This week, the White House announced a new rule enshrining Environmental, Social, and Governance (ESG) posturing whenever approving or denying energy projects under the National Environmental Policy Act (NEPA). 

The White House Council on Environmental Quality (CEQ) said the Bipartisan Permitting Reform Implementation Rule (National Environmental Policy Act Implementing Regulations Revisions Phase 2) would expedite approval of clean energy projects if they accord with environmental justice and lean on indigenous knowledge. This rule was derived from the debt ceiling deal reached last year under the Fiscal Responsibility Act of 2023.

“CEQ agrees that agencies should consider and include Indigenous Knowledge in Federal research, policies, and decision making, including as part of the environmental review process,” the Federal Register explained. “While a few commenters opposed the inclusion of Indigenous Knowledge as a form of special expertise, many commenters expressed support. Having considered the comments, CEQ continues to view the inclusion of Indigenous Knowledge as a form of special expertise as appropriate and, therefore, finalizes the change…”

The Wall Street Journal argued the rule is misleading about its supposed bipartisan nature. The final rule, however, is facing actual bipartisan opposition. Senator Joe Manchin (D-WV) has vowed to invoke the Congressional Review Act (CRA) to repeal it. Manchin said the rule departs from the intent of the 2023 debt-ceiling deal, noting, “This will only lead to more costly delays and litigation.”

The final rule will require federal agencies to assess a project’s “indirect and cumulative effects” on greenhouse gas emissions. It’ll undo Trump-era NEPA rules that would have modernized the law and delivered actual permitting reform to approve more energy infrastructure projects. The Trump rule stayed true to the 1978 law’s original intent “[t]o reduce paperwork, to reduce delays, and at the same time to produce better decisions [that] further the national policy to protect and enhance the quality of the human environment.” 

This is not the first instance of the Biden administration leaning on ESG posturing for rulemaking. In February, the Energy Department claimed liquified natural gas (LNG) export projects aren’t in “the public interest” and paused future ones until next year after it consulted a Cornell professor opposed to fossil fuels. 

The White House has insisted indigenous knowledge, which is subjective and not scientific, factor into policymaking. As I noted here at IWF earlier this year: 

There’s debate whether indigenous knowledge—or traditional ecological knowledge—is scientific. The former is “place-specific”—such as the relationship between people and their natural surroundings—while the latter studies isolated targets. The National Library of Medicine differentiates between the two, writing, “Western science favours analytical and reductionist methods as opposed to the more intuitive and holistic view often found in traditional knowledge. Western science is positivist and materialist in contrast to traditional knowledge, which is spiritual and does not make distinctions between empirical and sacred.’

As we have seen with financial investing, ESG leads to ruinous consequences. ESG funds have a poor return on investment (ROI), and related practices often lead to worsened environmental conditions. In the instances of NEPA, ESG posturing will be used to block critical energy infrastructure projects going forward.

Federal agencies should judge projects holistically and not by using questionable, subjective criteria like environmental justice and indigenous knowledge.