Act, B-A-A-J-A, which I guess everybody has agreed we're pronouncing Baja, was hashed out over the course of many fraught months of negotiation among Senators Shelley Moore Capito and Sheldon Whitehouse of the Environment and Public Works Committee. And Senators Mike Lee and Martin Heinrich of the Energy and Natural Resources Committee. You will notice that is 2 Rs and 2 Ds. This is a genuinely bipartisan proposal in that it contains provisions each side loves and provisions each side hates. The bill is more ambitious than analysts expected in almost every direction, and it has divided both coalitions. Many climate organizations have urged Democrats in Congress to vote against it, though others have remained neutral or tentatively positive, while clean energy industry boosters and investors love it. Fossil energy groups also love it, though the more radical Freedom Caucus in Congress objects to the presence of virtually any provisions that help renewable energy. Everyone is fighting over it. Online discussion has been, even for our era, heated and vicious, with personal insults and skepticism about motives flying in every direction. What I am going to attempt to do today is have a reasonable discussion of the contents and relative merits of the bill. My guest is Daniel Palkin, who runs infrastructure and energy permitting work at Arnold Ventures, a philanthropy devoted to sustainable energy systems. Before that, he spent more than 4 years in the Senate working for various senators on various bits and pieces of permitting legislation, including 2024's ill-fated Manchin-Barrasso Energy Permitting Reform Act. He has seen the process from the inside and followed the development of all the various provisions Closely. We are going to discuss how we got here, what the bill actually says, what we might reasonably conclude it will do, and the political considerations going forward. I expect this pod will fully please no one, but I hope that those of you out there who have not tuned in yet will find it at the very least educational. So let's get into it. All right. With no further ado, Daniel Palkin, welcome to Volts. Thank you so much for coming.

Thank you so much for having me, David.

We got a lot to do here, a lot to do. So just to maybe prep listeners slightly, I'll just sort of lay out kind of the arc of the conversation here in case they want to skip ahead. So we're going to start with a little bit of background and scene setting context. Then we're going to discuss the energy provisions, mostly the stuff that came out of the Energy and Natural Resources Committee. Then we're going to discuss the environmental stuff that came out of EPW. And then toward the end, we will talk about the politics. Why do this now? Why not wait? What are the balance of considerations? What does the modeling say it might do? All that kind of stuff. We will get to that stuff at the end. In the middle, it's going to get maybe a little technical just to warn people, but there's a lot to discuss. All right. So, Daniel, let's start here. Maybe for listeners, you know, everybody I think who's yelling about this online, who is engaged with it, takes this for granted, but maybe for listeners who have not been following this for ages, why don't we just start with like, What is the problem here? Nothing is bipartisan these days, and yet somehow we've found something that both parties agree, at least agree is a problem here. So maybe just lay out briefly, like, why do we need permitting reform? Why is everyone so exercised about it?

Yeah, that's the right question. It brings us to kind of what is the energy sector for? What are we trying to do in this country? I'm going to take a framing from One of the co-founders and chairs of my own organization, Arnold Ventures. The way I've heard John Arnold put this, which really I think resonates with me, is that there's 6 or 7 things we care about solving for in the energy sector. We care about affordability. That's obviously topic number one in political discussions these days. We care about reliability and resilience and kind of having the comforts of everyday life and not having to think too hard about how they get to us. We like to turn light switches on and have the lights come on. We care about economic growth and scalability and the ability to absorb new industries and opportunities. We care about energy security. We've seen a lot of that recently with foreign entanglements and how scary it can be. The prospect of either prices going way up or reliability going down or worse as a result of not having secure energy supply. We, of course, care about jobs and the ability of the people who work and might work in the future of the energy industry to be gainfully and well-employed. And then lastly, we care about sustainability and the environment and the climate. And historically, permitting reform has been something that I think most proponents, and the opponents probably wouldn't contest this themselves, can help deliver on the first 5 or so of those. So affordability, reliability, resilience, growth, energy security, jobs, making it easier to build things. We'll maybe discuss in a second why it's hard to build things. You can draw a pretty straight line to all of those, but the last one has always been and remains contested. Is it a good strategy for the environment or the climate to make it easier to build things, or is it going to backfire? And are you going to, at a minimum, be trading off that value for the other ones? In the background, right, 2 things have happened as a monotonic trend in American society and a lot of Western society. As we've become more affluent, as we have more people, populating the land, it has become harder and harder to build things in part, but not in whole, because of the presence of many permissions that you need to get from local, state, tribal, federal government. And the federal ones play a big role in that. And we're discussing about a federal bill today, so we'll restrict ourselves to talking about those, but it's worth flagging that there are definitely other permitting regimes out there that add and layer. Upon this challenge. It's become harder and harder as our laws have matured and as our country has matured to build things. And yet in the background, and this really bears on that last point about sustainability and the environment and kind of that dimension, the clean technologies, the ones that kind of show great technological promise for delivering us a more affordable, reliable future while also having fewer carbon emissions and less environmental pollution, have surpassed the wildest expectations of even the most astute observers 30, 20, even 10 years ago. When I was born in 1991, the price of a solar module was about 1,000 times what it is today. Meanwhile, the price of extracting or the cost of a barrel of oil in inflation-adjusted terms is about the same today as it was when my grandmother was born. That's not a knock on the oil industry. There has been tremendous innovation and progress, but there is a nifty asymmetry between technologies that you have to drill for where geology competes against technology. And technologies that you mass produce where economies of scale and learnings accumulate. And obviously, if we were to dive deeper into that, the price of a solar module is not equivalent to the price of solar electricity, et cetera, et cetera. But there is this trend that I think underlies the theory of change that we are now living in a paradigm where making it easier to build things may structurally advantage some of the cleaner technologies and actually present us a path, perhaps not a trade-off-free path. We'll discuss some of the pros and cons and the trade-offs of different parts of this bill. But I would argue that it actually scores quite well on this last criterion that historically skeptics have said, well, you know, that's a major trade-off reason not to speed up permitting.

Yes, that asymmetry point is one that I love and could spend a whole pod on, but I'm going to tear myself away from it and move on. I do have a couple of just general questions about this. You are correct that the general theory of the case for democratic involvement here and for the involvement of the left basically in this Is this premise that if you make it easier to build everything, clean energy will win, right? That's kind of the premise of their involvement. But then you got Republicans who are also involved in this, who presumably can overhear us saying that and have access to all the same models and the same background information and have come to the opposite conclusion, I'm assuming. They think that if you make everything easier, their favored sources of energy, principally gas, is going to win. Is that right? Are they just wrong? What's their thinking on this?

I mean, I do think you're hitting on kind of a fundamental dynamic that underlies the politics by which this bill can happen, which is that both sides have faith in their preferred technologies. And I've actually heard some of the negotiators of this bill describe it plainly in those terms, almost as a bet where I bet you that on a level playing field, my technologies will outperform your technologies. There's kind of a cynical way to view that bet, or like a nervous way to view that bet where it's like, well, what if the side I'm rooting for is wrong or something like that? And fair question. But I think also it is healthy as like a baseline matter that this is the bet our policymakers are making, right? It tells us a priori that our policymakers on both sides of the aisle believe that their resources are genuinely better. And will succeed in a level playing field, and they want them to succeed, and they're willing to tolerate the other side's resources succeeding if they're wrong. I think that that is far better than any imaginable alternative of like, you know, I want the world to totally come to a halt if my resources can't eat the whole cake. It's also not a zero-sum, I want to highlight, as that kind of very naive and first-order framing provides. There's a lot in this bill for resources that are, first of all, very popular with both sides. So geothermal has a big title of 8 or 9 sections, and a number of the provisions that aren't specific to geothermal but are tech neutral will actually probably have large asymmetric effects on geothermal. It is like a shouting contest between the parties for who likes geothermal more. So there's a lot of resources.

Yeah, we'll get, we'll get back to that.

See positive some, but I do think you have hit on a dynamic where the Democrats who negotiated this sincerely believe that the attributes of renewable sources, including but not limited to geothermal, will win out in the long run. The Republicans who negotiated it believe that fossil will. One other potential way to square this is there's different time horizons, right? The time horizon on which clean wins is potentially somewhat medium-long, right? It's not to say it's not also winning in the short term. You look at the interconnection queues, but that figure I gave about a 1,000-fold cost reduction in the cost of solar modules over my lifetime. If any trend like that continues in the next 3 decades, and trends will be bumpy, right? You'll have ups and downs. But if the trend of Wright's Law, which has thus far been a somewhat iron law of technological development for small, modular, factory reproducible technologies, continues to hold, and there's good reason to think it will, the case only gets stronger in each coming decade for how this would advantage clean technologies. And I think that's an important point.

Yeah. Another sort of general question about the whole thing, although maybe we'll get into this more when we get to the NEPA section, but it seems like one of the premises of this entire bill, of many, many sections of this bill, is that sort of regulatory provisions are holding things back and the solution is to cut back on those regulatory restraints. There's a sort of general counterargument to this. I'm sure you've read the paper by Edelman and Ploun about myths about permitting reform, but their basic point is Biden was actually accelerating these environmental reviews of various kinds. And the way he was doing it is not by sort of artificially restricting their timelines or their reach, but by better funding and staffing the agencies involved in doing them and having those agencies talk with each other and coordinate better and having earlier and better public engagement. And you know what I mean? So how do you view that sort of macro argument about this whole thing? Because when I look through the bill, I see very little of that and I see a lot of just sort of restricting the reach and timing of regulations. Do you follow me?

Yeah, I follow exactly what you're saying. And I think it's a valid point. the ability of the federal government to permit things of, you know, private industry or public entities to move through those permitting processes is a two-termed equation. It is both what is government being asked to do on the one hand, which, as you say, is a large and obvious focus of many sections of this bill, and also what tools are they equipped with to do it.

Right.

And, you know, you said something interesting there, which is that you see very little kind of things in the second bucket in this bill. I would actually put to you that there are a number of medium-high impact things kind of lurking throughout This bill, Easter eggs, if you will, that only take a line or two. And, you know, this is a 417-page bill with 71 sections. So I'm not faulting anybody who at first blush sees some of the bigger titles and the longer changes to regulatory text and has these escape their notice. But to give a few examples, which is not an exhaustive list, right? This bill has a section which gives pay flexibility to the PMAs, the Power Marketing Authorities. This is the Bonneville Power Authority.

Mm-hmm.

This is the Western Area Power Authority. That provide power to collectively dozens of states. They're traditionally in the hydropower business, but they're major players in the transmission and grid space. This bill gives them a lot of new hiring and pay authorities commensurate with other public sector utilities. I think that's a no-brainer, and it equips these large public utilities to actually operate as more normal quasi-businesses. It does another thing where it gives FERC special hiring authority. For economists and lawyers. And anybody who knows FERC knows it's just a building full of economists and lawyers. And so being able to bring on a lot more of those talented experts without having to go through this current provision, which is in law, which requires them to consult with the Office of Personnel Management, which tends to be a real buzzkill on can you have a special exception under law for hiring these sorts of people out of the normal process, is actually going to be a big deal there. It creates a new geothermal Ombudsman, it's called, and it allows that person to pay 25% of current salary retention allowances to people in the civil service who are doing permitting work. It creates a new grant program of $20 million a year for tribal historic preservation offices for implementing digitization work of allowing people to kind of access where are the resources that we're going to potentially run into conflicts with when doing a National Historic Preservation Act. It creates a new grant program also, I believe, of $20 million a year for 5 years for implementing streamlined permitting of distributed energy resources like rooftop solar. It explicitly names EV charging, home batteries. These things collectively add up and I think help on the other side of the scale, which, as you point out, is often somewhat neglected in the discourse alongside, I think, also very important, like right-sizing the burden that federal government has in terms of what it has to do.

All right. Administrative capacity Easter eggs, a good name for a band as well. As we go by those, as we're talking later, maybe you can shout some more out if we bump up against them in our discussions. And I think you'd probably agree, those are going to be relatively small beans relative to the macro decisions of Congress about how and whether to fund agencies, full stop. Those are the big decisions. And maybe we'll return to that in the politics.

Correct.

We'll return to that in the politics. section. But one more background question, and this we need to be quick about because I want to get to the bill itself. But this is not the first time Congress has tried to grapple with this issue, as you are no doubt painfully aware. Could we just briefly run through, like, what is the history of permitting attempts? How substantial were they and why did they founder?

Yeah, it's like that scene in, like, The Matrix Reloaded where he goes into that special room with the Architect and the Architect is like, this is the 6th time we've, you know, failed at passing permitting form and we're getting terribly efficient at it. That's kind of how it feels working on this issue. The, the real SparkNotes version is there were a lot of efforts, like every 5 years in the highway transportation bills that slowly ramped up over about 2 decades. And until 2015, didn't do all that much when they enacted the FAST Act, which created this big permitting dashboard that exists at the federal level and some judicial review protections. Then fast forward to the modern day, there were 3 real kind of recent era efforts. There was the effort that took place that was the kind of Joe Manchin, Chuck Schumer negotiated permitting deal that tried to be attached to NDAA in 2022, but failed on a deadlocked vote, 47 to 47 in December of that year and didn't go further. It had transmission provisions. It had the Mountain Valley Pipeline, which was very controversial. That Mountain Valley Pipeline then actually made it into the second of the 3 kind of modern efforts preceding this one, which was the Fiscal Responsibility Act, which was when there was a threat to default on the debt ceiling. From House Republicans who said, we're not going to raise the debt limit unless we do federal permitting reform. And there was an effort to try to get a kind of NEPA judicial review for transmission bargain in there, but the 2 sides couldn't really align on that. And they settled on what were some pretty, I would say, milquetoast timeline and page limit reforms, as well as a study on interregional transfer capacity and the permitting of the Mountain Valley Pipeline. And then there was the EPRA bill, which I spent a lot of time with a great team of people working on when I was on the Energy and Natural Resources Committee. Working for Senator Manchin and his staff. That was a bipartisan negotiated product between Senator Manchin and Barrasso. It contained a lot of transmission provisions. It contained provisions on hard rock mining, on liquefied natural gas, on leasing of renewables and fossil fuels, on geothermal. It took a vote. There was a vote on it in the committee. It passed the ENR Committee 15 to 4, very strong bipartisan showing. But there was no real path in the House, especially after the election resulted in a Republican trifecta. And then I kind of went back to the drawing board with new negotiators starting up this Congress who, as you alluded to, have spent really the whole 2 years of this Congress embarked on a colossal negotiating effort to bring forward this much bigger and more expansive product than any of the 3 previous efforts.

