The White House Council on Environmental Quality (CEQ) recently published a proposed rule that makes substantial revisions to the National Environmental Policy Act (NEPA) regulations, implementing the amendments directed by Congress under the Fiscal Responsibility Act of 2023 and codifying the Biden administration’s climate change and environmental justice priorities.

Dubbed the “Bipartisan Permitting Reform Implementation Rule,” this proposed rule is CEQ’s Phase 2 rulemaking, which follows the April 2022 Phase 1 rulemaking that restored certain key provisions that were in effect for decades after adoption in 1978 before they were modified in 2020 by the Trump administration (2020 rule), as described in our April 2022 client alert. A redline of the extensive proposed revisions is available here.

Intended to further dismantle the Trump administration’s 2020 rule by reviving longstanding principles and practice derived from the 1978 regulations, as well as to codify in NEPA consideration of climate change and environmental justice, the significant changes proposed in the Phase 2 rulemaking are to:

• Narrow the scope of projects subject to NEPA review by requiring that the agency’s “major federal action” be one subject to “substantial” federal control and responsibility, and specifically excluding non-federal actions with minimal or no federal funding.
  • The revisions reiterate, however, that major federal actions include granting permits and federal financial assistance “where the agency has the authority to deny in whole or in part the assistance due environmental effects, impose conditions on the receipt of the financial assistance to address environmental effects, or otherwise has sufficient control and responsibility over the subsequent use of the financial assistance or the effects of the activity for which the agency is providing the financial assistance.”
• Codify consideration of climate change in the NEPA analysis, which previously was laid out in interim guidance only.
• Revive consideration of proposals sufficiently closely related to be considered a single action or connected actions, not only when preparing EISs but also when determining whether to prepare an EA or apply a CE.
• Restore full consideration of “context,” expanding the narrow context in the 2020 rule to require agencies to consider multiple contexts, which can include the global, national, regional, and local environment. This use of ‘‘context’’ is consistent with CEQ’s Phase 1 reinstatement of the concepts of indirect and cumulative effects.
• Reinstate ‘‘intensity’’ as a consideration in determining significance, expanding the 1978 intensity factors to include:
  • The degree to which effects are highly uncertain, clarifying that the public controversy over an activity or effect is not a factor for determining significance.
  • The effect on endangered or threatened species habitat even if it has not been designated as critical habitat.
  • The effect on communities with environmental justice concerns and on Tribal Nations.
• Clarify that an agency need not publish a draft EA, but if it does it must invite public comment.
• Clarify that agencies can prepare a FONSI where the action will include mitigation to avoid (or compensate for) significant effects, but require a monitoring and compliance plan.
• Reinstate the emphasis on an EIS’s alternatives analysis, which is “the heart of the environmental impact statement,” and not preclude agencies from considering alternatives outside their jurisdiction.
• Allow additional flexibility in establishing CEs but require that agencies consider the aggregation of effects (direct, indirect, and cumulative) from anticipated multiple actions covered by the CE.
• Add an “innovative approaches” section that purports to provide alternative means for NEPA compliance intended to maximize “flexibility, creativity, and efficiency” to address “extreme environmental challenges.”

While intended to increase the efficiency of federal environmental review, and to streamline permitting of renewable energy projects, ultimately it is unlikely that these revisions as proposed will reduce the federal permitting burden in a meaningful way. CEQ is accepting public comments on the proposed rule through September 29, 2023.