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In a word: chaos.

A moment of profound uncertainty for many of America’s environmental laws has just become even more uncertain-er. This week, as President-elect Donald Trump considers how to revise or repeal the country’s bedrock climate laws, one of the country’s oldest environmental laws has been thrown into jeopardy.
A three-judge panel on the D.C. Circuit Court of Appeals ruled earlier this week that key rules governing the National Environmental Policy Act, which requires the federal government to study the environmental impact of its actions, do not carry the force of law. The ruling might — might — lay the groundwork for a massive revolution in the country’s environmental permitting regime. But for the time being, they guarantee a lot of chaos.
Whenever the federal government wants to build a new piece of infrastructure — and to some degree, whenever it wants to do anything significant — it has to go through NEPA. That sounds great in theory, but NEPA studies — which were originally meant to be just a few pages long — have now swelled in length, running into the thousands of pages and taking years to complete. They have become the subject of criticism from conservatives and some liberals.
That’s because NEPA doesn’t actually require the government to take the most environmentally friendly action. It only mandates that the government study the alternatives and arrive at a decision. Many critics, including progressives, now argue that NEPA has become a great bulwark of the status quo — a way for wealthy NIMBYs to slow down and block virtually any project they don’t like, including the large-scale solar, wind, and transmission projects necessary for the energy transition.
Other progressives argue that NEPA still serves a purpose — that it’s the only way environmental groups can provide a check on factory farms, new federal construction projects, or other big pieces of infrastructure. They say Congress should reform NEPA by affirmatively expanding parts of the permitting regime, adding new requirements to the process. The NEPA process is so time-consuming today not because it has become unwieldy, they say, but because the federal government does not employ enough civil servants to conduct the required studies on time. (NEPA’s critics reply to this, in essence: Sure, but why does NEPA require all those studies in the first place?)
At the heart of the case is a small federal agency called the Council on Environmental Quality. Since its creation in 1970, the Council on Environmental Quality has issued guidelines about how federal agencies should comply with NEPA. These rules have been treated as legally binding — that is, quasi-law on the same tier as federal regulation — since at least 1977.
In the ensuing decades, presidents from both parties have acted under the impression that the Council on Environmental Quality’s NEPA rules are binding. That’s why the first Trump administration went through the hassle of rewriting the council’s rules, subjecting them to the same notice-and-comment process other federal regulations must go through before they can be changed. The Biden administration later replaced the Trump administration’s rules with its own version.
But that actually isn’t the case, the judges ruled. The Council on Environmental Quality was never allowed to issue binding regulations about NEPA in the first place, they decided.
The Council on Environmental Quality can issue guidelines about how agencies should follow NEPA, the judges said. But these will have the same legal authority as executive orders, which can guide agency decisionmaking but provide no outside legal recourse. Executive orders are sort of like internal corporate policies for the government: They’re supposed to be followed by employees, but nobody can appeal to a court that a company got them wrong. What the council cannot do, the court said, is issue rules, quasi-laws that outside groups can appeal to and claim aren’t being obeyed in court.
If upheld, the ruling would throw virtually the entire body of law around NEPA into question — hundreds of cases, thousands of pages of rules, and hundreds of thousands of analyses all premised on the idea that the Center on Environmental Quality is the final NEPA arbiter. It could also vastly weaken NEPA, allowing the government to build projects quickly while giving Americans and nonprofit groups little recourse to stop them.
“It’s a very big deal,” James Coleman, an energy law professor at the University of Minnesota, told me. “NEPA by itself is a very limited piece of text. When it was adopted, no one imagined that it would lead to this comprehensive permitting system where it would take five years to get a permit.”
Over time, court cases and White House regulations have turned NEPA into the juggernaut that it is today. But now that’s exactly what is up in the air — potentially. “If a judge thinks that the decades of cases we’ve had are misconceived, then they don’t have to follow it any more,” Coleman said.
