How NEPA Will Tax Clean Energy

Introduction 

Will the National Environmental Policy Act (NEPA) hinder the clean energy revolution? Data on this question is sparse, which has led to significant disagreements about the answer. To understand how NEPA affects clean energy, we must first uncover NEPA’s so-called “dark matter” effects — the law’s downstream costs that distort markets, create uncertainty for developers, and undermine state capacity. By investigating these costs, this paper adds important missing context to the limited data on NEPA.^{1 2} A holistic evaluation of the available data supports a concrete conclusion: As we transition our energy system, NEPA is likely to create larger drags on clean energy than on fossil fuels. Therefore, reforming NEPA to accelerate the development of energy infrastructure will disproportionately benefit clean energy. 

This piece is organized into three sections. The first takes stock of the true costs of NEPA by identifying the dark matter of NEPA. Specifically, it assesses how NEPA creates uncertainty for developers and weakens agency capacity. The second section looks at the available evidence for how the law affects clean vs. fossil energy production. The final section considers the potential for reforming NEPA, and makes the case that clean energy stands to benefit more than fossil fuels. 

The real costs of NEPA 

The National Environmental Policy Act (NEPA) draws headlines for the delays to projects it causes and for the lengthy page counts of its documents. But NEPA’s true costs are more opaque: The environmental review process creates downstream burdens that distort markets, overburden state capacity, and leave an invisible graveyard of infrastructure projects. These effects are difficult to quantify. Indeed, some have referred to them as the dark matter of environmental law — effects we know exist, but have little data for.³ Accounting for these effects is crucial for informing future policy reforms. Defenses of NEPA often rely on glossing over the law’s downstream costs. But if we take a closer look, we can see how these “dark matter” effects harm clean energy compared to fossil fuels.

NEPA imposes two main forms of “dark matter” costs: (1) the process creates uncertainty for developers, leading to an invisible graveyard of projects that were never built; and (2) the process burdens federal agencies, wasting agency capacity, undermining agency authority, and preventing needed government action.

NEPA requires the government to conduct a detailed review of the environmental impacts of all major federal actions.⁴ However, what counts as sufficiently detailed is highly ambiguous and left up to case law to define.⁵ This creates an enormous vulnerability — the Administrative Procedure Act allows plaintiffs to challenge any NEPA review on the grounds that its documents were not sufficiently detailed.⁶ If plaintiffs succeed in showing the review was arbitrary or capricious in any way, the entire approval is upended. Project opponents have exploited this vulnerability, wielding procedural rules to challenge agencies and delay projects. 

Uncertainty for developers

The NEPA process ties a project’s future, and its developer’s financial success, to a process that is vulnerable bureaucratically, politically, and legally.

These uncertainties create significant tail risk — the potential for extremely bad outcomes. Project developers must consider the possibility they might end up in a nightmare scenario, where permitting delays drag on for 10+ years, or where their project suffers through endless rounds of litigation before being finally canceled. Companies can rack up enormous costs and potentially lose investments in these scenarios. For developers, this tail risk makes it far more difficult to commit to developing projects with federal support that would trigger NEPA. Because any given project may hit a perfect storm of litigation and delays, the number of projects that can be developed is far lower than it would be otherwise. The result is an “invisible graveyard” of projects which are never developed in the first place.

Timeline uncertainty

Developers can’t know ahead of time how long a NEPA review will take. The median environmental impact statement, or EIS — the longest type of NEPA review — takes 3.5 years, but the average is 4.5 years. A quarter of EISs take more than 6 years.⁷ This long tail of NEPA delays affects developer and investor calculations: Developers cannot confidently predict when they will need to raise financing, and investors cannot know when their investments will begin making a return. Longer wait times also make it harder to account for the uncertainty associated with important market factors like demand, the cost of capital, or supply chains.⁸ 

