How to Prevent Federal Judges From Killing New Energy Projects

President Donald Trump has identified permitting reform as a top priority. Unlike many of his administration’s goals, fixing the infrastructure-permitting process will be of interest to some Democrats. The most significant reforms will require not only legislative action in the House but also a bipartisan 60 votes in the Senate, rather than a simple majority via the budget reconciliation process. Previous bipartisan negotiations over permitting reform have foundered on a thorny challenge: how to prevent federal judges from killing new energy projects. Negotiators will need to find a solution to this “judicial review” problem.

Congress came close to a grand bargain on the issue last year. The Energy Permitting Reform Act, championed by West Virginia senator Joe Manchin and Wyoming senator John Barrasso, would have combined Republicans’ desire for expanded fossil-fuel and mining permits with Democrats’ dreams of faster transmission-line approvals. Unfortunately, the legislation died, reportedly over changes to the National Environmental Policy Act (NEPA). The dispute concerned the power of courts to issue injunctions that can stall projects for months or years on end—what we’ve called the “litigation doom loop.”

Even when energy projects secure every permit and run the gauntlet of regulatory reviews, a federal court can stop them by issuing injunctions. The PennEast and Atlantic Coast natural gas pipeline projects successfully defended dozens of permits, including one case that made it all the way to the Supreme Court. Yet, even after winning there, developers wound up throwing in the towel, realizing that plaintiffs would keep suing indefinitely.

Aggressive injunctions make American energy systems more expensive and fragile. Investors demand higher returns to compensate for the risk of delays, so projects’ final build costs are higher than they would otherwise be. Many projects get cancelled, such as the Keystone XL pipeline and the Plains & Eastern Clean Line for electricity transmission. And many other worthy ideas never get beyond the drawing board because investors, worried about canceled and delayed projects, simply give up on them.

In the past, climate campaigners might have been content merely to gum up the works of the energy system. But speeding up the approvals process is now a priority for Democrats and others hoping to build out America’s zero-carbon energy infrastructure. Zero-carbon energy technologies are even more dependent than oil and gas on federally approved leasing, funding, and infrastructure. Studies show that the vast majority of renewable-power additions promised by the Inflation Reduction Act will fall through unless power lines can be built ten times faster than their current rate of production. That won’t happen if courts retain their ability to stop any project indefinitely because of a procedural mistake. Only Congress—not executive orders, agency guidance, or administrative rules—can remove these roadblocks.

The National Environmental Policy Act, which requires the government to consider the environmental impact of the projects it approves or funds, is a magnet for lawsuits and delays—and the most frequently litigated federal statute. NEPA litigation means that those with the highest stakes—developers—pay for mistakes they didn’t make. When courts issue an injunction over a minor procedural flaw in an agency’s environmental review, it is the developer’s time, capital, and credibility on the line. The looming threat of such injunctions scares away investors, raising the direct and indirect costs of doing business.

In 2023, House Republicans passed a bill that would have removed the courts’ ability to issue injunctions under the NEPA. But it’s unrealistic to expect this provision to pass with the necessary bipartisan majority. For better or worse, using the courts to force more extensive environmental reviews of projects has become so commonplace that few Democrats are likely to accept a complete ban on injunctions.

Many supposed “compromise” reform solutions would do virtually nothing to speed up permitting. Simply shortening the NEPA statute of limitations (the window of time in which litigants may sue) wouldn’t help, because savvy environmental groups won’t miss filing deadlines. Imposing a heightened standard for court injunctions may appeal to reformers, but the Supreme Court itself has regularly called on lower courts to issue fewer injunctions. Lower courts have proved resistant.

What’s needed is a solution that ends the courts’ discretion to hold up a project indefinitely but allows for strictly time-limited review. We propose that courts receive a maximum of four years to block a project, beginning when environmental review starts. If a NEPA review is genuinely rushed, the courts can halt the project for the rest of the four years to ensure sufficient review time. But after four years, the project could go forward even if a court believes the agency’s review is inadequate. The court could still require the agency to do more review, but it could no longer delay the project.

A final advantage of this proposal is that it should lend itself to bipartisan negotiation. Republicans and Democrats can haggle over the exact length of time provided for reviews. Compromise requires only mutual recognition that some time limit must be set for the review process. Bipartisan agreement is hard to come by, but America’s energy future depends on it. Let’s get to work.

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