The Trump administration is aggressively rolling back environmental reviews for energy projects, a move that aligns with its broader bureaucracy-slashing priorities — but also represents a dramatic shift in how the federal government approaches environmental oversight.
The National Environmental Policy Act, the landmark 1969 statute that requires federal agencies to assess the environmental impacts of “major federal actions,” has long been a central procedural safeguard. It has drawn criticism from both sides of the aisle for slowing down infrastructure and energy development, and frequently is a litigation magnet for opponents seeking to stall projects with procedural delays.
Congress has in recent years chipped away at NEPA, though it has yet to do away with the law altogether. But the Trump administration — both officially and behind-the-scenes — has recently begun telling segments of the energy industry to ignore it.
Earlier this month, the administration announced a categorical exclusion for advanced nuclear reactors, covering everything from siting and construction to decommissioning. These new rules allow project sponsors to prepare their own environmental documents, potentially allowing deployments to move closer to the speed of private industry.
It’s a significant change, and it’s been met with mixed reactions from within the nuclear industry itself. Supporters say the shift will cut red tape and speed up deployment of clean firm power. Critics warn that, by routing more projects around traditional NEPA review, policymakers and the public will lose a key tool for understanding the environmental impacts of planned reactors.
But it’s not just the nuclear industry that is impacted. For months, the Department of Energy has been quietly setting aside the law when it comes to reviewing projects; more recently, Latitude Media has learned, the agency has instructed funding applicants to do the same.
The Office of Energy Dominance Financing, formerly known as the Loan Programs Office, has been pulling back from NEPA since late last year. According to Politico, EDF told staff in November they would not be “respecting NEPA” moving forward. And now, sources tell Latitude that NEPA non-applicability letters are going out to applicants in the pipeline stating that NEPA doesn’t apply to their projects. The agency is effectively arguing that a loan guarantee doesn’t constitute “sufficient federal control and responsibility” to trigger the statute.
The move doesn’t come totally out of left field, explained one former DOE official. “It’s not crazy to say that some loan guarantees are not major federal actions,” they told Latitude. “But the projects [EDF] funds take many different forms, and it’s probably foolhardy to have a single, across the board, no-NEPA-review policy.”
Different projects have different risk profiles, they explained. Some projects, like a hypothetical new coal plant, would have significant, predictable environmental effects. Others involve refinancing existing assets or financing highly diffuse activities, like a loan to a developer that will later decide where to place solar and storage installations across the country. In that case, NEPA exemption is probably defensible, because DOE might not have authority to dictate where the projects will end up, and therefore can’t meaningfully consider its environmental impacts.
Treating all EDF-backed projects as a monolith ignores real differences in both environmental and legal risk, they added. A blanket no-review stance raises the odds that at least some projects will face legal challenges —- and that courts could decide down the line that NEPA was required, after all.
An efficiency paradox
NEPA is famously unpopular within administrations led by both parties. There was some relief among clean infrastructure developers after a 2025 Supreme Court ruling narrowed the scope of environmental effects that an agency must consider to only those within its direct regulatory control. Many hailed the move, which nixed the requirement to study “indirect” impacts, as one that would finally allow the U.S. to build at the pace required for the energy transition.
At the time, however, legal experts warned that if agencies used the ruling to “significantly abbreviate” the NEPA process and public comment period, it could backfire, leading to increased litigation and more drawn out processes.
By decoupling projects from a comprehensive federal review, the court also stripped away legal immunity that a final Environmental Impact Statement usually provides, leaving developers to defend their projects against potentially more aggressive, fragmented challenges at the state and local levels.
Those warnings may now be coming to pass in the EDF pipeline. In the near term, companies may be relieved to have NEPA compliance off their project agendas, explained Joel Fetter, managing director of Clark Street Associates, an advisory firm specializing in securing government grants, loans and strategic partnerships, including with DOE, for hard tech companies.
But in the long term, abandoning NEPA entirely may not actually make things move faster, Fetter said, because there’s potentially a trade off between procedural speed and legal durability that companies now have to navigate on their own.
“If there’s a benefit to NEPA, it’s that there’s a process and people understand it,” Fetter said. “There will be some that would really prefer to have that clarity about their processes, to ensure that their investment is locked down, because there’s enough things to manage when you’re executing a project…getting the grant or the loan guarantee is just the first step.”
A lighter environmental reporting burden may make things easier for companies on the surface, Fetter added, but doesn’t remove the underlying concerns that NEPA is intended to mitigate. NEPA acts as an umbrella process, and without it companies must still navigate statutes like the Endangered Species Act and the Historic Preservation Act individually. Federal retreat, Fetter explained, doesn’t make state-level hurdles or wastewater permits disappear; projects still answer to local communities and state regulators.
The legal remedy for a NEPA violation can include a total work stoppage while a retroactive assessment is performed — a nightmare for project finance, Fetter explained. If a project is challenged in court and finds the NEPA exemption was issued in error, the contract with DOE itself could become a vulnerability.
Fetter said he’s still advising his clients to perform the environmental due diligence that NEPA requires anyway, even if DOE doesn’t require the official stamp.
As the former DOE official put it: “I would want to think through those questions before staking my company on billions of dollars that might be enjoined by a lawsuit.” And while the NEPA process is arduous, they added, “it takes a long time to get an [EDF] loan too.”