Maybe that's worth emphasizing here is this permitting bill is bigger in every sense and more ambitious, I think, in every sense than any of those Previous attempts. You agree?

Correct.

And the transmission stuff, I mean, we're about to get into it, but how much of that is your leftover work? How much of that is your EPRA work that somehow lived on?

Definitely not, you know, my EPRA work. It was a number of people who worked on it. The EPRA provisions have been preserved and in key ways actually strengthened in this proposal, but they've been added to a number of other really interesting provisions on everything from advanced transmission technologies to interconnection and things like that.

Okay, well, that's enough by way of background. Let's get into the bill. Let's start with the good happy stuff that makes people in the clean energy world happy. So let's start then with transmission, and we'll discuss how true this is, but I think a lot of people in our world are viewing this as transmission is the big get here. Transmission is the big Prize, and to some extent the political question is just how much other stuff do you want to trade in exchange for getting this great transmission stuff? And I think the transmission stuff is better, at least from my read, than anybody really expected. So let's talk about it. How lines get permitted. How does a big interstate power line get permitted today? What does this bill change about it?

The short answer is it often doesn't.

Yeah, I guess that's the right answer.

So in reality, right, I kind of say that tongue in cheek, but before you even get permitted, transmission has a more fundamental problem, which is that because it is centrally planned infrastructure, it's good dating back to the kind of origin of the utility regulatory compact. It is kind of one of the things that is most like shared infrastructure. Power flows over it between territories. It's hard to have a model where it's like privatized. in a way where anybody can just build a line anywhere without having like a million lines running down Manhattan, as you kind of see these pictures of in like the 1800s. So transmission at some level usually be planned or go through some centralized vetting process. And what that looks like today—

Yes, you've got the 3 Ps in the background here: permitting, planning, and paying. We're going to touch on all those.

Planning is, in my mind, the kind of the most fundamental of the Ps, because if you don't have transmission that gets planned, there usually isn't another mechanism to bring it forward. And so in the US today, we do a decent job, maybe a too good job, at building transmission within utility service territories. But we do a bad job building it between utility service territories, and we do an even worse job building it between what are called regions, these kind of RTOs or ISOs, and then equivalent regions that live in the parts of the country where they don't have those organized wholesale markets. And so what happens today, as an example of this, that really like crystallizes how bad the situation is. Interregional transmission. There's 11 of these transmission planning regions that were instantiated after a 2011 rule called Order 1000. Those 11 regions, there are 15 region-to-region borders where they touch each other. And that rule, that 2011 rule, has been on the books for 15 years. So some quick back-of-the-envelope math, region pairs times 15 years is 225 region pair years where every year since that order was passed, we have had an opportunity to do what the order lays out as interregional coordination, where the regions are meant to coordinate their needs with each other and find transmission solutions that meet them. Do you want to guess how many interregional transmission lines have been planned and built as a result in those 225 region pair years?

Is it meaningfully larger than zero?

It is actually identically zero. We've built zero transmission lines as a result of that process that FERC tried to set up to do interregional coordination. It's not hard to understand why. When you look at the process, it's incredibly toothless. What this bill does as a remedy to that is it writes a actually quite, I guess, toothsome would be like a version with teeth of an interregional planning rule that requires all these regions to get together with their neighbors on a periodic basis and go through a planning exercise subject to a bunch of known best practices, which have kind of been emblematic of the regional planning processes in regions where that has worked in the last several years. And identify needs that can be met with transmission, identify transmission solutions to meet them, and then select those solutions if they're meeting a set of affordability and reliability metrics that are essentially set forth in the bill, which there's very good reason to believe. There's so much pent-up need on the grid that we would have a lot of lines be able to meet. So that is one of the kind of central reforms in this bill. And then, by the way, it does the same thing at the regional level.

But what if they don't? You know what I mean? What if they don't? Is there a forcing mechanism?

There is. And this is the part that carries over from the EPRA bill is kind of the one-two punch of these 2 priorities. The first is this, I'm not going to call it top-down because it's really middle-out. It's driven by the regions, but this middle-out policy of having the regions get together and plan themselves. But then the failure mode of planning that we have observed time and again in this country is there are certain stakeholders that sometimes have a strong financial interest married with a capability to delay, delay, delay planning until it essentially becomes a paper exercise. To say it plainly, sometimes certain utilities are the entities that have the incentive to do that. This is probably unintuitive for people, right? Utilities, the first thing you learn in utility school about them and that they want to build more infrastructure to deploy capital to make a regulated return. So why do they not want to deploy the biggest kind of capital of all, which is a large hulking transmission line between territories? And it's that last part. It's when you build transmission between territories, there's 2 things that are wrong with it from a utility's perspective, oftentimes. One is that by virtue of going out of the territory, there's no obvious God-given reason why the utility that's only in one of the territories that the line is touching should have the right to build it. And so there's no reason that they can articulate to their regulator why we have to build this. And indeed, that's been reflected in regulation for years where regulators have said, yeah, like economically significant transmission that's built to solve problems like this, You got to bid that out competitively to make sure people are getting the lowest cost. That ensures that utilities don't like it. The second thing, which is even worse for them, is that you often don't get to build the generation on the other side of it. The generation is being supplied from another RTO or another utility or developer somewhere else.

It eases congestion in your area, thereby lowering prices in your area, which in a sane world would be a good thing, but not always from the utility's perspective.

To get back to your question, which is the essential question of what if they don't? What if they turn this planning into some sort of paper exercise? What the bill does in Section 2101 is it overhauls the existing backstop siting process, which is a process that already exists at FERC, but it makes it— puts the applicant in the driver's seat. So another, a non-incumbent, can bring a transmission proposal to FERC and say, hey FERC, we would like you to take a look at this. And if it passes your cost-benefit tests and if it improves the reliability of the system and meets these other guardrails that are set out in the bill, you will permit that line and you will cost allocate it according to the normal beneficiary pays cost allocation where you're having the people who benefit electrically from it pay. The thing that does is very powerful. It creates an incentive where every market actor can see proactively that if planning does not go apace, there is an alternate pathway where independent developers can go into the room of the regulator and say, please consider our line. The theory behind that backstop is that by having that there, it will be a massive incentive check on utilities to say, we're not going to turn this into any sort of paper exercise. Because as much as utilities might not love an inter-regional planning process that involves building some lines out of territory, they would much rather be— see through that process in which they have a big privileged seat at the table than have somebody else be able to identify real needs on the grid and bring things to FERC in order to build them.

Right. FERC basically bypassing their planning process. They do.

Yeah. And we want the utilities doing this, right? We want the regions. We don't want 1,000 lines going to FERC and them having to evaluate them. FERC doesn't have the state capacity to do that, no matter what hiring authorities we give it. Like, the theory of this bill is to get the regions working collaboratively, and we've seen enough success at the sub-regional level, at the intra-regional level, to know that this is like not an unattainable task. Like, SPP is doing a very good job at this. ERCOT does a very good job at this in Texas. You know, MISO, has done a decent job at this over the years.

Here's a slightly technical question. That's planning and permitting. There's also paying. You said these things are going to be paid for according to benefits, basically. That's the kind of principle. But there's a provision in here that state policy benefits like emission cuts or compliance with renewable portfolio standards Do not count as benefits and are explicitly excluded. My understanding is basically this is red states' way of saying, we do not want to be dragooned into paying for blue state climate policy. Do you think that is a meaningful provision? Do you think that's going to make it harder to justify building lines that are specifically going to be built to reach renewable resources?

My personal view is that is the only way that we are ever going to get transmission planning at the interstate level to work, is if red states and red counties within blue states, which is most of the country geographically that's going to be hosting transmission lines, is not on the hook for paying things that they— paying for things that they do not agree with. If we lived in a different world where everybody said we're willing to pay a premium for, you know, reduced emissions, That might be a different story. But I think that the nice thing about transmission is that there is a lot of genuine economic need for it. There really, really is. Like, the DOE under Trump, like, a few weeks ago put out a, what they call the Transmission Needs Study, which Biden had previously put out a version of 3 years prior in 2023. And that study identified billions and billions of dollars in opportunity, like, just the dollar per megawatt-hour transfers that they were identifying. For kind of interseam from the Western to the Eastern interconnect transfers of power are very massive. And so I think the case is it's widely understood, like this is a tremendously non-controversial statement to be very strong that just on the grounds of raw, honest affordability, reliability calculations alone, you can make a lot of transmission that is really meritorious to the country pencil. And if you try to kind of juice the numbers with some extra benefits, You might succeed in juicing the numbers, but you will make everybody really mad and grind process into something that where you'll never move lines through in practice. But by and large, like, what does transmission do for like different sources of energy? You know, whether we're talking solar today or geothermal tomorrow, I would say it does 3 things. One is it creates headroom. This is in many ways probably the most important. We live on a system now with almost no headroom on it on the generation or load side. Yeah. Right. And so anytime anybody goes to say, I have a new wind farm, or even I have a new gas I have a new anything I want to connect to the grid. They run into a paradigm where it's like, oh, look, we have to do an incredibly complex electrical engineering study to figure out just what the minimum is we can build to get you onto the system. And it's highly non-trivial because the grid is the, you know, world's most complex machine is how some people have described it. And also it's going to take several years and result in several tens, if not hundreds of millions of dollars of network upgrade costs and cost to the system. When you have a system that is a bit plus size, that has a bit of headroom, so the next thing that comes on is able to come on quickly, even if you charge that somebody a fair rate for their share of the infrastructure, that is just a paradigmatically different world in which they can integrate for the grid. So headroom is number one. Smoothing is number two. You know, the variable resources are obviously not smooth. You know, the wind is not always blowing anywhere, but it's usually blowing somewhere. You get benefits like that. That's also just good for the bread and butter operation of our existing resources. We've seen a lot of winter storms. have taken out gas over like 1,000-kilometer radii, and being able to move power from one region to the other would provide real reliability benefits, both for the legacy resources and for new resources. The last one is access, which is building to new areas allows you to access prime resources. You know, geothermal is really only good in the Western Interconnect, but the Western Interconnect serves 20% of U.S. electrical load. So if you want to ever have geothermal in the near term for the resources we might access in the next decade or two, be a resource that matters for the country's growth and decarbonization trajectories, you're going to need more than the paltry 1.3 gigawatts of transfer capability that we currently have across the seam. And I want to stress that that access point isn't necessarily synonymous with, oh, I'm building a long line out to go to the geothermal well and drink the electricity from it. It's often I am making better connectedness on other parts of the system so power can flow, you know, from one geography to another where it's currently congested and constrained.

Right. And just to reference here, our mutual friend Jane Flegel's frequent point, which is it makes a lot more sense to build in advance of load sometimes. Do you know what I mean? Like build the capacity with the presumption that load will be built around it rather than building increments of capacity with new load, which is our current torturous system, which is just going slow as hell.

Yeah, I cannot endorse Jane enough on that. Like having transmission tends to be the slowest to build and deploy of generation, transmission, and load. And so by the time you realize you need a big transmission upgrade to accommodate your load or generation, it's 5 or 10 years too late. And that's unfortunately the situation we find ourselves in today.

Yes. That point also transfers straightforwardly to public transit, but we won't get into that. Okay. The points I wanted to make is that one point I've seen many people make is this bill goes a little harder at utilities than I think a lot of people expected. And I think sort of bespeaks the fact that utilities Are somewhat kind of politically and socially on the back foot right now, which also speaks to sort of the unique opportunity we're in. But there are some other things that are sort of happening that maybe utilities are not super excited about. Part is states can refer local transmission spending to FERC, and FERC, there are some penalties involved, including ROE cuts, things like that. Talk about that. Very briefly, we've got to move on from transmission pretty quick, but let's touch on a few other things.

Yeah. Okay. Just quickly on this one, totally novel authority. And this one is kind of really interesting because it's for the states. The state in which the transmission that is of concern is in has sole discretion to refer their utility to FERC, essentially for an investigation. FERC is then given its full investigative authorities that are normally reserved for like market manipulation cases where they can compel testimony, subpoena documents. They run a big exercise in tandem with up to 3 representatives from the state looking into if there's been imprudent investment. And then if the commissioners by a vote determine that there has been, as you say, the statute recommends a number of penalties to them, including fines up to $5 million for imprudent facilities, reductions in returns on equity, eliminating the entire presumption of prudence for the class of local transmission facilities that's been developed and planned. This is attempting, I think, to address a real problem, which is the Overbuild of local transmission that is weighing down bills and crowding out other investment.

Yeah, they're not gonna like that. And then quickly, let's talk about grid enhancing technologies. Volt's listeners know grid enhancing technologies are, to a first approximation, ways of getting more capacity out of existing lines or existing rights of way. This bill makes them mandatory whenever the benefit cost ratio exceeds One, with again, penalties to state utilities if they don't do that. Is that correct? And is that as cool as it sounds to me?

So yeah, it sets up a best available conductor standard, and that standard is based on the ability of the conductor to transfer power and transmit power efficiently and other factors. And then basically FERC applies that standard and utilities are tasked with applying it when they build new transmission or upgrade existing transmission, and they are given a presumption of prudence if the benefit-cost ratio is greater than 1 for those new facilities. The other thing this bill does on advanced conductors and these advanced technologies is it really streamlines the permitting for them. Oftentimes these upgrades occur in existing rights of way, right? And, you know, an existing right of way is something that we've already permitted. And so it says it really reduces the permitting burden in many cases to zero under laws like NEPA specifically for activities that happen in existing rights-of-way that are these types of upgrades.

