Council on Environmental Quality Substantially Rewrites National Environmental Policy Act Regulations

• Citation: Vol. 2 No. 5
• Publication year: 2024

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Rafe Petersen, Alexandra E. Ward, and Jason A. Hill ^*

In this article, the authors review the Phase II regulations under the National Environmental Policy Act (NEPA) published recently by the Council on Environmental Quality and examine how the amendments to the NEPA regulations affect the process for NEPA compliance, along with the scope of NEPA and the roles of federal agencies and the public.

The Council on Environmental Quality (CEQ) on May 1, 2024, published its Phase II regulations ¹ under the National Environmental Policy Act (NEPA). ² As part of a multiphase effort to amend the NEPA regulations that straddled the statutory amendments under the Fiscal Responsibility Act (FRA) of 2023, ³ the stated goals of the Phase II regulations are to "provide for an effective environmental review process; ensure full and fair public engagement; enhance efficiency and regulatory certainty; and promote sound Federal agency decision making that is grounded in science, including consideration of relevant environmental, climate change, and environmental justice effects." ⁴ Although NEPA's statutory and regulatory provisions remained relatively unchanged since the 1970s, recent years have brought numerous changes in rapid succession, beginning with a comprehensive revision of the 1978 regulations in 2020, followed closely by the relatively modest Phase I revisions in 2022 that largely sought to reincorporate certain provisions from the 1978 regulations and comprehensive revisions to the statute in 2023 that statutorily incorporated several concepts from the 2020 regulations.

These most recent amendments to the NEPA regulations are significant in scope and affect virtually all aspects of NEPA review. Although many changes may achieve the Biden administration's goals of efficiency and streamlined review, others may burden the regulatory agencies and proponents of projects subject to NEPA

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review. Agencies have one year from the effective date to implement their own NEPA regulations consistent with the policies and processes provided in the Phase II regulations; but certain changes may exceed statutory authority and are likely to face judicial challenge.

NEPA Overview

Clients face the possibility of needing an environmental review under NEPA whenever applying for federal permits or federal funds. NEPA requires that federal agencies undertake an environmental review for "major Federal actions significantly affecting the quality of the human environment." ⁵ NEPA is a broad-reaching statute that directly applies to federal agencies but indirectly impacts most regulated communities by requiring environmental review of certain federal agency actions, which may include funding or approvals needed for public or private projects. NEPA is implemented under the regulations promulgated by the CEQ, 40 C.F.R. Parts 1500-1508, along with the NEPA regulations promulgated by each individual agency. In essence, through the NEPA process an agency evaluates a proposed action and analyzes the reasonably foreseeable environmental impacts of such action to inform the federal agency and the public of such impacts and consider potential mitigation.

NEPA's sliding-scale approach recognizes that agency actions can be characterized as falling somewhere on a continuum with respect to environmental impacts. Proposed actions with the potential for "significant" environmental effects normally require an Environmental Impact Statement (EIS), while projects with little to no effects can be addressed through an Environmental Assessment (EA). The EA is most often used to determine whether the impacts are significant enough to warrant preparation of an EIS or whether the impacts can be avoided or mitigated, in which case the agency issues a Finding of No Significant Impact (FONSI). The third type of NEPA review is a Categorical Exclusion (CatEx). A CatEx is a category of actions that the reviewing agency has determined normally would not individually or cumulatively have potential for significant environmental impacts and can therefore be excluded from further NEPA review absent "extraordinary circumstances."

As explained in the Phase II regulations, President Joe Biden in June 2023 signed into law the FRA, which included amendments to several sections of NEPA. ⁶ Among the changes, the amendments:

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1. Clarified that NEPA review is required to look at "reasonably foreseeable" effects of the agency action with a "reasonably close causal relationship" to the proposed agency action (Section 102);
2. Clarified the levels of review (Section 106);
3. Addressed coordination among agencies, allowed project sponsors to prepare environmental documents, imposed statutory page limits and deadlines, created a right for project sponsors to petition a court to enforce the new statutory deadlines and generally sought to improve streamlining of the process (Section 107);
4. Clarified an agency's ability to rely on programmatic reviews (Section 108);
5. Allowed for agencies to adopt the CatEx review of other agencies (Section 109);
6. Provided for the use of digital online technology to reduce delay and improve accessibility and transparency (Section 110); and
7. Provided new definitions of key terms such as "major federal action" (Section 111).

