Chapter 7B Categorical Exclusions: Development and Application

• Jurisdiction: United States

Chapter 7B Categorical Exclusions: Development and Application
Arthur R. Kleven¹ U.S. Department of Agriculture, Office of General Counsel Lakewood, CO

ARTHUR KLEVEN is the Deputy Regional Attorney for the U.S. Department of Agriculture, Office of General Counsel, Mountain Region, located in Lakewood, Colorado. In that capacity he works with the regional offices of USDA agencies located in Colorado, Utah, and Wyoming, including the Farm Service Agency, Forest Service, Natural Resources Conservation Service, and Rural Development. His practice focuses on natural resources law and litigation, primarily with the Rocky Mountain and Intermountain Regions of the U.S. Forest Service, which collectively administer National Forest System lands in seven states. His work frequently involves implementation of the National Environmental Policy Act but includes the variety of the principal laws relating to Forest Service activities, such as the Forest Service Organic Administration Act, Bankhead-Jones Land Tenant Act, National Forest Management Act, Federal Land Policy and Management Act, and Mineral Leasing Act. Prior to arriving at USDA in 2019, he was and attorney-advisor with the Office of the Solicitor, U.S. Department of the Interior, beginning in 2004. As part of the Rocky Mountain Regional Solicitor's Office, he counseled the Bureau of Land Management, Colorado and Wyoming State Offices on a variety of matters, but with NEPA and minerals focus. He also advised the Office of Surface Mining Reclamation and Enforcement, Western Region on matters involving its' Indian Lands Program, NEPA, and the Surface Mining Control and Reclamation Act. Art earned a B.S. in Environmental Health Science from the University of Georgia and a J.D. from the University of Denver, Sturm College of Law. He is a member of the Colorado bar. He still counts his luck in his career and life.

Make no mistake, categorical exclusions are NEPA! When properly established and applied they are not a simple shortcut or end run to avoid NEPA analysis. They are a form of NEPA compliance long provided for in Council on Environmental Quality (CEQ) regulations and federal agency NEPA procedures. In short, categorial exclusions are classes of actions found not to have significant environmental effect and that do not require analysis in an environmental assessment (EA) or environmental impact statement (EIS). They are the most common form of NEPA compliance. Use of categorical exclusions promotes efficiency by reducing agency time and resources spent analyzing proposals that generally do not have significant environmental impacts, and by focusing those resources on proposals that do. But those efficiencies typically come with the price of more limited consideration of environmental effects and opportunity for public involvement than "full blown" NEPA analysis, and their use may be controversial and criticized. This paper attempts to side-step the controversy, and merely presents an introduction to the regulatory framework for categorical exclusions, the processes by which agencies create and apply them, and a few emerging trends or issues.

I. Regulatory Framework for Categorical Exclusions

The NEPA statute itself does not provide for categorical exclusions. The CEQ's 1978 regulations provided that an agency could exclude categories of actions from detailed review in an EA or EIS where the agency found in its NEPA procedures that the action normally would not have significant environmental effects.² Agency NEPA procedures, however, were to provide for "extraordinary circumstances in which a normally excluded action may have a significant environmental effect" and which may limit use of an exclusion.³

Federal agencies took this direction to heart, making categorical exclusions the most common form of NEPA compliance. By 2020, the CEQ estimated that agencies had developed

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over 2,000 categorical exclusions and apply them to approximately 100,000 agency actions each year.⁴

The CEQ's updated NEPA implementing regulations of 2020 left the regulatory framework for categorical exclusions intact but added several clarifications on their use. Foremost, the CEQ added a new provision, section 1501.4, addressing categorical exclusions.⁵ That provision requires that, for efficiency, agencies "shall" provide for categorical exclusions in their NEPA procedures.⁶ It more clearly requires agencies to review the proposed application of a categorical exclusion for extraordinary circumstances in which a normally excluded action may have a significant environmental effect.⁷ Most significant, the CEQ clarified that agencies' criteria for extraordinary circumstances are not intended to necessarily preclude use of a categorical exclusion merely because a listed factor may be present or implicated. Instead, an agency may still categorically exclude a proposed action when an extraordinary circumstance is present if it determines that there are circumstances that lessen the impacts or other conditions sufficient to avoid significant effects."⁸ That section also expressly confirms that agencies must prepare an EA or EIS to proceed with a proposed action that cannot be categorically excluded.⁹