Political uncertainty

NEPA reviews create an avenue for political interference. While there is no official authority to deny projects under NEPA, political appointees can cause years of delay by shelving the review, requesting further study, or otherwise leaving the process in bureaucratic limbo.⁹ For example, New York City’s congestion pricing plan was held up by the Trump administration under the pretense that the Federal Highway Administration hadn’t decided whether the project needed an environmental assessment (EA) or EIS.¹⁰

Litigation uncertainty

Litigation is a major pain point for developers. Even frivolous lawsuits are costly to defend, and NEPA lawsuits often happen during construction, halting projects for months or years. To make matters worse, lawsuits can happen at any time and there is no limit on the number of lawsuits that can be brought. Lawsuits can interrupt construction via preliminary injunctions — stays on construction while a court date is set — or by getting a project’s NEPA approval vacated. If this happens, the review is sent back to the federal agency to conduct supplemental review. This process can take several more years, creating another round of uncertainty where agencies and political appointees can drag their feet.¹¹

A perfect storm of tail risk

In the worst cases, all three forms of uncertainty come together in one project. For instance, the offshore wind project Cape Wind took eight years (2001-2009) to permit.¹² Political opposition to the project exacerbated the timeline uncertainty of the NEPA process. For example, the late Senator Ted Kennedy, whose beachfront property overlooked the project site, declared that the project had done “insufficient environmental review.” He urged the project to wait while further reviews were completed — a classic obstruction tactic that likely contributed to the project’s exceptionally long review timeline.¹³ Then, once Cape Wind was finally permitted, project opponents, backed by wealthy NIMBY beachfront property owners, abused environmental permitting through litigation in a cynical strategy to further “delay, delay, delay.” Even though the developer won 31 out of 32 lawsuits, the prolonged litigation accomplished its true goal of inflicting a financially painful delay. 

After six years of legal obstruction (2009-2015), Cape Wind was canceled when investors burned out and regional utilities pulled their power purchase agreements.¹⁴ The project developer lost $100 million of his own money and was left with nothing to show for 16 years of work. NEPA’s defenders have been quick to point out that outcomes like Cape Wind are not the most common result of the environmental review process. But they miss that developers and investors can’t know in advance whether they’ll experience a Cape Wind-style nightmare. Their calculations are affected accordingly.

Headlines focus on projects stuck in long reviews and litigation. But the bigger cost is the invisible graveyard of projects that never get built. Paying close attention to the cost of the invisible graveyard is especially important for the clean energy transition; if we move forward without reform, the invisible graveyard may consume many important projects that are needed to meet our decarbonization targets. 

The largest effect of the invisible graveyard is that developers never even apply for a permit for projects, because they don’t see a path through the NEPA process or wish to avoid it entirely. Similarly, projects can be watered down by NEPA — either directly, by the need to duck litigation, or indirectly, by forcing developers to avoid triggers for NEPA review, like building on federal lands.¹⁵ But since these decisions are made behind closed doors, it is difficult to measure how many projects are prevented, and to what degree the NEPA process caused their cancellation. 

What we do have are examples of projects that died or were heavily delayed in the NEPA process.

Agency costs

The second major cost of NEPA is its downstream effects on federal agencies. NEPA puts federal agencies on the hook for producing environmental reviews. But the legal standards for reviews are a moving target. Court rulings and regulatory accretion have continually expanded the standards for NEPA documents. Agencies are highly averse to the possibility of being sued in court and told by a judge their review was insufficient. Consequently, federal agencies have practiced “litigation proofing” on their documents — attempting to preempt lawsuits by going above and beyond the requirements set by case law.¹⁶ The result has been a massive expansion in page numbers and detail, from a handful of pages in 1970 to 1,703 pages in 2018. One former EPA general counsel speculated that as many as 90% of the details in environmental reviews are only included to ward off litigation.¹⁷ 

Lost state capacity

Lost agency capacity isn’t just about extra pages and added delay. Staff time spent writing hundreds of extra pages to fend off lawsuits could certainly be better spent on other goals, like project planning or community engagement. But the biggest cost is in agency actions that get watered down or never happen because the prospect of completing a NEPA review is too daunting. Far from empowering civil servants, the NEPA process often multiplies the costs of other complex bureaucratic and political processes. When legal and bureaucratic costs rise too high, agency authorities are undermined, actions are watered down, and decision-making shifts to avoiding legal risks.

