The first amendments to the National Environmental Policy Act (NEPA) in decades might materially streamline federal permitting of oil, gas, and renewable energy projects, leasing on federal lands, and reviews for roads, bridges, and other infrastructure projects, including the extent to which federal agencies must consider greenhouse gas emissions said to impact climate change. President Biden recently signed the Fiscal Responsibility Act of 2023 into law, which raised the U.S. debt ceiling. Included among the spending provisions is Section 321, known as the Builder Act. These congressional amendments to NEPA codify past regulatory reforms, and could impact the pending effort of the White House Council on Environmental Quality (CEQ) to promulgate a "Phase 2" set of regulatory amendments to the current NEPA rules. We explore primary changes to the statute and potential implications.
SETTING THE STAGE
NEPA requires federal agencies to incorporate environmental considerations into their planning and decision-making. Subject to certain exclusions and exceptions, federal agencies must assess the environmental impact of "major federal actions" significantly affecting the environment.1 This generally requires an environmental assessment (EA), and then an environmental impact statement (EIS), which consider and document the potential environmental effects of a proposed action and alternatives to mitigate those effects.
The CEQ NEPA regulations2 historically provided the framework for implementing the statute. Prior to the Trump and Biden Administrations, the CEQ last comprehensively revised its NEPA regulations in 1978. In 2020, CEQ amended the pre-2020 NEPA regulations, seeking to streamline the NEPA process to promote infrastructure development. As we previously reported, key changes in the 2020 regulations included a revised definition of "major federal action," a narrowed definition of "effects," removing the express requirement that agencies consider cumulative and indirect effects in favor of an inquiry into the closeness of causal connection, and an introduction of presumptive time limits for completing EISs and EAs and various litigation reforms.
The Biden Administration announced a reconsideration of the amendments introduced by the Trump Administration with a two-part plan. In May 2022, Phase 1 went into effect.3 These regulations restored the express requirement to assess both indirect and cumulative impacts, revised the requirement for a purpose-and-need statement in an EIS, and clarified that federal agencies can develop their own programs that go beyond the review required by the CEQ NEPA regulations. The Biden Administration's Phase 2 of the NEPA revisions was announced to provide "further improvements to the efficiency and effectiveness of environmental review processes and reflect the Administration's commitment to achieving environmental justice and confronting climate change,"4 but it has not yet been proposed.
In March 2023, the Republican majority in the House introduced H.R. 1335 – the Transparency, Accountability, Permitting and Production of American Resources Act.5 The bill included scores of provisions intended to "restart onshore and offshore oil, gas, and coal leasing" and "streamline permitting for energy infrastructure."6 The bill sought to codify into NEPA Section 102 many of the regulatory changes from the Trump Administration's 2020 "Update to the Regulations Implementing the Procedural Provisions of NEPA."
During negotiations over the nation's debt limit, Congress incorporated a number of these "Builder Act" changes in Section 321 of the Fiscal Responsibility Act (FRA). President Biden signed the FRA into law on June 3, 2023. Unlike other provisions of the broader FRA, Section 321 contained no provision delaying or otherwise forestalling the immediate effect of the statutory changes to NEPA.
CHANGES TO NEPA INCLUDED IN THE FRA
With that backdrop in mind, regulated entities and proponents of projects, permits, and other approvals requiring potential NEPA reviews should be aware of the following key changes. The significance of these amendments is subject to debate. The import and effectiveness of these changes may only be settled in time, after litigation. Nevertheless, Congress's decision to incorporate regulatory changes from the Trump-era NEPA regulation reforms directly into the NEPA statute—along with a new provision for judicial review by project proponents—could materially streamline environmental reviews.
- Codifying Definition of "Major Federal
Action": NEPA applies to "major Federal
actions." The CEQ regulations historically defined "major
Federal action," not the statute. The Builder Act codifies a
definition into the statue for the first time. Under the Builder
Act, the term "major Federal action" means "an
action that the agency carrying out such action determines is
subject to substantial Federal control and
responsibility."7 This differs from the pre-2020
CEQ NEPA regulations, which stated that "Major Federal action
includes actions with effects that may be major and which
are potentially subject to Federal control and
responsibility. Major reinforces but does not have a meaning
independent of significantly."8 The decision to
drop the "may be" and "potentially subject to"
phrases from the pre-2020 definition in favor of adding a direct
requirement for a "substantial" control and
responsibility qualifier could be consequential in practice.
