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Few aspects of Biden’s climate law have spurred more controversy than the “three pillars” — a set of rules proposed by the Treasury Department for how to claim a lucrative new tax credit for producing clean hydrogen. Now, it appears, the pillars may be poised to fall.
The Treasury has been under immense pressure from Congress, energy companies, and even leaders at the Department of Energy to relax the rules since before it even published the proposal in December. The pillars, criteria designed to prevent the program from subsidizing projects that increase U.S. greenhouse gas emissions rather than reduce them, are too expensive and complicated to comply with, detractors argue, and would sink the prospects for a domestic clean hydrogen industry.
But lately, the campaign to dismantle the pillars has gotten both more forceful and more threatening. There’s the politically challenging hurdle that leaders of another federally-funded hydrogen program — the regional clean hydrogen hubs — have spoken out against the rules, arguing they threaten investment in hub projects and therefore job creation and economic development around the country. Then there’s the recent Supreme Court decision to overturn the precedent known as Chevron deference, which weakened agencies’ ability to defend their own rules and thereby emboldens any aggrieved parties to sue the Treasury if it keeps the pillars in place. Last week, 13 Democratic Senators, 11 of whom hail from states involved in the hubs, sent a letter calling on Treasury Secretary Janet Yellen to dramatically revise the rules or risk having them challenged in court.
The consequences of losing the three pillars can only be guessed at using models, which are built on assumptions and can’t predict the future with certainty. But proponents say the stakes couldn’t be higher. In their view, the pillars don’t just prevent carbon emissions. They mitigate the risks of rising electricity costs for everyday Americans. And without them, one of the most generous energy credits the government offers could become incredibly easy to claim, ballooning the federal budget.
The clean hydrogen tax credit was created by the Inflation Reduction Act, and offers up to $3 per kilogram of hydrogen produced, with the top dollar amount reserved for fuel that is essentially zero-emissions. The hope was that this would be enough to bring down the cost of hydrogen made from electricity to parity with hydrogen made from natural gas. If made cleanly, hydrogen could help decarbonize other carbon-intensive industries, like steelmaking and shipping.
At first, excitement for the tax credit ran high and companies quickly began making plans for new factories. Announcements of new hydrogen production capacity more than tripled from 2 million tons per year in 2021 to 7.7 million by the end of the following year, with another 6 million announced in 2023, according to the energy consulting firm Wood Mackenzie.
Then, after the Treasury’s proposal dropped last December, everything stopped. Under the three pillars, hydrogen companies that get electricity from the grid, which is still largely powered by fossil fuels, would be required to buy clean energy credits with specific attributes in order to mitigate their emissions and render their hydrogen “clean.” The credits must come from power plants located in the same region as the hydrogen production — the first pillar — that were built no more than 3 years before the hydrogen plant — the second pillar — and be purchased for every hour the plant is operating — the third pillar.
The three provisions work together to ensure that new clean power plants are brought online to meet hydrogen’s energy demand. But finding clean energy credits with these features is not easy — there aren’t many systems in place to do this yet. The Treasury took more than a year to publish its initial proposal, and leading up to it, companies lobbied aggressively for a more lenient version. There was so much money on the line that some businesses flooded the public with ads in newspapers and on streaming and podcast services delivering a cryptic warning that “additionality” — the requirement to buy energy from new power plants — was threatening to “set America back.”
Until businesses have clarity on whether the three pillars will stay or go, the industry is on ice. Several previously announced projects have been delayed. Few companies have reached offtake agreements, even provisional ones, for their hydrogen. Almost none have received a final investment decision or started construction.
“They’re losing advantage over other parts of the world,” Hector Arreola, a principal analyst for hydrogen and emerging technologies at Wood Mackenzie, told me. Momentum to develop hydrogen projects has started to shift back to Europe, which has already finalized its own definition of what constitutes clean hydrogen, he said.
It’s hard to imagine a path forward for the Treasury to keep the three pillars intact. Last week’s letter outlined the current state of play in stark terms. “Without significant changes to the draft guidance,” it said, “one of the most powerful job creation and emission reduction tools in the IRA will likely be hamstrung by future court challenges, congressional opposition, and unfulfilled private sector investment.”
