Council on Environmental Quality proposes substantial revisions to NEPA implementing regulations

The Council on Environmental Quality (CEQ) has proposed the Bipartisan Permitting Reform Implementation Rule[1] to revise its regulations for implementing the procedural provisions of the National Environmental Policy Act (NEPA), including the Fiscal Responsibility Act’s amendments to NEPA.

Building upon the prior limited Phase 1 rule in 2022[2], the proposed Phase 2 rule is more comprehensive and addresses Biden administration priorities around climate change, environmental justice, and Tribal equity, and removes some of the provisions added by the prior administration in NEPA regulations promulgated in 2020.

Key highlights of the proposed regulatory updates in the Phase 2 rule and implications for impact assessments are summarized below.

The proposed rule clarifies that the purpose of NEPA is to achieve the environmental and community benefits envisioned by Congress (§§ 1500.1 and 1500.3(a)) and removes the emphasis that NEPA is simply a procedural statute (§ 1500.1). To ensure that the environmental review is not a “check-the-box exercise,” CEQ is proposing to restore language from the first NEPA regulations (in 1978) clarifying that an Environmental Impact Statement (EIS) is more than a disclosure document and that agencies must use EISs concurrently with other relevant information to make informed decisions (§ 1502.1).

CEQ proposes that federal agencies shall identify the environmentally preferable alternative(s) in the alternatives section of the draft and final EIS (§ 1502.14). This is a significant update; while the CEQ regulations, at 40 CFR 1505.2, always have required agencies to identify the environmentally preferable alternative in the Record of Decision (ROD), the proposed rule would require agencies to identify this much earlier, in the draft EIS published for public comment.

Consistent with the Presidential E.O. 13990, Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, (January 20, 2021) and E.O. 13008, Tackling the Climate Crisis at Home and Abroad (January 27, 2021), the proposed rule contains several provisions pertinent to climate change.

The proposed rule restores NEPA Policy language from the 1978 regulations requiring federal agencies to identify and assess alternatives to proposed actions that will avoid or minimize adverse effects, and, in addition, now lists alternatives that will reduce climate change-related effects as an example of such an alternative (§ 1500.2). CEQ also describes addressing climate change-related effects as an example of an environmental benefit that would be considered when selecting the environmentally preferable alternative in an EIS (§ 1502.14).

The affected environment analysis in an EIS shall describe reasonably foreseeable environmental trends, including anticipated climate-related changes to the environment (§ 1502.15). In the preamble to the rule, CEQ clarifies that the baseline assessment of the affected environment over an action's lifetime should incorporate forward-looking climate projections using “high-quality information, including best available science and data” rather than relying on historical data alone.

The environmental consequences analysis in an EIS shall discuss any reasonably foreseeable climate change-related effects, including the effects of climate change on the proposed action and alternatives as well as any relevant risk reduction, resiliency, or adaptation measures incorporated into the proposed action or alternatives (§ 1502.16). Thus, the proposed rule intends to codify the corresponding language in the CEQ NEPA guidance on consideration of greenhouse gases (GHG) and climate change issued in January 2023.^[3] CEQ seeks comment on whether it should codify all of the CEQ NEPA GHG guidance.

The proposed rule updates the definition of 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 (§ 1508.1). This update is particularly significant if a NEPA review is litigated and there is discussion around insufficient evaluation of effects.

CEQ proposes to require agencies to use high-quality data and models to analyze effects and, where appropriate, to use climate change-related projections in the evaluation of reasonably foreseeable effects (§ 1502.23). In this context, CEQ notes in the preamble that agencies can use or rely on projections that are scaled to a more targeted and localized geographic scope, such as land use projections, air emissions, and modeling, or to evaluate climate effects experienced locally in relation to the proposed action. Thus, CEQ highlights the value of high-quality GHG emissions inventories and air modeling in environmental reviews.

To determine the appropriate level of NEPA review (i.e., categorical exclusion (CE), environmental assessment (EA) or EIS), agencies first assess the likely significance of a proposed action. The proposed rule requires agencies to consider the degree to which the action may have disproportionate and adverse effects on communities with environmental justice concerns when considering whether the effects of the proposed action are significant (§ 1501.3).

