A New Dawn?
CEQ Finalizes Updates to NEPA Regulations

Environmental/Aviation Alert (July 17, 2020)

On July 15, 2020, the Council on Environmental Quality (CEQ) announced its final rule (Rule) to “comprehensively update[], modernize[], and clarif[y],” for the first time in more than 40 years, the regulations that implement the National Environmental Policy Act (NEPA).[1] NEPA, at its most basic, is one component of our national charter for the protection of the environment. NEPA is a procedural statute that requires federal agencies to assess the potential environmental effects of proposed federal actions.[2] The purpose of the Rule is to “codif[y] Supreme Court and other case law, update[] the regulations to reflect current technologies and agency practices, eliminate[] obsolete provisions, and improve[] the format and readability of the regulations.”[3] The Rule was issued following CEQ’s investigation of the effectiveness and efficiency of the environmental review process and current NEPA regulations, as well as a public consultation process.[4] The Rule has been, and continues to be, the subject of controversy. Below, we summarize the key revisions to the Rule and their implications.

Process: Timeline, Page Limits, Authorship and Public Engagement. A number of revisions to the regulations are geared toward expediting the NEPA process. The Rule presumptively limits the time for the preparation of environmental documents – two years for an Environmental Impact Statement and one year for an Environmental Assessment – and sets presumptive page limits for both documents.[5] The Rule expands the role of the project applicant by eliminating restrictions on who can prepare environmental documents, while retaining the requirement that lead agencies independently review and evaluate the analysis.[6] The Rule also requires agencies to solicit public input earlier in the process to facilitate public participation, and promotes cooperation and coordination among the agencies involved in the process.[7]

Definition of “Environmental Effect.” Arguably, the most controversial substantive revision presented in the Rule is CEQ’s refinement of the definition of “environmental effect.” CEQ struck references to direct, indirect, and cumulative effects and clarified, consistent with the U.S. Supreme Court’s precedent, that – to be analyzed – “effects must be reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives; a ‘but for’ causal relationship is insufficient to make an agency responsible for a particular effect under NEPA.”[8] In response to comments that the elimination of the “cumulative effect” definition would preclude consideration of impacts of a proposed action on climate change, CEQ explains that the Rule does not preclude such consideration and the analysis of the impact on climate change will depend on specific circumstances of the proposed action.[9] The argument against this revision is that, while the regulations do not preclude climate change analysis, they do not require it, which arguably undermines the environmental analysis.

Definition of “Major Federal Action.” Among other noteworthy revisions is the Rule’s updated definition of what constitutes a “major federal action.” To give meaning to all words in the NEPA statute consistent with principles of statutory interpretation, CEQ revised the regulations to apply to “major Federal actions significantly affecting the quality of the human environment” (42 U.S.C. section 4332(2)(C)), rather than to “non-major Federal actions that simply have some degree of Federal involvement.”[10] Opponents of the Rule argue that this revision will erroneously eliminate certain projects, such as pipelines, bridges, and roads, from review under NEPA.

Categorical Exclusions. In the Rule, CEQ also addressed categorical exclusions, more than 2,000 of which have been developed by federal agencies and are applied to 100,000 federal actions each year. The Rule has been modified to provide that even if an “extraordinary circumstance” is present that would otherwise preclude use of a categorical exclusion, the agency may nevertheless categorically exclude the proposed action if it determines that there are “circumstances that lessen the impacts” or other conditions sufficient to avoid significant effects. The Rule also allows an agency to adopt another agency’s determination that a categorical exclusion applies when the proposed action is substantially the same.[11]

Alternatives Analysis. With respect to agencies’ consideration of alternatives, the Rule continues to require agencies to analyze reasonable alternatives that would meet the need of the proposed action and would avoid impacts or mitigate them to less than significant. However, CEQ limits reasonable alternatives to those that are “technically and economically feasible and meet[ing] the purpose and need of the proposed action” and requires that each alternative considers the goals of the applicant when the action involves a non-federal entity.[12]

Takeaways. The supporters of the Rule – primarily industry stakeholders – praise the revisions for streamlining the NEPA process and making it more efficient, flexible, and less costly. Similarly, President Trump’s Administration describes the Rule as necessary to overhaul outdated and cumbersome environmental regulations, and as a pathway to economic prosperity. Opponents, on the other hand, sound the alarm on the Rule’s negative implications, arguing that it would worsen global greenhouse gas emissions, make infrastructure less safe, and preclude public input on certain projects.

The Rule is set to go into effect on September 14, 2020, unless challenged in court or altered by Congress. Federal agencies and project applicants should exercise caution in applying the Rule until any legal challenges are resolved, and the time for Congress’ action to reverse it expires.

[This alert does not constitute legal advice and no attorney-client relationship is created by viewing or responding to this alert.  Legal counsel should be sought for answers to specific legal questions.]

[1] The NEPA regulations were first issued in 1978; for additional related information, see https://ceq.doe.gov/laws-regulations/regulations.html.
[2] The full text of CEQ’s Rule, titled an “Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act,” was published in the Federal Register on July 16, 2020, and is available at: https://www.govinfo.gov/content/pkg/FR-2020-07-16/pdf/2020-15179.pdf.
[3] CEQ Fact Sheet: Modernizing CEQ’s NEPA Regulations, available at: https://ceq.doe.gov/docs/laws-regulations/ceq-final-rule-fact-sheet-2020-07-15.pdf.
[4] See https://ceq.doe.gov/laws-regulations/regulations.html; see also the Rule, pp. 9-10 and 21-24 at: https://www.whitehouse.gov/wp-content/uploads/2020/01/CEQ-NEPA-Regulations-Final-rule-Pre-publication-Version.pdf.
[5] Please see the Rule, pp. 82, 93 at: https://www.whitehouse.gov/wp-content/uploads/2020/01/CEQ-NEPA-Regulations-Final-rule-Pre-publication-Version.pdf.
[6] Id. at pp. 135-137.
[7] Id. at pp. 40-42, 137-139.
[8] Id. at pp. 160-166.
[9] Id. at pp. 165-166.
[10] Id. at pp. 169-172.
[11] Id. at pp. 41-42, 75-78.
[12] Id. at p. 192.