Indeed, at least one company, Constellation Energy, has already suggested it would draw on the loss of Chevron deference to sue the agency if it didn’t remove the second pillar — the requirement to buy clean energy credits from recently-built power plants. (Constellation owns a fleet of nuclear power plants and is developing hydrogen projects powered by them.) In comments to the Treasury, Constellation wrote that the requirements for purchasing clean electricity “have no basis” in the law.
“People can always sue today to challenge regulations,” Keith Martin, a renewable energy tax lawyer at the firm Norton Rose Fulbright, told me. “It’s just that the odds of success have increased.” The Supreme Court’s ruling undermines regulatory agencies’ authority to interpret federal statute.
Another hydrogen company that has been fighting the three pillars, Plug Power, has already claimed victory: It put out a press release last month declaring that it anticipates receiving the tax credit, despite the fact that the rules are still not final and its projects would likely not qualify under Treasury’s proposal. The CEO, Andy Marsh, told a hydrogen trade publication that he’s “certain” the rules will be loosened. (Plug Power didn’t respond to a request for clarification by publish time.)
In their letter, the 13 Democratic senators propose that hydrogen producers should be able to purchase clean energy from existing power plants that are already supplying the grid if they are located in a state that has a clean energy standard, or as long as the power plant doesn’t reallocate more than 10% of its power to hydrogen production. They recommend losing the hourly matching requirement altogether and replacing it with annual or monthly matching, depending on when plants start construction. The senators also suggest allowing projects built in areas with “insufficient clean energy sources,” meaning places with suboptimal sun, wind, water, or geothermal energy, to source their power from farther outside the region.
Beth Deane, the chief legal officer for Electric Hydrogen, a company that has historically supported the three pillars, told me in an interview she thought these proposals represented a good compromise. “Bottom-line, the effectiveness of green hydrogen as a decarbonization tool is being artificially held back,” she said later in an email. “We need to give up perfection on both sides of the three-pillar debate and find the ‘good enough’ solution that lets early mover projects move forward with less stringent requirements.”
But other proponents told me the letter carves out so many loopholes that the pillars would remain in name only. Rachel Fakhry, the policy director for emerging technologies at the Natural Resources Defense Council, told me the letter was “outrageous” and “a giveaway buffet.” Daniel Esposito, a manager in the electricity program at the think tank Energy Innovation, told me he can’t imagine any scenario where these exceptions don’t result in an emissions boost rather than a reduction.
That’s because the electrolyzers used to produce clean hydrogen consume a lot of power and are expected to cause fossil fuel plants — which are more flexible than renewables — to run more often and stay open longer than they otherwise would. Without a requirement to buy power from new clean sources and a prescription to match operations with clean energy throughout the day, there will be no demand signals to bring (often more expensive) clean resources onto the grid that can, for example, produce power at night when solar panels aren’t generating. Power system models from Energy Innovation, Princeton University researchers, the Rhodium Group, and the Electric Power Research Institute have all found that there could be significant emissions consequences if the three pillars were relaxed in ways suggested in the letter.
“This effectively unlocks more than 10 million metric tons of dirty electrolytic hydrogen,” Esposito said, based on some back-of-the-envelope estimates. That would cost something like $30 billion per year. Put another way, he said, every $300 paid out by this program could subsidize one ton of CO2 emissions. Put a third way, he added, it could set the U.S. back two to three percentage points on its commitment under the Paris Agreement to reduce emissions 50% to 52% by 2030 — and we’re already off track.
The authors of the letter say they’re “confident” these fears are overblown. They cite a competing analysis published last year by the consulting firm Energy and Environmental Economics and paid for by the trade group the American Council on Renewable Energy, which found that requiring companies to match their operations with clean energy on an hourly basis, rather than an annual basis, does not ensure lower greenhouse gas emissions. They also cite research by an energy modeling group at Carnegie Mellon and North Carolina State University, which found that the difference in cumulative emissions between scenarios with less stringent requirements and the full three pillars comes out to less than 1% by 2039.
Paulina Jaramillo, a professor of engineering and public policy at Carnegie Mellon who worked on that research, told me the three pillars add a level of regulatory complexity to hydrogen production that is not worth the cost in terms of the emissions savings. In general, she said, she saw no need for the rules, and that the Treasury should subsidize electrolytic hydrogen regardless of where the electricity comes from. “We need to deploy this infrastructure,” Jaramillo told me. “We need to deploy it now so it’s available later.”
