Redrawing the Map – Energy Provisions in Proposed Budget Bill Seek to Shift the Future of Federal Infrastructure Policy

What’s In:

The amended language of the Bill:

• rescinds unobligated Inflation Reduction Act dollars across a range of Department of Energy (“DOE”) programs;
• amends the Natural Gas Act (“NGA”) to require a $1 million nonrefundable fee for applications to import or export natural gas involving countries without a free trade agreement, and deems such applications automatically in the public interest, requiring approval without modification or delay;
• establishes new fast-track permitting procedures for natural gas infrastructure under Sections 3 and 7 of the NGA;
• creates a first-of-its-kind DOE implemented compensation program to reimburse developers for unrecoverable losses caused by later federal actions — like permit revocation or court vacatur;
• directs new resources to the Strategic Petroleum Reserve (“SPR”) and implementation of the Alaska Natural Gas Pipeline Act (“ANGPA”); and
• establishes a new National Environmental Policy Act (“NEPA”) “opt-in fee” program that allows project sponsors to pay for expedited environmental reviews while also limiting legal challenges by barring administrative and judicial review.

What’s Out:

The latest amendment stripped key language from the original Bill:

• requiring entities to obtain a “certificate of crossing” from Federal Energy Regulatory Commission (“FERC”) — along with a $50,000 fee — before constructing, connecting, operating, or maintaining cross-border energy infrastructure (like pipelines or transmission lines) between the U.S. and Canada or Mexico;
• granting FERC federal licensing and eminent domain authority over certain petroleum, hydrogen, and CO₂ pipelines; and
• rescinding over $800 million in previously appropriated but unobligated funds across multiple DOE offices.

Also, the Bill trails recent developments at the DOE. On May 12, DOE announced it was rescinding or altering 47 different regulations, covering energy efficiency standards, permitting, and climate change. Some of these actions, such as rescinding certain permitting regulations, aim to alleviate the same regulatory burdens targeted by the Bill.

The analysis below highlights key provisions of the Bill and where they align with recent DOE regulatory actions. We note that the Senate is now expected to consider its own version of the legislation, and they will likely take a substantially different approach from the House.

Targeted Rescissions Impact DOE Clean Energy Programs

The Bill sets its sights on unobligated funding for various DOE programs and offices. Section 41001 cancels unobligated balances of funding previously appropriated under specific provisions of the Inflation Reduction Act of 2022 (“IRA”). The rescissions apply to a targeted set of DOE programs, including: 

1. Home energy efficiency contractor training;
2. DOE Loan Programs Office initiatives — specifically, advanced vehicle manufacturing, energy infrastructure reinvestment, and tribal energy loan guarantees;
3. Transmission-related funding for siting, planning, and financing; and
4. The Advanced Industrial Facilities Deployment Program.

Only unobligated funds — those not contractually committed before enactment — are affected. However, many DOE clean energy programs operate on multi-year funding cycles, with competitive solicitations, project vetting, stakeholder engagement, and interagency review. By canceling unobligated balances, this language may effectively cancel programs midstream.

Permitting Reform for Natural Gas Projects and Beyond

The Bill also includes permit reform for cross-border energy infrastructure, natural gas imports and exports, and natural gas infrastructure.

Section 41002 Redefines DOE’s Role in Non-FTA Natural Gas Export Approvals

Under current law, DOE automatically approves exports to free trade agreement (“FTA”) countries, but retains discretion — and must conduct a public interest review — for exports to non-FTA countries. For non-FTA countries, DOE conducts a public interest review that typically involves consideration of economic, geopolitical, and environmental impacts, including whether the export would harm domestic supply or pricing, and response to public comments.

Section 41002 of the Bill could have the practical effect of redefining DOE’s public interest role by creating a dual-track system — a fee-based clearing process vs. a non-fee process involving substantive policy evaluation. Section 41002 overrides the current framework by legislatively substituting the public interest finding, and effectively collapsing the distinction between FTA and non-FTA reviews. Specifically, Section 41002 amends Section 3 of the Natural Gas Act by adding a new Subsection (g) that creates an alternative, mandatory approval pathway for applicants who pay the $1 million fee. Subsection (g) requires the DOE to automatically approve applications to export or import natural gas to/from non–free trade agreement (non-FTA) countries, upon payment of a $1 million non-refundable fee. On receipt of the application and the fee, the Secretary of Energy must deem the transaction “in the public interest” and approve it without modification or delay.

