CEQ Overhauls NEPA Regulations
By: Jared Wigginton and Paulina Williams, Baker Botts LLP
On July 16, 2020, the Council on Environmental Quality (“CEQ”) published a rulemaking (“Final Rule”) comprehensively updating its regulations implementing the National Environmental Policy Act (“NEPA”) for the first time since they originally were adopted in 1978. 85 Fed. Reg. 43,304. Enacted for the salutary purpose of ensuring that the federal government takes a “hard look” at environmental impacts before undertaking major federal actions, “NEPA law” today – including the NEPA regulations and the resulting body of case law – has developed into a complex web of reviews and processes and has increasingly been used to thwart many projects across the country. CEQ states that these updates will ensure more efficient, effective, and timely NEPA reviews. Although much of the Final Rule codifies NEPA case law that courts have developed over the past 40 years, it also includes other meaningful changes. Key elements of the Final Rule include clarification of important NEPA terms (such as “major federal action” and “reasonably foreseeable”), expansion of “categorical exclusions” from NEPA review, and streamlining efforts to reduce red tape and speed up reviews—all of which should help improve the regulatory landscape for project development going forward. The points below highlight some of the Final Rule’s key regulatory changes.
NEPA Threshold Determination: The Final Rule establishes that a proposed activity or decision is exempt from NEPA if it is, among other things, (1) expressly exempted from NEPA under another statute; (2) not a “major Federal action”; or (3) non-discretionary such that the agency lacks the authority to consider environmental effects within its decision-making process. The Final Rule revises the definition of “major federal action” to exclude activities that do not result in final agency action under the Administrative Procedure Act and non-federal projects with minimal federal funding or minimal federal involvement where the agency does not exercise sufficient control and responsibility over the outcome of the project.
Level of NEPA Review Required: The Final Rule provides new guidance on the level of NEPA review required for a specific proposed action, including clarifications increasing the ability to (1) apply Categorical Exclusions, (2) streamline the information provided in Environmental Assessments (“EAs”) to support a decision to prepare a finding of no significant impact (“FONSI”) or environmental impact statement (“EIS”), and (3) limit supplemental environmental review to when a major federal action remains to occur and other requirements are met.In addition, the Final Rule clarifies that an agency can commit to mitigation measures for a mitigated FONSI when it can ensure that the mitigation will be performed, when the agency expects that resources will be available, and when the agency has sufficient legal authorities to ensure implementation of the proposed measures. The Final Rule also clarifies that, in preparing an EIS, an agency shall state how the alternatives considered in it and decisions based on it serve the purposes of the statute as interpreted in the CEQ regulations.
“Effects or Impacts” Definition: In what is already a controversial change, the Final Rule eliminates references to direct, indirect, and cumulative effects and repeals the definition of “cumulative impacts.” The Final Rule then defines “effects or impacts” to include “changes to the human environment from the proposed action or alternatives 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.” A “but for” causal relationship is insufficient to make an agency responsible for a particular effect under NEPA.
Purpose and Need: The Final Rule adopts regulatory language confirming that the statement of “purpose and need” should focus on the purpose and need for the proposed action and must be based on an applicant’s goals and recognize the limits of the agency’s authority.
Reasonable Alternatives: The Final Rule defines “reasonable alternatives” to mean “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.”
NEPA Process: The Final Rule provides that federal agencies are to issue a single record of decision where appropriate and not impose additional procedures or requirements beyond those set forth in CEQ regulations excepts as otherwise provided by law or for agency efficiency. It also provides that an agency may direct a consultant or the applicant to prepare an EIS or EA under the agency’s supervision. Agencies also are to complete EAs within one year and EISs within two years, though these deadlines can be extended by an agency official.
Judicial Review: To preserve an issue for judicial review, the Final Rule requires a person to first raise the issue in comments. Additionally, the Final Rule states that any harm caused by NEPA is reparable because it is a procedural statute.
Overall, the Final Rule will affect project applicant planning, agency activities, and legal challenges related to NEPA reviews. Additionally, while we anticipate that the Final Rule will face legal challenges in the near future, even a successful challenge would not necessarily eliminate many provisions of the Final Rule due to its inclusion of a severability provision.