The other camp of researchers disputed Jaramillo’s group’s findings, chalking them up to a series of differences in assumptions and approach. They also call the industry’s bluff on the claim that the three pillars are too hard and expensive to comply with. Esposito pointed out that a small group of hydrogen companies has already told the Treasury that if the rules were finalized as-is, they planned to build enough capacity to produce more than 6 million tons of hydrogen per year.
Fakhry argued that we are already seeing the risks of losing the three pillars play out in real time as power-hungry industries like bitcoin mining and artificial intelligence grow. Bitcoin mines have driven up emissions and energy costs around the country. Utilities in Pennsylvania are sounding the alarm that an Amazon data center seeking to divert power from an existing nuclear power plant could shift up to $140 million in costs to other electricity customers. As I wrote in Heatmap last year, this debate is not just about hydrogen — think of all the other energy-intensive industries that will have to electrify before we can reach net zero.
Plenty of stakeholders still believe that the Treasury can find a middle ground by making the three pillars more flexible. The American Clean Power Association, which represents a wide range of energy companies, has proposed loosening the hourly matching aspect for projects that start construction before 2028. Fakhry acknowledged the need for flexibility, but her recommendations are much more narrow than the senators’. For example, she would allow hydrogen producers to buy power from existing nuclear plants, but only if they are at risk of retirement and the purchase would help keep them open. Esposito said Energy Innovation would support power procurement from existing clean resources that are curtailed, meaning they produce power that currently goes unutilized.
Both Fakry and Esposito also downplayed the threat of lawsuits, arguing that Treasury did exactly what it was instructed to do by the law. The IRA specifically says that hydrogen emissions should be calculated per a section of the Clean Air Act that says any accounting should include “significant indirect emissions.” Treasury has interpreted this to include the induced emissions caused by a hydrogen plant, and received letters of support from the Environmental Protection Agency and Department of Energy backing this interpretation.
However, as Martin, the tax lawyer, told me, by overturning Chevron deference, the Supreme Court has just given “677 federal district court judges greater latitude to substitute their own judgment for subject matter experts at the federal agencies.”
Asked for comment on the Senators’ letter, a Treasury spokesperson told me the agency is still considering the many thousands of comments the agency received on the proposed rules. “The Biden Administration is committed to ensuring that progress continues and that the IRA’s investments continue to create good-paying jobs, lower energy costs, and strengthen energy security.”
Even if Yellen heeds the Senators’ advice, the department may not be able to avoid a lawsuit. “We will use every tool available to us — including the courts — to either defend a strong final rule or challenge an unlawful one that reflects the asks in the letter,” Fakhry told me.
There’s also a realpolitik argument here that the industry might want this all to be over more than it wants to kill the three pillars. “The number one thing people want is business certainty,” Esposito told me. “I don’t think people want this to drag on for another two years.”
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In defense of “everything bagel” policymaking.
Writers have likely spilled more ink on the word “abundance” in the past couple months than at any other point in the word’s history.
Beneath the hubbub, fed by Ezra Klein and Derek Thompson’s bestselling new book, lies a pressing question: What would it take to build things faster? Few climate advocates would deny the salience of the question, given the incontrovertible need to fix the sluggish pace of many clean energy projects.
A critical question demands an actionable answer. To date, many takes on various sides of the debate have focused more on high-level narrative than precise policy prescriptions. If we zoom in to look at the actual sources of delay in clean energy projects, what sorts of solutions would we come up with? What would a data-backed agenda for clean energy abundance look like?
The most glaring threat to clean energy deployment is, of course, the Republican Party’s plan to gut the Inflation Reduction Act. But “abundance” proponents posit that Democrats have imposed their own hurdles, in the form of well-intentioned policies that get in the way of government-backed building projects. According to some broad-brush recommendations, Democrats should adopt an abundance agenda focused on rolling back such policies.
But the reality for clean energy is more nuanced. At least as often, expediting clean energy projects will require more, not less, government intervention. So too will the task of ensuring those projects benefit workers and communities.
To craft a grounded agenda for clean energy abundance, we can start by taking stock of successes and gaps in implementing the IRA. The law’s core strategy was to unite climate, jobs, and justice goals. The IRA aims to use incentives to channel a wave of clean energy investments towards good union jobs and communities that have endured decades of divestment.
Klein and Thompson are wary that such “everything bagel” strategies try to do too much. Other “abundance” advocates explicitly support sidelining the IRA’s labor objectives to expedite clean energy buildout.
