Trump Administration Completes Sweeping Overhaul of Environmental Review Process Through NEPA Regulation Elimination

In a historic development that fundamentally reshapes the landscape of federal environmental reviews, the Council on Environmental Quality (CEQ) published its final rule on January 8, 2026, formally adopting without modification the interim final rule that rescinded all CEQ regulations implementing the National Environmental Policy Act (NEPA). The decision represents the most significant transformation in environmental review processes since NEPA—frequently characterized as the “Magna Carta” of environmental law—was originally enacted during the Nixon administration in 1970.

This final rule marks the culmination of what permitting-reform advocates describe as an unprecedented “hat trick” in 2025, during which all three branches of the U.S. government took coordinated action to limit and streamline environmental reviews under NEPA. The Federal Register publication confirmed that CEQ received approximately 108,385 written submissions in response to the interim final rule, with the overwhelming majority being campaign form letters. After considering approximately 457 unique public comments, CEQ determined that none undermined its core conclusion that the agency lacks authority to issue regulations binding on other federal agencies.

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Executive Action Initiates Regulatory Transformation

The regulatory transformation began on January 20, 2025, when President Trump signed Executive Order 14154, titled “Unleashing American Energy,” which directed CEQ to propose rescinding its NEPA regulations. The executive order also revoked E.O. 11991, a 1977 Carter-era directive that had originally authorized CEQ to issue federal government-wide NEPA regulations and required other federal agencies to comply with those regulations.

CEQ acted swiftly in response to the presidential directive, issuing an interim final rule on February 25, 2025, which went into effect on April 11, 2025, removing its NEPA regulations pursuant to President Trump’s day-one executive order to expedite and simplify the permitting process. The interim final rule provided a 30-day comment period that closed on March 27, 2025, before CEQ finalized its position in the January 2026 rule.

According to CEQ Chairman Katherine Scarlett, the deregulation effort represents a definitive end to what she characterized as “NEPA’s regulatory reign of terror.” In announcing the final rule, Scarlett emphasized that CEQ acted to “slash needless layering of bureaucratic burden and restore common sense to the environmental review and permitting process,” putting the American people first by cutting red tape that has held back growth of the U.S. economy.

Supreme Court Provides Judicial Foundation for Reform

The judicial branch’s contribution to NEPA reform came through the Supreme Court’s unanimous decision in Seven County Infrastructure Coalition v. Eagle County, issued on May 29, 2025. In the first major NEPA case to reach the Supreme Court in almost two decades, Justice Brett Kavanaugh delivered an 8-0 opinion (with Justice Gorsuch recused) that fundamentally reshaped the scope of environmental reviews required under NEPA.

The case arose from a proposal for an 88-mile railroad line in Utah’s Uinta Basin that would facilitate transportation of crude oil from the basin to refineries along the Gulf Coast. The D.C. Circuit Court of Appeals had vacated the Surface Transportation Board’s approval, finding that the agency failed to adequately analyze environmental impacts from upstream oil drilling and downstream refining activities. However, the Supreme Court reversed this decision, holding that agencies need not analyze environmental effects from projects that are separate in time or place from the federal action under review.

The Court’s opinion emphasized that NEPA is “a procedural cross-check, not a substantive roadblock” to infrastructure development. Writing for the majority, Justice Kavanaugh directed courts to afford agencies “substantial deference” when making decisions about the scope and content of environmental impact statements. This directive represented a significant departure from the more searching judicial review that had characterized many lower court decisions in recent years.

The decision’s implications extend far beyond the oil and gas sector. As the Court noted, the principles established in Seven County apply to “railroads, airports, wind turbines, dams, housing developments, highways, bridges, subways, stadiums, arenas, data centers, and the like.” Legal analysts widely view the decision as effectively overruling years of D.C. Circuit precedent that had taken more expansive views of agency NEPA obligations, including the influential 2017 Sabal Trail decision that required detailed analysis of downstream greenhouse gas emissions from pipeline projects.

Congressional Amendments Strengthen Permitting Reform

The legislative branch contributed to NEPA reform through amendments contained in the Fiscal Responsibility Act of 2023 and the One Big Beautiful Bill Act signed into law on July 4, 2025. These legislative changes established concrete deadlines and page limits designed to prevent the environmental review process from becoming an indefinite obstacle to project development.

