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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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The data center boom is everywhere you look in U.S. economic and emissions data.
This is an edition of Heatmap Daily, an evening review of the day’s news written by our executive editor. Sign up for it here.
It isn’t exactly a new thought, but I’ve been struck recently by how many trends in America’s economic and environmental data are fundamentally about the data center boom and the return of electricity demand:
First, the Energy Information Administration reported this week that U.S. emissions grew by more than 2% last year, driven by surging electricity demand and an increase in coal-fired generation.What caused that higher power demand? New factories and data centers — as well as record summertime cooling demand.
Second, many of the new factories driving that higher power demand are themselves producing goods that are … let’s say … data center-adjacent. There are the enormous new semiconductor fabs, of course. But Ford and General Motors have also set up new production lines (or repurposed old ones) to manufacture grid-scale batteries to meet power demand.
Third, take a look at the recent U.S. spending on private non-residential construction — in other words, everything American companies are building that is not houses, condos, or apartments.
The construction industry’s spent almost $60 billion on data centers over the past year, which is more than it spent on all other office buildings combined (and more than it spent building warehouses, too). Just a handful of categories — data centers, power plants, electricity infrastructure, and certain kinds of electronics manufacturing — now make up a third of all U.S. private non-residential construction investment. They’ve never made up such a large share of construction spending since data collection began in 2014.
As The New York Times recently noted, the American economy is unusually dependent on the American stock market right now — and the stock market is unusually dependent on artificial intelligence. This week, investors started to balk at the enormous spending hyperscalers are planning to keep building out the AI boom; Alphabet’s shares dropped 8% this week after it boosted its planned 2026 capital expenditure and signaled 2027 will be even bigger. If the data center boom started to slow down in earnest, then more than just that budget will change.
Speaking of which, my colleague Emily Pontecorvo wrote earlier this week about how many businesses are struggling to even estimate their carbon emissions from artificial intelligence. The carbon accounting startup Watershed recently unveiled a new formula to help companies get a sense of their AI-related emissions.
But even that formula is still limited by the amount of data hyperscalers publish — and they don’t publish that much. Google, for instance, is the only AI company that has (laudably) provided estimates of its emissions on a per-prompt basis. Yet no company has published its per-token emissions, or how emissions sync up with particular models or regions.
So Emily asked Google: Why aren’t you — or any other model provider — disclosing this kind of data yet?
The tech company didn’t get back to us until after we’d published Emily’s story. But its response was interesting enough that I wanted to quote some of it here.
The problem is “industry consensus,” Cooper Elsworth, a Google spokesperson, told us. “There is currently very little consensus on how to comprehensively and fairly measure the serving environmental impact of generative AI (such as text generation),” he wrote. “Without standardized, ‘apples-to-apples’ frameworks, it is difficult to compare different providers accurately.”
That’s partly because energy use — and emissions data — can vary from site to site and depend on “custom-built hardware, software compilers, and advanced inference techniques.” And he claimed Google doesn’t always have the measurement hardware in place to provide such specific estimates: “Providing precise, repeatable data requires highly advanced measurement infrastructure,” he said. “For example, software-based energy monitoring tools often suffer from sampling biases. For our study, we had to step away from top-down averages and directly measure actual energy at the physical power supply unit (PSU) level across our deployed fleet. Not all providers have the telemetry or data sets required to benchmark their operations at this level of granularity.”
Read Emily’s story to understand the other reasons why estimating — or even “guesstimating” — AI-related carbon emissions is so challenging.
A conversation with Emma Uridge of the Kansas Health Institute.
This week’s conversation is with Emma Uridge, analyst with the Kansas Health Institute. Uridge spent copious hours analyzing state and local laws on data center development to best understand how policymakers are responding to the potential environmental public health impacts of large AI infrastructure, including power and water. The report, which came out this week, also goes in depth into those health impacts. I reached out to her to discuss what she sees as must-watch territory for our readers on this emerging policy arena.
Our conversation was lightly edited for clarity.
What is actually being done on policy when it comes to data centers — beyond moratoria of course?
