The Council on Environmental Quality Updates NEPA Regulations

The Council on Environmental Quality (CEQ) published a final rule in the Federal Register on July 16, 2020, updating its regulations for implementing the National Environmental Policy Act (NEPA). The amended regulations – the first significant update in more than 40 years – are intended to streamline environmental review of federally approved or funded projects, and to effectuate previous Executive Orders (EO) of the Trump Administration that sought the same.

Proponents of projects subject to federal funding or approvals should be aware of the sweeping revisions to the NEPA regulations, as they may result in greater expediency for project approvals, as well as increased scrutiny from opponents. While CEQ's updated regulations may be welcomed by project proponents, the regulations are likely to be subject to legal challenges as soon as they are applied to a particular project.

Background

Often called the linchpin of U.S. environmental laws, NEPA directs federal agencies to review proposed actions and to consider potential impacts that the action will have on the social, economic and physical environment. Generally, NEPA applies to projects requiring a federal approval or permit, receiving federal funding, or impacting federally owned public land. NEPA is a "process-forcing" statute designed to ensure that environmental considerations are factored into the decision-making process of federal agencies.

The substantive requirements of the NEPA process are largely found in CEQ's regulations (augmented by certain federal agencies' regulations and policies). Although CEQ has issued a number of guidance documents over the decades, the agency has only substantively amended its NEPA regulations once (in 1986) since their initial adoption. Meanwhile, an extensive body of case law has developed around the interpretation and application of NEPA and CEQ's implementing regulations which also guides federal agencies.

Prior to CEQ's issuance of revised NEPA regulations, the Trump Administration has consistently endeavored to expedite the permitting and environmental review processes for major infrastructure projects (e.g., transit, energy, water and telecom). For example, EO 13807 of August 2017 directed federal agencies to coordinate and expedite their environmental reviews of major infrastructure projects.

Updated Regulations

To streamline environmental reviews and procedures under NEPA, the updated regulations accomplish the following:

• Shorter and Faster Environmental Reviews: Section 102 of NEPA requires federal agencies to prepare for every "major Federal action significantly affecting the quality of the human environment" a detailed statement on the environmental impact of the proposed action. Agencies typically first prepare an Environmental Assessment (EA) to determine whether the effects of the action are significant. If the EA demonstrates that the action will have a significant impact on the human environment, an agency must undertake the time-consuming and expensive process of preparing an Environmental Impact Statement (EIS).

In issuing the revised regulations, CEQ noted that the average EIS is more than 600 pages and takes an average of 4½ years to produce. Under the revised regulations, EAs must be prepared within 1 year, and EISs in 2 years (measured from the Notice of Intent), unless the lead agency's senior official agrees to an extension. In turn, the regulations impose new page limits and word limits for each page. EAs must be 75 pages or fewer, not including appendixes; and EISs must be 150 pages or fewer, or 300 for "unusual or complex" proposals, unless a senior agency official agrees to extend those limits. Further, each page is limited to 500 words, excluding maps, diagrams and graphs.

• Incorporation of One Federal Decision Policy: To improve interagency coordination for complex projects involving multiple agencies, EO 13807 directed federal agencies to comply with the One Federal Decision (OFD) framework. Under OFD, federal agencies were directed to develop permitting timetables wherein a single EIS or EA is prepared, and issue all necessary approvals within 90 days of the lead agency's issuance of the Record of Decision (ROD). CEQ's updated regulations incorporate elements of the OFD policy, such as requiring the preparation of single EISs and joint RODs "to the extent practicable"; requiring lead agencies to develop permitting milestones and accountability processes for missed deadlines; and requiring agencies to establish procedures to resolve interagency disputes and delays.
• Sharing of Other Agency Categorical Exclusions: Under NEPA, categorical exclusions (CE) may be used to exempt certain common classes of actions from detailed environmental review, after a federal agency has determined that such category of actions do not have a significant effect on the environment individually or cumulatively. (40 CFR Part 1508.4). CEs are published by the agencies in their separate NEPA regulations. While federal agencies complete approximately 176 EISs and 10,000 EAs annually, more than 100,000 actions are covered by approximately 2,000 distinct CEs. These includes, for example, routine maintenance of federal land, small transactions and minor projects (e.g., disturbance of a small amount of land). Federal agencies have always been permitted to "tier" off of another agency's EIS or EA in order to expedite review and avoid duplication. However, until now, each federal agency was limited to relying on only those CEs that it adopted. CEQ's revised regulations now allow agencies to utilize other agencies' CEs for covered projects.
• New Definitions:

The revised regulations include a number of significant changes to the regulatory definitions of NEPA terms:

• "Major Federal Action": NEPA is now expressly limited to actions that are "subject to Federal control and responsibility," excluding nondiscretionary decisions made pursuant to an agency's statutory authority. For example, the updated regulations clarify that small business and farm loan guarantees are deemed not to qualify as major federal actions as they do not provide federal agencies sufficient control and responsibility over the underlying project.
• Deletion of "Cumulative Impact"; New Definition of "Reasonably Foreseeable": The NEPA statute refers to "environmental impacts" and "environmental effects," but does not include terms such as "direct impacts," "indirect impacts" and "cumulative impacts." Those concepts were created by CEQ in its 1978 regulations. To reduce the amount of litigation that has arisen from those concepts, CEQ's regulations replace "direct, indirect, and cumulative effects," with a new "reasonably foreseeable" standard.