Lost agency authority

NEPA’s tax on building new things extends to agency authorities. Following widespread blackouts in 2003, Congress acted to improve grid reliability by amending the Federal Power Act and giving the Department of Energy authority to designate National Interest Electric Transmission Corridors (NIETCs). Once designated, NIETCs would create regions with streamlined processes for siting and permitting transmission lines. Moreover, the corridors would grant the Federal Energy Regulatory Commission (FERC) backstop authority — if states refused to approve lines on their own, then FERC could step in to issue building permits for projects in the national interest. The Department of Energy (DOE) acted by proposing two large corridors in 2007.

But these efforts were undermined by lawsuits from environmental groups.¹⁸ In 2011, a court ruled that the action of designating a corridor was itself a “federal action” under NEPA, meaning DOE would have to prepare a NEPA EIS just to designate the corridor.¹⁹ At the direction of Congress, NIETCs were supposed to cover vast regions of the United States, thereby providing developers and states with options for building new lines. But a NEPA review for a massive corridor with innumerable alternatives would require an infeasible level of detail.²⁰ The practical impossibility of conducting such a NEPA review was added to the challenges of a 2009 ruling, which ruled that FERC’s backstop authority was limited to cases where states “withheld” approval, meaning FERC could not backstop lines if states actively “denied” approval.²¹

The double blow of burdensome NEPA reviews and watered-down backstop authority led to DOE dropping NIETC designation altogether. In other words, NEPA’s overburdensome process is a key reason FERC doesn’t have federal backstop authority for transmission lines.

In 2021, Congress finally fixed the backstop authority loophole, including state “denials” alongside “withheld approval” as cases where FERC maintained backstop authority, but left the NEPA problem unfixed. To get around the infeasibility of a NEPA review for a massive corridor, DOE has decided to instead designate a handful of significantly smaller corridors.²² Shrinking the corridors — and with them, FERC’s authority — is the only way DOE stands a chance of getting the corridors approved under NEPA. 

In the past, we’ve described NEPA as a tax on building new things. But the NIETC case study highlights another form of NEPA’s costs: its deleterious effect on state capacity. Even an ambitious act of Congress granting sweeping authority to DOE and FERC was undercut by environmental review. NEPA creates an invisible graveyard of unbuilt projects, but it also quietly destroys agency authority and capacity.

Litigation undermines decision-making

Litigation’s primacy in the NEPA process damages the law’s original purpose: promoting sound, environmentally conscious decision-making. As the NEPA process has become oriented around avoiding litigation, the decision-making process that NEPA reviews are supposed to inform has become less about environmental tradeoffs and more about legal risk management. A survey of U.S. Forest Service personnel showed that “likelihood of litigation,” “degree of public controversy,” and “degree of political attention” factored into NEPA decisions more than environmental impacts.²³ The need for legal risk management takes project decisions out of the hands of officials with the greatest knowledge of a project’s details. Moreover, the obsession with avoiding litigation makes NEPA documents longer and more technocratic — and thereby less readable and less informative to the public.²⁴

Worst of all, litigation aversion undermines the original point of NEPA, which was to use environmental reviews to inform government decisions. Instead, it is an open secret that agencies and developers enter the NEPA process with a small range of pre-chosen project designs.²⁵ Pre-planning reduces the number of project alternatives that must be considered in the review, shortening review delays and reducing the litigation attack surface.²⁶ This is a pragmatic strategy from agencies, but it creates an absurd irony: Litigation makes the details of environmental impacts — and the years and pages needed to document them — virtually irrelevant to the actual decision-making process.

