Originally published for customers January 24, 2025.
What’s the issue?
The new administration issued three executive orders immediately upon taking office - two focused on expanding domestic energy development and infrastructure, and one eliminating environmental justice considerations.
Why does it matter?
These orders could significantly impact project timelines by reshaping how federal agencies approach energy infrastructure permitting and environmental reviews.
What’s our view?
Changes to LNG export criteria and NEPA implementation offer immediate impact. The impact of other provisions depends on agency implementation, and the administration's recognition of needed Congressional action signals eventual permitting reform legislation on the horizon.
Amidst the recent flurry of executive orders, the new administration rolled out three key directives - two focused on expanding domestic energy development and infrastructure, and one eliminating environmental justice considerations. These orders could significantly impact project timelines by reshaping how federal agencies approach energy infrastructure permitting and environmental reviews.
Changes to LNG export criteria and NEPA implementation offer immediate impact. The impact of other provisions depends on agency implementation, and the administration's recognition of needed Congressional action signals eventual permitting reform legislation on the horizon.
Executive Orders in Context
The administration's energy-focused executive orders (EO) — "Declaring a National Energy Emergency" and "Unleashing American Energy" — are part of an unprecedented 26 day-one executive orders, with 33 total so far in the first week. This marks a dramatic increase from historical patterns, where day-one orders were rare before 2021, used only by Biden, Trump, and Clinton since 1937. It surpasses Biden's previous record of nine day-one orders (22 in first week). For comparison, Trump's first term saw one day-one order and 220 total orders versus Biden's 162.
NEPA and Environmental Justice Overhaul
The most significant changes to the federal permitting framework come through NEPA implementation and environmental justice elimination. The "Unleashing American Energy" order revokes President Carter's EO 11991, which authorized CEQ's NEPA regulations, and directs CEQ to propose rescinding current regulations. New implementation guidance is due within 30 days, though meeting this timeline may prove challenging without a confirmed CEQ chair.
Separately, the "Ending Illegal Discrimination and Restoring Merit-Based Opportunity" order revoked President Clinton's EO 12898 on environmental justice, which required agencies to incorporate environmental justice into their missions, including in environmental reviews. This order directs the Office of Management and Budget to revise government processes, remove diversity, equity and inclusion references, and terminate related programs. FERC's environmental justice webpage content has already been taken down.
These changes effectively reset agency NEPA implementation. The process requires:
- Rescinding existing CEQ regulations
- Issuing new guidance (likely based on 2020 Trump-era regulations)
- Agencies updating their regulations and procedures
The first two of these will be less time consuming than the last. Updating agency NEPA procedures across all agencies consistent with new CEQ guidance is a process that will likely require extensive drafting and notice and comment rulemaking.
It is worth highlighting that environmental justice formed a key part of Rio Grande LNG litigation as discussed in Another Significant Ruling From the DC Circuit — Rio Grande and Texas LNG Projects Vacated. The rollout timing and precise agency impacts of the EO remain unclear, but additional environmental justice analysis required by that decision or by any potential rehearing order may become difficult to accomplish.
LNG and Permitting Reform
The "Unleashing American Energy" order also touches on permitting reform. It directs the National Economic Council (NEC) and Office of Legislative Affairs to prepare Congressional recommendations for streamlined judicial review and permitting certainty, particularly for NEPA. This is an explicit recognition that while the regulatory changes will have an impact, they ultimately cannot account for the indeterminate cost and timeline of litigation and as a result, Congressional intervention will be required.
For LNG exports, DOE must restart application reviews focusing its public interest analysis on economic, employment, and allied security impacts. Apart from the executive orders, the administration also extended the comment period on DOE's recent analytical framework study — likely to give time for additional criticism — suggesting a strategy to return to traditional analysis while minimizing litigation risk.
Emergency Declaration Framework
While the energy emergency order spans the entire energy supply chain, its provisions are less immediately impactful. It requires agencies to identify and exercise emergency authorities for domestic energy resource development, from identification through generation. It also contains regular reporting requirements and meetings that focus particularly on Clean Water Act and Endangered Species Act provisions.
The impact of this order will largely be measured by agency implementation — when an agency takes an action based on identified emergency authorities, to the extent they exist. The emphasis on interagency coordination through meetings and reports will likely create pressure for agencies to act, but the extent to which they can act will be governed by relevant legal frameworks.
Regional Focus
Both of the energy executive orders emphasize historically constrained regions, particularly the Northeast and West Coast. The required Congressional recommendations by the NEC specifically address areas lacking recent development, highlighting pipeline needs in historically underserved regions.
As we discussed in Build … Maybe, Build? Easing Appalachian Capacity Constraints Ain’t Easy, the Appalachian Basin’s natural gas supply potential remains constrained despite strong production potential. While demand remains robust, pipeline infrastructure development hasn't kept pace with production growth, hampered by regulatory hurdles and litigation. As seen below, Northeast project proposals have steadily declined since 2015, and FERC decision timelines for all projects regardless of region have remained fairly consistent except for the period during former Chairman Glick’s tenure.
Looking Forward
The impacts of these Executive Orders depend heavily on agency implementation within the outlined timelines and statutory constraints. Market participants should monitor multiple workstreams:
- Agency emergency authority identification and use
- DOE's export review integration
- CEQ NEPA guidance development
- Agency-specific NEPA regulation updates
- Impacts to ongoing litigation
The litigation landscape remains uncertain. If agencies develop highly customized NEPA procedures with varying standards, regulatory compliance could become more complex, potentially increasing litigation risk. However, if forthcoming CEQ guidance successfully balances agency-specific needs with uniform standards, some current litigation pathways based on CEQ regulations may close.
The risk of future policy shifts remains. Just as NEPA regulations have swung with political changes, CEQ guidance could face similar reversals under future administrations. Agencies must still comply with NEPA's core requirements, and permitting certainty still requires Congressional intervention.