The Fiscal Responsibility Act, enacted on June 3, 2023, imposed specific time limits for environmental reviews: two years for Environmental Impact Statements (EIS) and one year for Environmental Assessments (EA). The legislation also established page limits of 150 pages for most EIS documents (300 pages for extraordinarily complex actions) and 75 pages for EA documents, excluding appendices and citations. Notably, these deadlines included enforcement mechanisms, allowing project sponsors to petition courts to compel agency compliance.

The amendments also narrowed NEPA’s scope by requiring agencies to analyze only “reasonably foreseeable” environmental effects and to consider only a “reasonable range” of alternatives that are “technically and economically feasible and fit the purpose and need of the project.” These changes represented the first substantial statutory amendments to NEPA in over four decades, providing statutory certainty that cannot be easily altered through administrative rulemaking.

Building on these reforms, the One Big Beautiful Bill Act introduced Section 112 to NEPA, creating an optional sponsor-paid expedited review process. Under this provision, project sponsors can pay 125% of the anticipated preparation costs to receive accelerated timelines: 180 days for an EA or one year for an EIS. While this represents an additional cost for project developers, it offers significantly faster review periods than even the Fiscal Responsibility Act’s already-shortened timelines.

CEQ Guidance Directs Agency Implementation

On September 29, 2025, CEQ issued comprehensive guidance to federal agencies on implementing NEPA in the new regulatory environment. The guidance directed federal agencies to revise their NEPA implementing procedures—or establish such procedures if they do not yet have any—within one year to ensure consistency with NEPA’s statutory requirements and the review deadlines established by Congress.

The guidance emphasized several key principles drawn from the Seven County decision. Notably, it highlighted that when determining the scope of action subject to NEPA review, “agencies must consider the proposed action at hand and that action’s effects,” and are not required by NEPA to analyze environmental effects from other projects separate in time or place, or that fall outside the agency’s regulatory authority, or that would have to be initiated by third parties.

The guidance also provided agencies with a procedures template and flowchart designed to streamline NEPA reviews while ensuring compliance with statutory requirements. CEQ emphasized that agencies should focus on efficiency and certainty, avoiding delays and ambiguity in their NEPA processes despite the significant shifts in the regulatory landscape.

Federal Agencies Implement New NEPA Procedures

In July 2025, approximately 15 federal agencies issued interim final rules or notices revising their NEPA implementing regulations in response to CEQ’s guidance and the removal of government-wide regulations. These agencies included the Department of Agriculture, Department of the Interior, Department of Energy, Federal Energy Regulatory Commission, Department of Transportation, Department of Commerce, and Department of Defense, among others.

The U.S. Army Corps of Engineers, for example, issued an interim final rule effective July 3, 2025, that rescinded its prior NEPA implementing regulations and replaced them with new regulations found at 33 C.F.R. Part 333. The Corps noted that it would rely on Department of Defense procedures for civil works purposes, reflecting the new decentralized approach to NEPA implementation.

Agencies adopted different strategies for establishing their procedures. Some, like the Department of the Interior, moved most procedures to non-binding guidance documents while retaining only categorical exclusions, emergency procedures, and applicant preparation provisions in binding regulations. Others, like the Army Corps of Engineers, maintained more extensive regulatory frameworks while updating them to reflect current legal requirements.

These revised procedures share several common elements that reflect the administration’s permitting reform priorities. They clarify and expand circumstances in which NEPA does not apply, require that reasonable alternatives analyzed must meet applicants’ goals, and narrow the scope of effects and impact analyses. Notably, the new procedures generally eliminate explicit references to environmental justice and climate change that had been prominent features of previous NEPA guidance.

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Legal Authority Questions Resolved

CEQ’s decision to rescind its regulations rests fundamentally on questions of legal authority. Following the rescission of Executive Order 11991, CEQ concluded that it lacks independent statutory authority under NEPA to issue regulations binding on other federal agencies. This position gained support from two significant federal court decisions in 2024.

In November 2024, the D.C. Circuit issued its decision in Marin Audubon Society v. Federal Aviation Administration and Iowa v. Council on Environmental Quality, holding that CEQ lacked authority to issue binding regulations to implement NEPA. A federal district court in North Dakota reached a similar conclusion in February 2025, invalidating CEQ’s 2024 regulatory revisions on the grounds that the agency exceeded its statutory authority.