Making planning worse

NEPA also warps the political incentives for infrastructure projects, worsening planning. Megaprojects in dense cities are naturally controversial and extraordinarily expensive. To secure funding and negotiate policy design with stakeholders and city residents, politicians need flexibility. But the NEPA process locks in a strict, regimented process that forecloses political negotiations and alternatives. Planners are disincentivized to change plans once the NEPA review has begun, even if communities want the changes; changing course outside the prepared alternatives could result in having to restart the review, adding years of additional delay. Additionally, the lag time of environmental review opens opportunities for project opponents to mobilize opposition, file obstructionist lawsuits, and wait out elected officials who champion the project. 

The near-40-year saga of New York’s Tappan Zee Bridge replacement highlights how NEPA gums up the already challenging process of delivering major transportation projects. By 1980, New York State’s Department of Transportation (NYS DOT) had begun considering how to alleviate congestion on I-287 and renovate the existing Tappan Zee Bridge. But construction would not begin for 33 years, decades late and billions of dollars over budget. The NEPA review was by no means the only reason the project’s delivery was such a mess.²⁷ But it did create lengthy delays and locked-in plans, creating time for the project’s opponents to mobilize. Tellingly, what finally got the project through was Governor Andrew Cuomo’s strategy to ignore NEPA’s goals, minimize public input, pre-select a preferred design, and aggressively head off opposition.

Environmental review began undermining plans in 1989, when NYS DOT reviewed a proposal to alleviate congestion by adding high occupancy vehicle (HOV) lanes to the existing Tappan Zee Bridge. The review took much longer than expected because of poor interagency coordination and because federal officials were unfamiliar with suburb-to-suburb HOV lanes.²⁸ This is another challenge that NEPA reviews add: multiple agencies need to coordinate, and if one drops the ball, the entire process can be delayed. Perversely, NYS DOT’s attempts to save money and minimize the need for property-taking by narrowing the width of the HOV lanes meant the design proposed non-standard lane widths, frustrating federal officials and creating novel details to review.²⁹ By 1995, after five years of considering alternatives and adding details to the project’s scope, the cost of the project had risen dramatically from an estimated $208 million in 1989 to $365 million.³⁰ But here, again, the NEPA process undermined good decision-making. Because the NYS DOT commissioner had signed off on the plans back in 1989, canceling them with nothing but a long review to show for it would be politically embarrassing. And the EIS review, which was almost complete, locked in plans for an expensive HOV lane with no cheaper alternative.³¹

The long review had done even more damage by giving project opponents time to mobilize. By 1995, environmentalists had set up a series of efforts to undermine public support for the project.³² The opposition launched a sustained public engagement campaign, which NYS DOT planners were unequipped to counter.³³ Notably, public complaints came from transit advocates as well as highway opponents. Through political spin, much of the public came to believe that NYS DOT could accomplish much better projects at a lower cost. 

The Tappan Zee saga highlights a key problem with public engagement in the NEPA process: intense, drawn-out scrutiny of a project’s costs inevitably sours public opinion. The HOV lanes alternative was ultimately scrapped in 1997, after 15 years of planning and 6 years of NEPA review. Instead of executing a simple upgrade for a reasonable price, the NEPA process — along with fragmented planning and adversarial politics — dragged down delivery until the project was both unpopular and financially inefficient. New York State ultimately lost millions on review costs and $200 million in federal funding allocated to the project. 