DOE retains its existing authority to conduct public interest reviews for applications not covered by Subsection (g). This means that applicants who choose not to pay the $1 million non-refundable fee would be subject to the existing § 717b regulatory framework in which DOE retains full authority to conduct reviews.

Concurrently, in March 2025, as part of what appears to be broader policy push, DOE took steps to remove regulatory barriers for liquefied natural gas (“LNG”) exports. For instance, it rescinded a policy that imposed stringent criteria on LNG exporters seeking to extend their commencement dates, which allows for more flexibility and case-by-case evaluations.

Section 41004 Would Expedite Natural Gas Permitting and Limit Judicial Review

The permit reform aspects of the bill also significantly change FERC’s certification process and the approval process for other agencies granting approvals required under federal law. Section 41004 amends the Natural Gas Act by adding a new Section 15A, which establishes an optional expedited permitting process for certain natural gas infrastructure projects that involve construction. An applicant may elect to pursue expedited review before submitting the relevant application. The applicant would need to:

1. Provide FERC notice of its intent to use the expedited process;
2. Identify all required federal authorizations and the corresponding agencies (including federal, state, and interstate authorities);
3. Pay a fee to the Secretary of the Treasury (1% of the project’s construction cost, not to exceed $10 million); and
4. Submit the full application to FERC within 60 days of electing expedited review.

Once the application is submitted, FERC and all identified agencies would conduct their normal reviews, but have one year to review and approve their respective portions. In particular, FERC and other relevant agencies would still be responsible for conducting NEPA reviews. A single six-month extension is available only if the applicant consents, and only on a per-agency basis. If any agency or FERC fails to act within the required deadline (12 or 18 months), the covered application or federal authorization is deemed approved in perpetuity notwithstanding any related procedural requirements under other federal law. However, if the agencies act in time, they retain discretion to deny or condition the approval. If passage of time results in any approval, the applicant must still comply with the substantive requirements of federal law.

Under Section 41004, the law limits judicial review of these approvals to Administrative Procedure Act claims from two categories of plaintiffs: (1) the applicant, and (2) a person who suffers (or is likely to imminently suffer) direct and irreparable economic harm from the approval. Associations also have standing so long as each member of the association meets the above harm standard. The Section also imposes a 180-day deadline to file suit and raises the evidentiary burden from the traditional “substantial evidence” test to “clear and convincing evidence.” The language in the provision combines to potentially narrow judicial review, especially for procedural errors and environmental compliance failures.

Section 41004 limits judicial review (and potentially administrative review) over the expedited application process. First, Subsection (c)(3) grants original and exclusive appellate jurisdiction to United States Court of Appeals for the District of Columbia Circuit for claims involving facial and as applied attacks involving the expedited application process. Second, the language in Section 41004 makes no mention of administrative exhaustion or rehearing; likely meaning that sole path for appellate challenges to actions or inaction under the expedited application process at FERC will lie exclusively with the D.C. Circuit.

Section 80151 May Expedite NEPA Review and Would Limit Judicial Review

Section 80151 of the Bill introduces a novel “opt-in fee” mechanism under NEPA that allows project sponsors to pay for expedited environmental reviews. Upon submitting a project description and declaration to the Council on Environmental Quality (“CEQ”), the sponsor receives a fee quote — 125% of the anticipated cost of either preparing or supervising the preparation of an environmental assessment (“EA”) or environmental impact statement (“EIS”). Once paid, the statute mandates firm deadlines — six months for an EA and one year for an EIS. Also, the provision sharply limits legal exposure by barring both administrative and judicial review of any EA or EIS completed under this process, and prevents challenges to a resulting Finding of No Significant Impact (“FONSI”) or Record of Decision (“ROD”) based on alleged deficiencies in those documents.

While the Section as written could improve review timelines, questions remain regarding the scope of CEQ’s authority and whether the bar on judicial review will withstand scrutiny.

