Evolving NEPA Regulations May Facilitate Energy Projects
Background
The National Environmental Protection Act ("NEPA") requires that federal agencies assess the environmental effects of their proposed actions prior to making final decisions, including decisions on issuing federal permits, constructing publicly owned facilities and adopting federal land management actions. The median time for NEPA reviews in which a final decision was issued in 2024 was 26 months. To avoid what are viewed as unnecessary delays, the Trump administration has issued executive orders and interim final rules to deregulate the environmental review process in hopes that such deregulation will spur growth in energy projects, particularly in the area of fossil fuels. The administration's actions include withdrawing the Council on Environmental Quality ("CEQ") regulations regarding NEPA, reviewing the social costs of carbon ("SCC"), providing waivers for the NEPA process, and automating the environmental review process where possible. Likewise, the Supreme Court recently issued a decision that may curb litigation challenging the sufficiency of environmental impact statements ("EISs") under NEPA.
CEQ Withdrawal of NEPA Regulations
On January 20, 2025, President Trump signed an executive order titled "Unleashing American Energy" ("EO 14154"), which rescinded EO 11991 and ordered CEQ to propose rescinding the NEPA implementing regulations. EO 11991 was a Carter-era executive order that directed CEQ to promulgate regulations to implement NEPA and required executive agencies to follow the regulations. The Administration's decision may have been influenced by a D.C. Circuit opinion late last year that held CEQ lacked the authority to issue binding regulations even with EO 11991. The CEQ regulations contain the procedures pursuant to which federal agencies conduct the environmental impact reviews required by NEPA.
On February 25, 2025, to implement EO 14154, CEQ published an interim final rule, effective on April 11, 2025, and request for comments. The rule rescinded CEQ's existing regulations (40 C.F.R. Parts 1500–08) under two theories. First, EO 14154 ordered CEQ to rescind the regulations, which CEQ stated is a sufficient reason itself. Second, EO 14154 rescinded EO 11991. Without EO 11991, CEQ states it may not have any authority to issue binding regulations on executive agencies because the plain text of NEPA may not directly grant CEQ that power, which reflects the D.C. Circuit's interpretation of NEPA.
The rescission of CEQ's regulations under NEPA may create ambiguity in how NEPA is implemented at other agencies, as many agencies' implementing procedures rely on CEQ's regulations. For example, the Department of Energy's regulations evaluate whether an EIS, Environmental Assessment ("EA"), or a categorical exclusion applies to a proposal based on, in part, the procedures in "CEQ Regulations." Without CEQ's regulations, how agencies will implement their NEPA regulations becomes less clear.
On April 8, 2025, media reports indicated that CEQ circulated a draft template to agencies on how they may approach their NEPA regulations. The template included: (i) an adjustment to the definition of "major Federal action" to include a presumptive but nonbinding monetary threshold; (ii) an option, but not a requirement, to provide a public comment period; and (iii) a requirement to strictly adhere to the statutory timeframes (i.e., one year for an EA and two years for an EIS). While the template is not binding, it provides insight into how the Trump administration will implement NEPA in the coming years.
SCC Impact on NEPA Approvals
On March 12, 2025, EPA Administrator Lee Zeldin announced that EPA will revisit the SCC. On May 5, 2025, the acting administrator of the Office of Information and Regulatory Affairs within the Office of Management and Budget released a memorandum instructing agencies to consider greenhouse gas ("GHG") emissions only if required by statute. If a statute requires GHG emission consideration, then the agency's analysis should be limited to the minimum consideration required under the statute. The memorandum also stated that GHG emissions should not be monetized. Even if a Federal Court of Appeals finds that monetized calculations are required, the agencies should consult with the Department of Justice to consider their options under the nonacquiescence doctrine. In response, CEQ withdrew its interim guidance that assisted agencies in their consideration of GHG emissions and climate change when conducting environmental reviews.
Reducing or removing the SCC could directly affect NEPA reviews. Agencies determine if an EIS is required based on whether a federal action significantly affects the quality of the environment. Agencies prepare an EA to determine if an EIS is required. If the agency decides an EIS is not required, the agency will issue a Finding of No Significant Impact ("FONSI"). Not considering the SCC or considering a lower SCC would reduce the perceived impact of carbon-intensive projects, which could cause more to result in FONSIs instead of EISs, paving the way for faster project approvals.
NEPA Border Wall Waivers as a Blueprint
On April 8, 2025, the Department of Homeland Security ("DHS") issued a waiver of NEPA to construct 2.5 miles of border wall in California. This is not the first time that NEPA has been waived to construct the border wall. Most recently, the Biden administration also waived NEPA to construct barriers in Texas in 2023.
The Trump administration may seek to provide similar waivers for energy projects, but it will likely face challenges. While both the Trump and Biden administrations successfully waived the NEPA requirements for the border wall, the border wall waiver has statutory backing that energy projects do not. Under Section 102(c) of the Illegal Immigration Reform and Immigrant Responsibility Act, the Secretary of DHS may waive all legal requirements that the Secretary determines, in his or her sole discretion, are necessary "to ensure expeditious construction of the barriers and roads" defined under Section 102. Without similar statutory authority, the Department of Energy may have problems issuing similar waivers.
Automation of Project Reviews
On April 15, 2025, President Trump issued an executive order aimed at automating much of the environmental review process. This process will include creating an initial data and technology standard for permit applications, a roadmap for creating a unified interagency permitting and environmental review data system, and an interagency government structure for oversight of implementation. President Trump tasked the CEQ with implementing the executive order.
Supreme Court Guidance on NEPA
On May 29, 2025, the Supreme Court issued a decision in Seven County Infrastructure Coalition v. Eagle County, Colorado, a case in which Jones Day submitted an amicus brief to reverse the D.C. Circuit's decision on behalf of a client. The Court held that "when determining whether an agency's EIS complied with NEPA, a court should afford substantial deference to the agency." Specifically, an agency should receive deference in determining whether a report is detailed enough. The Court also held that if a project "might lead to the construction or increased use of a separate project—for example, a housing development that might someday be built near a highway—the agency need not consider the environmental effects of that separate project," particularly in cases where the agency does not possess regulatory authority over the separate project. In so doing, the Court reversed the D.C. Circuit.
This decision will give agencies greater discretion when issuing EISs and will potentially curb the amount of litigation alleging an insufficient EIS in an attempt to stop infrastructure projects.
All of these changes may decrease the regulatory burden of environmental reviews, potentially clearing the way for new energy projects, as the Trump administration appears to be encouraging. But the changes also create uncertainty in the short-term. Thus far, however, the uncertainty has not impacted project development, with federal and state data showing a sharp increase in drilling permits approved compared to this time last year. Affected industries should stay up to date on the changes to ensure compliance and to understand the current expectations for environmental reviews.
