U.S. Infrastructure Permitting Reform: A Key Enabler Amid Surging Energy Demand

Core Observations

1. Permitting reform becomes bottleneck for industrial expansion: The review process under the current National Environmental Policy Act (NEPA) is duplicative and unpredictable, with multi-year approval cycles that have severely discouraged domestic and foreign capital investment in U.S. infrastructure.

2. Soaring energy demand forces reform: AI-related infrastructure, data centers, and electrification are driving U.S. electricity demand growth at an unprecedented pace, and traditional permitting processes cannot keep up with construction speed.

3. Rare bipartisan consensus but time is tight: Both Republicans and Democrats recognize the need for reform. The House has passed the SPEED Act and introduced the CERTAIN Act, but the 2026 midterm elections could reshape congressional leadership, potentially closing the reform window.

4. Industry coalition driving change: Representatives from the renewable energy and natural gas industries are jointly calling for reform, exposing the fact that the traditional environmental review system equally obstructs both energy pathways.

Why Must Reform Happen Now?

The U.S. is experiencing an industrial investment revival: semiconductor fabs, battery gigafactories, LNG export terminals, data centers, and transmission grid projects are springing up everywhere. Yet every single one of these projects faces lengthy federal permitting—an average environmental review takes 4.5 years, and litigation rates are climbing. As an Arnold & Porter briefing notes, delays and costs have already made it "difficult or even impossible to build the infrastructure we need."

The root cause is that the NEPA framework was created in the 1970s, when energy demand structures, project scales, and complexity were vastly different from today. Now every large project triggers multi-agency reviews, with cumulative documents reaching tens of thousands of pages, while the law provides numerous legal hooks for opponents.

Which Industries Will Benefit?

• Renewable energy: Wind, solar, and energy storage projects often become mired in years-long environmental lawsuits. The CERTAIN Act's modification of judicial review provisions will significantly shorten the time from approval to construction start.
• Natural gas infrastructure: Pipelines and LNG terminals are also plagued by interstate permitting delays. After reform, existing pipeline expansions and new export facilities can be brought online faster, supporting growth in U.S. natural gas exports.
• AI and data centers: Tech companies have enormous power demands for AI expansion, but require supporting new power generation and transmission facilities with streamlined permitting. Reform directly reduces uncertainty in data center siting.
• Industrial manufacturing: Semiconductor and battery factories need stable power supplies and rapid plant construction. Accelerated permitting helps companies seize the subsidy window under the CHIPS Act and IRA.

Which Industries Will Face Pressure?## Which Industries Will Face Pressure?

• Traditional environmental litigation industry: Environmental groups that rely on NEPA lawsuits to block project development will face stricter legal limits, and their influence may decline.
• Some local governments: States or localities that rely on detailed environmental reviews as a tool of opposition may lose some bargaining chips.
• Compliance consulting and legal opposition services: If reforms effectively reduce litigation, law firms focused on challenging permits may see business shrink, while demand for consultants specializing in accelerating approvals will rise.

Regional Impact

• Reforms benefit the entire country, but energy- and infrastructure-intensive states stand to gain significantly:
• Texas: Grid and LNG export projects will be approved faster.
• Southwest desert states (Arizona, New Mexico): Solar and energy storage projects will accelerate.
• Gulf Coast: LNG terminals and chemical projects will see fewer delays.
• Midwest: Transmission lines and wind farms will connect more demand centers.

Policy Drivers and Risks

Despite bipartisan support, the fight is far from over. The SPEED Act and the CERTAIN Act are two major pieces of legislation; the former focuses on shortening environmental review timelines, while the latter targets reducing the scope of judicial review. However, dynamics between the White House and Congress complicate the process. Bree Raum of Arnold & Porter warns that leadership changes in the House and Senate after the 2026 midterm elections could derail reforms.

Additionally, the reforms face a "must-pass" legislative challenge: many senators want to tie permitting reform to the debt ceiling, the National Defense Authorization Act, etc., increasing uncertainty.

What Does It Mean for U.S. Manufacturing and Supply Chains?

• Permitting reform is the last-mile obstacle for "reindustrialization." Even with funding from the CHIPS Act and IRA, if projects cannot break ground on time, capital will flow overseas. Accelerating permits means:
• Faster supply chain localization (component factories can start production sooner).
• Lower financing costs for industrial projects (time is money).
• Enhanced U.S. competitiveness relative to nearshoring destinations like Mexico and Canada in project execution speed.

Outlook for the Next 5 Years

• If reforms pass successfully, the U.S. will see a construction boom in the latter half of the 2020s:
• Accelerated grid upgrades to support AI and electrification loads.
• Simultaneous growth in natural gas and renewable energy capacity, creating a hybrid energy mix.
• Manufacturing project timelines from announcement to production shortened by 30–50%.
• But if reforms fail, the project backlog will worsen, and the U.S. may miss the window for industrial expansion, driving investment to Europe or Southeast Asia.

At the Arnold & Porter briefing, all participants agreed: if we don't act now, the costs will be borne by companies and all Americans alike.