But here’s the thing about everything bagels: They taste good.
They taste good because they combine ingredients that go well together. The question — whether for bagels or policies — is, are we using congruent ingredients?
The data suggests that clean energy growth, union jobs, and equitable investments — like garlic, onion, and sesame seeds — can indeed pair well together. While we have a long way to go, early indicators show significant post-IRA progress on all three fronts: a nearly 100-gigawatt boom in clean energy installations, an historic high in clean energy union density, and outsized clean investments flowing to fossil fuel communities. If we can design policy to yield such a win-win-win, why would we choose otherwise?
Klein and Thompson are of course right that to realize the potential of the IRA, we must reduce the long lag time in building clean energy projects. That lag time does not stem from incentives for clean energy companies to provide quality jobs, negotiate Community Benefits Agreements, or invest in low-income communities. Such incentives did not deter clean energy companies from applying for IRA funding in droves. Programs that included all such incentives were typically oversubscribed, with companies applying for up to 10 times the amount of available funding.
If labor and equity incentives are not holding up clean energy deployment, what is? And what are the remedies?
Some of the biggest delays point not to an excess of policymaking — the concern of many “abundance” proponents — but an absence. Such gaps call for more market-shaping policies to expedite the clean energy transition.
Take, for example, the years-long queues for clean energy projects to connect to the electrical grid, which developers rank as one of the largest sources of delay. That wait stems from a piecemeal approach to transmission buildout — the result not of overregulation by progressive lawmakers, but rather the opposite: a hands-off mode of governance that has created vast inefficiencies. For years, grid operators have built transmission lines not according to a strategic plan, but in response to the requests of individual projects to connect to the grid. This reactive, haphazard approach requires a laborious battery of studies to determine the incremental transmission upgrades (and the associated costs) needed to connect each project. As a result, project developers face high cost uncertainty and a nearly five-year median wait time to finish the process, contributing to the withdrawal of about three of every four proposed projects.
The solution, according to clean energy developers, buyers, and analysts alike, is to fill the regulatory void that has enabled such a fragmentary system. Transmission experts have called for rules that require grid operators to proactively plan new transmission lines in anticipation of new clean energy generation and then charge a preestablished fee for projects to connect, yielding more strategic grid expansion, greater cost certainty for developers, fewer studies, and reduced wait times to connect to the grid. Last year, the Federal Energy Regulatory Commission took a step in this direction by requiring grid operators to adopt regional transmission planning. Many energy analysts applauded the move and highlighted the need for additional policies to expedite transmission buildout.
Another source of delay that underscores policy gaps is the 137-week lag time to obtain a large power transformer, due to supply chain shortages. The United States imports four of every five large power transformers used on our electric grid. Amid the post-pandemic snarling of global supply chains, such high import dependency has created another bottleneck for building out the new transmission lines that clean energy projects demand. To stimulate domestic transformer production, the National Infrastructure Advisory Council — including representatives from major utilities — has proposed that the federal government establish new transformer manufacturing investments and create a public stockpiling system that stabilizes demand. That is, a clean energy abundance agenda also requires new industrial policies.
While such clean energy delays call for additional policymaking, “abundance” advocates are correct that other delays call for ending problematic policies. Rising local restrictions on clean energy development, for example, pose a major hurdle. However, the map of those restrictions, as tracked in an authoritative Columbia University report, does not support the notion that they stem primarily from Democrats’ penchant for overregulation. Of the 11 states with more than 10 such restrictions, six are red, three are purple, and two are blue — New York and Texas, Virginia and Kansas, Maine and Indiana, etc. To take on such restrictions, we shouldn’t let concern with progressive wish lists eclipse a focused challenge to old-fashioned, transpartisan NIMBYism.
“Abundance” proponents also focus their ire on permitting processes like those required by the National Environmental Policy Act, which the Supreme Court curtailed last week. Permitting needs mending, but with a chisel, not a Musk-esque chainsaw. The Biden administration produced a chisel last year: a NEPA reform to expedite clean energy projectsand support environmental justice. In February, the Trump administration tossed out that reform and nearly five decades of NEPA rules without offering a replacement — a chainsaw maneuver that has created more, not less, uncertainty for project developers. When the wreckage of this administration ends, we’ll need to fill the void with targeted permitting policies that streamline clean energy while protecting communities.
