Fiscal Responsibility Act: How It Impacts Our Infrastructure

Over the Memorial Day weekend, President Joe Biden and House Speaker Kevin McCarthy (R-CA) announced an agreement to avoid a U.S. debt default, which has been estimated as early as June 5^th by U.S. Treasury Secretary Janet Yellen. The closely negotiated proposal quickly passed the House of Representatives by a vote of 314-117 and was then taken up and passed in the Senate by a vote of 63-36 the following evening.

The Fiscal Responsibility Act of 2023 (H.R. 3746) suspends the $31.4 trillion debt limit through January 1, 2025 and holds non-defense spending roughly flat in 2024, before increasing it by just 1% in 2025. While the legislation does lay out larger fiscal policy over the next two years, many provisions in the bill have direct ties to the nation’s infrastructure.

The bill explicitly safeguards funding from the Infrastructure Investment and Jobs Act, exempting H.R. 3746 from having any “budgetary effects” or creating any “discretionary spending limits” related to the bipartisan infrastructure law.

But, beyond safeguarding the IIJA, the legislation impacts infrastructure spending and project approval in several other ways, which are detailed below.

Transportation Rescissions

Some transportation funds will be impacted through an overall rescission of approximately $28 billion in unobligated 2021 appropriations, as well as funding provided by both the Coronavirus Aid, Relief, and Economic Security Act (CARES)Act and the American Rescue Plan. Impacted transportation programs included in the rescission are:

• $2.2 billion in unobligated FY 2021 Omnibus appropriations for Federal Highway Administration programs, excluding any IIJA resources.
• $133.9 million in Airport and Airway Trust Fund dollars from the CARES Act, as well as $54 million in relief for airports under the American Rescue Plan.
• $2 million from Amtrak under the American Rescue Plan.
• $15 million from the Broadband Connectivity Fund.

The $3 billion in unobligated transit dollars, however, will not be rescinded and has explicitly been protected.

Permitting Reform

The 118^th Congress takes its first steps toward further permitting reform in the Fiscal Responsibility Act of 2023. ASCE strongly encouraged permitting reform policy to be included in any bipartisan agreement and the Society is happy to see that many elements of the BUILDER Act made it into the debt ceiling agreement.

The final legislation aims to speed up the permitting process through setting deadlines for environmental reviews and further clarifying language. However, the permitting language is considered by both McCarthy and Biden as a first step for permitting reform this year, as both parties still want to advance permitting reform legislation that includes transmission, pipelines, and other infrastructure. A full list of provisions that made it into the final package includes:

• Amending the National Environmental Policy Act (NEPA) to clarify and narrow agency considerations to “reasonably foreseeable environmental impacts of the proposed agency action.”
• Codifying certain elements of One Federal Decision, including the development of a lead agency, creating procedures to elevate delays, and allowing for the preparation of a single environmental document.
• Setting reasonable page limits for environmental documents.
• Setting time limits of one year for environmental assessments and two years for environmental impact statements.
• Facilitates agencies’ adoption of categorial exclusions of another agency through a new streamlined process.
• Allowing a project sponsor to assist agencies with environmental reviews without taking control away from the lead agency.
• Clarifying that a major federal action is limited to those which are “subject to Federal control and responsibility.”
• Requiring agencies to use reliable existing data sources.
• Clarifying that NEPA does not require undertaking new scientific and technical research to inform analyses.
• Directing the Council on Environmental Quality to conduct a study on applying modern digital technologies to provide efficiency in the permitting process.
• Requiring the consideration of a government-wide permitting portal to streamline communications and data sharing between agencies and applicants.

Transmission Infrastructure

The Fiscal Responsibility Act requires the North American Electric Reliability Corp. to assess how much “prudent” transmission capacity is needed to share electricity with neighboring regions to strengthen grid reliability.

The group would have a year and a half to study whether more transfer capacity is needed between regions. The Federal Energy Regulatory Commission (FERC) would then have a year to seek and consider public comments on the study before filing a report to Congress. The language comes in the wake of recent power outages across the country and galvanizes FERC to make increasing transfer capacity a priority.

Energy Storage

The bill makes energy storage projects eligible for permitting under the FAST-41. FAST-41, first authorized in 2015 as part of the FAST Act surface transportation reauthorization, created a new governance structure, set of procedures, and funding authorities to improve the federal environmental review and authorization process for covered infrastructure projects.

PAYGO

The bill establishes a Pay-As-You-Go (PAYGO) requirement for executive branch actions that increase direct spending, as well as broad waiver authority for the Office of Management and Budget Director and protections against judicial review. The language is meant to prevent the federal government from being able to write regulations that will increase federal spending.

The legislation asserts that whenever a federal department or agency is considering an action that is not required by law and would increase mandatory federal spending by more than $100 million in a year or more than $1 billion over a decade, the department or agency must also include a proposal that would decrease federal spending by the same amount. The requirement would expire on December 31^st, 2024.