National Environmental Policy Act Regulations: Phase 2 –  A Deeper Dive, Part 1

On May 1, 2024, the Council on Environmental Quality (CEQ) published its final Bipartisan Permitting Reform Implementation Rule (Final Rule), that revises regulations implementing the National Environmental Policy Act (NEPA), in part to address amendments to NEPA made pursuant to the Fiscal Responsibility Act (FRA) and solidify Biden-Harris administration (Administration) environmental policies. The Final Rule is the second of a two-part NEPA rulemaking (Phase 2 Revisions) initiated by the Administration, which identified revising NEPA implementing regulations among its highest priorities in the early days of the administration.

This is the first in a series of six eAlerts that will examine the contents of the Final Rule and provide insight into how the Final Rule may (or may not) affect the NEPA compliance process moving forward.

Background on Final Rule

As we have previously reported, on July 16, 2020, the Trump Administration made the first significant revisions to NEPA regulations (2020 Regulations) since CEQ’s promulgation of the same in 1978 (1978 Regulations). The 2020 Regulations were the subject of five separate lawsuits, which were variously stayed or dismissed.

On January 20, 2021, President Biden issued Executive Order 13990 (EO 13990), Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, which, among other things, required federal agencies to review regulations issued between January 20, 2017 and January 20, 2021 for consistency with the policies established by EO 13990, and to take appropriate steps where such regulations were found to be inconsistent with the same.  On January 27, 2021, President Biden issued Executive Order 14008, Tackling the Climate Crisis at Home and Abroad, which directed federal agencies to address the climate crisis by, among other things, advancing environmental justice.

On June 29, 2021, CEQ issued an interim final rule extending by two years the deadline for federal agencies to propose changes to agency-specific NEPA procedures to make the procedures consistent with the 2020 Regulations. On October 7, 2021, CEQ finalized the first phase of its changes to the 2020 Regulations, in which the agency made a handful of targeted revisions. Among these revisions was a restoration of the regulatory definition of “effects” that was established by the 1978 Regulations (which made a distinction between direct, indirect and cumulative effects) and had been altered by the 2020 Regulations (collapsing direct, indirect and cumulative effects into one definition of “effects”).

On July 31, 2023, CEQ published proposed Phase 2 Revisions to the agency’s NEPA implementing regulations (Proposed Rule), which received more than 148,000 comments—920 of which CEQ identified as being “unique” and 540 of which CEQ identified as being “substantive.” In the preamble to the Final Rule (Preamble), CEQ indicated that “the majority” of unique comments were supportive of the changes in the Phase 2 Revisions.

Overview of Final Rule

The Preamble explains that changes made to NEPA implementation regulations fall into five categories:

• Implementing the changes required by FRA;
• Amending the regulations to “enhance consistency and clarity”;
• Improving the efficiency and effectiveness of the environmental review process, emphasizing that decisions should be science-based and reflecting caselaw developments;
• Reverting certain of the regulatory language to that of the 1978 Regulations and revising other language for clarity; and
• Removing provisions from the 2020 Regulations that CEQ believes are “imprudent or legally unsettled,” or create uncertainty that could make NEPA review less efficient or at risk of litigation.

After providing the broad purposes behind the provisions adopted by the Final Rule, the Preamble then describes, section by section, the changes the agency considered in the Proposed Rule, the comments CEQ received on the Proposed Rule, whether CEQ agreed with the comments, and how the Final Rule differed or not from the Proposed Rule. Additional information about CEQ’s process for developing the Final Rule, including a more specific accounting of how CEQ responded to comments on the Proposed Rule, may be found in the “Documents” tab under Docket No. CEQ-2023-0003.

Up Next

In the coming weeks, we will take a closer look at aspects of the Final Rule that may be of particular interest to NEPA practitioners. These topics include, but are not limited to:

• Changes in the definition of “major federal action”;
• Changes to the way federal agencies approach NEPA’s threshold question of whether the effects of a major federal action are “significant”;
• Codifying environmental justice and climate change as among the effects that must be examined during the NEPA process;
• Updated requirements relating to public engagement;
• Codification of CEQ’s 2023 greenhouse gas guidance;
• Additional flexibility for federal agencies to establish new categorical exclusions;
• Codification of CEQ’s longstanding practice of relying on mitigated findings of no significant impact (FONSI);
• Providing clarity on the requirements for mitigation to form the basis of a mitigated FONSI;
• Removal of language added by the 2020 Regulations that sought to limit the ability of third parties to challenge NEPA determinations; and
• Adoption of provisions intended to speed the NEPA review process.

Our next eAlert will focus on how the Final Rule addresses the threshold question of whether a given federal action is subject to NEPA review in the first place.