Council on Environmental Quality Partially Restores National Environmental Policy Act Provisions

The U.S. Council on Environmental Quality (CEQ) published a Final Rule regarding implementing regulations of the National Environmental Policy Act (NEPA) on Wednesday, April 20. As anticipated, the CEQ’s final version is nearly identical to the earlier Proposed Rule and revises three separate NEPA provisions that CEQ identified as posing significant near-term interpretation or implementation challenges for federal agencies. These three provisions include purpose and need, 40 C.F.R. § 1502.13; agency NEPA procedures, 40 C.F.R. § 1507.3; and the definition of “effects” or “impacts.” Ultimately, CEQ’s Final Rule abandons revisions the agency made to NEPA regulations in 2020 and returns certain aspects of NEPA review to the former approach. CEQ noted that this revision is the first of two phases, so additional NEPA regulatory revisions are expected later this year.

The Final Rule addresses three regulatory changes accomplished by the 2020 NEPA revisions. A short summary of these provisions follows.

1. Purpose and Need Statements. Pursuant to the Final Rule, an environmental impact statement (EIS) must again include a broad purpose and need statement when a federal action involves approval of a proposal from a nonfederal applicant. The rule removes the requirement for agencies to base the EIS’s purpose and need of a project on the goals of a nonfederal applicant. In its place, the Final Rule provides federal agencies the discretion to analyze a variety of factors, including the goals of a nonfederal applicant. The Final Rule also conforms the definition of “reasonable alternatives” to remove reference to a nonfederal applicant’s goals. This revision appears to eliminate an approach to streamlining environmental review of proposals from nonfederal applicants. However, in response to comments opposing this revision, CEQ stated that it received no evidence that the revision would affect the environmental review process, including timelines, and that the ambiguities of the current regulation further supported such revisions.
2. Agency NEPA Procedures. The Final Rule also removes “ceiling provisions” from NEPA regulations promulgated in 2020. Those provisions limited federal agencies from imposing more rigorous NEPA review requirements than contained in CEQ regulations. CEQ asserted, however, that those provisions hampered federal agencies’ ability to take a wide range of approaches to their agency-specific NEPA procedures. CEQ withdrew those provisions, explaining that the change would “promote better decision, improve environmental and community outcomes, and spur innovation that advances NEPA’s goals.” CEQ clarified that “while agency NEPA procedures need to be consistent with the CEQ regulations, agencies have discretion and flexibility to develop procedures beyond the CEQ regulatory requirements, enabling agencies to address their specific programs, statutory mandates, and the contexts in which they operate.”
3. “Effects” or “Impacts.” CEQ’s Final Rule also revises the definition of “effects” or “impacts” in 40 C.F.R. § 1508.1(g) to restore the original meaning contained in the 1978 regulations by defining “effects” and impacts” the same and

• revising the introductory paragraph to define “effects” or “impacts” as “changes to the human environment from the proposed action or alternatives” that include “direct effects,” “indirect effects,” and “cumulative effects” “that are reasonably foreseeable” (i.e., removing the phrase “and have a reasonably close causal relationship”)
• describing “direct effects” as “effects that occur at the same time and place” and “indirect effects” as “effects that are later in time or farther removed in distance” and conforming the definition of “cumulative impact”
• removing language that narrows the definition of “effects” such as the requirement for a “but for” causal relationship and “remote in time”

Although CEQ chose to maintain the clause “that are reasonably foreseeable” in the definition of effects/impacts that it originally proposed to delete, CEQ maintained the remaining portions of the Proposed Rule in an effort to be “consistent with this Administration’s policies to be guided by science and to address environmental protection, climate change, and environmental justice.”

Stakeholders undergoing current NEPA review, or embarking on such journey during the coming months, should be aware that the scope of their environmental review and attention to reasonable alternatives could be broader. Although much of the stayed and/or pending litigation regarding these aspects of the 2020 regulations are now likely moot, additional challenges to the Final Rule may arise. Additionally, CEQ has not clarified whether the revised regulations will require agencies to adjust current NEPA reviews. In response to comments, however, CEQ noted that “agencies have sufficient discretion to apply their existing NEPA procedures in a manner not inconsistent with CEQ’s regulations.” In its announcement of the Final Rule, CEQ also noted that the “rule will not delay any projects or reviews underway and will not add time to the NEPA process.” Neither of these statements precludes federal agencies from adjusting ongoing NEPA reviews once the Final Rule becomes effective 30 days after publication, on May 20, 2022.

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.