Low-Energy Fridays: Is lightning-fast permitting possible?

Under the Trump administration’s executive order (EO) 14156, “Declaring a National Energy Emergency,” the Department of the Interior (DOI) has created an “alternative arrangement” process for some energy permits that could enable a major project to receive a permit in as little as 28 days instead of the usual two to four years. But is this actually possible? And if it’s so easy, why hasn’t it been done before? The simple answer is that, while this approach may score some near-term victories, it could potentially create more problems than it solves.

Extraordinary permitting delays have been a concern for both parties for some time now. Because some projects take over a decade to be permitted, politicians seeking to get more built want to make adjustments to expedite the process. One of the main factors in these delays is the National Environmental Policy Act (NEPA), which governs compliance with environmental statutes for new infrastructure projects.

Projects do not have a “significant environmental impact” under NEPA guidelines in about 99 percent of cases, but exceptionally large—and economically noteworthy—projects almost always have a significant environmental impact. Consequently, they are required to prepare an Environmental Impact Statement (EIS) as part of their permit under NEPA, which kicks off a multi-year permitting process. Because any major infrastructure project is likely to require an EIS, the protracted timelines are often pegged as an underlying reason for delayed infrastructure development. However, in some emergency situations, an “alternative arrangement” for NEPA compliance may be used, and the DOI is arguing that President Donald J. Trump’s EO justifies utilization of this procedure. The new alternative NEPA process, which can apply to projects needing a permit under the DOI, would cut this to 28 days for most energy types, though wind and solar power are notably ineligible. An assistant secretary or equivalent (i.e., a high-level political appointee) must approve its use. What, then, is different about the new process?

At surface level, the NEPA permitting process concludes with a Record of Decision (ROD) by the government noting that a project’s environmental impact has been evaluated and that relevant statutes (like those from the Endangered Species Act or the National Historic Preservation Act) have been complied with. The DOI’s new alternative arrangement for the NEPA process specifies that these laws must still be complied with, and this is where we encounter a problem: The reason it takes so long to prepare an EIS supporting an ROD is that it takes a long time to evaluate compliance.

Additionally, the government is frequently sued over its permits for environmentally significant projects, with 72 percent of the litigation coming from non-governmental organizations potentially seeking to delay projects. This type of litigation often challenges the adequacy of EISs, and courts must decide if supplemental materials should be prepared. Research has found a correlation between EIS preparation time and litigation outcomes, where agencies that take longer to prepare EISs fare better in court— leading some to find that litigation risk drives longer permitting timelines. Importantly, research has found that litigation rarely forces any change in a project’s construction. Proponents of litigation argue that this is important oversight ensuring quality permits from government and environmental protection, while critics argue that the litigation does not improve environmental quality and is merely used as a tactic to delay infrastructure deployment.

Getting back to the alternative NEPA arrangement, it is technically legal for the government to issue an ROD within any amount of time. The government can do this, and theoretically, the emergency authorities it relies on should override many of the statutory causes of permitting delay. But can the government successfully argue in court that it fully complied with all relevant statutes and requirements in such a short time? Probably not, especially considering that the DOI’s justification for relying on emergency authorities doesn’t fit within the definitions of the statute they invoke. So why bother at all?

The entire litigation process takes 4.2 years on average. During that process, the court tells the defendant (in this case, the government) exactly how their EIS is deficient and what supplemental materials must be prepared. From the standpoint of someone who wants to get as many projects built as quickly as possible, there is a temptation to cut out the middleman and go straight to the courts. After all, if legal uncertainty is what makes NEPA documents take so long to prepare, then why not force the courts to figure it out? Some of the political calculus there makes sense.

But from a policy perspective, this may cause more headaches than benefits. It isn’t likely that courts would sustain the idea that the 28-day EIS represents sufficient compliance. Instead of detailing what the EIS should contain, they may simply reject the idea that NEPA’s alternative arrangement represents a reasonable fulfillment of the law. Recent tariff news where courts rejected the idea that the president’s emergency authority applies to non-emergency situations puts further doubt on a court victory for the DOI. Projects would take even longer to get permitted under such a scenario.

The bigger issue is that if the courts sustain this alternative arrangement, then it opens the door to all sorts of political shenanigans that would make the permitting process even more susceptible to the whims of politicians. (To a certain extent, this is a road we have already been down—arguably since the Keystone XL pipeline controversy.) The politicization of permits has worsened over time, and while those in power may see this as an opportunity to score some wins for their side, the broader economic effect is decidedly negative. If investors believe that constructing a major energy project in the United States depends upon electoral outcomes, the result will be more risk and less investment. And if that happens, we’ll probably end up with less long-run productivity and higher long-run energy costs.

Ignoring the legal uncertainty of the DOI’s alternative NEPA process for a moment, the key question is whether politicians should be responsible for choosing who can get a fast permit and who cannot. Put another way, should the government be in the business of picking winners and losers? The emphatic economic answer is no, as politicians can never be as effective as the market at steering investment. Better policy would result from Congress addressing the systemic causes of permitting delays without political preference for the types of projects permitted, but we’re not quite there yet.

Ultimately, the DOI’s new permitting policies are a product of the current political environment and congressional inaction. But if we want the sort of structural permitting reform that gets America building things again, we’re going to need less politicking on permits rather than more.