Tag: National Environmental Policy Act

Biden Administration Revitalizes and Advances the Federal Government’s Commitment to Environmental Justice

On April 21, 2023, the eve of Earth Day, President Biden continued his Administration’s spotlight on environmental justice issues by signing Executive Order 14096, entitled “Revitalizing Our Nation’s Commitment to Environmental Justice for All.”

This Executive Order prioritizes and expands environmental justice concepts first introduced in President Clinton’s 1994 Executive Order 12898. The 1994 Order directed federal agencies to develop environmental justice strategies to address the disproportionately high and adverse human health or environmental effects of federal programs on minority and low-income populations.

One of President Biden’s early actions [covered here], Executive Order 14008, introduced the whole-of-government approach for all executive branch agencies to address climate change, environmental justice, and civil rights. It created the White House Environmental Justice Interagency Council, comprising of 15 federal agencies, including the United States Environmental Protection Agency (“EPA”) and the Department of Justice. Biden’s new Executive Order expands the whole-of-government approach by: (1) adding more agencies to the Environmental Justice Interagency Council and (2) establishing a new White House Office of Environmental Justice within the White House Council on Environmental Quality (“CEQ”). The new Office of Environmental Justice will be led by a Federal Chief Environmental Justice Officer and will coordinate the implementation of environmental justice policies across the federal government.

This new Executive Order emphasizes action over aspiration by directing federal agencies to “address and prevent disproportionate and adverse environmental health and impacts on communities.” It charges federal agencies with assessing their environmental justice efforts and developing, implementing, and periodically updating an environmental justice strategic plan. These new Environmental Justice Strategic Plans and Assessments are to be submitted to the CEQ and made public regularly, including through an Environmental Justice Scorecard, a new government-wide assessment of each federal agency’s efforts to advance environmental justice.

Specifically, defining “environmental justice” is one strategy to make concrete what federal agency efforts will address. Under the Executive Order, “environmental justice” means “the just treatment and meaningful involvement of all people, regardless of income, race, color, national origin, Tribal affiliation, or disability, in agency decision-making and other Federal activities that affect human health and the environment so that people: (i) are fully protected from disproportionate and adverse human health and environmental effects (including risks) and hazards, including those related to climate change, the cumulative impacts of environmental and other burdens, and the legacy of racism or other structural or systemic barriers; and (ii) have equitable access to a healthy, sustainable, and resilient environment in which to live, play, work, learn, grow, worship, and engage in cultural and subsistence practices.” This definition adds “Tribal affiliation” and “disability” to the protected categories and expands the scope of effects, risks, and hazards to be protected against. The Fact Sheet accompanying the Executive Order explains that the definition’s use of the phrase “disproportionate and adverse” is a simpler, modernized equivalent of the phrase “disproportionately high and adverse” originally used in Executive Order 12898. Whether this change in language from “disproportionately high” to “disproportionate” will affect agency decision-making is something to watch for in the future.

As part of the government-wide mission to achieve environmental justice, the Executive Order explicitly directs each agency to address and prevent the cumulative impacts of pollution and other burdens like climate change, including carrying out environmental reviews under the National Environmental Policy Act (“NEPA”), by:

  • Analyzing direct, indirect, and cumulative effects of federal actions on communities with environmental justice concerns;
  • Considering the best available science and information on any disparate health effects (including risks) arising from exposure to pollution and other environmental hazards, such as information related to the race, national origin, socioeconomic status, age, disability, and sex of the individuals exposed; and,
  • Providing opportunities for early and meaningful involvement in the environmental review process by communities with environmental justice concerns potentially affected by a proposed action, including when establishing or revising agency procedures under NEPA.
    The Executive Order also emphasizes transparency by directing agencies to ensure that the public, including members of communities with environmental justice concerns, has adequate access to information on federal activities. These activities include planning, regulatory actions, implementation, permitting, compliance, and enforcement related to human health or the environment when required under the Freedom of Information Act, the Clean Air Act, the Clean Water Act, the Emergency Planning and Community Right-to-Know Act, and any other environmental statutes with public information provisions.

