New Federal Regulations Aim to Reduce and Streamline NEPA Environmental Review Requirements

The Council on Environmental Quality (“CEQ”) released a broad overhaul of the regulations governing federal environmental review. The revisions reflect the Trump Administration’s continuing efforts to eliminate environmental and regulatory hurdles that delay or limit development of new infrastructure projects. The CEQ’s Final Rule is the first comprehensive update in over 40 years to the regulations for implementing the National Environmental Policy Act (“NEPA”). If the new rules withstand the inevitable legal challenges, they will impose substantive changes to how federal agencies examine the environmental impacts of their decisions – and may avoid or streamline NEPA review for numerous projects.

The new regulations apply to any NEPA process begun before September 14, 2020, though federal agencies are allowed to apply the new regulations to ongoing activities and environmental documents begun before that date. Thus, the new rules are effectively applicable immediately, including to projects that have already commenced NEPA review. Agencies and developers currently engaged in the NEPA process should review the changes to the CEQ regulations carefully to determine how these changes could impact individual NEPA documents. In addition, project proponents should be aware of the highly likelihood of multiple court challenges to these new regulations, which could impact ongoing and future NEPA reviews.

Key Substantive Changes
The rule changes are truly expansive, affecting nearly every one of the NEPA regulations. A link to a redline of the existing rules can be found here. Agencies and developers working on projects requiring federal approvals or funding should analyze these revisions carefully, including the following substantive changes.

1. Categorical Exclusions
2. Expanded Areas Where NEPA Does Not Apply
3. Increased Streamlining of NEPA Review
4. Changes to the Definitions of Environmental Effects
5. Substantive Changes to NEPA Analysis
6. Procedural Changes
7. Exhaustion Requirements

Categorical Exclusions
Federal agencies are now required to establish categorical exclusions as a part of their NEPA procedures. (§ 1501.4) These categorical exclusions, similar to the categorical exemptions existing under the California Environmental Quality Act, would exclude from NEPA review groups of projects or activities where there is little or no likelihood that the projects or activities would have a significant effect on the environment. This rule change is likely to result in fewer overall NEPA analyses as federal agencies develop groups of projects that would no longer be subject to NEPA.

Expanded Areas Where NEPA Does Not Apply
In a new section, CEQA established “NEPA thresholds” for when NEPA review applies to federal activities, including excluding from NEPA review activities where “NEPA would clearly and fundamentally conflict with the requirements of another statute” or “be inconsistent with Congressional intent expressed in another statute.” (§ 1501.1(a).) There is substantial leeway in this rule for interpretation regarding whether NEPA review of a particular action would fundamentally conflict with another statute or be inconsistent with Congressional intent. As such, reliance on this rule is likely to result in increased litigation over whether NEPA review would truly conflict with other statutes.

Increased Streamlining of NEPA Review
Further additions to the regulations allow federal agencies to rely on previously adopted EAs and categorical exclusions adopted by other agencies. (§ 1506.3(b)(2).) Again, this rule would likely result in fewer overall NEPA analyses as federal agencies look to these streamlining provisions to exempt their actions from NEPA review.

Changes to the Definitions of Environmental Effects
The revised rules eliminate the consideration of “direct” and “indirect” effects in favor of a more generalized analysis of “environmental consequences.” (§ 1502.16.) Similarly, the rules delete the definition of “cumulative impact” in favor of a definition of “effects” or “impacts” that are “reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives, including those effects that occur at the same time and place as the proposed action or alternatives and may include effects that are later in time or farther removed in distance from the proposed action or alternatives.” (§1508.1)

The new regulations further indicate that a “ ‘but for’ causal relationship is insufficient to make an agency responsible for a particular effect under NEPA. Effects should generally not be considered if they are remote in time, geographically remote, or the product of a lengthy causal chain. Effects do not include those effects that the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action.” The revisions are likely to significantly reduce the scope of NEPA analysis and the types of impacts that future NEPA analyses will identify as significant, especially in the areas where NEPA analyses currently identify cumulative impacts.

Substantive Changes to NEPA Analysis
The CEQ made several substantive changes to the contents of NEPA documents. First, the new rules eliminate the requirement to consider reasonable alternatives not within the jurisdiction of the lead agency. (§ 1502.14.) Second, the new rules now require the inclusion, where applicable, of “economic and technical considerations, including economic benefits of the proposed action.” In addition, an Environmental Impact Statement (EIS) must now include an estimated total cost of the document. (§ 1502.11(g).) The elimination of alternatives not within the jurisdiction of the lead agency is likely the most significant of these changes. This change will significantly limit the scope and types of alternatives that federal agencies would be required to analyze under NEPA.

Procedural Changes
Finally, the CEQ tightened and expanded some of the procedural requirements for NEPA documents.Environmental Assessments (EAs) are now limited to 75 pages and EISs to 150 pages (or 300 pages for proposals with unusual scope or complexity) unless an extension is approved by a senior agency official. (§§ 1501.5(f), 1502.7.) Previously this regulation was a suggestion that was rarely followed. The new rules also mandate that EAs be completed within one year and EISs be completed within two years. (§ 1501.10(b).) These time limits can also only be extended with written approval of a senior agency official. It is unclear at this time how many NEPA analyses will be able to comply with this rule, or whether the approval of extensions by senior agency officials will become routine. However, the rule is in line with the overall intent of the revisions to reduce the burden of NEPA on federal agencies.

Exhaustion Requirements
The new rules codify the requirement that commenters on NEPA documents exhaust any challenges to those documents before bringing an action in court to challenge a federal agency decision. The new rules require that all comments be specific, propose specific changes, and include data sources or methodologies supporting the proposed changes, and further require that all comments be submitted during the noticed public comment period. (§§ 1500.3(b), 1503.3.) This rule is likely to come into play in future litigation regarding NEPA analyses and gives federal agencies stronger arguments to reviewing courts to reject petitioners’ claims based on a failure to comply with the exhaustion requirements.