This is a major update as NEPA reviews that were hitherto assessed as a CE or EA may now require assessment as an EA or EIS, respectively, depending on likely effects on communities. In particular, CEQ notes that an example of an "extraordinary circumstance" that may preclude the use of a CE includes disproportionate and adverse effects on communities with environmental justice concerns (§ 1508.1). CEQ does not provide a formal definition of the phrase ‘‘communities with environmental justice concerns’’ but intends that phrase would mean communities that do not experience environmental justice.

For the first time under NEPA, CEQ proposes a definition for environmental justice, namely, the just treatment and meaningful involvement of all people regardless of income, race, color, national origin, Tribal affiliation, or disability so that they are fully protected from disproportionate and adverse human health and environmental effects 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 have equitable access to a healthy, sustainable, and resilient environment (§ 1508.1).

CEQ emphasizes the need for meaningful public engagement with communities with environmental justice concerns (§ 1500.2). CEQ believes that agencies have not always meaningfully engaged with them, and such communities have been disproportionately and adversely affected by certain federal activities.

The environmental consequences section of an EIS shall discuss the potential for disproportionate and adverse human health and environmental effects on communities with environmental justice concerns (§ 1502.16). It also encourages mitigation measures that address or ameliorate significant adverse human health and environmental effects of proposed federal actions that disproportionately and adversely affect communities with environmental justice concerns (§ 1505.3).

Considering the repeated use of the term “communities with environmental justice concerns” in the proposed rule, it should come as no surprise that CEQ invites comment on whether to provide a separate definition of this term. It is anticipated that there would be considerable comment on this question as this affects the level and extent of NEPA review.

Consistent with the administration’s priorities around Tribal rights and impacts, the proposed rule requires that federal agencies shall encourage and facilitate meaningful engagement with indigenous communities and Tribal communities (§ 1500.2 and § 1501.9). When assessing significance to determine the appropriate level of NEPA review, agencies shall analyze the degree to which the proposed action may adversely affect Tribal sacred sites and the degree to which the action may adversely affect the rights of Tribal Nations that have been preserved through treaties, statutes, or Executive Orders (§ 1501.3).

The proposed rule identifies Indigenous Knowledge as relevant special expertise for cooperating agencies (§ 1501.8). Following concerns raised by Tribal leaders during consultations, CEQ clarifies that activities for projects approved by a Tribal Nation on lands held in trust for them by the US are not major federal actions where such activities do not involve federal funding or other federal involvement.

Following up on E.O. 13175, Consultation and Coordination with Indian Tribal Governments, CEQ seeks comment on whether additional provisions are needed in the rule regarding Tribal consultation distinct from NEPA public engagement requirements.

The environmental justice requirements in the proposed rule (described above) also apply to Tribal communities. CEQ notes that communities with environmental justice concerns often include Tribal communities. For example, CEQ proposes including disproportionate impacts on such communities as an example of an extraordinary circumstance (§ 1508.1) when evaluating whether a CE applies.

CEQ proposes to require agencies to invite public comment on the draft EA and consider those comments in preparing the final EA. The proposed rule continues to impose a 75-page limit on the text of the EA but removes the provision for a senior agency official to approve an exception to this page limit (§ 1501.5).

Interestingly, no climate change-related language has been added to the “Environmental Assessments” section (§ 1501.5) of the proposed rule. However, CEQ proposes that agencies generally should apply to EAs the provisions of §1502.23 (Methodology and Scientific Accuracy) which, as noted above in the discussion on Climate Change, now includes a reference to climate change-related effects.

CEQ clarifies that an agency may authorize a contractor to prepare an EA under the supervision of the agency (§ 1506.5); this is longstanding practice at several agencies. More importantly, CEQ proposes that an agency may authorize a contractor to draft the Finding of No Significant Impact (FONSI), but the agency is responsible for its accuracy, scope, and contents (§ 1506.5). This proposal will doubtless draw considerable comment.

The EA shall include a listing of state, tribal, and local governments and agencies or persons consulted in addition to federal agencies (§ 1501.5).

If the agency determines, based on the EA, that the proposed action will not have significant effects due to mitigation, the agency is required to prepare a mitigated FONSI. The FONSI shall now include the authority to enforce enforceable mitigation requirements or commitments, such as permit conditions, agreements, or other measures. In addition, the agency shall prepare a monitoring and compliance plan for any mitigation the agency relies on as a component of the proposed action. Thus, this proposal imposes additional requirements on the part of the agency and applicant when a FONSI subject to mitigation is issued.

