Facing a deadline for averting a U.S. government default, negotiators representing the White House and congressional Republicans have reached agreement on legislation that would raise the U.S. debt ceiling until Jan. 1, 2025, set caps on discretionary spending for two years and create steps aimed at accelerating federal approvals for infrastructure projects. 

The "agreement in principle," which President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) announced on May 27, also includes unusually broad provisions to advance the controversial Mountain Valley pipeline, which would carry natural gas from West Virginia to southern Virginia.

The text of the legislation, titled the Fiscal Responsibility Act, was released May 28.

Major hurdles remain, however. The bill still must be approved by the House and Senate. To reach that goal, Biden and McCarthy must win over enough votes for passage from among their respective party members, overcoming doubts on the part of conservative Republicans and progressive Democrats. 

McCarthy said he plans to bring the proposal to the House floor on May 31. The deadline for action on the debt limit is fast approaching. Treasury Secretary Janet Yellen told Congress in a May 26 letter that if Congress does not act to raise or suspend the ceiling by June 5, the U.S. would have "insufficient resources " to meet its financial obligations.

Permitting Reforms

Stephen E. Sandherr, Associated General Contractors of America chief executive officer, highlighted the bill's permitting provisions, calling them "significant reforms" to a process "that has, until now, been one of the main impediments to progress on many vital infrastructure projects."

According to a summary from a White House source, the permitting provisions include designating a single lead federal agency per review, which would develop one environmental review document on "a clear and public timeline."

In addition, environmental reviews would have to be completed in one year, or two years, in the case of projects that are "most environmentally complex," the summary said.

It also said the bill does not "curtail the substantive scope" of the National Environmental Policy Act, reduce the statute of limitations or eliminate injunctive relief "or other judicial remedies."

The National Stone, Sand & Gravel Association also praised the legislation, especially the permitting provisions. Michael Johnson, the association's president and CEO, said in a May 30 statement that the focus on modifying the National Environmental Policy Act "is particularly commendable, as it catalyzes our industry's ability to operate efficiently, while adhering to environmental standards."

International Brotherhood of Electrical Workers International President Kenneth W. Cooper, welcomed the permitting language and also underscored that the bill "maintains the Inflation Reduction Act's [IRA] climate and clean energy provisions." Earlier House Republican proposals would have canceled  significant clean energy provisions of the IRA.

Sandherr also welcomed provisions setting new requirements for some individuals who receive federal aid from the Supplemental Nutrition Assistance Program (SNAP). It would phase in work requirements to people up to age 54, from a maximum of 49 now. 

Sandherr said that provision and others "should help make labor shortages less severe while delivering people from dependency to the dignity of high-paying careers in professions like construction."

The summary from the White House source said that the legislation also would include other changes that would "reduce the number of vulnerable people who are subject to SNAP work requirements." The changes would include exemptions for individuals who are veterans and homeless and also for foster youth.

Sandherr added, "The biggest challenge with the deal will be to maintain already promised levels of infrastructure funding into future years." That would include funding under the $1.2-trillion Infrastructure Investment and Jobs Act.

He said that "the President has a lot vested in protecting those investments and ensuring those projects move forward, as do the bipartisan majorities in Congress that supported the original funding bill."

 'Top Line' Funding Caps

The measure sets overall “top line” funding levels for defense and nondefense discretionary funding for fiscal 2024 and 2025. 

McCarthy and other top House GOP lawmakers said in a May 28 statement, "We cut spending year-over-year for the first time in over a decade while fully funding national defense and veterans' health benefits..." 

They also included a graph showing that the bill has $583 billion in 2024 nondefense and veterans' funding, a cut of about 7% from 2023.

But a White House official said in a May 28  background briefing for reporters that for fiscal 2024, the bill "keeps nondefense spending roughly flat" with 2023. The official added that for 2025, the proposal increases nondefense and defense spending totals by 1% from 2024.

But the official added that "beyond 2025, there are no budget caps, only non-enforceable appropriations targets..."

Some of the difference between the House GOP and White House numbers may be due to how they treat what the White House terms "repurposing" of $10 billion in 2024 from the Internal Revenue Service and billions in unobligated Covid-19 relief funds.

It is clear that the bill generally does not spell out detailed 2024 and 2025 funding amounts for the scores of individual federal programs, including construction and infrastructure accounts.

That task will be up to House and Senate appropriations committees as they write, debate and negotiate the 12 individual fiscal 2024 spending bills over the coming months.

Mountain Valley Pipeline

One individual project that stands out in the 99-page bill is the Mountain Valley pipeline. Nearly complete, its still outstanding permits are still being challenged in court by opponents, with the project becoming a top priority for Senate Energy and Natural Resources Committee Chairman Joe Manchin (D-W.Va.), who said he has "secured the bipartisan support necessary to get it across the finish line."

Project approvals by the U.S. Army Corps of Engineers and Federal Energy Regulatory Commission, as well as by West Virginia, remain to be finalized.

Among the provisions is language directing the secretary of the Army to "issue all permits or verifications necessary" to complete the pipeline's construction across federally regulated waters, and to allow operation and maintenance of the pipeline. It also blocks court review of federal or state permits or other actions related to building the project.

But environmental groups, which have long fought the project, sharply criticized the pipeline provisions. Ben Jealous, executive director of the Sierra Club, said in a statement that an agreement that "rolls back bedrock environmental protections and makes life harder for workers and families already struggling is a bad deal for the country."

Story updated on 5/30/2023 with comments from NSSGA and IBEW.