Finally, a clean energy abundance agenda should also welcome pro-worker, pro-equity incentives like those in the IRA “everything bagel.” Despite claims to the contrary, such policies can help to overcome additional sources of delay and facilitatebuildout.
For example, Community Benefits Agreements, which IRA programs encouraged, offer a distinct, pro-building advantage: a way to avoid the community opposition that has become a top-tier reason for delays and cancellations of wind and solar projects. CBAs give community and labor groups a tool to secure locally-defined economic, health, and environmental benefits from clean energy projects. For clean energy firms, they offer an opportunity to obtain explicit project support from community organizations. Three out of four wind and solar developers agree that increased community engagement reduces project cancellations, and more than 80% see it as at least somewhat “feasible” to offer benefits via CBAs. Indeed, developers and communities are increasingly using CBAs, from a wind farm off the coast of Rhode Island to a solar park in California’s central valley, to deliver tangible benefits and completed projects — the ingredients of abundance.
A similar win-win can come from incentives for clean energy companies to pay construction workers decent wages, which the IRA included. Most peer-reviewed studies find that the impact of such standards on infrastructure construction costs is approximately zero. By contrast, wage standards can help to address a key constraint on clean energy buildout: companies’ struggle to recruit a skilled and stable workforce in a tight labor market. More than 80% of solar firms, for example, report difficulties in finding qualified workers. Wage standards offer a proven solution, helping companies attract and retain the workforce needed for on-time project completion.
In addition to labor standards and support for CBAs, a clean energy abundance agenda also should expand on the IRA’s incentives to invest in low-income communities. Such policies spur clean energy deployment in neighborhoods the market would otherwise deem unprofitable. Indeed, since enactment of the IRA, 75% of announced clean energy investments have been in low-income counties. That buildout is a deliberate outcome of the “everything bagel” approach. If we want clean energy abundance for all, not just the wealthy, we need to wield — not withdraw — such incentives.
Crafting an agenda for clean energy abundance requires precision, not abstraction. We need to add industrial policies that offer a foundation for clean energy growth. We need to end parochial policies that deter buildout on behalf of private interests. And we need to build on labor and equity policies that enable workers and communities to reap material rewards from clean energy expansion. Differentiating between those needs will be essential for Democrats to build a clean energy plan that actually delivers abundance.
On DOE grants, OPEC, and construction costs
Current conditions: Air quality alerts remain in effect for the entire state of Minnesota through Monday evening due to wildfire smoke from Manitoba • An enormous dust storm is blowing off the Sahara Desert and could reach the Gulf Coast this week • Northern lights were visible on camera as far south as Florida on Sunday. You’ll have another chance to see them tonight.
In case you missed it, the Department of Energy canceled nearly $4 billion in funds for industrial and manufacturing projects on Friday. Many of the projects had been planned in rural or conservative areas, including $500 million awarded to ExxonMobil and Calpine’s carbon capture project in Baytown, Texas. A DOE spokesperson said in the announcement that the 24 canceled grants were for projects that “were not economically viable and would not generate a positive return on investment of taxpayer dollars.”
None of the awardees responded to my colleague Emily Pontecorvo’s inquiries about whether they plan to pursue legal challenges, but she did note in her analysis one critic of the Trump administration’s move who described it as “dismantling” the clean energy economy and “giving away the future of manufacturing.” Emily also observed a notable absence from the DOE’s list of canceled grants: steelmaking company Cleveland Cliffs, which she reported last month was in the process of renegotiating its award under the Industrial Demonstration Program.
This weekend, the eight members of OPEC+ announced that they would continue to increase oil production in July, the third straight month in a row. The group’s target is an additional 411,000 barrels a day, or more than three times what it had previously planned, AFP reports, though analysts expect the actual production amount will be less.
The increases have followed a period of low production by Saudi Arabia, though The New York Times notes that the Saudis and other OPEC+ members like the United Arab Emirates “had chafed because some members, including Iraq and Kazakhstan, had exceeded their ceilings. The Saudis are now sending a message that they will not restrain output if others don’t.” Though the prices for Brent crude have fallen this year by around 16%, the Times adds that the Saudis, “who have low costs, can still make money at those levels” even as shale drillers in the U.S. have slowed. OPEC produces approximately 40% of the global crude oil supply, with oil and gas operations accounting for around 15% of total energy-related emissions worldwide.