In 2002, plans to renovate the I-287 corridor and replace the Tappan Zee Bridge entirely began to move through environmental review. But planners again fell into the trap of trying to earnestly plan during the NEPA review process.³⁴ Political disagreements over project scope combined with NEPA requirements to perpetually increase the alternatives and details needed for review.³⁵ Perversely, sensitivity to environmental considerations meant planners had to do more review to consider further alternatives.³⁶ Stakeholders used the threat of future litigation to force consideration of their preferred alternatives.³⁷ By the time the review was nearly complete, some of the earlier analysis was out of date and had to be redone.³⁸ The decade-long, 10,000-page Draft Environmental Impact Statement was completed in 2011, prompting one MTA planner to call for reforming environmental review: “It takes so freakin’ long to do anything… There must be a better and easier way for a thirty-mile corridor.”³⁹ 

Governor Andrew Cuomo’s success in 2011 shows NEPA’s costs from a different angle. To get the bridge through NEPA, Cuomo embraced the opposite of the law’s intended goals. Instead of considering public input, Cuomo made decisions behind closed doors, cut out most stakeholders, and expedited a pre-chosen alternative through the NEPA process with minimal public engagement.⁴⁰ Cuomo headed off opposition from frustrated transit proponents with political spin designed to suggest the bridge would still include support for transit, and hired a local news anchor to serve as his liaison. Cuomo also directed the state to find a contractor before the EIS was even completed — further mocking the idea that reviews are supposed to inform decision-makers.⁴¹ Cuomo’s strategy may have been brash, but it was also pragmatic. Cuomo was responding to the perverse incentives created by the NEPA process. NEPA was supposed to encourage decision-makers to consider environmental impacts and community input. But to get through the legal gauntlet that has grown around NEPA, decision-makers are now incentivized to pre-choose preferred alternatives and treat public input as a legal risk to be mitigated.⁴²

In many cases, the NEPA process unwittingly makes real community engagement harder. Environmental review mandates a long drawn-out process of review and engagement, airing out all the downsides of a project, inviting stakeholders to give inevitably conflicting input, and leaving plenty of time for opposition to mobilize. But at the same time, the NEPA process prevents changes in project design outside the scope of addressed alternatives. If projects want to incorporate stakeholder input, planners either have to pick an already reviewed alternative or start the entire review process over again.

An invisible graveyard of agency actions

Invisible graveyard effects are, by definition, hard to quantify. It’s difficult to visualize unbuilt infrastructure, or actions left untaken by agencies. But one tangible example is wildfire prevention: while inaction on infrastructure permitting leads to an absence of building, inaction on wildfire prevention actively causes bigger, more costly wildfires. 

Decades of mistreatment have resulted in a backlog of American forests that need to be treated to prevent wildfires.⁴³ Risks of wildfire are exacerbated by the effects of climate change.⁴⁴ Research estimates as many as 80 million acres of forest need treatment. In 2022, the U.S. Forest Service (USFS) committed to treating 50 million acres over 10 years. But increasing treatment from roughly 2 million to 5 million acres per year will require completing significantly more NEPA reviews, which delays forest treatment.⁴⁵ 

Prescribed burns are small, intentional fires used to burn underbrush and remove built-up fuels. Despite a scientific consensus that these fires benefit forests and protect against wildfire, the activity remains controversial and is subject to regular litigation from environmental groups.⁴⁶ These misguided lawsuits are often brought by regional conservation groups intent on preserving a particular forest or endangered species from disruption.⁴⁷ Litigation causes further court delays and increases the review times by incentivizing the USFS to prefer EISs in order to prevent lawsuits.⁴⁸ Litigation also eats up valuable staff time that would be better used planning and implementing forest treatment.⁴⁹ Having to wait 7.2 years to begin a major prescribed burns treatment simply won’t get us to treating 50 million acres in 10 years.⁵⁰

The cost of untaken actions and unsolved problems rarely grab headlines. But the consequences of inaction are just as real. If we fail to hit our goals for preventing forest fires or transitioning to a clean energy economy, the human and environmental costs will be just as real as the side effects of human activity. As Senator James Lankford points out: “wildfires don’t wait on NEPA approval.”⁵¹ For that matter, neither will climate change. 

So far, we’ve discussed the harms caused by NEPA. But it’s not clear from those costs alone that NEPA will harm the clean energy transition. Perhaps, as some observers allege, NEPA restricts fossil fuels more than clean energy, thereby benefiting the clean energy transition. We believe the evidence does not show that. Instead, there is persuasive evidence for the opposite conclusion: NEPA will harm clean energy more than fossil fuels, and will be a significant drag on the clean energy transition.