CEQ emphasized NEPA’s provisions describing its consultative and advisory role, particularly NEPA’s direction that agencies develop their methods and procedures “in consultation with” CEQ. The agency argued that this consultative framework does not provide authority to issue binding, government-wide regulations absent a presidential delegation of such authority. With E.O. 11991 revoked, CEQ concluded it had no choice but to rescind its regulations.

In responding to public comments, CEQ addressed concerns about potential negative consequences of the rescission, including agency and judicial confusion, increased litigation, project delays, and weakened environmental review. CEQ characterized many of these asserted harms as speculative, noting that agencies will continue to be bound by NEPA’s statutory requirements and their own NEPA procedures. The agency also rejected arguments that longstanding reliance on CEQ’s regulations should prevent their removal, concluding that reliance interests cannot overcome the absence of current delegation of rulemaking authority.

Implications for Environmental Review Process

The removal of CEQ’s NEPA regulations creates a fundamentally different framework for environmental review. Rather than a single, government-wide set of rules issued by CEQ, NEPA implementation now depends on three sources: the statute itself as amended by Congress, individual agency NEPA procedures, and federal court decisions interpreting NEPA’s requirements.

For project sponsors and those who depend on federal permits and approvals, this new framework presents both opportunities and challenges. The overall trend clearly points toward more streamlined, efficient, and circumscribed NEPA reviews that will receive significant judicial deference from federal courts. The concrete deadlines, page limits, and narrowed scope of analysis should reduce the time and resources required for environmental review.

However, the timeline for agencies to establish their own comprehensive NEPA procedures remains unclear and could be delayed by factors including limited staffing, resources, or litigation. In the meantime, agencies and project sponsors must navigate NEPA review under an evolving framework that requires case-by-case assessment of the proper scope and process for environmental review.

The shift to agency-specific procedures may also lead to less uniformity in NEPA implementation across the federal government. Under the former CEQ framework, for example, wetlands analysis looked broadly similar across agencies. With CEQ regulations removed, that uniformity may erode over time as different agencies develop their own approaches and emphases. The U.S. Army Corps of Engineers, Federal Highway Administration, Bureau of Land Management, and Department of Energy may each develop distinct procedures for analyzing wetlands and other environmental resources within their respective jurisdictions.

Persistent Challenges Beyond NEPA

While permitting-reform advocates have achieved significant victories in reshaping NEPA, other permitting and project development challenges remain hotly contested. Project sponsors are keenly aware that federal, state, and local environmental laws and regulations besides NEPA can present substantial obstacles to development.

At the federal level, developers must navigate the Endangered Species Act, the National Historic Preservation Act, Clean Water Act Section 404 permitting, and numerous other statutory requirements. These substantive environmental laws impose obligations distinct from NEPA’s procedural requirements and remain largely unaffected by the recent NEPA reforms.

Moreover, state and local environmental and land use laws impose their own permitting obligations that operate independently of federal NEPA requirements. Notably, certain state and local groups and individuals have become increasingly opposed to specific categories of infrastructure projects, creating new waves of challenges and uncertainty for project sponsors.

Data Center Opposition Exemplifies Local Resistance

The data center sector provides a particularly striking example of how state and local opposition can obstruct projects even as federal permitting reforms reduce regulatory barriers. According to Data Center Watch, a research organization that tracks grassroots opposition to data center projects, $64 billion worth of data center projects were blocked or delayed between 2023 and March 2025 due to local opposition.

The pace of opposition accelerated dramatically in 2025. Data Center Watch reported that in the second quarter of 2025 alone, an estimated $98 billion in data center projects were blocked or delayed—more than the total for all previous quarters since 2023 combined. The organization tracked active opposition efforts in 17 states, with 53 different groups taking action against 30 projects. Opposition groups succeeded in blocking or delaying two out of every three projects they protested, underscoring the growing impact of organized local resistance.

The opposition crosses partisan lines and geographic boundaries. Blue and red states alike are tightening rules or rethinking incentives for data center development. Legislators in places like Virginia, Minnesota, and South Dakota are scrutinizing subsidies, grid impacts, and local authority, often cutting across traditional party lines. At least 25 data center projects were canceled in 2025 following local opposition, accounting for at least 4.7 gigawatts of electricity demand.