CEQ is expected to issue interim guidance by the end of the year and more long-term guidance by the end of 2024 as to implementing the Executive Order’s directives. It is too early to know whether any directives will go through rulemaking under the Administrative Procedure Act. But with a presidential election looming and ongoing budget negotiations between the White House and Congress that propose modest cuts to NEPA as part of permitting reform, CEQ’s efforts may be limited to guidance for now.

© 2023 Ward and Smith, P.A.. All Rights Reserved.

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Permitting Reform Package Passes as Part of Debt Ceiling Deal

The past year’s long wrangling between Republicans, Democrats, and the White House on permitting reform finally made progress this month when Congress enacted significant reforms to the National Environmental Policy Act (“NEPA”) as part of the legislation to increase the debt ceiling. Prior to this legislation, the core statutory framework of NEPA had remained relatively unchanged for 50 years. Building from Rep. Garrett Graves’ (R-LA., 6th Dist.) “Building United States Infrastructure through Limited Delays and Efficient Reviews” (“BUILDER”) Act of 2023, the permitting reform title of the Fiscal Responsibility Act of 2023 (“FRA” or “legislation”) tackles four key areas:

(1) reforming NEPA to make the federal environmental review process simpler and quicker;

(2) directing a study of the existing capacity of our transmission grid to reliably transfer electric energy between distinct regions and subsequent recommendations to improve interregional transfer capabilities within the grid;

(3) streamlining permitting for energy storage projects; and

(4) congressional ratification of the Mountain Valley Pipeline.

Several of the reforms to NEPA codify changes to the Council on Environmental Quality (“CEQ”) NEPA implementing regulations made during the Trump Administration.

While these provisions are intended to yield significant benefits for projects requiring federal approvals or funding, the actual impact will depend substantially on how the reforms are implemented, and there remains considerable interest in other aspects of permitting and siting reform making further legislative action likely.

Key NEPA Reforms

The FRA includes numerous changes to NEPA. We have highlighted several key changes here.

Narrowing the Scope of “Major Federal Action”

The term “major Federal action” is the trigger for requiring environmental review under NEPA – federal actions that qualify as a “major Federal action” must be considered under NEPA. The new legislation narrows the definition of what constitutes a “major Federal action” by limiting the term to actions that the lead agency deems are “subject to substantial Federal control and responsibility.” The legislation does not define this phrase, leaving substantial room for agency interpretation. Building on this general concept, the amendments codify the regulatory definition of a “major Federal action,” with modifications. As now defined, certain federal actions will be excluded from the scope of a major federal action, including:

  • non-federal actions (i.e., private or state actions) “with no or minimal Federal funding”;
  • non-federal actions (i.e., private or state actions) “with no or minimal Federal involvement where a Federal agency cannot control the outcome of the project”;
  • funding assistance consisting exclusively of general revenue sharing funds, where the federal agency does not have “compliance or enforcement responsibility” over the use of those funds;
  • “loans, loan guarantees, or other forms of financial assistance where a Federal agency does not exercise sufficient control and responsibility over the subsequent use of such financial assistance or the effect of the action”;
  • Small Business Act business loan guarantees under section 7(a) or (b) of the Small Business Act or title V of the Small Business Investment Act of 1958;
  • federal agency activities or decisions with effects located entirely outside of the jurisdiction of the United States; and
  • non-discretionary activities or decisions that are made in accordance with the agency’s statutory authority.

The meaning and application of these exclusions to specific actions will be subject to interpretation and likely litigation going forward. For example, what constitutes minimal funding—a threshold dollar amount or a percentage of the federal funding contribution in relation to overall project cost—is not clearly identified under the revisions. Resolution of this question will be critical to determining what actions are subject to NEPA review going forward. Given the recent dramatic increase in federal funding opportunities from the Inflation Reduction Act and Infrastructure Investment and Jobs Act, determining what actions are subject to NEPA review based on the level of federal funds involved is likely to become a more frequent and important question.

Scope of Review

When an agency action constitutes a “major Federal action,” the FRA also focuses and limits the scope of the NEPA review in two key ways.