Part 1500 Purpose and Policy

Part 1500 of the regulations sets forth CEQ's broad interpretation and vision of the goals of NEPA and significantly expands CEQ's base interpretation of the purpose and policy. As discussed below, CEQ expects individual agencies to amend their own NEPA regulations to implement these policies.

Overall Agency Goals

Section 1500.1 stresses that federal agencies have a "continuing responsibility . . . to use all practicable means" to meet several goals of NEPA, including assuring "for all people safe, healthful, productive, and aesthetically and culturally pleasing surroundings"; preserving "important historic, cultural, and natural aspects of our national heritage, and maintain[ing], wherever possible, an environment which supports diversity and variety of individual choice"; and "enhance[ing] the quality of renewable resources and approach the maximum attainable recycling of depletable resources." ⁷ The

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revisions state that information used in the NEPA review "shall be of high quality" and "most importantly, environmental documents must concentrate on the issues that are truly relevant to the action in question, rather than amassing needless detail." ⁸ Further revisions, such as page limits and clarity, are intended to implement this policy. For example:

■ Section 1500.2 expects that federal agencies will implement procedures "to reduce paperwork and the accumulation of extraneous background data" and integrate NEPA into their own planning reviews so that they run concurrently. ⁹
■ Section 1500.4 requires federal agencies to "prepare analytical, concise, and informative environmental documents."
■ Section 1500.5 requires federal agencies to "improve the efficiency of their NEPA processes" by undertaking certain steps, such as establishing more CatExes, engaging early in interagency cooperation with affected federal, state, tribal and local agencies before or during the preparation of an EA (as opposed to waiting for comments), and using the scoping process to identify the "important" issues that require detailed analysis.

Consistent with other themes, there is an emphasis on meeting deadlines and preparing documents early. These stresses on efficiency are welcome additions for project proponents, as they will infuse the NEPA process with greater certainty and timeliness. This may put more pressure on the agencies and increase workloads, but this pressure may be helped by other provisions allowing project proponents to undertake certain roles or adoption of other agencies' environmental reviews.

The changes to Section 1500.3 are most significant for removing the "exhaustion" requirements, which had required commenters to be specific with their comments. The Phase II regulations removed the language that "comments or objections of any kind not submitted, including those based on submitted alternatives, information, and analyses, shall be forfeited as unexhausted," which was an attempt to limit NEPA litigation and flyspecking of decision documents. In addition, the Phase II amendments removed the "remedies" section that stated the CEQ's intention that the regulations "create no presumption that violation of NEPA is a basis for injunctive relief or for a finding of irreparable harm" or that any "alleged NEPA violation be raised as soon as practicable after final

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agency action to avoid or minimize costs to agencies, applicants, and affected third parties." However, the changes included an additional provision recognizing that project sponsors may seek judicial review prior to the agency issuing the final agency action, which is consistent with Section 107(g)(3) of NEPA as amended. It must be noted, however, that judicial review in federal courts is slow and can often impact the ability to meet project development milestones. ¹⁰

Lastly, Section 1500.6 clarifies that the requirement that an agency comply with NEPA "to the fullest extent possible" is not intended to "limit an agency's other authorities or legal responsibilities unless an agency activity, decision, or action is exempted from NEPA by law or compliance with NEPA is impossible." The preamble makes clear that "compliance with NEPA is only impossible within the meaning of this subsection when the conflict between another statute and the requirements of NEPA are clear, unavoidable, and irreconcilable."

Environmental Justice

The most significant addition is the requirement that all federal agencies "encourage and facilitate public engagement in decisions that affect the quality of the human environment, including meaningful engagement with communities such as those with...