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The National Environmental Policy Act, commonly known as NEPA, became law in 1970. The law itself remains intact, but the way in which the law is implemented is undergoing major changes.

The back-story goes like this. In 1977, President Jimmy Carter signed an Executive Order that gave the Council on Environmental Quality (CEQ)–which is an office in the White House administrative structure–the authority to interpret the provisions of the law. Thus, the law includes terms how environmental review and permitting is required for any “major federal action” with a “significant effect,” but under the CEQ interpretations, this has turned into requiring environmental review for pretty much any action with even an arguable environmental efect. Over the decades, courts have often treated the CEQ interpretations as functionally the same as the law itself.

This arrangement began to come apart back last November, when the US Court of Appeals held in Marin Audubon Society v. Federal Aviation Administration that the CEQ lacked authority to interpret the provisions of NEPA. The admittedly thin legal line here seems to be that CEQ could issue “guidelines,” which did not have the force of law, but did not have the power to issue “regulations,” which would have the force of law. I’ll add that this distinction is not unusual: for economists, a better-known example might be the Merger Guidelines issued by the Federal Trade Commission and the Antitrust Division of the US Department of Justice. Courts are welcome to read the Guidelines for input, but courts are not bound by how the Guidelines have chosen to interpret the law.

A presidential Executive Order is not a law, and can be overridden by any future president. Thus, emboldened by the Court of Appeals decision, President Trump signed his own Executive Order revoking Carter’s 1977 order. The order essentially sets aside all previous CEQ rulemaking with regard to NEPA, and thus also calls into question all court decisions since 1977 that were based on the CEQ rules. Instead, in the next 30 days, all federal agencies with plans affected by NEPA rules are required to “develop and begin implementing action plans to suspend, revise, or rescind all agency actions identified as unduly burdensome.” The CEQ has now published an Interim Final Rule to implement Trump’s Executive Order, which is open for public comment.

Setting aside the legalities, what policy choices are on the table here? It seems clear that the Trump administration would like to roll back the reach of NEPA, so that it is focused on a smaller group of major actions, with less need for agencies to submit (and to defend in court) Environment Impact Statements. For those with environmentalist leanings, this general stance may seem obviously regressive. But in a country where green energy projects and infrastructure projects can be held up for years at a time by permitting requirements, the issues are not clear-cut. Zachary Liscow lays it out in “Getting Infrastructure Built: The Law and Economics of Permitting” (Journal of Economic Perspectives, Winter 2025,  pp. 151-180).

(Full disclosure: I’m Managing Editor of the JEP, and thus predisposed to find the articles of particular interest.)

As Liscow points out, NEPA and other rules requiring environmental permitting emerged in the 1960s, in response to examples where government had approved and facilitated large infrastructure and energy projects with little or no public input, which often involved imposing costs on those with little political power. However, under the environmental permitting regime as it has evolved, the blocking power of even small groups has been magnified. As Liscow writes: “In the 1960s, the United States did big things with little public consultation. Now, even smaller things can be held up by small opposition groups.”

If you support, say, substantial building of low-carbon energy projects along with the transmission lines to get that energy to market, or substantial building of mass transit project, then it needs to be a concern that anyone who can pay to hire lawyers can drive up costs of such projects, delay them, and even block them entirely. By Liscow’s calculation, the average environmental impact statement in 2022 took 4.2 years to prepare.

Is there a way to strike a more functional balance between concern over environmental protection and the importance of public feedback, and allowing projects that have large positive expected value to proceed somewhat expeditiously? As Liscow points out, the US has been deciding these questions through a process of “adversarial legalism,” in which opposing parties slug it out in the courts. Some obvious difficultie with this approach is that it can involve severe delays, and those with the most lawyers may have an outsized chance of winning.

For example, many countries have a mechanism for producing a long-term plan for infrastructure, and once the plan has been debated and approved, it becomes much harder for anyone to file a lawsuit to block it. One study compared these plans across countries–except that the United States was not included in the study, because it doesn’t have a long-term infrastructure plan. Energy companies in Europe have a requirement to cooperate with national infrastructure plans. In Canada, province-level government regulate energy companies inside the province, but the federal government controls decisions about energy infrastructure between provinces.

The US system spends much, much more on lawyers to argue draw up rules and to argue them in court than it spends on planners who would actually get down into the details, obtain public feedback, and think about how projects might be adjusted to keep their benefits but minimize their costs. Liscow is full of nuggets like this:

In Italy, a country with low transit construction costs, Milan’s transit agency has built up so much planning and design capacity that it consults not only on other Italian projects, but also projects abroad (Goldwyn et al. 2023). In contrast, when Boston began building its Green Line mass transit extension, its transit agency had only four to six full-time employees “managing the largest capital project in the agency’s history” (Goldwyn et al. 2023, p. 24), leading to poor design choices, reliance on consultants, and high costs. Similarly, “[i]n New York, where consultants largely designed and managed construction for Phase 1 of the Second Avenue Subway, the project management and design contracts were 21 percent of construction costs,” whereas in countries with more in- house capacity for planning, like France, “the typical range is 5–10%, with 7–8% most common, and in Italy and Istanbul, it is typically 10%” (Goldwyn et al. 2023, p. 25).

Liscow raises the idea of a “green bargain.” The notion is that the US would seek a dramatic increase in resources for planning and public participation in large infrastructure projects. The counterbalance would be that when a project was completed, courts would then be generally disposed to accept the outcome and to let the project proceed without further investigation. As Liscow writes:

After all, broadening public participation and moving it upstream could well be a better way of generating outcomes that reflect public preferences than a series of not-in-my-backward lawsuits brought by small special-interest groups. There is little “democratic” about a small handful of people using the courts to hold up projects that have been thoroughly evaluated, with issues widely aired.

In the present setting, the steps being taken by the Trump administration in response to NEPA and CEQ seem to be all about loosening constraints, and not about improved planning and public participation. But it’s important to remember that the problem to which the Trump administration is responding–the way in which the US method of environmental permitting delays and drives up costs of transportation and energy infrastructure–is a real problem. Liscow offers a vision for how to address the problem, with a number of detailed policy suggestions, while balancing all the values at stake.

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