The National Environmental Policy Act (“NEPA”) was signed into law on January 1, 1970 and requires federal agencies to assess the environmental effects of their proposed actions prior to making decisions. On July 31, 2023, the White House Council on Environmental Quality (“CEQ”) published its proposed rule titled “Bipartisan Permitting Reform Implementation Rule” in the Federal Register to “revise, update and modernize” the NEPA implementing regulations. This proposed rulemaking is known as Phase 2 of CEQ’s amendments to the NEPA regulations.
For background, CEQ issued a Phase 1 final rule on April 20, 2022 to reinstate key elements of the NEPA regulations to their historical language and intent before they were rescinded by the Trump Administration in 2020. Most notably, the Phase 1 final rule restored: (1) the requirement that federal agencies to consider the “direct,” “indirect,” and “cumulative” impacts of a proposed action, including those associated with climate change and environmental justice communities; (2) the authority of federal agencies to determine the “purpose and need” of the proposed project; and (3) the ability of federal agencies to expand their NEPA procedures and treat CEQ’s NEPA regulations as a floor, not a ceiling.
The proposed Phase 2 rule builds on Phase 1 and implements broader changes to CEQ’s NEPA implementing regulations at 40 CFR Parts 1500-1508. The purpose of the proposed rule is to “provide for an effective environmental review process that promotes better decision making; ensure full and fair public involvement; provide for an efficient process and regulatory certainty; and provide for sound decision making grounded in science, including consideration of relevant environmental, climate change, and environmental justice effects.” 88 Fed. Reg. 49924.
In general, the proposed rule contains numerous extensive and detailed changes to the NEPA implementing regulations. For convenience of reviewing the revisions, CEQ published a redline comparison of the proposed rule against the current rule. This post highlights five notable changes, as follows.
1. The proposed rule codifies that federal agencies are required to consider climate change effects during environmental reviews under NEPA. In particular, the proposed rule codifies many of the elements contained in CEQ’s Guidance on Consideration of Climate Change and Greenhouse Gas Emissions issued on January 9, 2023, which encourages analysis of climate change-related effects associated with federal agency actions. For example, the proposed rule defines “effects” to include “climate change-related effects, including the contribution of a proposed action and its alternatives to climate change, and the reasonably foreseeable effects of climate change on the proposed action and its alternatives.” See proposed § 1508.1(g)(4). As a result, an agency’s analysis will need to account for reasonably foreseeable climate-change-related effects in addition to the effects of climate change on the proposed action and alternatives. The proposed rule also encourages agencies to use the NEPA process to identify and assess alternatives to a proposed action that will reduce climate change-related effects.
2. Under the proposed rule, CEQ seeks to require federal agencies to consider environmental justice issues during environmental reviews under NEPA. For the first time, the proposed rule codifies a definition of “environmental justice” as:
[T]he just treatment and meaningful involvement of all people, regardless of income, race, color, national origin, Tribal affiliation, or disability, in agency decision making and other Federal activities that affect human health and the environment so that people:
(1) Are fully protected from disproportionate and adverse human health and environmental effects (including risks) and hazards, including those related to climate change, the cumulative impacts of environmental and other burdens, and the legacy of racism or other structural or systemic barriers; and
(2) Have equitable access to a healthy, sustainable, and resilient environment in which to live, play, work, learn, grow, worship, and engage in cultural and subsistence practices.
See proposed § 1508.1(k). In addition, the proposed rule incorporates environmental justice in the definition of “effects” which includes “disproportionate and adverse effects on communities with environmental justice concerns, whether direct, indirect, or cumulative.” See proposed § 1508.1(g)(4).
3. CEQ proposes to revise the definition of “major federal action,” which is the trigger for environmental review under NEPA, in order to align with the statutory changes made to the Fiscal Responsibility Act of 2023 (“FRA”), including the exclusions. See proposed § 1508.1(u). CEQ indicates that “[g]enerally, Federal financial assistance, other than minimal Federal funding, is a major Federal action where the Federal agency has authority and discretion over the financial assistance in a manner that could address environmental effects from the activities receiving the financial assistance.” 88 Fed. Reg. 49962. CEQ further indicates that “[i]n such circumstances, the agency has sufficient control and responsibility over the use of the funds or the effects of the action for the decision to provide financial assistance to constitute a major Federal action.” Id. CEQ is interested in understanding whether additional procedures, such as thresholds for the amount or proportion of federal funding necessary for an agency action to constitute major federal action, could help increase predictability for determining when funding is considered a major federal action.
4. The proposed rule clarifies that projects that only have significant, long-lasting positive impacts do not require an environmental impact statement (“EIS”). Put differently, actions with only beneficial effects and no significant adverse effects will not require an EIS. For instance, long-term reduction in greenhouse gas (“GHG”) emissions from a renewable energy project could outweigh the project’s short-term construction-related GHG emissions. Similarly, long-term wildfire risk reduction from a forest restoration project could outweigh the project’s short-term adverse effects on species habitat. In each scenario, a federal agency could reasonably determine that an EIS is not be required.
5. CEQ proposes a new rule at § 1506.12 that will allow federal agencies to pursue, with CEQ’s approval, innovative approaches to NEPA compliance to maximize “flexibility, creativity, and efficiency” to address “extreme environmental challenges,” including those related to climate change. More specifically, the proposed rule codifies the following examples of extreme environmental challenges: sea level rise; increased wildfire risk, water scarcity, degraded water or air quality, species loss, disproportionate and adverse effects on communities with environmental justice concerns, and impaired ecosystem health, among others. The proposed rule also describes how a federal agency may seek approval from CEQ to pursue an “innovative” approach and indicates that CEQ has 60 days to approve, revise, or deny an agency’s request. CEQ is seeking public comment on whether this “innovative” approach provision is needed and how it may be employed in practice.
The proposed rule is open for public comment through Friday, September 29, 2023. CEQ will be holding four virtual public meetings on the proposed rule on Saturday, August 26, 2023; Wednesday, August 30, 2023; Monday, September 11, 2023; and Thursday, September 21, 2023. For additional information, please visit CEQ’s website at https://ceq.doe.gov/laws-regulations/regulations.html.
member center