CEQ proposes that agencies may supplement EAs if a major federal action remains to occur, and the agency determines supplementation is appropriate. This should ease the EA process for applicants and agencies in certain cases.

The deadline for preparing EAs continues to be one year. The proposed rule now codifies when the clock would start; this is from the sooner of, as applicable, the date on which the agency determines that an EA is required for the proposed action; the date on which the agency notifies an applicant that the application to establish a right-of-way for the proposed action is complete, and the date on which the agency issues a notice of intent (NOI) for the proposed action.

The proposed rule requires agencies to establish a schedule for EAs which shall include the following milestones: decision to prepare an EA; issuance of the draft EA and public comment period, where applicable; and issuance of the final EA and decision on whether to issue a FONSI or issue a NOI to prepare an EIS. While agencies typically already issue a schedule, this requirement is now codified.

All the aspects of the proposed rule discussed above for the environmentally preferable alternative, climate change, environmental justice, and tribal concerns apply to EISs. The following are some key additional revisions to the EIS requirements in the proposed regulations.

The proposed rule removes the requirement to post the EIS preparation cost on the cover (§ 1502.11).

CEQ clarifies that the agency need not consider every conceivable alternative to a proposed action; rather, it shall consider a reasonable range of alternatives that will foster informed decision-making (§ 1502.14).

Importantly, the proposed rule now requires an analysis of any adverse environmental effects of the no-action alternative (§ 1502.16); this provision should be of interest to renewable energy developers. Similarly, during the initial assessment of the level of NEPA review, CEQ proposes that agencies consider the duration of effects when assessing the overall intensity of an action to determine whether the action is significant and warrants an EIS (§ 1501.3). CEQ provides an example of a renewable energy development that may have short-term adverse effects due to construction emissions but long-term beneficial effects that result in lower GHG emissions. Thus, the agency could reasonably determine that the climate effects of the proposed action would not be significantly adverse, and therefore an EIS would not be required.

CEQ proposes restoring the context and intensity considerations in assessing the significance of effects. Only actions with significant adverse effects require an EIS. A significant adverse effect may exist even if the agency considers that on balance the effects of the action will be beneficial.

CEQ proposes that an agency may authorize a contractor to draft the EIS or ROD, but the agency is responsible for its accuracy, scope, and contents (§ 1506.5). This proposal is likely to result in considerable comment as it pertains to agency obligations for a ROD under NEPA.

In the case of changes to the proposed action or availability of new data since the publication of the EIS, the agency may reevaluate an EIS and find that changes to the proposed action or new circumstances or information relevant to environmental concerns are not substantial or that the underlying assumptions of the analysis remain valid, and therefore do not require a supplemental EIS (§ 1502.9).

The deadline for preparing EISs continues to be two years (although some agencies and bureaus follow shorter deadlines). However, the proposed rule now indicates that the clock may start earlier than the NOI if one of the following dates occurs sooner as applicable – the agency determines that an EIS is required for the proposed action or the agency notifies an applicant that the application to establish a right-of-way for the proposed action is complete (§ 1501.10). This provision introduces ambiguity as it is unclear when the agency would otherwise determine that an EIS is required.

The page limit for the text of an EIS continues to be 150 pages; this excludes citations and appendices. Documents of “extraordinary complexity” can continue to be up to 300 pages (§ 1502.7).

CEQ proposes to allow federal agencies to pursue “innovative approaches” to comply with NEPA and the regulations using procedures modified from the requirements of these regulations to address extreme environmental challenges such as sea level rise or increased wildfire risk, or bolster the resilience of infrastructure to increased disaster risk from the effects of climate change, etc. (§ 1506.12). CEQ provides examples of innovative approaches such as new ways to use information technology and innovative tools for engaging the public and also introduces strict requirements for the approval of these innovative approaches. Thus, the proposed rule offers a potential opportunity to apply automation or AI to streamline environmental reviews.

Public comments may be submitted through September 29, 2023. Additionally, CEQ is conducting virtual public meetings on August 30 and September 11 and 21.

For additional information and to register for the meetings, please visit CEQ’s website.

[1] https://www.federalregister.gov/documents/2023/07/31/2023-15405/national-environmental-policy-act-implementing-regulations-revisions-phase-2 [2] National Environmental Policy Act Implementing Regulations Revisions, 87 FR 23453 (Apr. 20, 2022) [3] National Environmental Policy ActGuidance on Consideration of Greenhouse Gases