First, the legislation modifies the statute’s existing, broad language requiring that “major Federal actions” significantly affecting the quality of the human environment include a detailed statement on the “environmental impact of the proposed action.” The revised language statutorily limits environmental review of environmental effects to those that are “reasonably foreseeable.” This change follows from a provision of the Trump Administration’s 2020 NEPA rule—later removed by the Biden Administration—which sought to eliminate long-used concepts of direct, indirect, and cumulative effects and instead focus on effects that are reasonably foreseeable and that have “a reasonably close causal relationship to” the proposed action or alternatives. Although the new statutory language does not go as far as the Trump Administration’s rule, which required a “close causal relationship,” it does follow the trend in case law to only require evaluation of reasonably foreseeable impacts. What project-specific impacts are “reasonably foreseeable” is still likely to be the subject of litigation.

Second, the FRA also makes changes regarding the alternatives analysis, often considered the heart of NEPA review. The legislation clarifies that agencies are to consider a “reasonable range” of alternatives to the proposed agency action, and that such alternatives must both be “technically and economically feasible” and “meet the purpose and need of the proposal.” This seems to codify long-standing guidance from CEQ contained in its 40 Most Asked Questions Concerning CEQ’s NEPA Regulations. In addition, it directs that, in assessing the no action alternative, agencies must include an analysis of any negative environmental impacts of not implementing the proposed action. Whether an agency has met its obligations under NEPA to consider “alternatives to the proposed action” is a frequent source of controversy and litigation, particularly for the authorization of large infrastructure and energy projects.

These changes should both help focus environmental reviews and reduce costs and delays associated with challenges to agencies’ alternative analyses and emphasize the importance of properly defining the “purpose and need” of a proposed action.

Data Standards and Requirements

The FRA includes several provisions related to data. First, it clarifies that in making a determination on the appropriate level of review (Environmental Impact Statement (“EIS”), Environmental Assessment (“EA”), or categorical exclusion), the lead agency can make use of any reliable data source—and that “new scientific or technical research [is not required] unless the new scientific or technical research is essential to a reasoned choice among alternatives, and the overall costs and time frame of obtaining it are not unreasonable.” It is unclear whether this will be applied beyond the determination of what level of review is required. This change has the potential to limit delays due to agencies undertaking or requesting additional studies from project proponents. What is deemed “essential” and what costs and timeframe are “not unreasonable,” however, remain undefined.

Second, the legislation requires that the action agency “ensure the professional integrity, including scientific integrity, of the discussion and analysis in an environmental document.” The practical implications and scope of this scientific integrity mandate are unclear—and is likely to be a subject of agency guidance and, potentially, future litigation.

Efficiency Measures

The FRA further codifies several less controversial changes from the Trump Administration 2020 NEPA rule, which the recent Biden rulemaking had left in place. These changes include expressly recognizing and establishing regulations for EAs. Additionally, these changes include setting page limits for EISs—150 pages generally and 300 pages for agency actions “of extraordinary complexity”—and EAs—75 pages—excluding citations and appendices. Additionally, the changes codify the regulatory presumptive deadlines for completion of NEPA reviews—two years for EISs and one year for EAs. The legislation goes beyond existing regulations by creating the right to judicial review when an agency fails to meet a deadline. Under the new legislation, if an agency misses the deadline, the delayed project’s sponsor may seek a court order requiring the agency to act as soon as practicable, which is not to exceed 90 days from the date on which the order was issued unless the court determines that additional time is needed to comply with applicable law.

Further, the legislation clarifies the role of the NEPA lead agency, specifying that the lead agency must develop a schedule, in cooperation with each cooperating agency, the applicant, and other appropriate entities, for the completion of the environmental review and any permit or authorization required to carry out the proposed agency action. This mirrors provisions previously adopted as part of Title 41 of the Fixing America’s Surface Transportation Act (“FAST-41”) in 2015, which has demonstrated success in requiring coordination and improving the permitting and authorization processes for certain large infrastructure projects. Although the FRA expressly contemplates extensions to the schedule, just having a schedule in place can be a helpful tool in the timely completion of NEPA reviews.