Clean vs. fossil energy

Clean energy and fossil fuels are significantly different industries, so it’s no surprise that NEPA affects the two differently. Fossil companies produce commodities that are sold in a global market and transportable via pipelines, ships, trucks, and trains. By contrast, clean energy companies produce electricity that must be moved through transmission lines and sold in heavily regulated markets. And even though renewable energy is clean, it often requires more land, meaning it triggers more stringent NEPA reviews. Most fossil production is done through small projects, usually no more than a few acres per well pad.⁵² Utility-scale solar and wind, however, require far more land disturbance, both per megawatt produced and per project.⁵³ Wind and solar have a practical need to build large projects to reach economies of scale and justify the cost of grid interconnection. So it’s no surprise that NEPA affects fossil fuels and clean energy differently — it would be surprising if they were treated equally by the same statute.

As newcomers to a complex regulatory environment, clean energy companies have to start at the beginning of the “regulatory cost curve” — the process of learning how to streamline the cost of regulation. Over time, industries and regulators learn how to work with each other; companies learn what regulators need, regulators learn about the technical specifics of industry, and both sides learn the limits of statute and regulation. Industries also manage to negotiate streamlining by lobbying policymakers. The fossil fuel lobby has achieved this: FERC sites fossil fuel pipelines, and the Energy Policy Act of 2005 created a categorical exclusion (CE) for oil and gas exploration and some types of production wells.⁵⁴ 

Besides the major statutory differences, the oil and gas industries have achieved significant soft streamlining through years of pressure and repetition. Take the treatment of fossil fuel exploration compared to geothermal: the 2005 Energy Policy Act categorically excludes oil and gas exploration from NEPA, whereas geothermal energy can require up to seven reviews, including for basic exploration.⁵⁵ Geothermal leases are processed less frequently, both because oil and gas persistently pressure policymakers to ensure the Bureau of Land Management (BLM) prioritizes oil and gas leases, but also because BLM field staff have gone through the oil and gas leasing process many times.⁵⁶ This is part of the regulatory cost of being a new industry: regulators have to learn new technical specifics and iron out questions of legal responsibility. In practice, that means delays while agencies hire new specialists, and uncertainty while agencies determine how to comply with unclear legal requirements. The threat of litigation in the NEPA process exacerbates these difficulties. 

Data shows NEPA disproportionately harms clean energy 

Common-sense conceptual arguments suggest NEPA is a bigger problem for clean energy than fossil fuels. But what does the data tell us? Recent data from Michael Bennon and Devon Wilson at Stanford University shows that, between 2010 and 2018, far more EISs were completed for energy projects than for fossil fuels.⁵⁷ 60% of energy EISs were for clean energy projects, while only 24% were for fossil fuels.⁵⁸ That data is backed up by a count IFP conducted of current federal permitting trackers: 62% of ongoing energy EISs are for clean energy projects, while only 16% are for fossil fuel projects.⁵⁹ Despite being better for the environment, clean energy faces higher scrutiny in the environmental review process.

This data also shows the regulatory cost curve in action. The reason there are so few fossil projects in the EIS data is that the overwhelming majority of fossil projects cleared through NEPA go through streamlined EAs and CEs. For ongoing fossil projects, the BLM register shows 5 EISs compared to 211 EAs and 76 CEs. For clean energy projects, the register shows 19 EISs and 9 EAs.⁶⁰ Clean energy has not had decades to streamline the regulatory process and faces significant challenges given the size of utility-scale clean energy projects. 

Clean energy projects also face higher rates of litigation under NEPA and cancellation compared to fossil fuels. 64% of solar EISs faced litigation, even greater than pipelines at 56%.⁶¹ Both solar and wind projects faced higher rates of litigation than fossil production projects and were canceled at a higher rate than either pipelines or fossil.⁶²

How will NEPA affect the clean energy revolution? 