Anything else worth mentioning quickly on transmission before we move on?

In the transmission title, I wouldn't say this is transmission qua transmission, but there's an— a few interconnection provisions that are really interesting. And one that I want to highlight is this interconnection automation provision. This was a bill that actually passed as part of the DOE AI Act in the previous Congress, and it was a provision that was in there that basically requires FERC to direct all of the RTOs and the other providers of interconnection to update their interconnection processes with a bunch of the modern technologies that are now available around cloud computing and AI and machine learning. RTOs are not generally the hotbeds of computational innovation that running a fast and modern interconnection process would demand. And this is the sort of thing where could FERC do it under existing authority? There's actually debate on that within FERC, as I understand it. It's a very granular finding. to have to make that rates are unjust and unreasonable because people aren't using this specific computation technique. But directing FERC to do it, it not only answers the question of could they do it, but answers the question of will they do it. And I think we've already answered the question of is there meaningful upside to this? I definitely think there is. So that's like a sleeper provision that I see as having a lot of upside if some of these new companies and technologies that are doing this sort of automation work kind of achieve the heights that they've set for themselves.

Okay. So transmission, better planning, better permitting, faster permitting, more inter-regional cooperation, easier to permit, faster to build, mandatory or close to mandatory grid-enhancing technologies, and better, faster interconnection procedures at RTOs. These are all things that I think everybody in clean energy world, or almost everybody, agrees are huge wins and hugely necessary for expanding the clean energy grid. I think unqualified goods, as far as I can tell. Let's talk about data centers real quickly. This is interesting to me. So talk about what the bill requires of data centers.

The bill has a number of provisions. The section to really look at here is 2107. It's also in the transmission title. A number of them try to encourage a number of best practices. Some just give the states authority to do certain things like try to allocate interconnection rights based on an open season auction concept. It's been pointed out by very smart people like Travis Kavula that the current way that we do interconnection for generation and load is often that we have people get in a line and we like award them a property right as if this were like the Colorado River and say, if you were here first, like, you know, you have a God-given right to get considered before You know, the guy who came after you, even if your project is way less ready and has a bunch of other things wrong with it. A good way in other walks of life where we have a fixed resource that we need to allocate administratively, like spectrum, is to say we're just going to auction it off and let people's willingness to pay money for those rights be the first indicator of their seriousness and willingness to come online. So there's concepts like that that will both hopefully raise a lot of money for the system, because if you're having these people bid, they will be paying that money and that will be going into the grid, into ratepayers.

But isn't the result of that going to be that data centers get all the capacity because they have all the money?

Not necessarily. Data centers are somewhat unique in the size of their loads to begin with. So other smaller loads, I don't think are going to necessarily be facing these competitive processes. This is an optional authority for the state, and I don't think a state would say like, Joe Schmo, you have to bid against a data center to, you know, connect to the local utility. I think that there's a lot of details up to the implementation. But I don't see the sorts of, you know, you could imagine really pathological interpretations of implementing this. I am less worried about scenarios like that. The other provision I think really deserves highlighting that has gotten a lot of attention. This is maybe the one with the most teeth of the data center, you know, ratepayer protection type provisions, is this provision that has to do with something called AND pricing. FERC people name things in like the most hopeless, imperceptible way. And pricing traces to a 1994 policy statement that FERC put out. Where it basically said that if you're a load connecting to the system, you can either be made to pay the incremental cost of any network upgrades that you need to connect, or you can be made to pay the average embedded cost, the total cost of the wires on the system divided by the number of, you know, megawatt hours used, multiplied by your number of megawatt hours used. Fine. Either of those things, either of those bases at looking at cost, if you made everybody pay one or everybody pay the other, it would sum to the total cost. of the grid. But what this bill does is it says that data centers, you have to pay both. It says computational loads, and that's called and pricing. You pay the incremental cost and you pay the average embedded cost. And what that does is it's going to be, and we can discuss kind of the pros and cons of this because the calculus of it isn't entirely obvious, but it's going to be a very big, significant revenue pull in kind of human terms, potentially billions of dollars from data centers.

Mm-hmm.

Into ratepayers' pockets and into grid infrastructure, because they will be paying more than their fair share. And that is like a policy decision. Like Congress has it within its right to make that decision. And I think it responds to this political moment where there's a lot of angst around, are these data centers driving costs up? And to be honest, there are a lot of kind of hidden vectors where data centers can drive costs up. Sometimes policymakers think they've covered the obvious ones by saying, okay, we're Sure, we're making them cover the right universe of incremental costs on the transmission system, but then what about the distribution system? What about energy costs? What about capacity costs, ancillary service costs? What about the costs of inputs and commodities and equipment that they're driving up? And so I actually don't think it's a dumb idea to make sure that in this one area of kind of grid network costs that they are paying in a sense more than their fair share.

Yeah, I guess just to give voice to, I think, what might be the reservation about this is just once you open up the Pandora's box of treating different large loads differently, what else might sneak through that door? Although I personally have no problem at all with, I personally have no problem at all with charging data centers as much as we want to charge them, but I just thought I'd get that out there.

It's fair.

Okay. That's data centers. So data centers basically are going to be paying more than the costs that they impose on the grid for hooking them up. And this will be a revenue source for going back to repairers' pockets or investing in grid capacity. That is a good thing. Let's talk very quickly about a couple of other energy provisions. Distributed energy gets a shout out here, a little VPP piece. Quickly, what is that?

So it's a piece that kind of tries to speed up compliance and answer some unanswered questions around Order 2222, which was FERC's year 2020 order to require regions to allow aggregations of distributed resources to sell into wholesale markets. And then there's a second section on these distributed resources that I already alluded to it kind of in the Easter eggs for state capacity that provides a $20 million a year grant program for having technical assistance and other federal resources to help localities speed up the interconnection of all kinds of distributed resources. I actually think that one is pretty interesting and is getting a low amount of attention because, you know, it's candidly not one of like the 50 biggest provisions in this bill. It's an interesting provision.

And then geothermal, you mentioned that this is getting a little bit overlooked. What is geothermal getting out of this?

I think this deserves a lot of attention in how this bill is talked about. And let me kind of just frame up why for a second before I say what the bill does for it. Take a step back and you look where the US and the world is right now in kind of its decarbonization trajectory and its energy transition. We basically have, you know, when all is said and done and the decades of blood, sweat, and tears of scientists and engineers and politicians are tabulated and accounted for, we have like 2 clean generating technologies that are being deployed at scale around the world. We have wind and we have solar. You know, nuclear is being deployed somewhat in like China and South Korea, but not so much in Western nations. And, you know, China's building some hydro as well, but like mostly we have 2 clean technologies. And geothermal is like the one other technology along with nuclear fusion, potentially one day that like stands to come on the scene and be a massive disruptor for that. And among the technologies, it is the only one where you can say with like confidence and credibility that if the US does not do this, nobody else is really going to on a relevant timescale. The US is the one with the fracking technologies, candidly. It is the one with the workforce. It is the one with the motivation and the companies that are currently on an upward trajectory. And we have great geothermal resource.

And if you listen to Zanscar, which I did a pod with a few weeks ago, we also have way, way more conventional geothermal resources than we even thought we did.

Yes. So there's 3 different dimensions of it. There's conventional hydrothermal, there's, you know, enhanced geothermal, which is what Fervo does, and there's advanced geothermal, which is even bigger, hotter reservoirs that are potentially accessible anywhere in the country in kind of the deeper future. And my way of thinking about this is This sort of nascent technology, if you look historically, is kind of susceptible to butterfly effects. You know, we had combined cycle gas turbines for a while, and then one day fracking and combined cycle gas turbines took off. We had solar panels since like the late 1800s, early 1900s in some form or fashion, and they slowly and steadily ramped up and then all at once with really, frankly, China going all in on them. We had, you know, wind technology dating back many centuries, depending on how you look at it. It took off under the right conditions, and sometimes those conditions are permitting things. Like with oil and gas, they got a famous categorical exclusion in the Energy Policy Act of 2005 that people give some amount of credit to allowing them to kind of innovate and iterate quickly and have the kind of boom that they had. But if there were to be a bill that would unlock some of the butterfly effects that would move geothermal forward in a way that we may be very grateful for in 20 or 30 years, Let's look at the things this bill does. Like, it has a geothermal title that has like 9 provisions. None of them on their own are monumental, but they add up. This is a bill from Yasmin Ansari from Arizona and Jared Huffman in the House. They create what's called a Gold Book for geothermal, which is something that the Department of Interior has created for oil and gas for decades, where it's basically a manual for how to navigate the federal government if you want to get a permit. Like, how kind of the federal government to kind of give you the kind of one-stop manual if you're an oil and gas driller, not if you're a geothermal driller. So it has them make that for geothermal companies, which will be very helpful as we have a lot of new up startups who will want to know how to navigate the permitting regime. It creates new cadexes for certain categories of test wells that mirror the one that oil and gas has that I alluded to a minute ago that helped that industry take off. It increases the frequency of lease scales. It rationalizes the royalty rates when you make an upgrade to a geothermal facility. It removes permitting requirements in certain instances where you're drilling into private land and private minerals and taking a lateral into federal minerals. It allows applications to keep being processed while lawsuits are pending. These are all important good deeds that I think add up. The 2 biggest things this bill does for geothermal, though, are like not in the geothermal title.

Hmm.

They are the NEPA and transmission reforms. If you talk to Fervo, if you talk to the companies, they will tell you time and again, their number one priority in permitting reform is transmission. But very close on that list are these reforms like NEPA and NHPA reforms. And I can't stress this enough, asymmetrically apply out west where all the federal land is, because that is where the NEPA process incurs the most. That is also identically where the geothermal is. And those processes are long and arduous to comply with, especially for new technologies that haven't navigated them before and where a lot of new bespoke analysis needs to be done. So geothermal kind of has all these features that align it with having a world where it is easier to permit on federal land, which is where the geothermal often is.

Okay. Big news for geothermal. Okay. Those are the energy titles. There are some fossil bits in the energy titles that I wanted to address here. I know there are groups worried about these things. I think one of the biggest areas of concern for a lot of groups is that there's a section here that basically exempts Increasing capacity for existing natural gas rights of way exempts that from NEPA entirely, makes it much easier to expand existing natural gas rights of way. And of course, like notably, there are a bunch of data centers flooding into the parts of the country where are, there are existing natural gas rights of way, and of course they want to 2x, 3x the throughput on those rights of way. There's a lot of different models flying around, but I've seen at least one model that says this is probably the single most emission-increasing portions, titles of the bill. What do you make of that section and the rationale and who it benefits?

I think the section you're referring to is Section 1102, which provides these exceptions from NEPA. And it does, as you say, include upgrades to pipeline and transmission line. It's important to say infrastructure.

And compressors, compressors, which are often sort of the big ugly things next to communities that communities are fighting.

Yep. I assume you're right on that, but I not thought about the applicability to compressors, but we'll stipulate that that's correct. It does allow for those sorts of upgrades to not have to go through NEPA. I am like a little skeptical that this provision is truly game-changing from like an emissions perspective. And the reason I say that is if you look at where pipeline capacity is being built in the country, it is often in areas like— it's in the Haynesville in Louisiana, it's in the Permian in West Texas, it's in the Marcellus in Pennsylvania, West Virginia, Ohio. These are areas where it tends to be relatively easy to get permits. There are tens of BCF per day that are currently going through these processes and that are not having trouble getting their NEPA processes done. In fact, traditionally, gas pipelines have a pretty good record on NEPA. There was like a study of all NEPA analyses that had been done over like a 10-year period recently by some folks at Stanford, and gas pipelines, somewhat shockingly, underwent fewer NEPA EISs than solar over the same period. Even though that period coincided with the peak of the shale boom, during which solar almost functionally didn't exist. So gas pipelines very often do EAs. This was a big issue, by the way, under the Biden administration. The Biden FERC tried to move gas pipelines from mostly doing EAs to mostly doing EISs, and a big controversy ensued, and FERC ended up not taking that action. And so NEPA just has not been the rate-limiting step as much as like the Clean Air Act and other substantive environmental laws that are generally not amended in the case of the Clean Air Act in this, and getting the permits requisite to run these compressors and onsite gas at data centers where that is the route that's being elected. The data center development is disproportionately occurring in regions where NEPA often isn't even done anyway, or is, is a pretty minimal burden for this infrastructure, and the circuit courts are very favorable, et cetera.

Okay. There's also a cluster of things that are sort of Trying to ease burdens on oil and gas drilling. There's 2211, 2229, 2201. These are all more or less exempting various activities or removing the need for permits for various activities. We probably don't have time to go through all these individually. I'm just curious, sort of in the aggregate, how much more drilling do you think these things will enable?

I think maybe some more. Like, it's worth noting that shale resources disproportionately exist on non-federal land in the US. There's only one shale play of note that sits under federal land, and it's the New Mexican Permian, and they don't seem to have any trouble getting their drilling permits there. If you look at the production numbers, the first thing to say is that like with 90-ish percent of US onshore production not occurring on federal land, these federal provisions are, I don't think, going to move the needle terribly much. Even if you believed in something that I don't believe in, which is that supply-side restriction of a fungible, like globally traded commodity And a highly inelastic one at that, is going to do much to change emissions, right? If you bring on more oil in particular from the US, because it's such an inelastic commodity that is traded so fluidly around the globe, you may not be able to identify the well that somewhere in Russia or the Middle East that is going to output a nearly commensurate amount less. But that is how the economics of it largely works. And it's not to say there's not perfectly inelastic. There is some effect. I just think it's a very bad strategy to try to achieve emissions goals through supply-side restrictions. And the bargain of this bill is we are going to make it easier to drill for oil and gas, especially on, you know, federal resources. But we are also going to make it easier to build, you know, clean resources that compete.

