Infrastructure Regulation: How Overlapping Regulators Stall Projects

NEPA requires federal agencies to prepare an environmental assessment or environmental impact statement before approving any major federal action significantly affecting the quality of the human environment, and the EIS process for large infrastructure projects routinely runs two to seven years from initiation to record of decision.

An EIS requires the lead agency to publish a notice of intent, conduct scoping with cooperating agencies and the public, prepare a draft EIS for public comment, respond to all substantive comments, issue a final EIS, and publish a record of decision before any approval can become effective. Each stage has defined timelines that agencies routinely exceed, and the scoping process can expand the alternatives analysis to include project alternatives the applicant never proposed, each of which must be evaluated at the same level of detail as the proposed action. A project that fails to engage the scoping process proactively by presenting a clear preferred alternative with the strongest available environmental record enters the alternatives analysis at a competitive disadvantage compared to the no-action alternative.

NEPA litigation is the most common vehicle for infrastructure project opponents to delay construction after all permits have been issued, because a federal circuit court finding that the agency's EIS analysis was inadequate sends the project back to the agency for supplemental environmental review without vacating the record of decision in some circuits, but vacating all downstream permits in others. An attorney who handles environmental review and NEPA litigation matters can evaluate whether the lead agency's EIS analysis is vulnerable to the specific legal theories that project opponents are most likely to pursue in the applicable circuit.

FERC's authorization and rate-setting jurisdiction over interstate energy infrastructure means that the economic viability of a transmission project or natural gas pipeline depends not only on whether FERC grants a certificate to build, but on what rates FERC authorizes the infrastructure owner to charge for access to its facilities after construction is complete.

For interstate natural gas pipelines, FERC exercises certificate authority under Natural Gas Act Section 7(c), which requires the applicant to demonstrate that the project is required by the present or future public convenience and necessity, that the company is financially able to construct and operate the proposed facilities, and that the proposed project will not adversely affect existing customers. The Fiscal Year 2019 FERC Policy Statement on Certification of New Interstate Natural Gas Facilities, updated in 2022, requires FERC to conduct a more searching analysis of the environmental and economic need for proposed pipelines, including consideration of whether existing infrastructure can serve the proposed markets.

For interstate electricity transmission, FERC's Order No. 1000 requires transmission planning regions to conduct long-term transmission planning and competitive solicitation processes for new transmission facilities, limiting the ability of incumbent utilities to use first mover rights to claim transmission rights without competition. A transmission developer whose project is selected through the Order No. 1000 competitive process faces a separate FERC rate case to establish the transmission rate on which the project's financing depends. An attorney who handles energy regulatory enforcement and FERC rate proceedings matters can evaluate whether the transmission rate request satisfies FERC's cost-of-service rate base methodology and supports the project's financing assumptions.

The Bipartisan Infrastructure Law enacted in 2021 appropriated $550 billion in new federal spending for transportation, energy, water, and broadband infrastructure, but much of that funding flows through competitive grant programs with their own application requirements, compliance obligations, and federal nexus that triggers additional NEPA review for projects that otherwise would not have required it. A state highway project that accepts federal IIJA funding that makes it a major federal action requiring a full EIS has extended its approval timeline by two to five years compared to a state-funded project that would not trigger federal environmental review. The decision to seek federal funding must account for the regulatory obligations it triggers, not only the capital it provides.

The Bipartisan Infrastructure Law's FAST-41 permitting reform provisions require the Federal Permitting Improvement Steering Council to coordinate federal permitting for covered infrastructure projects, establishing a single permitting timetable, a designated lead agency, and a target completion date that the participating agencies are expected to honor.

FAST-41 coverage requires the project to involve at least one federal authorization, to have estimated construction costs of at least $200 million for most project types, and to be classified in a covered infrastructure category including surface transportation, aviation, ports, waterways, water resources, broadband, pipelines, and electricity generation and transmission. A project that qualifies for FAST-41 coordination receives a project dashboard on the federal permitting dashboard tracking system that provides public visibility into each agency's review status, which creates both accountability pressure on agencies that fall behind their committed schedules and transparency for project opponents who are monitoring the process.