Whether NEPA will harm clean energy more than fossil fuels is distinct from the question of what NEPA’s total costs on clean energy are. After all, it might be that even though NEPA harms clean energy more than fossil fuels, it harms both relatively little and, therefore, reform is not pressing. This worry is legitimate and deserves consideration. A recent dataset shows that only 5% of utility-scale wind and solar projects require an EIS under NEPA, suggesting that NEPA may have small total effects on the clean energy industry.⁶³ However, what this statistic misses is how the dark matter effects of NEPA create distortions and strong selection effects via “jurisdiction shopping.” Moreover, what the skeptical argument misses is that the relatively low rates of NEPA review cannot continue as the clean energy transition ramps up. 

The 5% statistic can be explained as a selection effect. Similar to “venue shopping” in the legal system, “jurisdiction shopping” is the practice of choosing a project location to find a friendly regulatory environment. The high costs of federal permitting, for which NEPA review is the largest burden, incentivizes developers to find locations that avoid triggers for NEPA review. This leads to a strong selection effect, where the costs of NEPA cause developers to avoid developments that would invoke the law.

Take utility-scale solar developments as an example. These projects consistently avoid federal lands and the associated NEPA reviews, despite federally managed lands covering much of America’s best solar resources. For example, Nevada, Arizona, and New Mexico have some of the best solar resources in the country, provide friendly tax incentives, and proactively prevent local prohibition. Both New Mexico and Arizona scored highly for ease of grid interconnection.⁶⁴ But all three states have relatively little solar development and solar developers seem to dodge federal lands as much as possible.⁶⁵ While many factors contribute to selecting project locations, the evidence suggests that federal permitting — for which NEPA is the tip of the spear — plays a significant role.⁶⁶

Going forward, jurisdiction shopping to avoid NEPA will likely be more difficult for several reasons. First, as wind and solar move from a marginal industry to the core source of generation, projects will have to be built across a variety of regions, including in jurisdictions with natural NEPA triggers. Moreover, developers and utilities may need to prioritize other concerns, like proximity to transmission infrastructure or proximity to consumers, further reducing flexibility to shop for favorable regulatory jurisdictions. Second, going forward, new technologies and new policies will create new NEPA triggers. This has already started as offshore wind and next-gen geothermal — which have a natural nexus for federal review — have become viable.⁶⁷ Additionally, federal policy to support clean energy will create new triggers. For example, loans from the Loans Program Office (LPO) — one of the IRA’s largest initiatives — create a nexus for federal permitting.⁶⁸ Federal backstop for transmission lines, whether from future transmission reform or from backstop authority in the new NIETC corridors, likewise will trigger NEPA. 

Finally, going forward solar, wind, and transmission lines will get larger, making them more likely to overlap with federal lands and other trigger points for NEPA review.⁶⁹ As projects get larger and requirements increase — for proximity to power markets, proximity to existing infrastructure, and so on — the number of viable locations decreases rapidly. On top of this, the combination of state, local, and federal regulations can make it impossible for projects to avoid every burdensome permit.⁷⁰ This reflects the simple fact that large infrastructure projects are naturally controversial; it is unrealistic to expect developers to receive universal support. 

Take the Cardinal-Hickory Creek transmission line — a proposed Wisconsin-Iowa line that would connect 161 clean energy projects (~25 GW) to the grid. The final few miles of the transmission line have to go through a wildlife conservatory and, despite developing a robust mitigation plan, the project has been sued and halted multiple times. Environmentalists claim the project could have avoided the conservation area with an alternative route. But in actuality, the project chose the selected route to avoid historic preservation issues; the route was least controversial of all the financially viable options. Financial and regulatory constraints often make it totally infeasible to avoid federal permitting triggers, especially for large projects. The data backs this up. While only 3.5% of transmission line projects require an EIS, they account for 26% of total miles of new transmission.⁷¹ 