New Funding and De-Risking Compensation Program

Along with the funding rescissions and permitting reform noted above, the Bill also includes new funding for two existing programs and creates a new and novel compensation program for certain energy projects.

New De-Risking Program Offers Limited Financial Backstop for Energy Developers

Section 41005 establishes a new, Congressionally mandated De-Risking Compensation Program within the DOE. The program authorizes DOE to compensate private sponsors of certain energy projects that suffer unrecoverable losses due to adverse federal actions, such as revocation or judicial invalidation of previously issued permits or approvals. Specifically:

1. Congress appropriates $10 million for FY 2025, to remain available through September 30, 2034.
2. Funds are designated for administering and implementing the compensation program.
3. No disbursements may occur after FY 2034.
4. The Secretary of Energy is required to establish and administer the program through a dedicated De-Risking Compensation Fund, composed of sponsor-paid fees, annual premiums, and accrued interest.

To qualify, a project sponsor must:

1. Be incorporated and headquartered in the U.S.;
2. Have secured all approvals or permits required under federal law;
3. Have commenced construction or made substantial capital expenditures in reliance on those approvals;
4. Not yet have been subject to a “qualifying federal action” (e.g., permit revocation, cancellation, or judicial invalidation);
5. Apply for enrollment in the program before such a federal action occurs.

Once enrolled, the sponsor must:

1. Pay a one-time enrollment fee equal to 5% of its certified capital contribution;
2. Pay an annual premium equal to 1.5% of the capital contribution, subject to adjustment every two years (but capped at 5%).

The premiums are collected annually until either:

1. The sponsor withdraws; or
2. FY 2033, whichever comes first.

A sponsor may seek compensation only if:

1. It has remained enrolled and up to date on payments; and
2. A “qualifying federal action” occurs — defined as a federal regulation, administrative decision, or executive action that revokes, cancels, materially delays, or renders the project commercially unviable, even if done pursuant to a court order.

To obtain compensation, the sponsor must submit:

1. Documentation of federal approvals and capital expenditures;
2. A description and citation of the federal action;
3. A showing that the project was otherwise viable but was rendered unviable specifically because of the government’s action;
4. A certified economic analysis demonstrating unrecoverable losses.

Compensation is capped at the sponsor’s capital contribution, which means the sponsor’s financial investment in the project — including development, construction, permitting, and financing costs directly related to the covered energy project that are verified by DOE — and not merely the fees or premiums the sponsor pays into the fund.

The Secretary may not consider the project’s technology type or merit in evaluating the claim. The Section gives the Secretary of Energy broad discretion to administer and adjudicate claims but places very few constraints on eligibility denials, fund depletion, or payout prioritization. The only clear limit is that no more can be paid than what is in the program at the time. It’s too early to ballpark the potential long term impact of this Program, but theoretically a fully operational fund could possibly encourage companies to aggressively pursue large-scale fossil fuel and nuclear projects given that some of the risk is insured. At the outset, it appears that the $10 million appropriation to “carry out” the program will provide initial capital to DOE to make compensation payments to sponsors. It is possible, though, that one or a few large infrastructure projects could deplete the funds in a short period of time. Developers would need to consider how broad participation is in the program and its own timelines to determine the utility of participating.

The Alaska Natural Gas Pipeline Act and Strategic Petroleum Reserve Receive Targeted Boost in DOE Budget Provisions

Two sections of the Bill provide additional funding for implementing the Alaska Natural Gas Pipeline Act (“ANGPA”) and to bolster the SPR. Section 41003 appropriates $5 million to the Secretary of Energy to cover administrative expenses associated with implementing Section 116 of the ANGPA. The funds are drawn from general Treasury revenues and are available for obligation through FY 2030.

Section 41006 provides new funding and repeals a prior statutory mandate that required the DOE to carry out pre-scheduled drawdowns and sales of Strategic Petroleum Reserve (“SPR”) crude. Recently, DOE altered its regulations for acquiring petroleum for the SPR by requiring index price contracts.

We will continue to closely track the budget reconciliation process and related regulatory developments as the legislation advances through Congress. Please reach out to your Vinson & Elkins team to discuss these matters and their implications for your business.