What’s odd about the case is that neither side intended to get this ruling in the first place. Neither the Federal Aviation Administration nor the Marin Audubon Society, a San Francisco-area birding group, set out to strike down the entire body of NEPA regulations. The FAA had relied on the Council on Environmental Quality’s rules when it approved a plan for tourism flights over national parks, saying that the regulations didn’t require it to conduct a NEPA study. The Marin Audubon Society argued that the air tours didn’t fall under an exemption created by the rules.
Two Republican-appointed judges on the panel then essentially took the case into their own hands, using the dispute as an opportunity to throw modern NEPA procedure into question. In fact, they said, the Council on Environmental Quality never had the authority to issue rules in the first place — so the claimed exemption didn’t matter. (Judge Sri Srinivasan, who dissented from part of the ruling, criticized the judges for opening such big legal questions when they didn’t need to do so.)
The outcome doesn’t mean that the federal government will immediately move faster to approve infrastructure projects — in some cases, it might move slower. As part of its rules, the Council on Environmental Quality has approved a list of “categorical exclusions,” federal actions that do not require a NEPA review. These can include activities like holding a small meeting or taking out a federal farm loan. The judges have now rejected the council’s ability to create categorical exclusions altogether, meaning that many more federal actions may — at least at first — be subject to NEPA oversight. (Congress has also told agencies to create some categorical exclusions — including for oil and gas drilling — and those are not affected by the case.)
For that reason, some environmental lawyers are doubtful that the argument will change NEPA in the way its opponents hope. “What the ruling does is deeply complicate things for both sides,” Sam Sankhar, the senior vice president at Earthjustice, an environmental legal group, told me. “The NEPA regulations are a body of law that has developed over years to guide the way that people do the NEPA process. The absence of those regulations does not mean the absence of NEPA — it means the absence of any guidelines about how to implement NEPA in the future.”
If the NEPA regulations get tossed out, he said, then it will “really be up to each individual judge to wing it” when interpreting the law, he added.
Nicholas Bagley, a University of Michigan law professor who has written critically about NEPA and other liberal laws that focus on procedure, tends to agree with that view. “When you go to court, agencies and challengers both would look at these regulations as a sword or a shield,” he said. Challengers used the White House rules as a weapon, asserting that the government needed to look at some question but failed to do so. But the federal government used those same rules “as a shield,” he said, showing that it faithfully followed the rules, and therefore that judges didn’t need to get involved.
If the rules are gone, then each side has lost a tool — and judges will have much more power. That means federal agencies, which are hesitant to run afoul of the courts, may now become even more timid in their decision-making, Bagley said. What’s more, the White House’s regulations would still act as executive orders, binding agency action. “They just won’t be enforceable in court,” he said. (The Trump administration could also respond by chucking out the White House regulations altogether, he said.)
It’s unclear what happens next. If the FAA appeals, the D.C. Circuit could choose to hear the case again en banc, meaning the full panel of judges — a majority of whom were appointed by Democrats — would consider the questions. But eventually a higher court may weigh in. “I would not be surprised at all to find this eventually find its way to the Supreme Court,” Coleman told me. In the past, the Supreme Court has ruled that the Council on Environmental Quality’s regulations carry the force of law. But the new, arch-conservative court — and the incoming Trump administration — might push for a different approach.
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With more electric heating in the Northeast comes greater strains on the grid.
The electric grid is built for heat. The days when the system is under the most stress are typically humid summer evenings, when air conditioning is still going full blast, appliances are being turned on as commuters return home, and solar generation is fading, stretching the generation and distribution grid to its limits.
But as home heating and transportation goes increasingly electric, more of the country — even some of the chilliest areas — may start to struggle with demand that peaks in the winter.
While summer demand peaks are challenging, there’s at least a vision for how to deal with them without generating excessive greenhouse gas emissions — namely battery storage, which essentially holds excess solar power generated in the afternoon in reserve for the evening. In states with lots of renewables on the grid already, like California and Texas, storage has been helping smooth out and avoid reliability issues on peak demand days.
The winter challenge is that you can have long periods of cold weather and little sun, stressing every part of the grid. The natural gas production and distribution systems can struggle in the cold with wellheads freezing up and mechanical failure at processing facilities, just as demand for home heating soars, whether provided by piped gas or electricity generated from gas-fired power plants.