The average energy infrastructure project costs 40% more than expected for construction and takes nearly two years longer to complete than initially planned, according to a new study of 662 such projects in 83 countries by the Boston University Institute for Global Sustainability, published in the journal Energy Research & Social Science. Nuclear power plants were the worst offenders, with construction costing 102.5% more on average, or $1.56 billion more than expected. Hydrogen, carbon capture and storage, and thermal power plants that rely on natural gas were also among higher-risk infrastructure projects, the study found. “I’m particularly struck by our findings on the diseconomies of scale, with projects exceeding 1,561 megawatts in capacity demonstrating significantly higher risk of cost escalation,” Hanee Ryu, one of the researchers, said. “This suggests that we may need to reconsider our approach to large-scale energy infrastructure planning, especially as we commit trillions to global decarbonization efforts.”
Solar energy and transmission projects, on the other hand, had the lowest investment risks for construction and time costs, and are often completed ahead of schedule and for less than expected, the research found. Wind, similarly, “performed favorably in the financial risk assessment.” You can read the full report here.
Airline industry decarbonization goals are “in peril,” according to comments made by the International Air Transport Association’s senior vice president for sustainability, Marie Owens Thomsen, at a trade conference in India on Sunday. While several major aviation groups have set 2050 as the goal for achieving net-zero carbon emissions for air travel, Owens Thomsen specifically cited the Trump administration’s policies as “obviously a setback,” Barron’s reports.
Programs to support the development of sustainable aviation fuels are also in jeopardy. The European Union requires carriers to include 2% lower-emission biofuel in their fuel mix starting this year, but Owens Thomsen said the cheap cost of oil is still diminishing the “sense of urgency that people have.” She expected a $4.7 trillion investment in SAF would be needed to meet the 2050 emission goals. “It is entirely achievable,” she went on, calling the money involved “very comparable to the money that was involved in creating the previous new energy markets, notably, obviously, wind and solar.”
Tesla is no longer the best-selling electric vehicle in Canada. Late last week, GM announced it has officially taken the crown as the “#1 EV seller” in the country, following a surge in sales of 252% in the first three months of the year, led by the Chevy Equinox EV.
Though Tesla’s dethroning is also indicative of the brand’s diminished reputation abroad — Electrek notes Tesla registered just 542 cars in Quebec, the country’s top EV market, in the first quarter of 2025 — the numbers also reflect GM’s successes, with even sales of its GMC Hummer EV Pickup up 232%. Combined Q1 EV sales in Canada were nevertheless still down significantly, to 5,750 from 15,000 EV sales in Q4, Electrek adds, a dip attributable to Quebec’s pause on federal EV incentives between February and April.
NOAA
Happy second day of meteorological summer! It could be a toasty one: The National Oceanic and Atmospheric Administration’s Climate Prediction Center expects hotter-than-average temperatures across much of the Southwest and Northeast this year.
Justice Brett Kavanaugh’s decision in the case of Seven County Infrastructure Coalition v. Eagle County, Colorado enlists the nation’s highest court in the campaign to reform federal environmental enforcement.
A new chapter opened for one of the country’s most important environmental laws this week.
On Thursday, the Supreme Court transformed the National Environmental Policy Act, or NEPA, an environmental permitting law that affects virtually every decision that the federal government makes. The quasi-unanimous ruling limits the law’s scope and cuts off future avenues for challenging energy and infrastructure projects under the law.
It could reshape the scale of legal challenges that projects could face in the future, giving the Trump administration — and any successive administration — greater leeway to approve energy projects.
Under NEPA, federal agencies must study the environmental impacts of their decisions before they make them. The strictest studies can run into the hundreds of pages, and they can take years to complete.
But in what was essentially an 8-0 decision, the Court ruled that federal agencies almost never need to analyze the second-order environmental effects of their decisions. In other words, an agency need only study the environmental impact of a project itself — be it a pipeline, a solar farm, or, in the case at issue, a railroad — and not its metaphorically downstream consequences. That remains the case even if a given project might indirectly make it much easier to do something with a big environmental footprint, such as drilling for oil or natural gas.
That is the clearest effect of the ruling. But Justice Brett Kavanaugh, writing for the court’s conservative majority, went much further than that summary alone suggests. In a broad and forceful ruling, he told lower courts that they should stop nitpicking the environmental studies that federal agencies must publish under NEPA to justify their own decision-making. Courts should, instead, defer to federal agencies as much as is reasonable when reviewing a NEPA study. “The goal of the law,” he writes, “is to inform agency decision-making, not to paralyze it.” (Justice Neil Gorsuch recused himself from the case because of his connection to an oil magnate who could have benefited from the ruling.)