Agencies still have discretion to determine whether an action is
"major." This change nevertheless establishes a textually
narrower standard for what qualifies as a "major Federal
action" requiring NEPA.
- "Reasonably Foreseeable" Effects:
The Builder Act modifies NEPA Section 102(2)(C) to now specify that
study should be of the "reasonably foreseeable environmental
effects of the proposed agency action."9 NEPA
previously required assessment of any "environmental impact of
the proposed action." An agency's obligation only to
assess "reasonably foreseeable" effects was instead
expressed in the CEQ NEPA regulations. The Builder Act formally
codifies the concept of "reasonabl[e] foresseeabl[ility]"
into the statute. This textually incorporates and implements the
"rule of reason" for application of NEPA recognized by
the Supreme Court in its seminal decision in Department of
Transportation v. Public Citizen.10 There, the
Court confirmed that where an agency has no ability to prevent an
environmental effect due to the agency's limited statutory
authority over the relevant action, an agency cannot be considered
a legally relevant cause of a putative environmental effect. An
agency need not consider such effects in its NEPA analyses.
- Narrowed Consideration of "Cumulative"
Effects: The modifications to Section
102(2)(C)—narrowing the scope of NEPA review to
"reasonably foreseeable" effects "of the proposed
action"—also appear to impact CEQ's existing
regulatory definition of "cumulative
effects."11 This would affect the scope of agency
obligation to assess potential climate change effects from
greenhouse gas emissions upstream or downstream of a specific
"proposed action" under agency review.
The requirement that federal agencies consider the "cumulative" effects of a proposed action—in combination with and by further consideration of the reasonably foreseeable effects of other agency actions, even by other persons and agencies—was a feature of the pre-2020 CEQ regulations, reinstated by the Biden Administration's Phase 1 NEPA reconsideration. Again, NEPA § 102(2)(C) previously required assessment of any "environmental impact of the proposed action." Current CEQ regulations then defined "[c]umulative effects" as "effects on the environment that result from the incremental effects of the action when added to the effects of other past, present, and reasonably foreseeable actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions. Cumulative effects can result from individually minor but collectively significant actions taking place over a period of time."12 The revised text of Section 102(2)(C) now, however, narrows and directs agencies to study only those "reasonably foreseeable" effects coming from "the proposed action." The current regulatory definition of "cumulative" effects—requiring consideration of "other actions" by other agencies and persons, Federal or non-Federal—is no longer textually consistent with NEPA's narrowed statutory text.
- Technically and Economically Feasible Reasonable
Alternatives: Part of the NEPA process is considering
alternatives to a proposed action that might mitigate environmental
effects. Section 321 amends NEPA to clarify that only those
"reasonable" alternatives that are "technically and
economically feasible, and meet the purpose and need of the
proposal" warrant consideration and discussion. Historically,
ambiguity around the appropriate scope of the alternatives
analysis, and what constituted an appropriate alternative for study
and consideration, was a source of debate and litigation. The
requirement that alternatives be "technically and economically
feasible" was not part of the pre-2020 CEQ regulations, but
was incorporated into the CEQ amendments of 2020. It is unclear
whether this narrowing of NEPA's alternatives analysis might
have been reconsidered during Phase 2 of CEQ's reconsideration
of the 2020 regulations. Regardless, the narrowed specification of
appropriate alternatives for consideration is now codified in
NEPA.
- Categorical Exclusions: The Builder Act
expressly incorporates into NEPA the concept of categorical
exclusions. Categorical exclusions are a class of actions that CEQ
has determined do not require an EIS or an EA because they do not
have a significant effect on the environment. In addition, the
statutory revisions provide for use and sharing of exclusions
across agencies. This feature from the 2020 CEQ regulations, now
incorporated into the statute, should streamline the process for
creating categorical exclusions and allow broader agency use.
