The energy transition and increased public focus on environmental issues have strained the existing regulatory regime including the National Environmental Policy Act (NEPA). NEPA directs agencies to conduct environmental assessments before taking “major federal actions.”

A wide variety of federal government decisions are considered “major federal actions” covered by NEPA. These not only include many infrastructure projects but also approvals issued by the federal agencies overseeing biotechnology, such as the US Department of Agriculture (USDA) and the US Food and Drug Administration (FDA).

On July 31, the Council on Environmental Quality (CEQ) issued a proposed NEPA “Phase 2” rule known as the “Bipartisan Permitting Reform Implementation Rule,” to revise regulations for implementing NEPA. CEQ proposed the regulations “to provide for an effective environmental review process that promotes better decision making; ensure full and fair public involvement; provide for an efficient process and regulatory certainty; and provide for sound decision making grounded in science, including consideration of relevant environmental, climate change, and environmental justice effects.” These changes echo Biden Administration proposals on equity and public participation (here and here) and environmental justice (EJ), which we have discussed elsewhere (see here, here, and most recently here). 

CEQ will be accepting public comment on the rule proposal through September 29, 2023, and has announced plans to have virtual meetings on the rule proposal later this summer. Registration information for these meetings is available here. 

NEPA in Context

NEPA is a procedural environmental statute that forces federal agencies to evaluate the potential environmental impacts of their decisions before acting, and also provides the public with information about the environmental impacts of potential agency actions. Under NEPA, federal agencies must complete environmental impact assessments for major federal actions significantly impacting the environment. NEPA also requires considerations of EJ, particularly how actions will impact minority and low-income communities. (A recent podcast by colleagues, former US Senator Byron Dorgan, former US Congressman Phil English, and Amy Antoniolli is available here.) 

As we have discussed, during the Trump Administration, various efforts were undertaken to “modernize” NEPA, aiming to create a “more efficient, timely, and effective NEPA process.” More than 1.1 million comments were received in response to a 2019 advanced notice of proposed rulemaking, and in 2020, the Trump Administration overhauled the CEQ regulations implementing NEPA in ways that altered how environmental assessments were conducted. (See here.) Major changes included:

• Excluding consideration of cumulative effects from NEPA analysis;

• Setting time and page-length limitations on environmental impact statements (EIS);

• Removing loans and loan guarantees from the definition of “major federal action”;

• Seeing strict limits for public comments on EISs; and

• Establishing CEQ’s regulations as the ceiling for what federal agencies could require under NEPA.

In a Phase 1 NEPA rule finalized in April 2022, the Biden Administration rolled back several key changes included in the 2020 rule and signaled that more changes were coming in a Phase 2 rule.

While the Phase 2 rule was underway and nearing completion, President Biden signed into law the Fiscal Responsibility Act of 2023 (FRA), known colloquially as the Debt Ceiling Bill, on June 3, 2023. This legislation includes the most substantive amendments to NEPA since the statute’s enactment in 1970. Changes included:

• Requiring agencies to provide recommendations only on “reasonably foreseeable environmental effects” of the proposed major federal action and a “reasonable range of alternatives” to the proposed agency action, while solely requiring agencies to consider any irreversible and irretrievable commitments of federal resources. Furthermore, as part of the “alternatives” analysis, the agency is now required to consider “any negative environmental impacts of not implementing the proposed agency action in the case of a no action alternative.”

• Excluding various actions from being considered a “major federal action” subject to NEPA, including those with “no or minimal federal funding,” activities where federal agencies only serve as lenders, and actions where federal agencies “cannot control the outcome of the project.”

• Implementing several procedural changes, such as page limits and deadlines intended to streamline the NEPA environmental assessment and EIS processes, and opportunities for parties seeking government action to enforce agency deadlines in court. 

With its proposed “Phase 2” language – which incorporates significant changes as seen in this redline – the Biden Administration proposes new language that largely aligns other initiatives in the environmental space, even if it does not fully correspond with last month’s changes to NEPA included in the FRA. These include:

• Applying a narrow interpretation of recent changes to the NEPA statute. The FRA amended NEPA in various ways, including to focus EIS alternatives analysis on effects that were “technically and economically feasible.” The proposed language generally views these changes narrowly, in contrast to bill proponents that sought to use the language to streamline the federal permitting process. (The importance of this language is demonstrated by the Supreme Court’s recent vacatur of a lower court stay precluding the construction of the Mountain Valley Pipeline.)

• Description of “anticipated climate-related changes.” EISs now include additional analysis to “describe reasonably foreseeable environmental trends, including anticipated “climate related changes.”

• Evaluation of EJ concerns. The proposed rule includes a definition of “environmental justice” that mirrors definitions used elsewhere in Biden Administration EJ initiatives. It also requires parties to consider potential EJ impacts as part of an EIS alternatives analysis. 

• Increased community engagement. The proposed rule directs agencies to engage with the public through “inviting the participation of likely affected” government units “as early as practicable;” by conducting early public engagement; and by considering “what methods of outreach and notification are necessary and appropriate based on the likely affected entities.”