That suggests a significant change is coming to how the court system interprets NEPA, a law that is little known to the general public but that plays a defining role in how federal agencies make decisions or approve infrastructure projects. NEPA creates a procedural requirement that federal agencies study the environmental impact of any “major decision,” but that category is so broad that it affects virtually everything the federal government does — spend money, write a new regulation, or approve a new project on federal land. The law and the yearslong lawsuits that it spawns have been blamed for delays in building solar farms and transmission lines, but also oil refineries and gas pipelines.
Kavanaugh’s ruling is “pretty striking for just how strident it is, and how assertively it tries to shut the door on further NEPA litigation,” Nicholas Bagley, a University of Michigan law professor who studies the permitting system, told me. Kavanaugh’s message to lower courts is, in essence, “We keep telling you to knock it off. You keep not listening. So knock it the fuck off,” Bagley said.
At the very least, the ruling suggests that a new phase in the effort to reform the country’s permitting laws has arrived. Now that movement has, in essence, been blessed by the Supreme Court.
The case in question — Seven County Infrastructure Coalition v. Eagle County, Colorado — concerns an 88-mile railroad proposed to connect the Uinta Basin in eastern Utah to the national freight rail network. In 2021, the Surface Transportation Board, a federal agency that regulates railroads, approved the project after completing a roughly 3,600-page study of the railroad’s potential environmental impact.
Almost immediately, environmental groups argued that the board’s study did not go far enough. The ground beneath the Uinta Basin is rich in a waxy and particularly carbon-intensive crude oil; right now, very little of that oil is extracted because the only way to get it out is by truck, along windy mountain roads. The railroad, if built, would allow for much larger volumes of crude to be transported out of the basin and sent to Gulf Coast refineries. Building the railroad, in other words, would indirectly increase local oil extraction, and thereby raise global greenhouse gas emissions.
The board argued that its NEPA study did not need to consider these downstream effects because the board itself does not regulate oil extraction — that is, it regulates the building of railroads, not what gets moved on them.
The eight justices agreed that the board was right: It didn’t have to consider the effects of second-order oil drilling when it approved the railroad. (The railroad remains on hold for other reasons, Sambhav Sankar, a senior vice president at Earthjustice, told me.) But by going further in his ruling, Kavanaugh entered into a running debate about the role of NEPA and other permitting laws in the American economy.
NEPA was never meant to play the commanding role that it does today, Kavanaugh writes. When it was first signed into law in 1970, NEPA was meant to act as a “purely procedural” check on federal decision-making. Agencies were supposed to conduct environmental studies, make their decisions, then move on. But in a famous 1971 ruling concerning a proposed nuclear power plant in Maryland, Judge Skelly Wright of the D.C. Circuit Court of Appeals transformed the law. He found that agencies had to carry out NEPA’s procedural requirements “to the fullest extent possible,” and crucially that courts could reject agencies’ analysis for lack of completeness.
Over the years, as hundreds of cases following Wright’s have added up, NEPA has turned into a “fearsome project killer,” Bagley said. Agencies spend decades of person-power and hundreds of thousands of dollars to prepare fastidious environmental reviews of their decisions. Any new infrastructure project or new policy change — even New York City’s congestion charge — requires some form of NEPA study.
Many conservatives have long opposed the modern NEPA process. But in recent years, some liberals have joined them, arguing that the law primarily slows down clean energy infrastructure and encourages NIMBYism. In practice, they say, NEPA acts as more of hindrance to the clean economy than the old fossil fuel economy: Because of a 2005 law, most oil and gas drilling has been exempt from the NEPA process, while wind farms, solar plants, and other forms of zero-carbon energy infrastructure still have to face it. Environmental groups rebut that the law is a useful tool to slow down fossil fuel pipelines, which do not generally get a NEPA exemption.
Data supports the idea that NEPA holds back clean energy projects, but that is partly because it holds back so many kinds of projects. The R Street Institute, a center-right think tank, has found that 42% of projects stalled by NEPA involved green infrastructure or conservation. Another analysis from the Center for Growth and Opportunity at Utah State University found that it takes more than two years on average for federal agencies to complete environmental reviews of solar and wind projects. Reviews for new hydroelectric or nuclear power plants take even longer.
