Phase 2 Revisions to U.S. National Environmental Policy Act Regulations Streamline Process, Expand Agency Review

On Wednesday, May 1, the White House Council on Environmental Quality (CEQ) published Phase 2 of its National Environmental Policy Act (NEPA) rulemaking, concluding the Biden-Harris administration’s multiyear effort to “simplify and modernize” the federal environmental review process. CEQ’s Phase 2 rulemaking is broader and more comprehensive than Phase 1 — which primarily restored three narrow elements of the NEPA regulations to their pre-2020 form — and incorporates amendments as directed by Congress under the Fiscal Responsibility Act (FRA) and BUILDER Act of 2023, including page and time limits for environmental assessments (EA) and environmental impact statements (EIS). 

Some of the new regulatory provisions lauded by the administration may improve the efficiency and timing of the federal permitting process. These measures include streamlining multiple reviews, minimizing discussion of unimportant issues, and limiting the time and length of the review process. Other provisions, however, may increase the regulatory burden for review. These include expanding requirements for assessing climate change, environmental justice, and global effects; requiring supplemental reviews for certain incomplete or ongoing actions; and increasing agency review for both EAs and Findings of No Significant Impact (FONSI). And by adding requirements to assess enforceable mitigation measures and restoring language in the regulatory purpose, CEQ reemphasizes its position that NEPA is more than a purely procedural statute; it is a tool by which an agency can “facilitate better environmental and social outcomes.”

Below we identify certain elements of the rule worth highlighting given their potential to affect the efficiency and substance of the NEPA review process.

NEPA Efficiency Improvements

• Incorporation of FRA/BUILDER Act Requirements
  • Time limits (subject to potential extensions)
    • one year to complete an EA
    • two years to complete an EIS
  • Page limits
    • 75-page limit for an E
    • 150-to-300 page limits for an EIS
  • Scope limits
    • “major federal action” defined in a manner that excludes certain actions lacking federal control from NEPA review
    • increased flexibility for agencies to use categorical exclusions adopted by other agencies
    • requiring initial determination by agency to NEPA applicability
• Emphasis on preparing concise, informative, and efficient environmental reviews
  • requirement for agencies to develop a schedule for completing environmental review and issuing a decision
  • discussion of effects to focus on important issues and only brief discussion of unimportant ones
  • expansion of authority to conduct programmatic environmental reviews
  • increased ability to use tiering to include EAs
• Streamlined approach for long-term greenhouse gas (GHG)–reducing actions
  • acknowledgement that long-term environmental benefits may offset short-term effects of proposed action
    • an agency can find short-term construction-related GHG emissions from a renewable energy project to be insignificant in light of long-term reductions in GHG emissions (and thus conclude that an EIS would not be required)

New Requirements That May Increase Complexity of NEPA Reviews

• Expanded NEPA review, which CEQ anticipates will ensure more fully informed decision-making with regard to reasonably foreseeable environmental effects
  • requires analysis of effects related to environmental justice
  • requires analysis of climate change effects from proposed action and on the proposed action
  • clarifies “major Federal action” in a manner that could expand (or narrow) NEPA scope; appropriate approach for agencies is to identify corresponding scope of analysis rather than exclude activity from NEPA review altogether but provides examples of major federal actions and lists exclusions (e.g., nonfederal actions with no or minimal federal involvement where the federal agency cannot control the outcome of the project)
  • restores requirement to use all practicable means to restore and enhance the environment, consistent with the policies of NEPA
• Increased scope of analysis
  • suggests the scoping process could be part of an EA, which would add an extra additional public comment process and increase the time needed to complete the NEPA review
  • requires agencies to quantify GHG emissions, where feasible
  • references climate modeling, although no specific citation to, for example, the social cost of carbon/GHG
  • requires consideration of effects to habitat of endangered or threatened species regardless of whether area has been designated as “critical habitat” pursuant to the Endangered Species Act
  • revives former context and intensity factors related to “effects” of actions for determining “significance”
  • adds requirements regarding unavailable information, applicable to information from new scientific of technical research; agencies must disclose for all levels of NEPA review, not just EISs
• Expanded scope of “affected environment”
  • revises definition of “human environment” to remove focus on United States, implying global focus of review
  • requires agencies to consider context of an action and intensity of the effects in determining whether a proposed action’s effects are “significant”; this includes directing agencies to consider potential global, national, regional, or local contexts
• Potentially broadened scope of alternatives
  • implies that agencies have discretion to consider reasonable alternatives beyond their jurisdiction — regardless of the fact that neither NEPA nor CEQ regulations require such considerations
  • restores language that the “alternatives section is the heart of the environmental impact statement”
• New requirements for mitigated FONSI
  • authorizes agencies to prepare mitigated FONSI if there are enforceable mitigation requirements or commitments stated in the FONSI
  • requires a monitoring and compliance plan when the EA relies on mitigation as incorporated component of proposed action
• Increased public engagement obligations
  • requires agency to invite comments on published draft EA and requires agency to consider such comments in final EA
  • requires public notification of NEPA-related hearings, public meetings, and availability of environmental documents
  • requires draft EIS be available at least 15 days in advance when subject to a public meeting or hearing
  • emphasizes importance of agencies conducting early engagement and invite early participation of affected parties and agencies
  • requires agencies publish notification of proposed actions being analyzed through an EIS, clarified to allow the requirement to be met through a notice of intent consistent with § 1502.4

The revised NEPA regulations are effective on July 1, 2024, and apply to all project reviews commencing after that date. Agencies maintain discretion to apply the revised NEPA regulations to pending project reviews. Finally, individual agencies must revise their regulations to incorporate any necessary changes by July 1, 2025.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.