Okay. Quickly, mining waste on public land.

Yes.

This says miners can use as much federal land as is, quote, reasonably necessary For waste rock and tailings. I think the clean energy rationale for this is we need a lot of lithium, a lot of copper, et cetera. We don't necessarily want to be fully dependent on other countries for those things, et cetera. Of course, the communities next to mines will view this differently. Curious what your thought is on the net effect of that provision.

Yeah, I mean, this is another one, right? We're kind of kidding ourselves if we think that by not mining metals that are critical to the economy here— mines do pollute and you can run them better or worse, and the US tends to have better environmental standards for them. I don't think we're doing the globe's environment any favors, let alone US energy security, or as you mentioned, the nexus with clean technologies, which disproportionately require many of these critical minerals, by making it so hard to mine here that we don't have a domestic industry, which is largely the case. today for everything other than some precious metals and some copper. But what this provision does is it actually returns to the status quo, like pre-2022, I'm going to say, where there was a ruling out of the Ninth Circuit called the Rosemont ruling. Yeah. And if you look at the general mining law of like 1800-whatever, my mining friends are going to beat me up because I'm going to either get this completely right or get the reverse of what it did. The law, I think, says that you have to have a discovery of a mineral. You have to believe that there's a mineral somewhere in order to activate the law and stake a claim and plant 4 flags in the ground. And if you don't have a mineral, you can't do that. And so what historically happened was people would like identify a mineral and then they would just identify, you know, they would stake their claim for their mine and they would build a disposal site next to it to process and, you know, responsibly dispose of mining waste. I think what happened was they said, you actually can't dispose of waste unless you discover a mineral on the land that you're disposing of waste on, because you're also relying on this law to stake your claim there.

Right.

The thing that happened that is facially somewhat ridiculous, Because like, you don't want to have to discover a mineral in order to paper over that land with mining waste. Like, that is not good policy, but that was how a court interpreted the law. This bill fixes that. It says you can designate these things called mill sites for like milling activities that can also be used for waste processing. And you can then put the mining waste on those, but critically, you have to pay a fee. It's, it's like $400 per some number of acres, which is actually twice what the EPRA bill had. And that fee goes into the—

Yeah.

Hard Rock Mining Restoration Fund, the abandoned hard rock mine fund that Senator Heinrich fought for and set up in the bipartisan infrastructure law in 2021.

Okay. Before we move on to the environmental committee stuff, one final question about data centers, which I think you probably have sort of implicitly answered, but maybe we'll just make it explicit. I think one worry is that if you are going to charge them a lot more to hook up to the grid, And then you're simultaneously going to make it easier to expand capacity at existing natural gas pipelines. That might be interpreted as increasing the incentive to build behind-the-meter gas plants rather than hooking up to the grid. You think that worry is unfounded?

No, I don't think— look, I think the effect is real there. And like, I think that in thinking through some of these provisions, like the and pricing provision, we should do some careful economic analysis.

Yes.

And think about like the effect is there, right? If you are charging data centers more than their fair share to connect to the grid, an economist would slap you in the face if you said you're not creating a financial incentive for them to not locate on said grid. I think the reason to not be out of proportion alarmed about it is what's called the bit-watt spread in the data center industry parlance, like how much money it costs you to install a gigawatt of power at your facility or connect to the grid for a gigawatt of power. Versus the amount of money you make at a data center, the way they're capitalized today, that's a gigawatt in size, is like the highest of any industry in the history of industries. It's 50x or something like that. And the prices that we're talking about increasing by here, even if it's something like $5 or even $10 a megawatt hour or even more, is very small compared to the profit margin of being able to connect. And all, all I'm saying there is the thing that we already know in other terms, which is speed to power. Speed to power and social license are like the 2 rate-limiting factors for connecting data centers to the grid. And I think that the social license that comes from charging them more than their fair share, rightly comes from that, may, but it's hard to tabulate that in a model, may offset the small in the scheme of the bit-watt spread economic disincentive, all else equal, to locate on the grid. And the fact that this bill will be driving a lot of grid buildout all the while through its transmission provisions also makes that pathway in the medium and long run, right? This transmission isn't going to be built by next Tuesday, but also makes that pathway in the medium and long run much more available. And if you ask the data center developers, even the ones that are going off-grid, they will tell you that they do not want to be in the business of being their own utility and fuel procurer and supplier. They would much rather just connect to a grid and not have to think about it. And it's the fact that the grid is out of headroom and out of capacity that is driving the off-grid rush.

Yeah. Although we do get back a little bit to the disparate timescales here, like what's going to be incented in the short term versus long term, but maybe we'll get back to that. Yeah.

This is not a trade-off-free territory. I can't promise that over every timescale, you know, the provisions that DUEX went out, but my kind of calculus on it is I think there is more time under the integral in the medium and long term than there is in the short term. And the time under the integral is kind of what matters for how much emissions we end up putting into the air or effects on affordability or other things we care about.

You're assuming regulatory and policy stability over the medium and long term when you make that calculation. And we'll get back to whether that confidence is justified. But anyway, let's talk about the environment stuff. So NEPA, NEPA is the big thing here. A lot of changes to NEPA. Here, a lot of people angry about various and sundry things. It seems to me like the big one here is that NEPA cannot stop a project. Like, if the environmental review is found insufficient, courts cannot stop the project from continuing to be built while they do another review. And as I understand it, this was the primary delay mechanism. of NEPA is these injunctions stopping the building of a project. So just tell me if that's correct. And maybe like, I don't know why I'm talking. Let's back up. Just talk about the biggest changes to NEPA.

That is the biggest one. And there are a lot of others we can talk through. But the one you're referring to is the kind of no vacature, no injunction, no preliminary injunction change. It is a big change to NEPA. And I think that people are right to think about the tradeoffs attendant to that. We will definitely be entering a regime Not in which NEPA doesn't exist by any means. I think NEPA will continue to play a very meaningful role in federal infrastructure permitting, but in which NEPA plays a different role than it does today, and a role that is much less capable of being used as a tool, you know, by opponents to obstruct projects. And the trade-off to that is obvious, right? Sometimes there are projects that, you know, don't deserve to go forward. And sometimes, you know, there will be one less tool for stopping those projects in some sense. It's not that NEPA can't be a tool for that, but it will become a much less effective tool for that. On the other hand, there are a lot of projects that should go forward that I would argue that NEPA has traditionally also played a big role in stopping. In even larger universe of projects that I would argue is what's been called the dark matter of NEPA, and I think there's actually really good evidence that like lets you kind of ballpark how big this dark matter is. that we don't even see in the first place.

Meaning projects that don't try?

That don't try because they have seen what happened to previous people that entered the cavern. Yeah. So what is the no vacature thing doing specifically? It is basically saying that when a court finds that an agency has erred in its responsibilities under NEPA, somebody can file suit under what's called the Administrative Procedure Act. All NEPA lawsuits actually happen under this other bill because NEPA doesn't have a federal cause of action. It doesn't have a right to sue for third parties. But you can bring a lawsuit under this general purpose law that says you acted arbitrarily and capriciously. And for a while, NEPA had become a very big obstacle to development because as NEPA grew over time, its analyses, these so-called environmental impact statements and environmental assessments, grew from like 20 pages in the early '70s after it passed to, in some cases, 10,000+ pages, you know, with records that were 100,000 pages long.

Yes.

Into the 21st century. And the courts had all different precedents across the country. This is something that is not terribly well understood, right? We have, you know, 11 or 12 circuit courts across the country that cover usually several states at once. Some of them had very lax standards on NEPA, and if you violated NEPA, weren't going to do much to you. Actually, the Fifth Circuit, which is the circuit in which most oil and gas infrastructure centers, it's like Louisiana and Texas, is famously by far the kind of most oil and gas industry friendly. Circuit. And so NEPA already wasn't as big a barrier there as it is in, like, the Ninth Circuit, which is, like, California, which is famously the most liberal circuit. And what happened recently that shifted all of this was there was a big Supreme Court case called Seven County Infrastructure Coalition—

Yeah.

—versus Surface Transportation Board or something like that. And that case basically had a bunch of pronouncements. The central holding of the case by the 8 justices— it was a unanimous opinion, but one justice abstained— that wrote in the majority was that you have to give substantial deference to the agencies if you're a court. These agencies have a lot of expertise. We could comment on the irony that, like, the people who architected this ruling often don't want to afford agencies that same level of expertise in general-purpose regulatory rulemakings.

Mm-hmm.

But in the case of NEPA, there was a sense that agencies have expertise and they should be afforded quote unquote substantial deference. It said a bunch of other things too. Kavanaugh said in the majority opinion, that you don't necessarily have to vacate things if any part of the decision is wrong. And that gets to this vacature reform that's in the Baja Bill.

Kind of interesting, just to insert a note here, it's kind of interesting when these Supreme Court conservatives do and don't want to defer to agencies.

Yeah, I think there's a little bit of irony in like—

One begins to suspect that they might be working backwards from their goals to those principles.

And to be fair, I think that some of the hypocrisy runs in both directions. In like 2022, Elizabeth Prelogar, who is Biden's Solicitor General, brought a case to the Supreme Court and argued an oral argument that like vacature should not be allowed as a remedy under the APA, full stop. And so that would also affect vacature under NEPA potentially. And so, you know—

And just to clarify, sorry, we're using a lot of technical terms. Vacature is vacating the—

The vacating of a ruling. Yeah, it's, it's nulling and voiding the whole ruling, you know, agency decision and saying, go back to the drawing board and do this again and come back to us, you know, if you still think it's worthwhile. Whereas remand is just like—

Come back with another 10,000-page report.

Yeah. And, you know, another 10,000-page report and public comment period. And so, like, what was happening in a lot of the circuits is vacature was the default remedy, or even in some cases, the sole remedy. It was, some courts interpreted it as the only thing you're allowed to do, no matter how small the error, if the error clears the bar, Of like, you know, being arbitrary and capricious, if they didn't consider the effect of the government permit on some aspect of the environment, then you have to kind of redo the whole thing. That is, I think, I kind of have like a common sense objection to that. I think that if you're going to have an error that's discovered that plainly wouldn't have changed the trajectory of the agency decision, we shouldn't hold up large, you know, wind, solar, transmission, Even get you to gas whatever projects for it.

Yes. It just made it very, very easy to halt a project in its steps, whatever the phrase I'm groping for is.

100%. And so this outlaws that fully. Like it says there's no more vacature. It says there's no more injunction. You can still—

Yeah. You were expecting just sort of a higher bar for vacature, right? And they just nuked it entirely. I'm sort of just curious, like what is it going to be the practical effect of that?

I think the practical effect of that, When I first learned about NEPA, I was like a young congressional staffer working for John Hickenlooper, and I called up the Congressional Research Service and was like, can you explain to me this law? And the way it was explained to me actually has still stuck with me today. It's like, NEPA is the law that if it didn't exist, you would have to invent it. Because there are so many other government analyses that happen of infrastructure projects where like, okay, you've got to do a Clean Water Act, you know, 404 permit, and you've got to do your ESA Section 7 consultation, and you've got to get your Natural Gas Act certificate, and you gotta do your NHPA consultation. If you didn't have a process that tried to bring all of those things under one roof, it would not only be incredibly cumbersome for the federal government to kind of corral its knowledge and efforts, it would be hopelessly impossible for the general public to have like a unified source of the environmental impact information of the project.

Right.

I think under this law, NEPA will still serve that like very good purpose of government efficiency. And state capacity and alerting the public. But it will stop serving, to a great degree, the second purpose, which is being a tool for blocking projects. It is essential to note, though, that if projects are still violating the other environmental laws, the Clean Water Act, Endangered Species Act, the Clean Air Act, some of which have changes to them here, but none on the scale of this change to NEPA, if, and certainly not to the substantive standards in those laws, if you are found violating the substantive standards of air and water quality or harming a species in a way that is not appropriate under the Your action will be just as stoppable tomorrow as it is today. So I think like the casual listener may be just like, what are they saying? That nobody can bring lawsuits against projects for environmental harms? Like, that's not the case at all. You can still have lawsuits brought for environmental harms. You can still have lawsuits brought for procedural fouls if you're not properly considering and collating comments on the record under other authorizing statutes like the Natural Gas Act, which is the law that governs the permitting of pipelines.

What about this poison pill concern, which is, it now says if NEPA's involved, you can't do an injunction and stop the project. Now people are worried that if you bring cases under other laws that are attended also by a NEPA claim, that the appeals court will not be able to issue an injunction even based on those other laws. In other words, it might strip remedies for other Claims. This is poison pill concern. I'm sure you've heard it. What do you make of that?

I surprisingly had not heard that one. I think the only other law that that would attach to is the law that people bring things under NEPA on, which is the Administrative Procedure Act. I had read the judicial review language in this bill to be very clear. And I think there's like savings clauses or language that actually expressly says this, that no ability to bring suit under these other laws that also are part of the NEPA quote unquote umbrella process, like Clean Water Act and ESA, pretty much any law that governs the permitting or authorization or consultation for a project, those are not affected except in as far as other titles of this law, you know, make changes to them. So I am quite confident from the lawyers I've talked to that you would still, if it were the case that you couldn't bring any ESA or Clean Air Act or Clean Water Act lawsuit.

No, you could. Yeah. I think the concern is you can still bring them, but injunction can't result from them if the NEPA claim is also part of that same—

Yeah, I don't, I don't think that's right. I think an injunction or vacature the decision can certainly result if you're in violation of a substantive water or air standard, or even a procedural requirement of those laws.