In addition, the legislation authorizes project applicants to hire independent consultants to prepare EISs and EAs, subject to the independent review of the lead agency. This provision can provide project applicants with a path to minimize delays caused by a lack of staff and resources at federal agencies.

Programmatic Reviews and Categorical Exclusions

The FRA also codifies the current agency practice of preparing and relying on programmatic environmental documents to streamline the review process for subsequent actions that implement the evaluated program. The legislation provides that programmatic review can be relied on for five years without additional review, and after five years if the agency reevaluates the analysis. Although this change promotes further use of programmatic reviews, the five-year period presumption and reevaluation process could present challenges in certain cases given the extensive resources and time required to undertake a programmatic review and tiered reviews.

The FRA also seeks to facilitate the use of categorical exclusions in the NEPA process by authorizing agencies to adopt a categorical exclusion established by another agency. The legislation lays out a process for consulting with the agency that established the exclusion to determine whether adoption is appropriate, notifying the public of the plan to use the categorical exclusion, and documenting adoption of the categorical exclusion. Though dependent upon agencies taking advantage of this new flexibility, this could have the effect of enabling some types of projects to forgo detailed environmental review.

Other Provisions

In addition to the NEPA reforms, the FRA includes several other important permitting provisions. The legislation seeks to streamline and accelerate permitting for “energy storage” projects by adding energy storage to the list of “covered projects” under FAST-41.

Additionally, the legislation provides a clear path for the completion of the much-delayed Mountain Valley Pipeline project. The legislation finds the timely completion of the project is in the national interest, and congressionally approves and ratifies the various federal authorizations required for the project. Further, the legislation bars judicial review of federal agency actions with respect to the project.

Finally, the legislation requires the North American Electric Reliability Corporation (“NERC,” the entity responsible for setting reliability standards for the nation’s electric grid) to undertake a study within a year and a half on whether more transfer capacity is needed between existing transmission planning regions—including recommendations on measures to increase the amount of energy that can be reliably moved between the studied regions. The Federal Energy Regulatory Commission will thereafter have a year to seek and consider public comments on the study and file a report with Congress detailing any recommendations for statutory changes. This study provision was in lieu of a larger set of transmission-related actions that are of key interest to Democratic lawmakers that will be the subject of future legislative efforts.

Implications

Although the provisions in FRA are not a silver bullet to solve every NEPA woe experienced by project applicants, it is a significant step in the right direction. The codification of key concepts within the NEPA statute itself (rather than regulation, guidance, or case law) will have a durable, long-lasting impact on implementation of environmental reviews because it limits the regulation issuance/withdrawal cycle that we have witnessed with the recent administration changes.

Looking forward, we can expect a rulemaking by CEQ to align the existing regulations with the revised statutory language, as well as additional rulemakings by other agencies to harmonize their NEPA implementing regulations with the revised law. For the last year, we have awaited the Phase 2 NEPA rulemaking from CEQ, as explained in our previous alert. With this new legislation, it seems likely that CEQ will pause and further revise its proposed regulations to capture these new reforms before issuing additional regulations. We can also expect future guidance—and eventual litigation—on several ambiguous provisions in the new legislation as agencies begin to implement them.

While the intention behind the legislation is to speed and ease what has become a very lengthy, expensive, and perilous environmental review process—far exceeding the original intent of NEPA—whether these goals are achieved will depend on whether federal agencies embrace them or look for ways to interpret the reforms to continue “business as usual.”

For example, to meet the new timelines, it is possible that federal agencies will require applicants to provide all documentation needed for the environmental review before starting the clock. This approach would have the effect of undermining the statutory timeframes as well as the efficacy of the public engagement process. Similarly, while the legislation seeks to curtail the extent of the analysis through page limits, it is foreseeable that relatively short EISs and EAs could be weighed down with thousands of pages of analysis contained in the appendices.

It also remains to be seen how courts will interpret these reforms. The “hard look” standard developed by courts to evaluate the adequacy of environmental review documents may have the effect of ballooning the analyses again despite Congress’ intent to streamline the process.