In its recent annual seasonal reliability assessment, the North American Reliability Corporation, a standard-setting body for grid operators, found that “much of North America is again at an elevated risk of having insufficient energy supplies” should it encounter “extreme operating conditions,” i.e. “any prolonged, wide-area cold snaps.”
NERC cited growing electricity demand and the difficulty operating generators in the winter, especially those relying on natural gas. In 2021, Winter Storm Uri effectively shut down Texas’ grid for several days as generation and distribution of natural gas literally froze up while demand for electric heating soared. Millions of Texans were left exposed to extreme low temperatures, and at least 246 died as a result.
Some parts of the country already experience winter peaks in energy demand, especially places like North Carolina and Oregon, which “have winters that are chilly enough to require some heating, but not so cold that electric heating is rare,” in the words of North Carolina State University professor Jeremiah Johnson. "Not too many Mainers or Michiganders heat their homes with electricity,” he said.
But that might not be true for long.
New England may be cold and dark in the winter, but it’s liberal all year round. That means the region’s constituent states have adopted aggressive climate change and decarbonization goals that will stretch their available renewable resources, especially during the coldest days, weeks, and months.
The region’s existing energy system already struggles with winter. New England’s natural gas system is limited by insufficient pipeline capacity, so during particularly cold days, power plants end up burning oil as natural gas is diverted from generating electricity to heating homes.
New England’s Independent System Operator projects that winter demand will peak at just above 21 gigawatts this year — its all-time winter peak is 22.8 gigawatts, summer is 28.1 — which ISO-NE says the region is well-prepared for, with 31 gigawatts of available capacity. That includes energy from the Vineyard Wind offshore wind project, which is still facing activist opposition, as well as imported hydropower from Quebec.
But going forward, with Massachusetts aiming to reduce emissions 50% by 2030 (though state lawmakers are trying to undo that goal) and reach net-zero emissions by 2050 — and nearly the entire region envisioning at least 80% emissions reductions by 2050 — that winter peak is expected to soar. The non-carbon-emitting energy generation necessary to meet that demand, meanwhile, is still largely unbuilt.
By the mid 2030s, ISO-NE expects its winter peak to surpass its summer peak, with peak demand perhaps reaching as high as 57 gigawatts, more than double the system’s all-time peak load. Those last few gigawatts of this load will be tricky — and expensive — to serve. ISO-NE estimates that each gigawatt from 51 to 57 would cost $1.5 billion for transmission expansion alone.
ISO-NE also found that “the battery fleet may be depleted quickly and then struggle to recharge during the winter months,” which is precisely when “batteries may be needed most to fill supply gaps during periods of high demand due to cold weather, as well as periods of low production from wind and solar resources.” Some 600 megawatts of battery storage capacity has come online in the last decade in ISO-NE, and there are state mandates for at least 7 more gigawatts between 2030 and 2033.
There will also be a “continued need for fuel-secure dispatchable resources” through 2050, ISO-NE has found — that is, something to fill the role that natural gas, oil, and even coal play on the coldest days and longest cold stretches of the year.
This could mean “vast quantities of seasonal storage,” like 100-hour batteries, or alternative fuels like synthetic natural gas (produced with a combination of direct air capture and electrolysis, all powered by carbon-free power), hydrogen, biodiesel, or renewable diesel. And this is all assuming a steady buildout of renewable power — including over a gigawatt per year of offshore wind capacity added through 2050 — that will be difficult if not impossible to accomplish given the current policy and administrative roadblocks.
While planning for the transmission and generation system of 2050 may be slightly fanciful, especially as the climate policy environment — and the literal environment — are changing rapidly, grid operators in cold regions are worried about the far nearer term.
From 2027 to 2032, ISO-NE analyses “indicate an increasing energy shortfall risk profile,” said ISO-NE planning official Stephen George in a 2024 presentation.