Okay. A couple other questions about this. One is, it cuts the window to sue over this down from 6 years to 150 days, which is supposed to give projects some sense of certainty. That makes some sense. But then the question becomes, if you have an administration Theoretically, that was slashing federal agencies to the bone and defunding them and firing half of agencies. In the case that you're stripping agencies of their administrative capacity, does not in that circumstance cutting the timeline down just amount to a rubber stamp? This is true of the timelines across a bunch of these. Across NEPA, across HPA, the whole range of them. If you're cutting down timelines, but you're not staffing, aren't you basically creating a rubber stamp? Of course, like, Democrats won't do that, but Republicans might and are. Do you worry about that?

I also think the answer to that one is no, because I think NEPA is in itself not a law that requires you to have any permits. NEPA only attaches when there is at least one other law. That requires you to have a government authorization or permit or money given to you or something like that. And in the case of permitting, you're going to have to comply with that other law. And those other laws, there's a lot you have to go through to still, you know, take comment and review the comments. And some of that, if you were violating that egregiously enough, even on a procedural basis, you could certainly be sued. If you look at lawsuits going to FERC now on natural gas pipelines, even before this law, which is obviously not even passed, you know, so it can't have gone into effect. People are bringing those lawsuits against kind of balancing factors, you know, that you have to consider when permitting a pipeline under the Natural Gas Act because NEPA has already been diminished, whether we like that or not, from the 7-county ruling. It would be a bad strategy for any administration, Democrat or Republican, to say we're going to starve our agencies just because this procedural law has, you know, diminished in its ability to halt projects. Because you would end up having people that aren't able to comply with the Clean Water Act, with the Endangered Species Act, with myriad other laws, and they would just run afoul of those. And so, like, I'm a big advocate of smart permitting and doing things quickly. If you passed this law yesterday, I would still be out there saying we need to resource agencies to do a good job at, you know, permitting all these things above and beyond what this bill does tomorrow, for the reason that I don't think this bill has that, you know, loophole in it, because I think that wouldn't work.

Final question on this. One way of viewing this might be because you've stripped courts' ability to stop projects, it's basically reduced all of NEPA to an advisory bill, which means that administrations who care about it, i.e., Democrats, will take violations of NEPA seriously and still slow down and still waste time on them, whereas a Republican administration could just ignore it entirely. It's got no teeth left, so there's no reason for it to care anymore at all. Do you think it will have asymmetrical effects on administrations in that way? Hey there, everybody. Don't worry, I'm not going to tell you about a new mattress or push a credit card on you. This isn't an ad. There are no ads on Volts. It is supported entirely by listeners like you. If you'll indulge me for a second, I'd like to ask for your support. I started Volts because we're all surrounded by depressing news about climate change and misinformation about clean energy, and it's never been more important to share the stories of the real people on the ground doing the real work of transition and all the ingenuity and courage and public spirit they are bringing to it. People are hungry to hear these stories, to learn from and find inspiration in them. I've heard from people who change majors or careers after hearing episodes of Volts, people using it in classrooms and community groups, even state legislators who have passed bills inspired by specific episodes. Sharing these stories matters. It makes a difference. If you have found value in it and want to help me continue doing it, I hope you will join the community of paid subscribers at volts.wtf. It's about the cost of a cup of coffee a month. If you don't like subscriptions, you can make a one-time contribution, leave a review on Apple or Spotify, or just tell a friend about Volts. I am grateful for any and all support. If you're already a paid subscriber, thank you. And now back to the show. Do you think it will have asymmetrical effects on administrations in that way?

That's an interesting— not heard kind of that theory of kind of how this could play out. What I said a second ago, I think, holds, which is that NEPA is this sort of process or law that if it didn't exist, you would have to and want to invent it, because there are all these other analyses that happen under the federal umbrella, and that if you try to run them all separately through a bunch of separate agencies, you're actually going to result in a more inefficient process. I think this is something that the proponents of a strong NEPA say that I actually strongly agree with. NEPA does This aspect of it, which is a critical aspect of it, the one many people learn about first, does play a really essential role in promoting both government efficiency and public goodwill by having people understand in advance what is being proposed in their neighborhoods. And I think if an administration of either party wanted to take the view that, like, we're just going to live with having a bunch of lawsuits, you know, first of all, that's still quite inconvenient on NEPA because we're not going to comply with That administration would actually be sacrificing on the efficiencies that, like, this sized-down NEPA legitimately provides. And, like, I think that would also be a bad strategy for how to respond to this bill. Like, I don't think this bill has, like, that sort of obvious loophole where, like, if you just do this one quick thing, you'll never have to think about NEPA again and everything will be easy for you in permitting your preferred type of project. Permitting is still going to be a real and hard endeavor, as it should be, for, like, large physical projects in the real world. But NEPA, which kind of provides one of the most subjective lenses through which to challenge projects, and also I believe has been asymmetrically applied against clean projects, which is a kind of controversial and non-obvious statement to probably many who are listening, is going to be less of a barrier. And I think, you know, while that has trade-offs, I would be the first to acknowledge that it will mean that some projects get through that should have been contested in different ways of both clean and fossil varieties. It also has real upside for our ability to build at speed and scale. Yeah.

Yeah, there's quite a bit of controversy, I should just say, and I'm the last person to be able to adjudicate this, but there's quite a bit of controversy about whether NEPA has been asymmetrical like that or in what direction. This is very much a live argument in the legal community.

Can we dive into that for a second though, before we go to—

Okay, briefly. We're so far behind schedule today.

Yeah, stop me if you want. We can go to the next.

No, no, go ahead.

If you look at federal lands, which is not the only place that NEPA attaches, but the place that it certainly attaches disproportionately and kind of, you know, often requires the most fulsome and robust analysis. On federal lands in the U.S., federal lands make up 21% of the lower 48. They account for 3 or 4%, respectively, of each of our wind, solar, and geothermal. If you look at a map of federal lands across the country overlaid with utility-scale wind and solar development, you can see the wind and solar development filling in in the negative of all the federal land. It is deliberately avoiding it. There have been polls of developers, veteran developers who've developed 10 to 200 solar and transmission projects. And they ask them, you know, what is the most challenging kind of permitting, federal, local, or state? And they say federal by overwhelming majorities. They've asked them, have you ever avoided federal lands as a result of anticipating, you know, NEPA or other approvals? 82% yes, 18% no. Like, we have an effect we observe in the real world. And when you ask the actors, are you avoiding these lands because of NEPA? They emphatically say yes. To me, that is good evidence that there's like an asymmetric, or at least a large burden placed on clean energy by NEPA.

Okay. There's probably lots more to say about NEPA, but yeah, for the love of God, we really got to keep moving. Let's talk about state water permits. This, I think, is one where the trade-off is most lopsided from the perspective of environmental groups. So the Sackett versus EPA case in 2023 shrank the sort of reach of the Clean Water Act in various ways. Now, this law goes after state water permits and restricts state water permits limited to water quality. And it says, if you're going to deny a state water permit, you need, quote, clear and convincing evidence, and that the remedy must be, quote, least burdensome. And from the lawyers I've talked to, they say there's a lot of shenanigans that you can sneak in under those phrases. It's very difficult to meet. that bar. So basically, this is going to allow a lot more pipelines that might have run afoul of state water permits. It's going to allow a lot more of them under this and remove the ability of states to stop them. What is your take on this provision?

I think you are correct that this is the title of the bill that is most asymmetrically geared Conservatives have been after this for years.

Yeah, they've been pursuing this for years.

Right. This bill is a compromise. It contains provisions that, you know, Democrats wanted on renewable technologies. It contains provisions that Republicans wanted on fossil technologies. These are provisions that have been primarily driven by pipeline developers. As you mentioned, it applies to the Section 401 of the Clean Water Act certification process. So permits don't kind of start under Section 401. Where Section 401 applies is if you're seeking a permit For some other thing in the dredging and filling operation, for example, for installing a pipeline or potentially a transmission line under the Clean Water Act, the state then has to certify your compliance with water quality standards it administers from the Clean Water Act and with any of its own policies that it's layered on in the state. And the controversy that kind of gave rise to this provision is that blue states, kind of New York in particular, have at times toyed with the idea, shall we say, Of saying, we're going to deny a pipeline's water quality certification for reasons that don't have directly to do with water quality. Like, we have a climate law. This pipeline, in our view, is incompatible with that climate law. We're going to deny you certification with this state, this cooperative federalism provision of the Clean Water Act. And pipeline developers have cried foul on that. I personally think they have a point that, like, the Clean Water Act, that is kind of an extension of its natural use. Now, as you say, it does other things. It goes a little further. It says you have to meet a clear and convincing evidence standard. That's like a little bit of an odd provision. It's something that's— I'm not a lawyer, but it's ported over, as I understand it, from criminal law, where you usually hear that sort of phrase on Law and Order, you know, alongside like preponderance of the evidence or beyond a reasonable doubt.

Yeah.

It's kind of one of the middle standards from that area of case law, and it's not entirely clear to people how it's going to map onto an administrative law context, but it is That is probably a higher standard than the arbitrary and capricious that exist today. That said, the things to note about the kind of strongest reforms in this section, which say that you only can look at direct discharges into waters of the United States, those only apply to pipelines and to transmission lines. I will concede happily that this provision is asymmetrically useful for pipelines, but I don't think it does nothing for transmission lines. I think there's like a line of argument out there that transmission lines don't tend to have their 401 certifications denied today, and therefore they won't tomorrow, which would be a good bet if we didn't pass the rest of this permitting bill, because the other provisions of this permitting bill make more usable potentially this federal pathway for permitting transmission. And that may make water crossings a more natural nexus for denying a certification for transmission lines.

So you think making it easier to build transmission and putting the federal backstop on transmission might make states that want to resist transmission look for other means of blocking it, and they might look to state water permits as one way to block it. Is the risk—

Yes, I think that is like a plausible thing to believe. I think there's another vector also, which is a 2025 ruling called the Transource ruling in the Third Circuit, which made clear that states cannot reject siting certificates for transmission lines based on economic factors if they've already been approved through a FERC planning process. And so to unpack that, What that means is that if a state basically wants to come up with a reason to say no to a transmission line post that ruling, which is already out, they will have to find some other reason than we don't like this thing economically, because the federal government has preempted states on that by saying that FERC is the economic regulator. And so that was, believe it or not, a bit of case law that was a bit hazy and unclear until this Transource ruling. And now, at least in the Third Circuit, and I think there's good reason to believe that other circuits might rule the same, It is not the case. And so that is another kind of stone on the scales of states potentially looking for other tools. And the Clean Water Act is one of the most obvious ones at hand for denying certification for dredge and fill materials when you're, you know, putting a transmission tower, you know, into or near a body of water.

And what about the least burdensome thing? I was talking to someone who said that that's kind of what sank EPA's attempt to ban asbestos back in 1991, is that this least burdensome standard is very difficult to meet, and basically industry can find friendly courts that will raise the bar for that until they're allowed to do basically anything.

I mean, as a general matter, what I would say is that most pipelines today are not being held up by states that are denying water quality certifications, right? This is like an issue in the Northeast. You know, by the way, there's not like a bunch of data centers chomping at the bit to locate in Rhode Island or Massachusetts at this point. Like, those aren't the big markets. So I think, will you see more pipelines built maybe in the Northeast corridor and maybe in a few other Atlantic states? I think that's possible. Yeah, I think that the main markets for this are not suffering from this problem, and it's important to keep that in perspective.

Okay, probably lots more to say on that too, but let's move on quickly to endangered species, the Endangered Species Act. I know a lot of people are upset about this too. If someone who's The way someone phrased this to me is, what if I'm not a climate person? What if I'm a biodiversity person? And that's my exclusive focus or not exclusive focus. That's my top focus. What should I make of the reforms to the Endangered Species Act in this law?

So I actually think the ESA reforms are very modest in nature compared to pretty much all of the other laws we've been discussing. I think they're mostly a sideshow. One that has gotten a medium amount of attention is this federalism one. Where it says that states— Yes. Yeah.

The determination moves to the states. And of course, like a lot of states are, as previously discussed, very friendly to fossil fuel infrastructure and very unfriendly to endangered species claims. It'll probably be easier if the decision moves to states.

You still have to meet all of the substantive standards of the Endangered Species Act. And there's actually— there have been previous versions of these sorts of bills that have been proposed before. That have not had the language that this one has, which requires a level of certification that the state has the technical and financial and personnel resources to carry out this responsibility. They have to kind of be proactively certified before any applications can even go to them to say, you're going to have this authority delegated. I think it's worth stepping back. Tim Mail, who is at a group called Epic, wrote 2 really good pieces on the ESA provisions. I've always wanted to be the guy on a podcast who says like, we'll put this in the show notes. Do you have show notes?

I do have show notes. What should we put in there?

Okay, well, put these in the show notes. They're on his blog called Permit Me to Explain, his Substack. It's the Senate permitting bill, take 1 and take 2 on the ESA considerations. He makes the argument, and he's a longtime, like, ESA practitioner who I think it's fair to characterize as, as having real sympathies towards both the environmental and the kind of developmental permitting equities here. He's a pretty balanced voice in my experience. I've learned a lot from him. And he makes the argument that, look, like in other laws, we have these cooperative federalist things, like within the Clean Water Act, where states have this big certification role, like within the National Historic Preservation Act, where you have these state and tribal consultation roles. It's not a priori better or worse to do things through a state pathway, as long as you are making sure that you are doing it reasonably right. And the provision here is— seems to be doing it roughly the right way. It's also kind of ironic that people who are saying, you know, the ESA provision is very bad because it gives authority to states, are then also upset when authority is taken from states in other provisions of the bill, like the Clean Water Act and NHPA. All of these arguments can be perfectly good faith, but I think the ESA ones in particular, like at least the way Tim has argued it, and I tend to buy it, and again, we'll put his pieces in the show notes, I think make the case that there may be a transition period where states get up to speed on this. But it's not like the federal government in its current incarnation is particularly friendly to endangered species. Like, if you're somebody who's like, I'm worried that Texas, you know, will not do a good job, do you have a lot of faith in Doug Burgum's Department of Interior to do better than Texas? At least this way, blue states, you know, under Republican regimes would have the right to run the ESA process themselves and could chart out the standard that they're comfortable The best available science standard has been somewhat redefined in this bill. Now we're treading into territory beyond my expertise. Tim definitely argues in his pieces that the language changes there, like, if you step back from this, are pretty objectively fine. I think the way he puts this is something akin to that if you were a Martian that kind of knew, you know, what this language meant, and you stepped down and saw that best available science language, it's not terribly more offensive today in this statute or less offensive than it is in case law and regulation as it exists today. I don't have the ESA-level expertise to know if he's spot on there or if there's an argument that he's overstating it, but I'll leave that for listeners to decide.