- Sources of Information: The amendments to NEPA
state that agencies are generally "not required to undertake
new scientific or technical research" to conduct an
environmental assessment. An agency is only required to undertake
new scientific or technical research where such research is
"essential to reasonable choice among alternatives, and the
overall costs and time frame of obtaining it are not
unreasonable." Agencies have often taken the time to
commission such research in the past, putatively adding months and
years to the review of certain agency actions and projects.
- Lead Agency: The Builder Act revisions
expressly incorporate the concept of lead agencies for coordinating
reviews in NEPA. Where there are two or more federal agencies
involved in a proposed action, a lead agency is selected. This role
includes supervising the preparation of the EIS, coordinating
participation of cooperating agencies, and developing and
implementing a schedule for completion of required review.
- Page Limits and Deadlines. The statute now
imposes page limits and deadlines for EAs and EISs. Generally, an
EIS cannot exceed 150 pages and must be completed within two years.
For the less comprehensive EA, there is a 75-page limit, and it
must be completed within one year. The effect and significance of
such changes to NEPA are debatable. Nevertheless, given NEPA
Section 102(2)(C)'s narrowed focus on studying only the
"reasonably foreseeable environmental effects of the proposed
action," such limits may prove to be material over time. To
the extent an agency proposes to voluntarily undertake
more environmental study than required by the amended
statute—and thereby run afoul of the page or time
limits—the proponents of proposed agency actions or projects
might now challenge such "voluntary" belt-and-suspenders
reviews as unnecessary, arbitrary, and capricious, if not ultra
vires.
- Right to Petition Delays. Congress's decision to streamline NEPA reviews, both substantively and procedurally, is now backstopped by judicial review. The statutory revisions add a petition process for project sponsors to challenge agencies alleged to have improperly failed to meet their deadlines. If the applicable court finds that the agency has failed to meet its deadline, the court must set a new schedule for the agency, with the revised deadline no later than 90 days from the court's order unless the court finds "a longer time period is necessary to comply with applicable law."
KEY TAKEAWAYS
- Congress has made the first material revisions to NEPA in four
decades. While the effect of these amendments may not be
appreciated until after several years of revised agency practice
and litigation about the statutory changes, the amendments have the
potential to materially streamline federal permitting of oil, gas,
and renewable energy projects, leasing on federal lands, and
permitting of roads, bridges, and other infrastructure
projects.
- Changes to narrow the scope of NEPA Section 102(2)(C) appear to
abrogate existing NEPA regulations broadly defining
"cumulative effects" to include assessments of other
actions of an agency—and even the actions of other agencies
or persons, Federal or non-Federal—when conducting a NEPA
review.
- Proponents of projects and permits requiring NEPA analyses should assess whether and how these changes—now immediately effective—may impact the scope of existing NEPA reviews already under way. Litigation using the new petition process created by Congress may be an option to enforce the new limitations in the statute.
* Jonathan D. Brightbill served at the U.S. Department of Justice's Environmental and Natural Resources Division (ENRD) from 2017 to 2021, including as Acting Assistant Attorney General of ENRD, and litigated the defense of the 2020 CEQ Regulations.
Footnotes
1. 42 U.S.C. § 4332(2)(C).
2. 40 C.F.R. Parts 1500–1508.
3. 87 Fed. Reg. 23453 (April 20, 2022).
4. CEQ Restores Three Key Community Safeguards during Federal Environmental Reviews (April 19, 2022), available at https://www.whitehouse.gov/ceq/news-updates/2022/04/19/ceq-restores-three-key-community-safeguards-during-federal-environmental-reviews/
5. H.R. 1335 – 118th Congress (2023–2024), introduced on March 3, 2023.
6. Id.
7. Fiscal Responsibility Act § 321(b) (emphasis added).
8. 40 C.F.R. § 1508.18 (2010) (emphases added).
9. Fiscal Responsibility Act § 321(a)(3).
10. 541 U.S. 752 (2004).
11. 40 C.F.R. 1508.1(g)(3).
12. Id. (emphases added).
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