Common themes driving opposition include concerns about higher utility bills, water consumption, noise pollution, impact on property values, green space preservation, and strain on local power grids. Environmental groups and resident coalitions point to electricity price spikes and project that data centers will consume as much as 12 percent of total U.S. power consumption by 2028—a higher demand than all manufacturing of steel, aluminum, and other high-intensity manufactured goods combined.

Specific examples illustrate the breadth and effectiveness of local resistance. In Louisa County, Virginia, strong public opposition led Amazon Web Services to withdraw its 7.2 million square foot proposal in late July 2025. In Prince William County, Virginia, Circuit Court Judge Kimberly A. Irving voided the proposed Prince William Digital Gateway rezoning for a $24.7 billion project, with the timeline expected to stretch at least two years even if the ruling is successfully appealed.

In Arizona, the city of Tucson unanimously decided in August 2025 to discontinue discussions with Beale Infrastructure regarding “Project Blue,” a massive data center that would have consumed millions of gallons of drinking water from the desert for cooling purposes. Similar stories have played out across Indiana, Georgia, Texas, Alabama, and numerous other states.

Cities and towns in at least 14 states have passed moratoriums on data center development, according to Tech Policy Press. In 2025, lawmakers across all 50 states considered at least 238 data center-related bills and enacted over 40 of them in 21 states, primarily addressing energy usage and local control issues.

Future Outlook and Ongoing Challenges

The NEPA reform landscape continues to evolve as agencies implement new procedures and stakeholders adjust to the transformed regulatory environment. While the removal of CEQ regulations and the Supreme Court’s Seven County decision provide clearer guidelines for federal environmental review, questions remain about practical implementation.

Agencies must balance the imperative for efficient permitting with their continuing statutory obligations under NEPA and other environmental laws. The accelerated timelines and page limits established by Congress will test agency capacity, particularly given workforce reductions and budget constraints affecting many federal departments. Whether agencies can consistently meet the one-year and two-year deadlines for environmental reviews remains to be seen, especially for complex projects requiring extensive technical analysis.

The expedited review option created by the One Big Beautiful Bill Act presents both opportunities and uncertainties. Project sponsors willing to pay the 125% premium can potentially secure even faster reviews, but the mechanism for determining costs and ensuring quality within compressed timeframes has not been fully developed. It remains unclear how this provision will work for projects requiring studies that have historically taken longer than the one-year period provided by the Act.

Project sponsors should also anticipate continued litigation as environmental groups and other stakeholders test the boundaries of the new NEPA framework. While the Supreme Court’s directive for substantial deference to agencies should constrain judicial second-guessing of agency decisions, courts will still play a role in ensuring agencies comply with statutory requirements and that their decisions fall within a reasonable zone.

For hyperscalers leasing data center capacity and other entities dependent on infrastructure development, close monitoring of developments in federal and state legislatures, regulatory agencies, and courts will be essential. The divergence between streamlined federal environmental review and intensifying state and local opposition creates a complex landscape requiring sophisticated engagement strategies at multiple levels of government.

Conclusion

The January 2026 finalization of CEQ’s rule removing NEPA regulations represents a watershed moment in American environmental law. After more than four decades of relatively stable federal environmental review procedures, the regulatory landscape has undergone fundamental transformation through coordinated action by all three branches of government.

The path forward for NEPA implementation will be shaped by individual agency procedures informed by CEQ guidance, congressional deadlines and page limits, and judicial deference to reasonable agency decisions. While this framework promises more efficient and predictable federal environmental review, it also introduces new complexities as agencies develop their own approaches and stakeholders adapt to decentralized implementation.

Critically, NEPA reform addresses only one dimension of permitting challenges. Substantive environmental laws, state and local regulations, and grassroots opposition to specific project types—particularly energy and data center infrastructure—continue to present significant obstacles. The $98 billion in data center projects blocked or delayed in the second quarter of 2025 alone demonstrates that streamlined federal environmental review cannot, by itself, ensure project success.

As the dust settles from this historic restructuring of NEPA, project sponsors, environmental advocates, government officials, and affected communities will need to navigate a more complex and fragmented regulatory landscape. Success will require not only understanding the new federal framework but also engaging meaningfully with state and local processes where opposition increasingly concentrates. The ultimate effectiveness of NEPA reform in achieving its goals of reducing delays and costs while maintaining environmental protection will become clearer as agencies implement their new procedures and the first generation of projects proceeds under the transformed regulatory regime.

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By: Montel Kamau

Serrari Financial Analyst

27th January, 2026