Okay. Let's move on to what I think is one of the more lively and contentious bits here that's getting a lot of pushback, Sections 1401 and 1402. The idea here, I think, as far as I know, tell me if I'm wrong, maybe you don't know either. As far as I know, these provisions were written by Democratic staffers. So like, I think the intention Here is to put a stop to the kind of thing that Trump is doing, which is capriciously interfering with the permitting of specific types of energy because he doesn't like what they did to his Scottish golf course decades ago, just to stop a president from mucking with permitting on capricious political grounds. But the way these things are written, I think a lot of lawyers out there worry that they're sort of slightly sloppily written and could have lots of negative consequences. So 1401 basically says if a permit has been issued, you can't unissue it, more or less. Tell us what 1401 says.

Yeah, it says that an agency shall not take any new action that would revoke, rescind, withdraw, terminate, suspend, amend, or alter a federal authorization or permit, or take any other action to interfere with or prevent the construction or operation at full capacity. People are trying to figure out exactly kind of what the extent of what that means is, but I think the core of it is well motivated and has real use cases, as you say, right? I should also mention that a bunch of exceptions are provided, so it's a Like, except if a court has ordered you to do this, or if the, you know, permit was obtained through fraud or otherwise illegally, or if it really would prevent specific and urgent harm. But the key thing is it places the burden on the federal government to show under this clear and convincing evidence standard that we discussed in the Clean Water Act sections, now being ported in again from criminal law, that there really is a problem, that there really is like a national security concern, or that there really is like this permit was given illegally.

Specific, urgent, proximate harm.

Yes. Is the phrase. And today the standard— the burden is on the developer, I believe, to show that the government acted arbitrarily and capriciously. So both shifting the burden and raising the standard is, I think, like, it's going to make it a lot harder for a future Trump administration or the current Trump administration to revoke, rescind, withdraw, terminate, and which has been exactly its strategy on so many of these permits of, you know, wind and solar projects In particular, so that is the use case that is intended, and I think that use case is very plausibly well met here. One trade-off that like you know people who are focused on like the emissions puts and takes are going to have to grapple with is this will make it much harder for a future Democratic administration were it to want to to revoke rescind withdraw terminate etcetera permits on fossil infrastructure, and we saw the Biden administration do that on pipelines.

This is the big worry from environmental groups, is that these are now forever permits, as they're called, which means Trump can spend the next 2 years lowering all his standards, permitting any and everything out into the Alaska wilderness, out into sensitive lands, blah, blah, blah, can permit a whole bunch of fossil fuel infrastructure, and future administrations will have no way of undoing or blocking any of that.

I think that's That certainly overstates it. Like, as already discussed, all these other laws apply. This is about revoking permits. So if you can't issue the permit in the first place because it's illegal, this doesn't do anything to a court's ability to, you know, say you issued that illegally. It's in the Alaska wilderness, dummy. Like, the Wilderness Act says that, you know, you can't build there. The obvious examples of like you're building somewhere illegally and now we have like a one-way ratchet on permits where it's open season during one administration and the next can't undo them. I actually think the exceptions that are provided in the law kind of, as smartly as you can, cover that. The challenge of permit certainty, like, I don't envy the task that the negotiators on this one on the Democratic and Republican side have, because permit certainty is the hardest of all of these things to legislate. We know roughly what people want to legislate and don't on transmission or on pipelines or on NEPA or on NHPA. With permit certainty, there's so many human behavioral elements, like in the extreme, it's impossible to legislate truly good behavior.

Mm-hmm.

But it is possible to put the gun in the safe. Like, it is possible to say we are going to take away the most readily at-hand tools that have been used and might plausibly be used to block infrastructure and set up incentives where it's hard to do that. Like, another thing that's controversial about this provision—

And it's sort of a note here. I mean, climate change is almost certainly not going to meet the bar of specific, urgent, proximate I wouldn't think so. So like a Keystone-style or Arctic Refuge-style reversal of permits is going to be off the table.

I mean, the Arctic Refuge reversal of leasing that happened in the IRA actually was done through statute and pulling back lease sales that had been put in place in the 2017 TCJA. So like Congress can still do whatever it wants. Like Congress can override its laws with its other laws. The Keystone, yeah, like you wouldn't be able to cancel a lawfully granted permit if there wasn't some legal deficiency. And I think, you know, people are going to have to be comfortable with that as like, this is the price of admission. The theory of this bill is like this tit for tat of during blue administrations, we cancel and stymie all the fossil infrastructure. And during red administrations, we cancel and stymie all the renewable infrastructure. I think it's negative sum. I don't even think it's zero sum. I don't think it's like, ah, you know, one side's getting hit as hard as the other. I think a lot of these projects take longer than 4 years to build, even under a more favorable permitting regime. And yet administrations are 4 years and tend to turn over after 4 years. And we haven't had a 2-term president in a while now. Like, I think that we mostly end up building nothing under the current regime. And here's an asymmetry, right? That favors the status quo. The incumbent system today is predominantly fossil.

Yes. This is such an important point to make is that freezing things in place benefits the status quo, which is filled with fossil fuel infrastructure.

Right.

You know what I mean? Even if you're like a, I don't know if this is the right place to make this point, but it's a little rant I got to get out of the way. Even if you're like some kind of degrowther, or even if you think the economy should be smaller or whatever, even if you think, you know, our primary goal should be reducing emissions immediately, there's no way to do any of those things without building replacements for existing fossil fuel infrastructure, even if that's all you want to do, you need to build like a mofo. Like, you got to build a lot really quick, even if you just want replacement-level infrastructure.

100%. There's a massive asymmetry here. And like, the people who are most wanting change should, all else equal, be the people who are most eager to see, you know, laws go into effect that speed up the rate of change. And you have to have a plausible theory of the case behind that for why changing those laws would lead to the deployment of the technologies you want. But I do think that case has been articulated both on this podcast and by many previous guests of yours.

This is just still on 1401, on the permanent certainty. It still allows permit revocation based on national security grounds, which is, of course, like what Trump has been saying. And those national security grounds, I think the Trump administration has demonstrated pretty clearly, are just loosey-goosey as hell, and you can do almost anything you want under the guise of national security. So what about the idea that, like, that is a loophole through which a malefactor like Trump could drive a semi-truck?

I think what Trump has discovered is actually that you can't do anything under those justifications, because the courts on those ones have been very quick to say, I think in one case they actually used the word pretextual. They said something like, this is pretty plainly pretextual. We're turning this down. All this bill does is it creates a new right of action where, like, you can sue on this specifically, for this specifically. And it moves the presumption, it moves the burden of proof from the developer to the administration. So now, as hard as it's been for Trump to make this showing yesterday, he's going to be the one that has to make the showing and have to make it under a higher evidentiary standard. than exist today. So it just supercharges the dynamic on which these things have been being turned down already fairly quickly today. And the speed matters here, like making it so they're turned down even more quickly tomorrow is better. The other thing it does, which this has attracted some level of controversy too, and I could argue this both ways, but it creates potential compensation for people who have been the victim of, or companies.

Well, hang on a second. Let's talk. This is 1402. This is sort of like Like, what do you do if someone is blocking these things and you want to sue? So let's talk about this because this is where I think the lawyers are really freaking out, which is you can sue under this disparate treatment standard, which is you can say the administration is blocking my kind of technology in a disparate way, you know, out of proportion to the merits. How do you demonstrate that? You compare it against the approvals and denials of the previous 5 years. And then of course you have the obvious danger, which is that the previous 5 years are the Trump administration where, where all, all the fossil fuel projects are being permitted and as many possible clean energy projects are being blocked. That's setting the 5-year standard so that then you could argue, If a future administration starts approving clean energy projects at speed and scale, that in itself is disparate treatment. You can imagine a fossil fuel developer saying it goes against the last 5 years, that diverts from the last 5 years in a way that suggests disparate treatment. What do you make of these legal controversy around this?

That specific iteration of it won't work. You won't be able to say you're permitting wind and solar too quickly, slow down, because the unreasonable delay or improper denial standard, which the language which is, is in Section 1402, only goes one way. It only goes towards slowing things down. So it's not disparate treatment under the language of the statute to be like, ah, you're going too fast. I think the concern though that I've heard, which is very closely related, which like fair enough, is Like this would stop a future Democratic administration from doing a lot of predatory slow walking on fossil permits and doing unreasonable delay there.

Or even predatory. Don't sneak in the word predatory there. Even if they start denying them on perfectly reasonable grounds, the Trump administration has been extraordinarily liberal in approving them, even if you just sort of return to a Democratic administration baseline. That would look like disparate relative to the Trump administration.

So I've heard different versions of this, and like the denials still, they, they have to meet the standard of being improper. And if they're, you're in violation of any law, which is the, the reason that an administration would have to deny it, it's like you're violating the Endangered Species Act. I don't think that would meet the language of this section, which says you actually have to make a showing that it meets all the relevant legal standards for all of the authorizations it needs. So that's a required showing. I did slip in the word predatory. I probably should have used a more neutral word that was like, for reasons that go beyond the letter of statutes as they exist, because if we're talking about denials, it would have to be for some reason other than you're violating the law. I've heard another version of this that is like, okay, what if the Trump administration is permitting all the pipelines in like 20 days and a future Democratic administration wants to give them, you know, a fair shake? But, you know, take the full year or 2 afforded under the deadlines of this and other statutes and, you know, deny some of them if they're breaking the law and approve the others that are adhering to the law. Isn't it the case that you could show some disparate treatment because you're going much slower? Like, you'd be able to show that the Trump administration was doing it in 20 days, assuming they did it all legally, which is questionable if you're doing it in 20 days. But like, for the sake of this hypothetical, that wouldn't work either, as I read it, because in order to meet the unreasonable delay standard, The permits have to be more than 60 days past due. So not only do you have to pass the applicable deadlines, you have to pass them by 2 months. And you have to not only do it for your own project, you have to do it for other projects as well, because you have to make a showing that this is happening on a systematic basis to your type of projects. My reason for not being as worried about this section is, I will caveat that I have not fully thought through all of the potential hypotheticals in this section. I'm open to persuasion that there is some game ability that I haven't envisioned, is that one—

Well, we will link to some arguments to that effect again in the show notes.

Yeah. And there are smart people who disagree with me on this, but I personally think that one provision of this section really comes into play here, which is that only developers are allowed to sue. And that sounds obvious, but if you actually look at a lot of the litigation against fossil projects, you know, that happened during like the Biden administration and subsequent administrations, or renewable projects, they're usually brought by attorneys general or they're brought by trade associations. And it's very clear in the statutory language that you have to be the developer in order to bring it. And I just kind of think it would be somewhat crazy for a developer to look at a permit that's been denied to And say, instead of taking the 1401 pathway or some other pathway that exists in this bill around permit timelines, I'm going to try to make an industry-wide showing that not only has my permit been improperly denied or unreasonably delayed, you have to make that showing too. But in addition to that showing, I'm going to make a showing that this is happening on an industry-wide basis as a general trend. Companies generally don't like suing the federal government. They generally like having state actors or trade associations do it for them because companies are repeat players. before the federal government and to take on a lawsuit that is much bigger than necessary in order to do an altruistic good deed for your competitors in your own industry who are trying to outcompete you at selling your own product, I think supposes a greater degree of camaraderie than often exists between competing actors.

But if the remedy as established in the law is 50 to 100% of the expected construction cost of the project, Depending on the size of the project, that is a substantial amount of money you could basically be making for not even building anything. So this seems to me that gives quite an incentive to venue shop and find a sympathetic judge and claim under either 1401 or under 1402 that you've been unjustly denied a permit. And then you could get billions of dollars from the public purse just for winning a lawsuit. That seems to me to create a pretty substantial incentive to do those lawsuits.

Yeah. And we should differentiate 1401 and 1402 here because like 1401 is not the one where you have to make the industry-wide showing. It does have a version of that you get damages provision. It's a slightly lower number than 50 to 100%. I think it's like 25 to 50. I do agree that that creates some enticement to it. But as mentioned, right, the government actually does, it can't have just merely be slower than the Trump administration. It has to be actually blowing by deadlines consistently by months. There are still a lot of incentives not to do this. There is a lot of judgment that is left up to the judge in all of this, and the judge is not just going to want to hand out very large sums for kind of marginal cases where it's not clear that there is unreasonable delay or bad intent. But I, like, I am not—

There are judges and judges out there on the federal court.

I mean, like, fair enough. For the reasons stated, I don't really think this is the likely outcome of the bill. But suppose you stipulate a world where this provision proves a lot easier to access and use than I think. I hear your argument on like the immediate 5 years coming will, you know, make it hard for a future Democratic administration in 2029 to block fossil, but not a future Republican administration, because 4 of the previous years will have been Trump, to like do differently on wind necessarily.

Yes.