“What keeps me up at night is the winter of 2032,” Richard Dewey, chief executive of the neighboring New York Independent System Operator, said at a 2024 conference. “I don’t know what fills that gap in the year 2032.”
The future of the American electric grid is being determined in the docket of the Federal Energy Regulatory Commission.
The Trump administration tasked federal energy regulators last month to come up with new rules that would allow large loads — i.e. data centers — to connect to the grid faster without ballooning electricity bills. The order has set off a flurry of reactions, as the major players in the electricity system — the data center developers, the power producers, the utilities — jockey to ensure that any new rules don’t impinge upon their business models. The initial public comment period closed last week, meaning now FERC will have to go through hundreds of comments from industry, government, and advocacy stakeholders, hoping to help shape the rule before it’s released at the end of April.
They’ll have a lot to sift through. Opinions ranged from skeptical to cautiously supportive to fully supportive, with imperfect alignment among trade groups and individual companies.
The Utilities
When the DOE first asked FERC to get to work on a rule, several experts identified a possible conflict with utilities, namely the idea that data centers “should be responsible for 100% of the network upgrades that they are assigned through the interconnection studies.” Utilities typically like to put new transmission into their rate base, where they can earn a regulated rate of return on their investments that’s recouped from payments from all their customers. And lo, utilities were largely skeptical of the exercise.
The Edison Electric Institute, which represents investor-owned utilities, wrote in its comments to FERC that the new rule should require large load customers to pay for their share of the transmission system costs, i.e. not the full cost of network upgrades.
EEI claimed that these network costs can add up to the “tens to hundreds of millions of dollars” that should be assigned in a way that allows utilities “to earn a return of and on the entirety of the transmission network.”
In short, the utilities are defending something like the traditional model, where utilities connect all customers and spread out the costs of doing so among the entire customer base. That model has come under increasing stress thanks to the flood of data center interconnection requests, however. The high costs in some markets, like PJM, have also led some scholars and elected officials to seriously reconsider the nature of utility regulation. Still, that model has been largely good for the utilities — and they show no sign of wanting to give it up.
The Hyperscalers
The biggest technology companies, like Google, Microsoft, and Meta, and their trade groups want to make sure their ability to connect to the grid will not be impeded by new rules.
Ari Peskoe, an energy law professor at Harvard Law School, told me that existing processes for interconnection are likely working out well for the biggest data center developers and they may not be eager to rock the boat with a federal overhaul. “Presumably utilities are lining up to do deals with them because they have so much money,” Peskoe said.
In its letter to FERC, the DOE suggested that the commission could expedite interconnection of large loads “that agree to be curtailable.” That would entail users of a lot of electricity ramping down use while the grid was under stress, as well as co-locating projects with new sources of energy generation that could serve the grid as a whole. This approach has picked up steam among researchers and some data center developers, although with some cautions and caveats.
The Clean Energy Buyers Association, which represents many large technology companies, wrote in its comment that such flexibility should be “structured to enable innovation and competition through voluntary pathways rather than mandates,” echoing criticism of a proposal by the electricity market PJM Interconnection that could have forced large loads to be eligible for curtailment.
The Data Center Coalition, another big tech trade group representing many key players in the data center industry, emphasized throughout their comment that any reform to interconnection should still allow data centers to simply connect to the grid, without requiring or unduly favoring “hybrid” or co-location approaches.
“Timely, predictable, and nondiscriminatory access to interconnection service for stand-alone load is… critical… to the continued functioning of the market itself,” the Data Center Coalition wrote.
The hyperscalers themselves largely echoed this message, albeit with some differences in emphasis. They did not want any of their existing arrangements — which have allowed breakneck data center development — to be disrupted or to be forced into operating their data centers in any particular fashion.
Microsoft wrote that it was in favor of “voluntarily curtailable loads,” but cautioned that “most data centers today have limited curtailment capability,” and worried about “operational reliability risks.” In short, don’t railroad us into something our data centers aren’t really set up to do.
OpenAI wrote a short comment, likely its first ever appearance in a FERC docket, where it argued for “an optional curtailable-load pathway” that would allow for faster interconnection, echoing comments it had made in a letter to the White House.