Most importantly, the scale of new energy projects needed to meet our clean energy goals is inconsistent with the current pace of permitting. Between 2010 and 2018, the period that Bennon and Wilson’s research covers, clean energy projects already made up 60% of energy-related EISs, but the U.S. only added 112 GW of renewable energy (14 GW per year). Solar only increased from 0.2% of U.S. electricity production to 4.3%, while wind increased from 3.5% to 7.3%.⁷² This pales in comparison to our 2050 targets of ~3,273 GW of clean energy generation and storage, which will require adding roughly 94 GW of new capacity per year.⁷³ Our permitting process, as currently construed, will not allow us to hit these goals. Even with an administration friendly to clean energy, it took more than three years to permit 25 GW of clean energy.⁷⁴ Clean energy is already being harmed, and, as the pace of deployment accelerates, these problems will become even more acute. 

In a complex, adversarial system, it is difficult to thoroughly model NEPA’s costs. But here’s what we do know: When clean energy projects go through NEPA, they are disproportionately harmed. Large project footprint requirements make it unlikely that clean energy will escape this problem in the future. We know that solar projects have largely avoided developing on federal land, but the clean energy industry will struggle to “jurisdiction shop” with offshore wind, large transmission lines, geothermal energy, and increasingly large wind and solar farms. We know that federal triggers are likely to increase as the federal government gets more involved with energy policy. We know that the pace of permitting is nowhere near where it needs to be to hit our clean energy goals. And we know the core driver of NEPA delays is litigation.

Permitting reform

In the wake of the Inflation Reduction Act (IRA), Congress is considering reforming the federal permitting process. NEPA reforms are front and center in these discussions. Given the need to strike a bipartisan deal, policymakers will need to find technology-neutral solutions to reform NEPA across the board. Additionally, potential NEPA reforms will need to strike a pragmatic balance between preserving community input and streamlining NEPA to remove obstructionist litigation. 

Technology-neutral reforms to NEPA would benefit clean energy more than fossil fuels for a few simple reasons. First, lowering NEPA’s tax on building new things will naturally benefit the developers that need to build more. The fossil fuel industry has already built much of the infrastructure it needs. But the clean energy transition is just getting started, and the U.S. has to build a staggering amount of new infrastructure.⁷⁵ Second, the fossil fuel industry has come down the regulatory cost curve, while clean energy is still at the beginning. Reforming NEPA to add more certainty and speed up reviews will benefit the industries that have more regulatory uncertainty to overcome. Third, clean energy projects are naturally disadvantaged in the NEPA process due to their large land footprints and need for transmission lines. Clean energy projects are not likely to be as successful as the fossil fuel industry at gaining specific carve-outs and reducing NEPA’s costs. 

Policymakers should reconceptualize NEPA litigation from a veto point to a check against lax reviews. Judicial reforms should aim to reduce timeline uncertainty, litigation uncertainty, and tail risk. Reform should go far enough to provide space for federal agencies to conduct shorter reviews and make decisions in the public interest. Two promising options are for Congress to set a time limit on the use of judicial injunctions or give agencies more discretion over which details to include in environmental review documents. Time-limiting injunctions would allow for a period of litigation but would set an end date for delays to project construction. To increase agency discretion, Congress could set a requirement that plaintiffs challenging NEPA documents must affirmatively prove that the error in question would have changed the agency’s final decision. This would create space for agencies and set a fair policy standard: NEPA decisions should not be upended for small mistakes but agencies should be held accountable if they make major errors. 

Reforms should also protect engagement with communities. Congress should proactively support the community engagement process by increasing the time available for public comment during the draft phase of the NEPA documents, thereby giving planners a chance to see input early in the process.

NEPA’s defenders have done their best to downplay the harms of environmental review. But the law’s costs will only increase as efforts to spur the clean energy transition accelerate. Permitting reform to fix NEPA litigation is one of the most practical and highest-leverage solutions to accelerate clean energy deployment in the United States.