Finally, while these reforms are substantial, Congress continues to discuss and debate additional reforms to address unresolved federal siting and permitting concerns—particularly with respect to energy infrastructure projects. Notably absent from the legislation was transmission permitting reform language of interest to Democratic lawmakers as well as provisions to support oil and gas leasing on federal lands and to facilitate the siting and permitting of mining projects to boost domestic supplies of critical minerals essential for existing and developing clean energy technologies.

© 2023 Van Ness Feldman LLP

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New Climate Guidance Issued to Federal Agencies Conducting Environmental Impact Analyses

Overview

On January 9, 2023, the Council for Environmental Quality (“CEQ”) published interim National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions and Climate Change (hereafter, “guidance” or “GHG Guidance”).1 CEQ intends for agencies to apply the guidance now even as CEQ seeks public comment on it.2 The guidance aims to establish best practices to ensure that Federal agencies conduct detailed analyses of greenhouse gas emissions and climate change when evaluating proposed major Federal actions in accordance with the National Environmental Policy Act (“NEPA”) and CEQ’s Regulations Implementing the Procedural Provisions of NEPA.3 The guidance states that these analyses should (1) quantify a proposed action’s GHG emissions; (2) place GHG emissions in appropriate context and disclose relevant GHG emissions and relevant climate impacts; and (3) identify alternatives and mitigation measures to avoid or reduce GHG emissions.

The long-awaited GHG Guidance does not set a numerical threshold for significant impact under NEPA, but it emphasizes achievement of national and other climate objectives. The guidance also stresses monetization of climate-related impacts (social cost of carbon) and consideration of alternatives to fossil energy production and transport, mitigation of climate-related impacts, and resilience and adaptation to climate-related vulnerability. Also prominent in the guidance is consideration of disparate impacts to environmental justice communities.

GHG Guidance

Quantifying a Proposed Action’s GHG Emissions

The guidance explains that agencies should quantify the reasonably foreseeable direct and indirect GHG emissions of their proposed actions and reasonable alternatives (including the no-action alternative) to ensure that each agency adequately considers the incremental contribution of its action to climate change. CEQ recommends that agencies quantify gross emissions increases or reductions (including direct and indirect emissions) individually by each GHG, as well as aggregated in terms of total CO2 by factoring in each pollutant’s global warming potential (“GWP”). CEQ further recommends that agencies quantify the proposed action’s total net GHG emissions or reductions (both by pollutant and by total CO2 emissions) relative to baseline conditions. Finally, CEQ recommends that “[w]here feasible . . . [agencies] should present annual GHG emissions increases or reductions, as well as net GHG emissions over the projected lifetime of the action, consistent with existing best practices.”4 CEQ emphasizes that agencies should be guided by the rule of reason when quantifying emissions. The guidance does not set a “significance” threshold that would trigger the requirement to prepare an EIS.

Disclosing and Providing Context for a Proposed Action’s GHG Emissions and Climate Effects

In the eyes of CEQ, quantifying emissions and summarizing this information in a NEPA document is not sufficient. Agencies should also disclose and provide context for GHG emissions and climate effects to help decision makers and the public understand a proposed action’s potential GHG emissions and climate change effects. CEQ provides a list of best practices for disclosing and contextualizing quantified GHG emissions:5

  • Use the Social Cost of Greenhouse Gases (“SC-GHG”) to estimate the dollar value of impacts associated with each type of GHG emission;
  • Explain how the proposed action and alternatives would help meet or detract from achieving climate action goals and commitments, and discuss whether and to what extent the proposal’s reasonably foreseeable GHG emissions are consistent with GHG reduction goals;
  • Summarize and cite to available scientific literature to help explain the real-world effects associated with an increase in GHG emissions that contribute to climate change; and
  • Provide accessible comparisons or equivalents to help the public and decision makers understand GHG emissions in more familiar terms (i.e., household emissions per year, annual average emissions from a certain number of cars on the road, etc.).