Now, agencies are limited to considering the effects of an action that have "a reasonably close causal relationship to the proposed action." Reasonably foreseeable effects are limited to "what a person of ordinary prudence in the position of the agency decision maker would consider in reaching a decision."CEQ explains that agencies should not consider effects that are "remote in time, geographically remote, or the result of a lengthy causal chain." Under this new standard, the mere fact that an effect might not occur "but for" the project is not sufficient to trigger a NEPA analysis. Rather, there must be a close causal relationship between the federal project and the effect, analogous to proximate cause in tort law. This new "effects" framework is likely to lead to reduced consideration of downstream impacts that have often resulted in legal challenge, such as the Federal Energy Regulatory Commission and U.S. Department of Interior's consideration of downstream greenhouse gas impacts resulting from pipeline and mineral leasing decisions, respectively.

• "Reasonable Alternatives": The courts have held that alternatives evaluation "is the heart of the environmental impact statement." Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349 (1989). There has always been debate as to the scope of alternatives that a project proponent should consider. At least one court had held that an agency must follow a "rule of reason" in preparing an EIS, both in terms of which alternatives that the agency must discuss and the extent to which it must discuss them (Natural Resources Defense Council, Inc. v. Morton (D.C. Cir. 1972) 458 F.2d 827, 834; Alaska v. Andrus (D.C. Cir. 1972) 580 F.2d 465, 475). Under the 2020 rules, an agency's obligation to consider project alternatives is now limited to a "reasonable range of alternatives that are technically and economically feasible, meet the purpose and need for the proposed action, and, where applicable, meet the goals of the applicant." The CEQ regulations do not define these feasibility standards, so agencies and project proponents seeking to limit the range of alternatives considered may turn to case law involving NEPA or state analogs for further direction on this point.
• "Mitigation": NEPA allows the agencies to consider mitigation in assessing whether an action will have a "significant" environmental impact. This can save time and resources, especially when a mitigation measure may be implemented to eliminate the need for an EIS. A "mitigated" Finding of No Significant Impact (FONSI) allows a project proponent to directly reduce environmental effects from a proposed action to insignificant levels. CEQ's new definition of mitigation clarifies that only mitigation measures with a "nexus" to the environmental effects of the proposed action or alternatives should be considered. The definition also notes that while NEPA requires mitigation to be considered, as a process statute, it does "not mandate the form or adoption of any mitigation."

• Increased Role of Permittees and Project Proponents: Federal agencies have always maintained the ability to require the project proponent to pay for the EIS that is undertaken by the agency's chosen consultant. An EIS can cost hundreds of thousands of dollars to prepare. Project applicants and contractors can now assume a greater role in preparing the EIS as long as their financial or other interest is disclosed and the work is supervised and independently evaluated by the federal agency.
• Forfeiture of Untimely Public Comments: NEPA requires lead agencies to provide meaningful opportunity for public involvement, specifically, when an environmental review document is released for public comment. It is not uncommon for legal challenges to revolve around the sufficiency of the lead agency's review and the response to public comments.  CEQ's revised regulations acknowledge that the purpose of public comments on a draft EIS is to promote informed decision-making by federal agencies. However, CEQ's regulations declare that public comments received outside of an EIS' public comment period are "unexhausted and forfeited."

Conclusion

By September 2021, federal agencies must update their internal NEPA regulations and policies to be consistent with CEQ's revised regulations.

For proponents of projects requiring federal approvals or funding, CEQ's revised regulations are likely a welcome change. While the regulations cannot address the practical problems that have resulted in lengthy permitting periods (e.g., limited agency resources and staff), the prospect of shorter and quicker EISs and interagency coordination – which until recently were the product of EO directives and a memorandum of understanding – are now codified in federal regulations.

However, CEQ's revised regulations may undoubtedly be challenge once applied. An EIS subject to shortened page limits (and now word limits) may be viewed by project opponents with increased scrutiny as to whether it fulfills the NEPA statute's obligation to provide informed decision-making. If pages are limited, the agency may risk not adequately explaining its rationale or may overlook an important environmental impact, and thus fail to take the required "hard look" at the project's impacts.

While CEQ – like other federal agencies – is owed deference to the regulations it promulgates, reviewing courts may question the extent to which the updated regulations are consistent with the NEPA statute as interpreted for the past several decades. Agencies and stakeholders will be monitoring NEPA cases closely to see how courts reconcile CEQ's updated regulations with NEPA case law that involved now superseded regulations.

For more information and questions on the updated NEPA regulations, please contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.