The Bipartisan American Affordability and Jobs Act of 2026, a sweeping federal environmental and permitting reform bill introduced in the Senate last week, includes several provisions that could significantly affect local governments, including changes to federal environmental reviews and new requirements for data centers to pay for their transmission costs.
The 417-page bill would overhaul provisions of the National Environmental Policy Act, Clean Water Act, Endangered Species Act and other permitting laws to accelerate energy and infrastructure projects and limit federal interference with approved projects.
The National League of Cities identified three provisions as particularly important to local governments, while the National Association of Counties called out several key wins for counties. Lobbying firm Brownstein said it is “possibly the most comprehensive permitting reform bill in recent history”
“The package’s most consequential feature is its combination of permitting speed, permit durability and transmission reform,” according to an alert from law firm Holland & Knight. “Tribal, state and local governments would have to operate within shortened review and response timeframes and more precisely drawn roles for participation in decision-making.”
Melissa Williams, NLC director of marketing and communications, told Smart Cities Dive in an email that the league supports streamlining and modernizing a cumbersome and complex permitting process that can increase the cost and availability of labor and materials and cause lost economic opportunities for communities. “At the same time, it is important for local leaders to have a seat at the table and maintain local authority and decision-making in the project siting and permitting review process,” she said.
Williams said that while NLC is still reviewing the proposed legislation, three of the bill’s permitting reform provisions stand out as particularly important for local governments. The bill would:
- Redefine “cooperating agency” to include “county, borough, parish, city and any other political subdivisions of a state.” This would ensure local governments are part of the NEPA review process from the beginning, she said.
- Narrow the scope of projects subject to NEPA review, excluding “projects with no or minimal federal funding, projects that replace life-line infrastructure (such as transportation, water and other public works projects) and more.”
- Prevent the federal government from interfering with projects that have obtained federal authorization, with a few exceptions. “Project certainty is important to communities that have worked and planned for years to bring beneficial projects to fruition — investing time and resources to do so,” Williams said.
NACo applauded the bill for codifying counties as cooperating agencies during NEPA reviews, which would allow them to work with federal agencies to conduct environmental reviews and help identify and address issues early in the process.
Counties would also benefit from one- and two-year deadlines for environmental assessments and impact statements, respectively; waived NEPA review for repair and replacement of county roads, bridges, water and sewage systems in smaller capacity instances; restrictions on agencies’ ability to rescind, suspend or materially change permits after they’ve been granted; and faster permitting for geothermal and other energy projects on federal land, “which could affect royalty revenue shared with counties,” according to a NACo analysis of the legislation.
BAAJA addresses political and economic concerns including rising electricity demand and cost, transmission constraints and the rapid growth of data centers, according to Brownstein. The bill would “change the process and timeline for permitting anything that has a federal nexus, including energy infrastructure, roads, bridges and data centers,” the firm wrote in an Oct. 5 analysis.
“Reaching an agreement on permitting reform is an important and long-overdue first step toward fixing a broken process that has held back our ability to build things again in the Central Valley and across the country,” Rep. Adam Gray, D-Calif., said in a statement. Pointing to the Los Banos Creek Detention Dam Project, which was proposed in 2012 but didn’t break ground until 2025, he said, “No project that takes six months to build should take over a decade to permit.”