The permitting reform provisions do not eliminate any agency's substantive review authority or override NEPA requirements, but they do impose procedural discipline that reduces the sequential delays that multiply when each agency waits for others to complete their review before beginning its own. An attorney who handles public-private partnerships and infrastructure permitting matters can evaluate whether a proposed project qualifies for FAST-41 coordination and develop the project description and federal nexus documentation that triggers the permitting improvement process.

Infrastructure regulation is the body of federal and state law governing the approval, construction, financing, and operation of transportation, energy, water, broadband, and other public infrastructure systems. It applies to any infrastructure project that requires a federal permit or authorization, crosses federal land or navigable water, is financed with federal funds, or affects critical infrastructure sectors designated by CISA. The regulatory framework is not unified: a single project may simultaneously require NEPA environmental review, FERC authorization, Army Corps Section 404 permits, ESA Section 7 consultation, and applicable state environmental approvals, each administered by different agencies under different statutes.

The National Environmental Policy Act, 42 U.S.C. § 4321 et seq., requires federal agencies to analyze the environmental impact of major federal actions through an environmental assessment or environmental impact statement before the agency can issue a final approval. An EIS is required for large infrastructure projects and takes two to seven years because it must evaluate the proposed project, a range of reasonable alternatives, and the cumulative environmental effects of each alternative across all relevant environmental resource categories, with public comment periods at multiple stages and written responses to all substantive comments. NEPA litigation challenging the adequacy of an EIS can delay construction for additional years after all permits are issued.

Eminent domain for interstate natural gas pipelines flows from FERC certification under Natural Gas Act Section 7(h), which grants certificated pipeline companies the authority to condemn easements and rights-of-way from private landowners who refuse to grant voluntary access. The condemnation proceeding is filed in federal district court and entitles the landowner to a jury trial on just compensation, which includes the fair market value of the taken easement interest and severance damages to the remainder. Transmission line developers typically receive delegated eminent domain authority from the applicable state public utility commission rather than from FERC, meaning the condemnation authority and the compensation standards vary by state. An attorney who handles eminent domain matters can evaluate whether a specific condemnation offer satisfies the just compensation standard.

CFIUS mandatory review under FIRRMA applies to certain foreign government-controlled investments in critical infrastructure sectors including energy, transportation, water, and communications, regardless of the transaction's ownership percentage or deal structure. Voluntary CFIUS filings are also available for foreign investments that are not covered by the mandatory filing requirement but that present national security concerns. A foreign investor that closes a transaction involving a covered critical infrastructure asset without filing for CFIUS review has made a potentially reviewable transaction that CFIUS can review and potentially order divested after closing. The mandatory filing must be made before or at closing, and CFIUS has authority to impose conditions on transactions that present national security concerns even when divestiture is not required.

FAST-41 is the federal permitting coordination program created by the Fixing America's Surface Transportation Act, expanded by the IIJA, which requires the Federal Permitting Improvement Steering Council to coordinate the federal permitting process for covered infrastructure projects with a single permitting timetable and a designated lead agency. Projects qualify when they require at least one federal authorization, involve estimated construction costs of at least $200 million for most project categories, and fall within covered infrastructure sectors including transportation, energy, water, broadband, and ports. Participation in FAST-41 does not eliminate any agency's substantive review authority or reduce NEPA requirements, but it imposes procedural coordination that reduces the sequential delays that multiply when agencies review independently.

Digital infrastructure including data centers, broadband networks, and cloud computing facilities falls within infrastructure regulation when projects require federal permits, are financed with federal broadband funding, or are designated as critical infrastructure by CISA. IIJA's $65 billion broadband investment flows through NTIA grant programs with compliance requirements including NEPA review for federally funded projects, Buy American requirements for eligible equipment, and labor standards. Data centers that consume significant electricity are subject to FERC's transmission interconnection regulations and may require utility rate case proceedings to establish the applicable tariff. An attorney who handles digital infrastructure and energy and natural resources law matters can evaluate the full regulatory stack applicable to a specific digital infrastructure project.