Meta, meanwhile, argued against any binding rule at all, saying instead that FERC “should consider adopting guidance, best practices, and, if appropriate, minimum standards for large load interconnection rather than promulgating a binding, detailed rule.” After all, its deploying data centers gigawatts at a time and has been able to reach deals with utilities to secure power.
The Generators
Perhaps the most fulsome support for the broadest version of the DOE’s proposal came from the generators. The Electrical Power Supply Association, an independent power producer trade group, wrote that more standardized, transparent “rules of the road” are needed to allow large loads like data centers “to interconnect to the transmission system efficiently and fairly, and to be able to do so quickly.” It also called on FERC to speed up its reviews of interconnection requests.
Constellation, which operates a 32-gigawatt generation fleet with a large nuclear business, said that it “agrees with the motivations and principles outlined in the [Department of Energy’s proposal] and the need for clear rules to allow the timely interconnection of large loads and their co-location with generators.” It also called for faster implementation of large load interconnection principles in PJM, the nation’s largest electricity market, “where data center development has been stymied by disagreements and uncertainty over who controls the timing and nature of large load interconnections, and over the terms of any ensuing transmission service.” Constellation specifically called out utilities for excessive influence over PJM rulemaking and procedures.
Constellation’s stance shouldn’t be surprising, Peskoe told me. From the perspective of independent power producers, enabling data centers to quickly and directly work with regional transmission organizations and generators to come online is “generally going to be better for the generators,” Peskoe said, while utilities “want to be the gatekeeper.”
In the end, the fight over data center interconnection may not have much to do with data centers — it’s just one battle after another between generators and utilities.
The senator spoke at a Heatmap event in Washington, D.C. last week about the state of U.S. manufacturing.
At Heatmap’s event, “Onshoring the Electric Revolution,” held last week in Washington, D.C. every guest agreed: The U.S. is falling behind in the race to build the technologies of the future.
Senator Catherine Cortez Masto of Nevada, a Democrat who sits on the Senate’s energy and natural resources committee, expressed frustration with the Trump administration rolling back policies in the Inflation Reduction Act and Infrastructure Investment and Jobs Act meant to support critical minerals companies. “If we want to, in this country, lead in 21st century technology, why aren’t we starting with the extraction of the critical minerals that we need for that technology?” she asked.
At the same time, Cortez Masto also seemed hopeful that the Senate would move forward on both permitting and critical minerals legislation. “After we get back from the Thanksgiving holiday, there is going to be a number of bills that we’re looking at marking up and moving through the committee,” Cortez Masto said. That may well include the SPEED Act, a permitting bill with bipartisan support that passed the House Natural Resources Committee late last week.
Friction in the permitting of new energy and transmission projects is one of the key factors slowing down the transition to clean energy — though fossil fuel companies also have an interest in the process.
Thomas Hochman, the Foundation of American Innovation’s director of infrastructure policy, talked about how legislation could protect energy projects of all stripes from executive branch interference.
“The oil and gas industry is really, really interested in seeing tech-neutral language on this front because they’re worried that the same tools that have been uncovered to block wind and solar will then come back and block oil and gas,” Hochman said.
While permitting dominated the conversation, it was not the only topic on panelists’ minds.
“There’s a lot of talk about permitting,” said Michael Tubman, the senior director of federal affairs at Lucid Motors. “It’s not just about permits. There’s a lot more to be done. And one of those important things is those mines have to have the funding available.”
Michael Bruce, a partner at the venture capital firm Emerson Collective, thinks that other government actions, such as supporting domestic demand, would help businesses in the critical minerals space.
“You need to have demand,” he said. “And if you don’t have demand, you don’t have a business.”
Like Cortez Masto, Bruce lamented the decline of U.S. mining in the face of China’s supply chain dominance.
“We do [mining] better than anyone else in the world,” said Bruce. “But we’ve got to give [mining companies] permission to return. We have a few [projects] that have been waiting for permits for upwards of 25 years.”