CEQ explicitly states that monetizing the “social cost” of GHG emissions as recommended does not require the agency also to monetize the social benefits of the proposed action, nor does it have to compare estimated costs and benefits.6 The guidance also emphasizes the use of “substitution analysis” to discern the GHG-related changes associated with shifting energy sources if the proposed or alternative actions occurred.7

Identifying Reasonable Alternatives and Potential Mitigation Measures

The GHG Guidance directs agencies to use the NEPA process to identify and assess the reasonable alternatives to proposed actions that will avoid or minimize GHG emissions or climate change effects. CEQ recognizes that reasonable alternatives must be consistent with the purpose and need of the proposed action, and that agencies are not required to select the alternative with the lowest net GHG emissions or climate costs or the greatest net climate benefits.8 However, “in line with the urgency of the climate crisis,” agencies should identify the alternative with the lowest net GHG emissions or the greatest net climate benefits among the alternatives they assess and should “use the NEPA process to make informed decisions grounded in science that are transparent with respect to how Federal actions will help meet climate change goals and commitments, or alternately, detract from them.”9 When quantifying reasonably foreseeable emissions associated with the proposed action or alternatives, CEQ directs agencies to include reasonably foreseeable direct and indirect GHG emissions of their proposed actions. CEQ provides that processing, refining, transporting, and end-use of the fossil fuel being extracted, including combustion of the resource to produce energy, would constitute indirect emissions of fossil fuel extraction.10

CEQ encourages agencies to mitigate GHG emissions “to the greatest extent possible.”11 It instructs agencies to consider potential mitigation measures by determining whether impacts from a proposed action or alternatives can be avoided, considering whether adverse impacts can be minimized, and rectifying or requiring compensation for residual impacts where unavoidable. CEQ considers available mitigation that avoids, minimizes, or compensates for GHG emissions and climate change effects to include measures like renewable energy generation and energy storage, carbon capture and sequestration, and capturing GHG emissions such as methane.12

Examples

The guidance provides a number of examples as to how it would work in specific scenarios. For example, the guidance notes that “absent exceptional circumstances,” construction of renewable energy projects “should not warrant a detailed analysis of lifetime GHG emissions.”13 CEQ uses natural gas pipelines as an example of consideration of indirect effects, stating that they create the “economic conditions for additional natural gas production and consumption, including both domestically and internationally, which produce indirect (both upstream and downstream) GHG emissions that contribute to climate change.”14 When discussing the need to analyze the effects of climate change on a proposed action (and not just the impacts of the proposed action on climate change), CEQ gives as an example a project that may require water from a source with diminishing quantities available and advises the agency consider such issues to “inform decisions on siting, whether to proceed with and how to design potential actions and reasonable alternatives, and to eliminate or mitigate effects exacerbated by climate change.”15

Conclusion

Robust comments are likely to be filed to further inform CEQ’s effort on the GHG Guidance. Nevertheless, CEQ has directed agencies to apply the guidance to all new proposed actions and to consider applying it to proposed actions that are currently under NEPA review. Comments on the interim guidance are due March 10, 2023.

FOOTNOTES

1. CEQ, National Environmental Policy Act Guidance on Consideration of Greenhouse Gas, 88 Fed. Reg. 1,196 (Jan. 9, 2023), https://www.govinfo.gov/content/pkg/FR-2023-01-09/pdf/2023-00158.pdf (“GHG Guidance”).

2. Id.

3. Note that CEQ has announced its intention to further revise its existing NEPA regulations in 2023, after having issued an earlier round of regulatory amendments in 2022. See CEQ Fall 2022 Regulatory Agenda, National Environmental Policy Act Implementing Regulations Revisions Phase 2, RIN No. 0331-AA07, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202210&RIN=0331-AA07; CEQ, National Environmental Policy Act Implementing Regulations Revisions, 87 Fed. Reg. 23,453 (Apr. 20, 2022), https://www.govinfo.gov/content/pkg/FR-2022-04-20/pdf/2022-08288.pdf.