A significant addition in the CEQ's 2020 regulatory revisions are provisions for agencies to adopt categorical exclusion determination of another agency and to establish procedures to use another agency's categorical exclusion.¹⁰

The CEQ also determined that all existing categorical exclusions developed by federal agencies and contained in their NEPA procedures as of September 14, 2020, were consistent with the requirements of the CEQ regulations.¹¹ This finding allowed agencies to continue to use their existing categorical exclusions while they updated their NEPA procedures to be consistent with the new CEQ regulations.¹² It also clarified that agencies are still required to review

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proposed categorical exclusions for the extraordinary circumstances listed in their NEPA procedures.¹³

Initially, the CEQ required agencies to propose updates to their NEPA procedures for consistency with the new regulations within one year from their effective date of September 14, 2020.¹⁴ Thereafter, the CEQ undertook a comprehensive review of its 2020 Rule "for consistency with the nation's environmental, equity, and economic priorities" and "to consider whether the 2020 Rule properly and lawfully interprets and implements NEPA."¹⁵ The CEQ has taken a phased approach for revising its NEPA regulations, and issued Phase 1 interim final rule of June 29, 2021, and a Phase 1 final rule on April 22, 2022.¹⁶ In the Phase 1 interim rule, the CEQ extended the period for agencies to propose revisions to their NEPA procedures for two years, until September 14, 2023.¹⁷ The Phase 1 final rule did not disturb the CEQ's determination that agency categorical exclusions before September 14, 2020, were consistent with NEPA or any of the 2020 rule's revisions for categorical exclusions.¹⁸ The more comprehensive Phase 2 rulemaking is underway.¹⁹

II. Establishing Categorical Exclusions

Categorical exclusions may be created in one of two ways. Agencies may develop categorical exclusions within their NEPA procedures. Congress may also categorically exclude certain actions from further NEPA through statute. Apart from process, a key difference between these approaches is whether an agency must review the existence of "extraordinary circumstances," where normally excluded actions may have significant environmental effects and that may preclude use of a categorical exclusion. Administrative categorical exclusions provided for in agency NEPA procedures must be reviewed for extraordinary circumstances. Whether use of a categorical exclusion requires review for extraordinary circumstances depends on the specific statute at issue.

A. Administrative Categorical Exclusions

As noted, CEQ regulations require that agencies shall provide for categorical exclusions in their NEPA procedures.²⁰ The great majority of categorial exclusions are created by agencies in accordance with CEQ and agency procedures, sometimes referred to as "administrative" or "regulatory" categorical exclusions. Agencies may provide for categorical exclusions in several different circumstances, for example when 1) a class of actions is not expected to have significant environmental effects (e.g., personnel, payroll, and other internal administrative functions), 2) based on prior NEPA reviews that demonstrate actions have no significant

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impacts, 3) after gaining experience with new or revised program responsibilities and their environmental effects, and 4) when directed by Congress.²¹ After establishing administrative categorical exclusions, agencies should periodically review them to ensure that they remain appropriate for program purposes and that covered actions still do not normally create significant environment impacts.²²

In short, the process for agencies to develop categorical exclusions is through public notice and comment and consultation with CEQ. This process is akin to rulemaking under the Administrative Procedure Act (APA), and indeed is for categorical exclusions promulgated in federal regulations. Agencies need not prepare a NEPA analysis before establishing or updating agency NEPA procedures, including when creating or revising categorical exclusions.²³ The CEQ's 2010 guidance on categorical exclusions explains²⁴ that an agency's process for establishing a new categorical exclusion should include:

• Drafting the proposed categorical exclusion;
• Substantiating the proposed exclusion;
• Consulting with CEQ on the proposal;
• Consulting with other federal agencies that conduct similar actions;
• Publishing a Federal Register notice;
• Considering public comment;
• Consultation with CEQ on public comment and the proposed final categorical exclusion;
• Obtaining CEQ written determination of NEPA conformity;
• Publishing a final Federal Register

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