Chevron Ruling's Impact on Infrastructure & Energy Projects

Supreme Court rulings and bipartisan push may finally curb environmental lawsuits blocking infrastructure and energy projects

The United States has an infrastructure permitting problem, but significant relief may be on the way. The Supreme Court's recent Chevron ruling should significantly reduce the power of federal agencies to interpret environmental laws in ways often used to block infrastructure and energy projects. The court also agreed to take a case on limiting unnecessary federal environmental reviews for energy infrastructure projects. The case, Seven County Infrastructure Coalition v. Eagle County, Colorado, will be heard in October and could result in the Supreme Court setting stricter boundaries for what can be considered under the National Environmental Policy Act (NEPA), which is increasingly being used to block needed transportation, energy and housing projects.

Due to NEPA, proposed energy and transportation projects spend years stuck in the federal environmental review process, delaying their construction and the resulting benefits. Project costs grow, often dramatically, due to inflation during the years-long review process but also due to mitigation measures that are imposed on the projects as a condition for them going forward. And some needed projects end up not being built at all.

Increasingly, bipartisan experts view the legal infrastructure that has evolved for implementing the requirements of the 1970 NEPA legislation as a significant factor in the country's transportation and energy infrastructure woes. Historically, transportation megaprojects were the primary focus of concerns about the negative consequences stemming from the environmental review process.

One notorious example is Boston's central artery project, the "Big Dig," which saw costs skyrocket from $3.2 billion to $21.5 billion. As Alan Altshuler and David Luberoff explained in their book on megaprojects, about half of the Big Dig's increased costs were due to 1,500 costly mitigations demanded by opposing litigants.On a smaller scale, the Century Freeway project (I-105) in Los Angeles, after many years of litigation, was eventually built for $1.6 billion, triple the original budget of $500 million.

In a 2023 analysis, Stanford University's Michael Bennon and Devon Wilson studied 171 energy and 184 transportation projects. They found that 28% of projects faced post-environmental impact statement litigation, with the overall permit process taking as long as seven years for energy projects and 10 years for transportation projects.

Since its 1970 passage, NEPA's administrative and judicial changes have significantly increased the scope and complexity of environmental reviews. Congress has made only minor changes to what has become a vast body of law but made reforms in 2021 with the Infrastructure Investment and Jobs Act, which codified the One Federal Decision policy, limited the length of alternatives analysis in an environmental impact statement (EIS) to 200 pages, and required the release of a record of the decision within 90 days of the EIS.

Additional congressional reforms came in the Fiscal Responsibility Act of 2023, which included a two-year time limit for an EIS and requiring that it consider only "reasonably foreseeable" environmental effects and a "reasonable range" of technically and economically feasible alternatives.

The fact that a closely divided Congress has enacted two bipartisan NEPA reforms since 2021 reflects a growing consensus that delays and extensive litigation negatively affecting large-scale infrastructure in both energy and transportation need to be fixed. But these modest reforms have not addressed the NEPA judicial process—the role and extent of citizen litigation against projects.

There is growing support among policymakers, opinion leaders and an extensive array of business, labor, environmental, and public policy organizations that the NEPA process has gone too far, placing obstacles and delays in the way of needed energy, housing and transportation infrastructure projects. Progressive New York Times columnist Ezra Klein's critique of the law, "Government Is Flailing, in Part Because Liberals Hobbled It," caught the eye of many lawmakers.

While the upcoming Supreme Court case may deliver significant improvements over the status quo, the bipartisan support for reform is important because meaningful litigation reform legislation needs to come from Congress.

Congress should focus on changes already vetted by centrist organizations such as the Bipartisan Policy Center and the Institute for Progress that can garner widespread political support. Examples include establishing a technical court to review litigation against major energy and transportation projects, limiting those who can file suits, and determining the length of time in which suits can be filed. These modest steps to limit environmental litigation could deliver significant improvements and receive broad bipartisan support from business and policy organizations and legislators.

Robert Poole is director of transportation policy at Reason Foundation, where he has advised federal and state agencies on infrastructure issues and is the author of the new study, "Reforming Environmental Litigation."