But if the next administration you do have that permits wind, the same thing will then apply in reverse to the next administration that wants to block wind. You know, we should not, when we're thinking about reforming our permitting laws, which tend to get reformed every 20 to 50 years, just think myopically about the next 5 years. We should think about the next 50 years. Is it possible that the first turn of the wheel, because of that 5-year number, cuts a little asymmetrically depending on how one imagines future elections going against some resources and not others? Yes, to the degree that you believe this provision gets used, which I'm not Not entirely convinced of. Is it like very also likely that if you stipulate that world, you kind of have to believe that it washes out over the subsequent several administrations? I think also yes. So I realize that answer is not going to be like fully satisfactory. I think that's fair because these laws come with trade-offs.

In almost any other case, I think that would be convincing. But Trump is just, you know, a bit of a one-of-one here and preemptively ratifying everything Trump is going to do in the next 2 years I think perfectly rightly freaks people the F out.

But it's not preemptive ratification. Like, I really want to stress that for the reasons stated. Like, he doesn't have license to grant permits to things that are in violation of the substantive laws. That's not what this is.

Why not just something like in the Levin-Caston bill? They had a parity test. Basically, you just have to treat permits from different energy sources Roughly comparably. Do you think that would be simpler? Or why not just like a fixed pre-2025 baseline instead of a baseline that's constantly changing with the whims of different administrations? Just seems like there are simpler ways to do this.

I think when you sufficiently probe any of the ways, it kind of, it's easier to write things that's like, don't do bad thing to this permit. It is harder to write things that are like, don't do anything to, you know, the whole class of permits and authorizations for this industry. You know, I think Kasten and Levin took their own thoughtful approach, but I think when you really probe all of these different avenues, they all end up, if you pressure test them, having potential gameability things because you're trying to kind of make a one-way valve for things that occasionally need to go two ways. So like with the idea of what if you did like gigawatt for gigawatt parity, which is an idea that gets discussed and you say that, you know, in order to permit any fossil, You need to permit a comparable number of gigawatts of, you know, renewable in the previous year or vice versa.

Yeah, I think that's a terrible— that's a terrible idea.

Yeah, those sorts of ideas are, you know, maybe terrible for perfectly obvious reasons. Sometimes you run into like these hypotheticals where it's like, well, what if in one administration or one year they just— there aren't any applications and then the number is stuck at zero for both classes of technology for all subsequent iterations? Permit certainty really is the hardest area to legislate. I think that the authors of this put a lot of thought into these provisions, and I think on the whole, they're accomplishing the job they set out. I definitely allow for the time to ingest this from lawyers and the healthy debate that is happening around it. You know, I think the potential good news is both sides are kind of going to be somewhat alarmed by the worst-case scenario that the other side could kind of exploit this, a true error here for their preferred technologies on. And so if there are real technical errors, Sheldon Whitehouse has said at the introduction of this bill that there will be a manager's package. I am not obviously in a position to speak to kind of what things will be in or out of that, but I think the debate that's happening is healthy.

Okay. And as I said, we'll link to various arguments on either side of this question in the show notes. It's pretty technical, but it's the one where I've seen the most sort of open alarm among lawyer types. Okay. That is the bill. Well, now let's talk about politics. My apologies to long-suffering listeners who just had to listen to a lot of very technical policy talk. For those of you who skipped straight here, I understand why you're doing what you're doing. I wanted to cover the whole waterfront because I have not really seen, like I said, the online dialogue about this has not been great. A lot of team sports, a lot of shouting back and forth. So I just wanted to get into the substance of all these questions. So let's talk The politics. A couple of things about politics and going forward to wrap up. One is, does anything here prevent Trump from continuing to capriciously block wind and solar permits for the next 2 years of his administration?

Yes, I believe it does. So like Section 1403, which is also in the permit certainty section, basically creates a cause of action for unreasonable delay on specific permits. So if you're slow walking permits past the deadline, And this law sets a bunch of new deadlines that apply to all resources and all of their authorizations and permits. You have a right to go to court and say, hey, this is being unreasonably delayed. Give me an answer, order the agency to do something, et cetera. So like it has provisions like that kind of littered throughout it, but 1403 is kind of a judicial remedy that maps onto them. It comes with a bit of a sidecar deal that was negotiated extratextually, but which has been reported on. Where Trump has reportedly agreed to move forward on a clutch of wind farms that are being held up at the FAA and Department of War.

Yeah, like 20% of them, something like that, I think is the number I saw.

Yeah. Yeah. So not all of them, but a number of them. And, you know, we live in the world we live in and this is what Trump is doing. And I don't like that Trump is doing it, but the deal to kind of let those go, and I think that Democrats may be in a position to take a trust but verify approach where it's like, okay, we'll vote for this as soon as those permits are, you know, cleared or something to that effect.

I mean, you just can't trust Trump as far as you can throw him. He could just change his mind on anything he says now, a week from now, you know what I mean? This, well then this presumes that Trump is, you know, subject to the law or will obey court orders, I guess. You know, at a certain point you have to have some sort of bedrock assumptions about proper functioning of government. But like, I get why people are nervous about this.

Yeah, I, I do too. But if you're gonna presume that Trump doesn't have to obey the law or won't obey the law, like why do you care about any of these other permitting changes anyway. Like, it's like, you know, okay, if none of the laws apply, like, why are we so stressed out over, you know, federalist changes to the ESA or something? Like, I think that one has to be consistent in one's concerns there. And I am concerned with some of the actions I've seen from the administration, but I think that the negotiators did a good job on that front in getting language that will make it harder to do that in the future, right? Congress should not just roll over and say, deny more projects. Putting stuff in law that makes that way harder is a good thing. And also negotiating stuff on the side is a preconditioned good thing.

Okay, but that's denying projects going forward, those changes in law going forward. The ones that he has in delay now, he's agreed to release 20% of them. Like, I'm just curious about that. Like, these FAA, these denying wind turbines their permits under these pretextual national security grounds, they're going to mess with drones or something. This is hundreds, hundreds of wind projects. Will changes in the law make those justiciable, I guess, is my question, or are they just a kind of a done deal?

If this were really like, just to comment on the pretextual nature of this, right? If this were really like a national security hazard, it would be the best national security hazard to discover of all time because like China in some years builds 5 times as much offshore wind as the rest of the world combined. So the worst thing to do would be to publicize it and to say that, hey, we think you can fly drones through these because we should keep that secret in case we're ever in conflict with China due to this massive national security loophole they've created for themselves. In all seriousness, like, for projects going forward, it will make it a lot harder for some of the projects that have been negotiated as part of this. And I'm not like fully up to speed on like how significant the proportion of projects is, but like you say, I think it's on the order of like low double-digit percents. I think a lot of those other projects are under active litigation that is generally going well. Like, the good news is that courts have not responded favorably to Trump's pretextual delays on these projects for a range of reasons. And so once those projects are back going through the motions of permitting, they will be on a better track as well. I am not saying that this bill is a panacea and is going to solve all the permitting problems that you would wish to solve. The question is, does it materially move the ball forward from where it would be otherwise? I just think it's hard to argue that the answer to that isn't yes.

Okay. The big political question, which in some ways I feel like is the easiest to answer, but the big one coming I think from a lot of, I think when I talk to, insofar as I interact with normies at all anymore in my weird life, I think one of the sort of questions people have about this is why do this now? We have a Republican Congress, a Republican administration. The midterms look like they're going to go well. There's lots of high hopes for 2028. There's some thought that we'll have Democratic Congress and maybe even a Democratic trifecta within the next few years. Why not just wait and hash out a better deal when Democrats have more control? What's your answer to that?

So one answer is that there's nothing stopping Democrats from hashing out their own, you know, better deal or changes to things in a world in which they truly have unfettered power and want to exercise it. I'm not opining on whether that would be a good thing or bad thing, but like the 2 pathways of doing something now and doing something later are not mutually exclusive. At a meta level, right, the thing we're trying to solve with permitting is there's a certain level of urgency for national security and climate and affordability and other reasons to stop slow walking all of the large infrastructure in the United States. And to say that, you know, the medicine that we would take to stop that slow walking itself should be delayed yet another two years after two previous Congresses in which that was the exact conversation and that happened, right? Often by the other side, right? Republicans were the ones. on EPRA, who, you know, in the House said, we don't want to do this now. We're going to wait until we're in a better position. And then they waited and they're in a better position. But actually, Democrats have also been in a good position this Congress. Like, this has been a very level playing field negotiation between Whitehouse and Heinrich on the one hand and Capito and Lee on the other. And it really is a bipartisan, I think, balanced product that they've put out. So I think the notion that you're like a priori going to get a better product or a product at all, right? Because the very foreseeable scenario, if you wait until the next Congress, for Is that Republicans will be like, okay, we're in less power now than we've been in, in the past. We will wait for a better deal. And this is not a hypothetical. This has been done.

Yes. This is just worth emphasizing, like the idea that Democrats can just jam through something on their own. They need 60 votes unless the next Congress is gonna get rid of the filibuster, which I think is a long shot. They're gonna need 60 votes. They're gonna need 60 votes and they're not gonna get 60 Democrats in the Senate, probably in our lifetime, but definitely in the next 2 elections. So Republicans will be in a position to block a bill next Congress and the Congress after that. That's like a 95% certainty that that is the case.

Correct. And now that the bar has been set roughly here, right, what we've seen on each successive permitting bill is both Democrats' and Republicans' provisions get monotonically Stronger each time. So like, now that the bar is set here, on the next permitting bill, both Democrats and Republicans are going to say, I guess we're stuck renegotiating, but we're not going to accept any backsliding from where our side was previously. But the other reasons to not do this later— next year is a presidential election cycle. It is very hard to move significant legislation like this when everybody is fixated on massive presidential primary and general election. It is much easier year to do it in the lame duck. I think that the turnover of a number of the committee chairs, like the people who have really built up subject matter knowledge, like Sheldon Whitehouse, are turning over. And you're going to have people like Jeff Merkley, who I think it's fair to say are more on the spectrum of skeptical of doing this kind of deal. I don't want to prejudge what his posture would be. And then people like Bruce Westerman, who, unless he gets a waiver in the House to serve another term, has built a lot of knowledge and credibility within his caucus. to sell this over there. You just have a lot of people who have, I think, done a lot of work to contribute this, all of whom are going to turn over. You're going to delay solving the problem when the very nature of the problem that you're trying to solve is speed. It is kind of self-defeating to do that, all for the possibility, and I would say a low possibility given that it's within election year, of negotiating any deal that could pass, let alone a better one, quote unquote.

This is just the point I want to sort of bang because I feel Some of the green groups who are opposing this are pretending that there's a better deal to be had in the next Congress or the one after that. And I just feel like they know that's not right. I feel like they're misleading their members somewhat, and it is very irritating to me. So there's just not a better Democrat-only bill on the horizon. That's just not an option. That's just not an option here. Like nothing is an option, but some phantom better deal next Congress, I don't think is an option.

You said it better than I could have or did. Like, it's just like you go down every avenue and you look through every door and it's like, nope, that doesn't really work for this reason. And as you say, right, like I don't want to ascribe motives to people. It may be the case though that some groups who are saying the wait till next Congress thing is you say no, that that is not an option. If that is the case, I just think we should be having the debate. Do we want to pass this bill or do we not want to pass this I would argue that this bill is good enough on enough dimensions, you know, that matter to Democrats. Or we haven't even discussed labor, but like labor has come out very strongly in support of this. And this is something, you know, that's another constituency that beyond just the environmental climate angle and affordability angle that matters to Democrats.

Well, the, yeah, the electoral thing, how do you think that balances out? Because some people are worried that this is like an insult to frontline communities. And that you're going to lose a bunch of votes and support from frontline communities. Just to be sort of mercenary about it, how do you think the electoral— how, how do you think this will affect, say, the midterms if this becomes something that Democrats support and are pushing for and are about to pass? It's not going to pass till after the midterms, I think. But like, do you think there's any substantial electoral consequences one way or the other if Democrats come out in favor?

I am skeptical of electoral consequences on this. I think this is a conversation that, though it's very robust in the circles that you and I travel in, people are not aware that there is a permitting bill under consideration. People are not aware what it would do, and people will certainly not be aware that it has passed until it is having effects in the real world. And look, effects in the real—

Probably not going to listen to 3-hour podcasts on this.

Certainly, we're at a point in this podcast where we're so far from the listeners who tuned out in the first hour that everything we say now is essentially behind closed doors. No, this bill will have real-world effects, which may cut in opposite directions with respect to voters. Like, even good projects that are like eminently environmentally friendly and permitted well sometimes attract a lot of opposition, and sometimes people will channel that opposition into a vote against whoever's currently in office. It's worth noting that Democrats aren't currently in office in the main. But secondly, people also are frustrated that things can't be built and that prices are going up. And if you want to create an environment where people are happier with their politicians and aren't just throwing out the incumbents every 2 to 4 years, as a matter of course. Having a world that is well-functioning and able to build things that should be built and still able to say no to things that shouldn't is actually like not just the right thing to do. It is probably good long-term politics for the interests of incumbents who don't want people to always be mad at them. And so I think that is worth considering.

That's one side of the possibility. The other possibility is, and this is something I've heard expressed a lot, which is transmission, even though these provisions are great, is slow. You know, it's going to probably be 10 years out before you see substantial changes on that front. Geothermal, everybody loves it, still pretty slow, probably going to be 10 years before you see really substantial macro changes in the energy balance based on that. Whereas the things that ease the burdens on oil and gas permitting are immediate. So So in terms of the short-term effects of this bill, do you not worry that the short-term effects are going to be a crapload of oil and gas permitting with no visible benefit for the climate community?

So I think Democrats should believe their own talking points on this, right? Democrats will often say wind and solar are the quickest resources to deploy. We've already discussed how solar is really asymmetrically burdened by a lot of Not the lowercase p permitting provisions, you know, the NEPA, the NHPA provisions that appear in, that are in existence today and that are amended in the statute. I think that quick-to-deploy resources in general, and you are right, the transmission is, does not score well on being a quick-to-deploy resource. I don't know that I fully agree with 10 years, but it'll take some mid-single-digit number of years before you start seeing effects there. You know, first of all, for the projects that are improperly halted today, like that's the quickest effect of all. And those Those are the renewable ones that we were already discussing. Second of all, that for projects that will benefit from a new regime in short order, projects that are quick to deploy, which in some cases may include gas projects and in some cases may include solar projects or battery projects, will definitely move. Yeah, VPPs. So like on a short timescale, I don't think that argument really holds up that there's this asymmetry that then maybe is only rectified in the long run.