Kavanaugh, in essence, rejects all of this. NEPA was never supposed to block or hinder large-scale energy or infrastructure projects, he writes; it was meant to “inform agency decision-making, not to paralyze it.”
“A 1970 legislative acorn has grown over the years into a judicial oak that has hindered infrastructure development ‘under the guise’ of just a little more process,” he says. When federal agencies write environmental studies under NEPA, courts should broadly defer to the decisions that they make. And even if an agency gets something wrong in its study or omits something important, that does not mean the entire study — and the decision that it justifies — should be thrown out. (There’s some irony to Kavanaugh’s call for deference to agencies here, given that the Supreme Court rejected the idea that agency regulations deserve deference last year.)
“What’s notable for me is that they didn’t just rule on the case,” Sankar, the Earthjustice lawyer told me. (Earthjustice participated in the case.) “They decided to take a broad swipe at NEPA itself, really unnecessarily.”
Alexander Mechanick, a senior policy analyst at the Niskanen Center and former White House regulatory official, agreed with Sankar about the scope of the ruling. The court’s decision “does communicate over and over again, with a heavy hand, a real desire to get lower courts out of the business of fly specking the environmental impact assessments,” he told me.
It’s this forthrightness that seems to announce a new era of NEPA jurisprudence — one where the courts will accept a level of environmental review that they may have once rejected. In a way, Kavanaugh’s ruling is a fitting sequel to Wright’s 1971 decision in that both set the tone and capture the overarching environmental concerns of their respective eras, Bagley said.
Half a century ago, Judge Wright wanted to make sure that the American public could slow the wave of infrastructure that threatened to overwhelm the country’s landscape. NEPA represented “the commitment of the government to control, at long last, the destructive engine of material ‘progress,’” he wrote, asserting that judges must make sure the law’s goals are not “lost or misdirected in the vast hallways of the federal bureaucracy.”
Now, Kavanaugh seems to fear that progress itself has been held up. He writes that the modern NEPA process, with its cycles of “speculation and consultation and estimation and litigation,” has slowed down infrastructure projects and driven up their cost. He can sound more like an op-ed writer than a legal scholar as he lays out the law’s consequences in the ruling:
Fewer projects make it to the finish line. Indeed, fewer projects make it to the starting line. Those that survive often end up costing much more than is anticipated or necessary, both for the agency preparing the EIS and for the builder of the project. And that in turn means fewer and more expensive railroads, airports, wind turbines, transmission lines, dams, housing developments, highways, bridges, subways, stadiums, arenas, data centers, and the like. And that also means fewer jobs, as new projects become difficult to finance and build in a timely fashion.
In this declaration, Kavanaugh seems to put himself on the side of a growing and tenuously bipartisan movement to reform NEPA. A 2023 debt ceiling bill, signed by President Biden, included modest reforms to the NEPA process, imposing page limits and deadlines on the strictest forms of environmental studies. A more sweeping bipartisan effort to change the law failed last year. Now, House Republicans are taking their own crack at revising NEPA, creating an optional and more expensive permitting “fast track” for developers in the reconciliation bill.
Sankar, whose organization has championed NEPA, argues that the ruling’s practical upshot will be to allow the Trump administration greater leeway to build fossil fuel infrastructure. Kavanaugh’s ruling exhibits “a shocking disregard for the realpolitik of what's going on with this administration in particular,” he said.
“As we’ve been saying all along, NEPA gets demonized as the problem,” Sankar said. With the law’s role reduced, “I think people will see that there are a lot of other things that are the problem here, and taking federal agency expertise out of the equation is not going to hurry things up.” He added that state and local governments often rely on federal NEPA reports for their own analyses, and now those reviews may be less trustworthy.
Bagley, who has generally supported permitting reform efforts, agreed that NEPA is just one of several laws holding back clean energy projects nationwide. But it is an important one, he said, and reducing its scope will likely allow more projects to happen. He added that by changing it, advocates will learn of additional bottlenecks that are holding back construction — including laws that nobody has noticed yet because they were previously less important than NEPA. Advocates can also now focus their attention on state and local barriers to building.
“If you want to look at the permitting burdens across the United States, probably 80% to 90% of them are state and local. This [ruling] isn’t going to inaugurate a new era of American dynamism,” Bagley said. “It’s a small step in the right direction.”