So first I’d like to just talk about the point of moratoria. It’s helpful to talk about how these policies emerge in the first place. One area where moratoria are helpful is when a data center is proposed but the county has no approach for how they’d like to potentially regulate them. That’s temporary, most of the time. It lets local governments conduct research on the various impacts and also negotiate community benefits, ones that can mitigate any potential negative impacts — like Lancaster Pennsylvania, which instituted a community benefit agreement that maximized the potential benefits of development while mitigating what large data centers can do. That agreement looked at capping municipal water use at 20,000 gallons per day and requiring 100% clean energy. It had financial penalties for non-compliance. The company also committed $20 million to their local economic development and clean energy fund. There are ways to negotiate with developers.
We also see amendments to existing zoning. Data center proposals are increasingly popping up in rural areas, many of which are unzoned, so there’s no way a county can negotiate unless there’s a moratorium in place.
Other policy solutions include different performance standards or requiring on-site renewable energy, like what Jefferson County, Missouri, looked at. Also setback requirements, mandatory noise buffers, ending by-right zoning.
Where are local governments getting ideas for regulating data centers?
A lot of the technical information comes from developers. That can in cases be seen as a biased source of information. I wouldn’t say there’s a dedicated group providing assistance to local governments when a project is proposed — which is a similar story to wind industry development, where we have only a handful of consultants who provide technical advice. It can be really helpful to get a multi-disciplinary approach to hearing information. It can be helpful to have the utility commission, public health folks, those in academia, as well as the developer.
As of right now, especially in rural areas, local governments have a hard task of balancing pushback while getting the most accurate, evidence-based, neutral information to make decisions. That balance can be contentious.
What is the federal government doing on data center policy? How is the Trump administration approaching it?
A few things there. In the early days, the drive was for AI expansion and to be competitive with foreign adversaries. Now due to the amount of public pushback in red and blue localities and a more cautious approach.
I’m not seeing a lot of actual policy movement at this time.
I know the EPA is looking at the chemicals used in cooling data centers because when that water is cycled through the system, some of it is discharged into the water system, so they’re looking at the Toxic Substances and Control Act for monitoring that.
How much of an impact does this minimal federal role have on industry behavior?
Y’know, this isn’t specific to data centers. This is true for all kinds of large-scale development: there’s a need to require some sort of federal monitoring and regulation.
That’s where I see an emerging role for public health. At the federal level, there could be policy movement towards requiring some sort of environmental monitoring at data centers to make sure they’re operating responsibility. Looking at specific water use relative to water availability and what happens when there’s a time of severe, persistent drought. With air quality too — we’ve seen areas where the grid isn’t as reliable so their diesel generators are kicking on more and affecting air quality for residents.
We’re just not seeing all of that right now. We need corporate disclosure.
What do you see as the most important public health impacts from data center development?
It varies by localities. The most discussed obviously is water usage. One thing I’d note about my conversations with folks enthusiastic around emerging tech is, there are still questions that need to be asked about the capacity of localities to support a data center. Like a small town in Kansas may only be using 40% of their water for their utility needs. If a data center came online, how much of that water goes to the data center?
One area underexplored within the public health discipline is energy poverty and energy security. The ability of a household to meet the needs of everything energy provides in our lives. It’s known we have an aging electric grid but we’re not talking enough about large-scale blackouts when the grid is not sufficient to support some of these new data centers.
Plus more of the week’s big development fights.
1. Laramie County, Wyoming — Meta is fighting the fine it received in the Cheyenne data center water pollution controversy, and the conflict between the tech giant and the city’s small board of public utilities is continuing to spill out into the public.
2. Niagara County, New York — This county just rejected a solar project’s highway work permits in a show of retaliation against the state’s Office of Renewable Energy Siting.
3. Barron County, Wisconsin — The anti-solar protest is the new campaign stop in deep red Wisconsin.
4. Chesapeake, Virginia — A large battery storage project on the Virginia coastline is on the rocks amidst rampant local opposition.
5. Lewis County, West Virginia — West Virginia is now a key battleground in the fight over transmission, as a line spanning all of West Virginia and Maryland — and cutting through Data Center Alley in Virginia — causes compounding consternation.