Oh, what about a different asymmetry argument, which is that A lot of this goes to the courts and is dependent on courts. And so a bunch of Republican judges could make this materially worse, whereas trying to make it better— I'm talking about from like a clean energy standpoint— a bunch of Republican judges could make it worse by the way they interpret some of these key phrases and key provisions, whereas making it materially better would require new legislation, which would require 60 Senate votes, which is never going to happen. In other words, the risks are somewhat asymmetric, and the modeling that shows the effects doesn't necessarily take into account those asymmetric risks.

So a lot of the provisions in this bill, not all of them, like we've pointed to some for which this is exceptions, but a lot of the provisions in this bill send projects straight to the appellate level. Like, the appellate level tends to be a more stable environment. Like, as discussed, there are still big differences between the Fifth Circuit and the Ninth Circuit and every circuit in between them, but there's a lot less scattershot variability than there is at the district court level. I also just don't know that I see the argument that, like, you know, you look in, in, like, red states like Texas, which are subject to the Fifth Circuit, Texas is building a lot of renewables today. Like, it's not like their judges are doing something where, like, they're secretly blocking all the renewables and finding, like, ways to do this. I just don't look at like the red state experience with their judicial system. And I also don't look at all the judges who have been very quick to slap Trump down, even Trump-appointed judges, which he often, you know, complains about on Truth Social, slap Trump down on these specific questions of blocking of disfavored energy infrastructure and have that fear.

Yeah, I guess, which just comes back really to where we started 112 years ago, which is the core argument for this bill, which is if you make it easier and more predictable and smoother and faster to get permitted, clean energy will win. That is the core bet here. And if Democrats believe that, if they believe that their sources are cheapest and fastest, they should believe that it's a good bet to make, basically, is the core of the politics here.

I think that is explicitly the bet that people like Sheldon Whitehouse and Martin and Rick kind of are making, and that is their vision. I don't want to put words in their mouth, but I've heard them say more articulate versions than I could of, we believe that clean technologies have these structural advantages going into the future, and Republicans believe the opposite, and may the best technologies win.

Well, speaking of bets, people have— just a quick touch on modeling. People would like to know what the outcome of this bill would be. People often would like to know things that are unknowable, and this is no exception. People really would like to know. And so there's been some attempts at modeling. As far as I can tell, the sort of like the modeling that's been done is mostly of the good stuff and not of the bad stuff. So I'm just curious. And then like, you know, I saw a different model from someone the other day who was trying to do a ground-up project-by-project modeling of it. And their sort of conclusion was like the net emissions effect of this is kind of a coin toss over the next 10 years. Do you have any confidence that we know what the net effect will be on, say, greenhouse gas emissions of this bill?

I am confident that I know the sign. I believe that the net effect of this will be to drive emissions down and do so materially, especially in the medium and long run, but also very plausibly in the short run. I think modeling the magnitude on this is very fraught, and I applaud the people that are trying to do it and ballpark Modeling can sometimes be an exercise in false precision. It's like we're getting the inputs of the gas supply model just right to the 3rd significant digit. And meanwhile, like, we don't even know about large macroscopic seismic shocks that seem to occur within the energy sector, like every 3 to 5 years at this point. Like 5 years ago, we had no idea that data centers were going to totally change the economics of the power sector.

I mean, Iran, Iran, I mean, fracking, Stuff happens.

Yeah. The cost declines in wind and solar, like none of these things were in the mainstream models, let alone 10, let alone 100 years, you know, before they happened. And yet they have all been the things that have determined the trajectory we are on. And so I think we should ask like, what are the things that enable us to be successful under a number of scenarios rather than like just what is our central scenario? I do think the central scenario looks good, but I think that like whether or not the data center load growth persists, Having a robustly built-out transmission grid and having the ability to build at more than 3% of total deployment of wind, solar, and geothermal on federal land, when that federal land is 21% of the lower 48's landmass, is like a good thing if you care about the deployment of those technologies. And like a number of other structural factors. It's not that I think there are no trade-offs. It's not that I think there are no individual titles of the bill that asymmetrically point in a different direction. And it's not that I think there aren't considerations outside of the climate environmental space. I actually also happen to think a lot of those considerations point in a good direction as well. I do think that we know the sign. We know that the magnitude is likely not small, but like anybody who's telling you a number with 2 significant digits is definitely making up the second. And, you know, the first one should probably be taken as like a magnitude indicator. Rather than a faithful prediction of the future, we don't know the future.

I sort of feel about modeling the way I feel about issue polling, which is like sure, go ahead and use it to make your case and get what you want. But like don't get too high on your own supply. And I think maybe to return to your sort of original kind of six considerations, I think we can be much more confident that this bill will. increase speed and resilience and et cetera, et cetera, et cetera. It's really the emissions piece that I think is the most uncertain, probably. But I will just say, if climate is your thing, if climate is your top thing, and it really ought to be more people's top thing, there's enough uncertainty that I think we should extend grace to people who are upset or angsty or just uncertain or, you know, even opposed I've seen a lot of very snotty, sneering dismissal of these concerns. And I think we've been through enough of the specifics that like, there's a lot of uncertainty here and things could go the other way on a lot of these provisions. And there's no guarantee it's good for climate. I just throw that out there.

I agree with you. When I'm at my best, I try to believe that everybody who is objecting is objecting in the same good faith that I am. And I think 99.9% of the time, I think that assumption is either true or you should operate as if it's true because it's very close to true. Like, I think people don't get into nonprofit work and public sector work and government work to do a bunch of evil deeds on behalf of shadowy interests. They do so because they believe in positive outcomes and public benefit. And I genuinely believe that people who think of themselves as fairly far across the political spectrum, actually, when you really probe what they want, want, want similar things and just have a very different calculus as to like how they read the evidence of the world and how to get there. At the same time, there are no guarantees, right? It's not like by keeping the status quo the same, we are guaranteeing ourselves a good and prosperous and sustainable future.

Yeah, things are not going well under the status quo. We are not under a trajectory we want to lock in here. Again, like a lot of people are saying, well, we don't need to do this. We can just mess with state Local permitting and we can use executive authority. I think a lot of people are fooling themselves a little bit on that stuff. You know, I have been convinced by speaking to enough different experts who are coming at this from different directions that federal permitting really is a core issue about speed here, about the speed.

Federal permitting really matters. I'm for sure convinced of that. State and local permitting also matter. To that, I'm like, yes, we can do both. Totally.

Okay. Final question. Praise be. Let's talk about what happens next. What's going to happen? This thing is going to get argued, debated. A lot of people I think are worried that utilities, to return to something I mentioned earlier, like utilities really kind of take it on the chin in a couple of places in this bill. I mean, in ways I thoroughly approve of that I think they're not going to be happy about. And I think if you're looking around for like blockers of this bill and people who are going to muck it up or screw it up, there's a lot too much attention on green groups and not enough on utilities who are going to be lobbying behind the scenes to change a lot of the things that I think you and I probably like most about this law. So just like, what happens next? There's going to be debates, amendments. When is there going to be a vote? What do we see happening in the next, whatever, 6 months?

Yeah, so nothing's going to happen until after the election in early November, and then the Senate will come back, and it will take a vote to essentially take this bill up, and it will be a 60-vote threshold under the filibuster. And then they'll have to actually vote on the bill itself, which will be a series of votes. The, the Senate is very slow-moving and requires a lot of process. But in that process—

Votorama.

Not a votorama. Not a votorama. That's a technical term reserved for when you do things on 50-vote legislation through reconciliation, and it is a torturous process where the senators and legislative staff must stay up till like 7 in the morning, mostly to take a bunch of votes that don't matter.

Yeah.

So we're thankfully not going to do that. One of the perks of going through regular order is not doing that. They're going to file a manager's amendment. They're going to bring in like a redone version of this bill that is, I think, at a minimum going to fix kind of some of the technical issues that are being discussed with it, where both sides are like, yes, this is a technical issue. You know, it's a 400-page bill. It was drafted very thoughtfully, but No, no document that long is perfect. I think there also are some unresolved— there's like at least one unresolved issue, which Sheldon Whitehouse flagged at the press release, where like there was an issue of some language around, around some of the affecting some of the offshore wind farms. So that will presumably be addressed. Assuming those things are all ironable out, the Senate will take a vote. And at that point, you know, the paths kind of fork in front of us. Assume the bill passes the Senate, which is not a given, but if it passes the Yeah, what's the House going to do? Then there's several ways it could move in the House. It could move as a standalone bill. So the Senate will have sent it over as a standalone bill on like a House-passed vehicle that was unrelated that they amended. And so the House could take a backup. And if they do that, there's like 2 procedural pathways. They can either do it by rule, which is— rule is the fancy way of saying like a provision that governs how you actually go to voting on something. And rule votes, for reasons of how the House works, works, generally speaking, require nearly unanimous support of the majority party. Even for minority members who support the bill, the general practice is to vote against the rule. There are a few exceptions to this, like few members like Jared Golden and Marie Gluason-Camparez who have been voting with Republicans on their rules and causing some consternation. But generally speaking, that pathway, you need unanimous or near-unanimous Republican support to bring it to a vote. Or you can go by what's called suspension of the rules, where you don't need to do that process that requires a near-unanimous kind of pre- vote, but you do need to get a 2/3 majority of people in the House. This will all be complicated by the fact that after the election, there are likely to be attendance issues where people who have lost their seats in, in either party are like, why should I come back to Washington? And so the math will be affected by that. There is another pathway, which is that there are certain must-pass vehicles, so-called, that are before Congress. There's a funding bill that just expires on December 11th that will want to fund the government And there's the NDAA, which is usually passed at the very end of the year, like towards Christmas, New Year's time. And so you could imagine a pathway where even if the Senate passes it standalone, the 2 sides just agree they're going to enter into some negotiation in both chambers and potentially attach it to a must-pass vehicle. And then there's all the same considerations around House and Senate would apply again there. Like, all of the pathways come with challenges, which is why I think nothing is assured here. Even if we just stipulate that this bill is like popular with like a very healthy fraction of both parties in the administration. There's like a lot of ways that it could not pass when you're this late in the game.

Yeah. Jared Huffman of the House, you know, one of the sort of energy leaders in the House, said that he thinks the bill will have to get much worse to win over the Freedom Caucus in the House. Do you agree with that?

No, I don't agree with that. I think that in the same way, I wouldn't agree that the bill will have to be negotiated like dramatically in either direction. I think that what the negotiators did put out was a pretty balanced product that includes a lot of things that excite equities in both parties and also make some people in both parties dislike it. And I think the Freedom Caucus is on the list of people that we've learned from experience with bills like the SPEED Act, which was like a more Republican, you know, favored permitting bill that the House passed, that even then members of the Freedom Caucus took exception to a number of provisions and made it very hard to move the bill. But that said, like all the pathways I just laid out, a lot of them, you know, don't require 3 or 4 marginal Freedom Caucus members. Some of them do. Like, I think the, the people who support this bill should make an earnest play to earn the support of everybody from the most progressive to the most conservative members of Congress and let the chips fall where they may with respect to put the proceduralists in the best possible position to have the most optionality. But like, is it possible that we find ourselves in a world where the Freedom Caucus doesn't like it? Yes. Does that foreclose the chance of passage without the bill getting dramatically worse? No.

Got it. And do you at Arnold Ventures have any red lines here? Is there anything that could happen to this bill in the coming process that could diminish it to the point that you would withdraw your support?

Too many hypotheticals to name, right? Like, we've come out in support of this bill because we think on balance the provisions tilt positive. But like, we were discussing a hypothetical at like hour 12 of this podcast, like a few days ago, where, you know, you said, doesn't this bill prevent anybody from suing for anything? I'm misparaphrasing you here. And I was like, no, I don't think it does that. Like, we would not support a bill that like takes away the right to sue under substantive, you know, the substantive environmental laws as a general matter. And like engaging in all of the hypotheticals on like, would this be enough to get you off or this? I probably not a good use of our time, but there are an infinitude of ways. There's an infinite space of legislative text you could write that would do more harm than good. And actually a narrower space of text you could write that would do more good than harm. This bill is, in my opinion, happily in the habitable zone right now, but if it changes, we'll reevaluate it.

All right. And final question is put a number On the odds of passage? I realize this is a wildly arbitrary exercise, but just your gut.

50/50. That's like the worst answer because it's unfalsifiable. I'm equally right and wrong no matter what happens. I've been telling everybody throughout this process, if you took my pulse at any time over the past 6 months, you know, Daniel, what do you think the chances of permitting happening are? I think at my highest I've been at 30, at my lowest I've been at 10. So I've been oscillating around 20. I am now at 50%.

So 50/50 is reasonably—

50/50 is very high for me. Yeah. I think this is like, this is a real shot. It also is a real shot of failure.

Yeah. Yeah. All right. Well, good grief, Daniel. It's nice to be alone in this room with you. Uh, if there are any listeners still with us, God bless you and your fortitude. Thank you so much. This was immensely satisfying for me personally, if for no one else, if for no one else, perhaps. I personally really enjoyed this. So thank you so much for coming through and talking through it in such detail.

Yeah, thank you so much for having me, Dave. This was a great conversation. I hope listeners take things from it, and I hope people correct me on the many points I probably got wrong on the fine details of this 417-page piece of legislation that came out a week and a day ago.

I'm sure we will hear about it if we got stuff wrong. All right. Thank you, Daniel.

All right. Thank you.

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