On Oct. 6, 2021, the White House Council on Environmental Quality (CEQ) announced Phase 1 of a proposed two-phase rollback of the most significant substantive changes included in the National Environmental Policy Act (NEPA) rule-making finalized by former President Donald Trump’s administration in 2020. Those 2020 changes were the first overhaul of the NEPA regulations in over 40 years and were widely viewed as seeking to narrow and expedite the environmental review process under NEPA by, among other things, limiting federal agencies’ discretion to undertake a broader environmental review process through the consideration of a greater array of alternatives as well as indirect and cumulative effects of major federal actions. Administrations over the past 20 years have sought to find ways to speed up NEPA reviews, which can drag on for years and delay important projects. However, for some observers, the Trump administration’s proposed changes went too far, seeking to limit the input of communities affected by a proposed project, which are often environmental justice communities, and to limit agencies’ discretion to evaluate a proposed project’s impact on climate change. The proposed Phase 1 changes announced last month by the Biden White House’s CEQ would largely revert to the 1978 regulations with respect to the evaluation of direct, indirect, and cumulative impacts, agencies’ flexibility to determine the purpose and need of a proposed project, and mitigation of impacts through a robust alternatives analysis. The draft regulations also restore agencies’ discretion to require in agency specific regulations a more robust and stringent environmental review than the CEQ regulations require, in essence establishing the CEQ regulations as a floor for an environmental review rather than a ceiling.

So far at least, CEQ has not made a move to repeal some of the more technical NEPA streamlining procedures put in place in 2020, such as the two-year time limit on conducting NEPA reviews and Environmental Impact Statement (EIS) page limits. However, CEQ has released little information on the Phase 2 changes, so the jury is out on what further revisions to the 2020 modifications may be in store in the next year or so.

Specific Proposed Revisions

The CEQ’s first Phase 1 change would eliminate language limiting federal agencies’ discretion to determine the purpose and need of a proposed project. An agency’s determination of a project’s purpose and need “sets the parameters for the range of reasonable alternatives an agency considers and informs the scope of the effects that an agency must analyze in an EIS.” The 2020 NEPA regulations required agencies to base purpose and need on the applicant’s goals and the agency’s statutory authority, including conforming language in the definition of “reasonable alternatives.” As a result, these changes potentially would have limited the scope of an agency’s review to those matters within its statutory authority to approve an action, as well as affording deference to an applicant’s stated goal.

By proposing to restore the 1978 language, CEQ reaffirms agencies’ discretion to consider both its statutorily mandated decision-making as well as other factors such as the public interest in a project. The reversion to the 1978 language is also intended to ensure agencies’ ability to evaluate a broader range of potential alternatives without being constrained by an applicant’s goals for a project or whether such alternatives are within the jurisdiction of the NEPA lead agency.

The CEQ further proposed eliminating a 2020 change that provided that where an agency NEPA procedure is “inconsistent” with the CEQ regulations, the CEQ regulations apply unless there is a “fundamental conflict” with another law. Some viewed this change as establishing the CEQ regulations as a ceiling for agency NEPA reviews by preventing agencies from establishing NEPA procedures that were more stringent than what is required in the CEQ regulations. The proposed revisions would return the CEQ NEPA regulations to a floor, allowing agencies to impose additional procedures and requirements beyond those established in the CEQ regulations.¹ This reversion to the earlier 1978 language will allow agencies to include more specific requirements for environmental reviews, as well as procedures that may include required public hearings and the evaluation of potential impacts on environmental justice communities.

CEQ also proposes abrogating perhaps the most controversial 2020 change to the NEPA regulations, which provided that agencies were not required to analyze cumulative effects – defined as the incremental impact of a proposed action when added to other past, present, and reasonably foreseeable future actions regardless of who undertakes the other actions. See 40 C.F.R. § 1508.7. The CEQ also would make related reversions to the causation analysis agencies were required to undertake, providing that a “but for” causal relationship was not enough to make an agency responsible for a particular effect, excluding effects that are geographically and temporally remote or the result of a lengthy causal chain, and excluded effects that the agency could not prevent based on its statutory authority, or that would occur regardless of the proposed action. These 2020 modifications represented a departure from the 1978 language, and, at the time the change was made, some observers viewed these changes as aimed at avoiding examination of potential impacts of projects related to greenhouse gas emissions and climate change.

In removing this language and reverting largely to the 1978 language (CEQ does propose to keep language that eliminated a tautological definition of “effect”), CEQ notes both the need to avoid ambiguity and return to longstanding agency practices, while citing caselaw holding that greenhouse gas emissions are foreseeable, indirect effects of fossil fuel releases (San Juan All. v. U.S. Bureau of Land Mgmt., 326 F. Supp. 3d 1227, 1244 (D.N.M. 2018)). CEQ also notes that the elimination of confusion caused by the 2020 modifications will ensure that the NEPA process considers “air and water pollution, greenhouse gas emissions that contribute to climate change, and effects on communities with environmental justice concerns.” Moreover, as an example of the substantive impact this reversion would have, CEQ notes that in reviewing proposed fossil fuel extraction, agencies should evaluate anticipated greenhouse gas emissions from fossil fuel combustion as a reasonably foreseeable, indirect effect of extraction. Accordingly, CEQ’s return to the 1978 language concerning cumulative impacts and causation leaves little doubt that it is aimed at clarifying that agencies must evaluate such indirect effects even when temporally and geographically remote from the proposed action.

Impacts From CEQ’s Proposed Restoration of Substantive Provisions

The proposed CEQ Phase 1 regulatory changes, if adopted, create the potential to broaden the scope of NEPA review, and thus the complexity and duration of that review. However, applying a review scope that has been in place for over 40 years may also provide more certainty and less litigation risk, which would be a positive for a complex project navigating NEPA. Under the new regime, as noted in our prior post (“A Tale of Two Environmental Policies: President Trump Announces NEPA Reform, as Former Vice President Biden Vows to Roll Back Reforms If Elected”), there was always a risk that the substantive changes to the scope of NEPA review contained in the 2020 modification would be nullified by the courts as contrary to NEPA’s statutory language and intents. The proposed changes, which essentially turn back the clock to the prior version of CEQ’s NEPA regulations in place since 1978, would appear to significantly reduce the risk that courts find a NEPA review for projects currently seeking federal authorizations or funding to be invalid. Arguably, that lessened risk outweighs any downside from the restoration of the scope of NEPA reviews based on the prior regulations.

¹ Agencies have until Sept. 14, 2023, to propose changes to their NEPA procedures, and the CEQ expressly does not propose changing that date.