4. GHG Guidance at 1,201.

5. Id. at 1,202-03.

6. Id. at 1,203, 1,211.

7. Id. at 1,205.

8. Id. at 1,204.

9. Id.

10. Id.

11. Id. at 1,206.

12. Id.

13. Id. at 1,202.

14. Id. at 1,204 n.86.

15. Id. at 1,208.

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Biden Revisions to the NEPA Regulations Now in Effect

The Biden Administration is amending the federal regulations for implementing the National Environmental Policy Act (NEPA) to reverse certain changes made by the Trump Administration. The first set of amendments took effect last Friday on May 20, 2022.

As background, the Council for Environmental Quality (CEQ) first issued the NEPA implementing regulations in 1978. They remained unchanged for more than 40 years until the Trump Administration published its 2020 rule updating the regulations to facilitate “more efficient, effective, timely NEPA reviews.” Developers, construction companies, and other businesses generally supported these changes with the hope they would streamline a lengthy process that often significantly delays projects. However, environmentalists opposed the changes, fearing they would weaken important protections, including those aimed at reducing climate change impacts and protecting natural resources. Upon taking office, the Biden Administration immediately began an effort to reverse parts of the 2020 rule.

The Biden amendments will be issued in two phases. The “Phase One” rule was published on April 20, 2022, and is in effect as of May 20, 2022. The “Phase Two” rule, which is expected to include more comprehensive revisions, will be issued “over the coming months”.

 The Phase One rule reinstates the following three key provisions of the NEPA regulations:

1.  Statement of Purpose and Need, and Scope of Reasonable Alternatives (40 CFR 1502.13)

Under NEPA, an agency’s statement of purpose and need informs the range of alternative actions analyzed in an environmental assessment (EA) or environmental impact statement (EIS). The NEPA regulations historically required agencies to consider “reasonable alternatives not within the jurisdiction of the lead agency.” The 2020 rule updates, however, instructed agencies to limit the statement of purpose and need, and therefore the range of alternatives, to only those that are consistent with the applicant’s goals and the agency’s statutory authority.

The Phase One rule removes these limitations to re-establish federal agencies’ discretion to consider a variety of factors, including a range of reasonable alternatives that are not entirely consistent with the goals of the project applicant. Accordingly, federal agencies may again coordinate with communities and project proponents to evaluate alternatives that could minimize environmental and public health costs, but extend beyond the scope of the agency’s authority or do not serve the applicant’s goals.

2.  Agency Implementing Regulations (40 CFR 1507.3)

The Phase One rule also removes language that could limit agencies’ standards and procedures for implementing NEPA rules that extend beyond CEQ regulatory requirements. This update reestablishes CEQ regulations as the “floor” for NEPA environmental review, and restores the agency’s discretion and flexibility to tailor NEPA procedures to align with specific agency and public needs. In contrast, the 2020 rule would have made the CEQ regulations a “ceiling” for NEPA requirements, effectively restricting agencies’ discretion to develop and implement procedures beyond requisite CEQ regulations.

3.  Scope of Effects (40 CFR 1508.1(g))

Finally, the Phase One rule restores the definition of “effects” that requires agencies to consider the historic categories of “reasonably foreseeable” direct, indirect, and cumulative effects. The 2020 rule, in contrast, limited the scope of this analysis to effects with a “reasonably close causal relationship,” and included language indicating that agencies were only required to consider direct effects, had discretion to consider indirect effects, and should not consider cumulative effects in NEPA review. The Phase One rule change thus ensures that agencies’ NEPA documents will evaluate all relevant environmental impacts resulting from the agency decision.

Here, the Phase One rule reversal is particularly impactful in terms of an agency’s consideration of climate change, where cumulative effects tend to be substantially greater than the effects of the individual project. The Phase One update confirms CEQ’s view that climate change impacts are adequately considered in evaluating direct, indirect and cumulative effects.

*****

Except for reinstating these three key provisions, the Phase One rule does not affect other changes made by the 2020 rule.  The Biden Administration plans to introduce more comprehensive changes as part of the forthcoming Phase Two rule. These changes, which are anticipated to be more controversial and draw additional public attention, are expected to address environmental justice, public participation, and streamlining provisions, including the use of plain language, deadlines, page limits, and inter-agency coordination.

Article By Alexander L. Merritt and Kathryn C. Kafka of Sheppard, Mullin, Richter & Hampton LLP

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