New Federal Rules for Environmental Review of Projects Reverse Some Trump-Era Rules and Ease Consideration of Climate Change; More to Follow

In what it dubs Phase I, the White House Council on Environmental Quality (CEQ) has reversed part of the regulations it adopted in 2020 and announced plans for a more leisurely comprehensive review to consider more sweeping changes in Phase II. The 2020 regulations overhauled how federal agencies review environmental impacts of projects under the National Environmental Policy Act (NEPA). Concerned that those regulations could hinder consideration of climate change and unduly limit the scope of impacts and alternatives considered in such review, CEQ has amended the parts it deemed most pressing, largely restoring them as they had been since the 1970s, when NEPA was enacted.

Background

NEPA, signed by President Nixon in 1970, is the nation’s most extensive environmental law. Other laws typically focus on specific resources (such as air, water, or land), specific activities (such as surface mining or releases of hazardous substances), or specific places, flora, or fauna (such as wilderness areas or endangered species). NEPA regulates the actions of all federal agencies in all of these areas. It requires federal agencies to determine, disclose, and consider the environmental implications of actions they propose to undertake, fund, or permit. While NEPA directly governs only federal agencies, it effectively regulates many actions of private persons as well as state and local governments, since their activities often entail federal funding or approval.

Generally, NEPA calls on federal agencies to discuss the environmental effects of proposed projects and alternatives to such projects either in a relatively brief Environmental Assessment (EA) or, if the project may “significantly” affect the environment, in a much longer Environmental Impact Statement (EIS). EAs, intended to be 10 to 15 pages according to CEQ guidance, have come to typically range from a few dozen to a few hundred pages; they commonly are prepared in less than a year. EISs, initially contemplated to be completed in a year or so, commonly require two to five or even more years to prepare and amount to several hundreds or thousands of pages.

Over the last five decades, CEQ issued guidance and reports and courts rendered hundreds of decisions elaborating on various aspects of NEPA and implementing regulations, much of which has lent to increasing complexity of NEPA environmental review. Presidents Obama and Trump also issued memoranda and executive orders aiming to improve and modernize the NEPA process.

In 2020, CEQ issued regulations substantially revising its NEPA regulations, which had remained largely unchanged since 1978. The aim of the revisions was to simplify and shorten the environmental review process, limit the scope of environmental impacts and project alternatives to be considered in such review, and reduce the risks that agency decisions will be overturned by litigation.

Phase I Rule

On his first day in office, President Biden issued Executive Order 13990, which established various environmental policies and called on federal agencies to review regulations issued during the Trump Administration for consistency with those policies. CEQ then reviewed its 2020 NEPA regulations and decided on a two-phase approach to revise them. It proposed Phase I to promptly address certain pressing concerns and committed to work on Phase II to develop comprehensive revisions of the rest of its regulations.

On April 20, 2022, it adopted its Phase I regulations amending the 2020 regulations in three respects.

Scope of Environmental Effects. CEQ restored consideration of “direct,” “indirect,” and “cumulative” effects of projects, thus facilitating review of greenhouse gas emissions that contribute to climate change. The 2020 rule collapsed these three categories into a single term—”effects” that are “reasonably foreseeable” and have a close causal relationship to the project. In its new rule, CEQ restored the earlier three categories of effects that should be considered and removed some related limitations of the 2020 rule. It did not, though, require agencies to categorize effects in these separate categories and rather allowed agencies to holistically evaluate all such effects that are “reasonably foreseeable.” How agencies will interpret this “reasonably foreseeable” limitation, which is drawn from tort law principles limiting liability to actions that are the “proximate cause” of damages, remains to be seen. CEQ also made plain that NEPA review encompasses beneficial as well as detrimental effects of projects. It explained, for instance, that a utility-scale solar facility may have short-term direct adverse effects arising from construction as well as long-term indirect beneficial effects such as reductions in air pollution and GHG emissions arising from displacing more GHG-intensive energy sources like coal or natural gas.

Purpose and Need. Seeking to ensure agencies have sufficient flexibility and are not unduly constrained to prioritize an applicant’s goals, CEQ eliminated a requirement to define a project’s “purpose and need” in an EA or EIS based on the goals of an applicant and the scope of the agency’s authority. The statement of purpose and need of a proposed agency action (e.g., issuance of a permit) serves to frame the discussion of issues in an EA or EIS and limit the reasonable range of alternatives that could feasibly fulfill that purpose and need. Under the new rule, an agency may define a project’s purpose and need more broadly than merely meeting an applicant’s goals, and take into account other factors such as carrying out policies and requirements established by law and the agency’s statutory authority and programs.

Agency NEPA Regulations. In its new rule, CEQ freed federal agencies to adopt procedures for environmental review beyond those prescribed by CEQ. While CEQ’s regulations apply to all federal agencies, NEPA also requires each agency (with CEQ’s oversight) to adopt its own regulations to implement NEPA. Some agencies have basically adopted or parroted CEQ’s regulations; others have tailored procedures for their particular programs. Seeking to eliminate inconsistencies between agency regulations, CEQ provided in its 2020 regulations that, with certain exceptions, an agency’s NEPA regulations could not impose additional procedures beyond those set forth in CEQ’s regulations, thus establishing a “ceiling” for agency procedures. Now thinking better of that, CEQ has removed that limitation, figuring that its oversight and review of each agency’s adoption of implementing regulations suffices to avoid troublesome inconsistencies.

CEQ’s Phase I rule takes effect on May 20, 2022.

What Is Next?

CEQ continues to review the remainder of the 2020 regulations and intends to propose comprehensive revisions in Phase II “in the coming months.” As a practical matter, adoption of a Phase II rule is likely a year or two away.

The 2020 regulations covered a lot of ground so there is much for CEQ to assess. Some of those regulations may be rescinded or reversed for policy reasons as is typical with a change of administrations. Some, though, provided common sense good-government reforms of CEQ’s outdated 1978 regulations that may be widely supported. Revisions to simplify and shorten environmental review include:

• Allowing agencies to rely on applicants or contractors to provide information and prepare environmental documents provided the agencies supervise them, independently evaluate their work, and ultimately take responsibility for the scope and contents of the environmental documents.

• Allowing use of modern electronic technologies (like email) to communicate with applicants, other agencies, and the public and to circulate environmental documents.

Other revisions designed to reduce risks and uncertainties posed by litigation include:

• Enhancing agencies’ discretion in determining whether projects “significantly” affect the environment.

• Prescribing requirements and standards for comments on EISs.

• Reinforcing rules regarding exhaustion of administrative remedies by providing that comments must be provided within prescribed time periods, or otherwise be deemed unexhausted and forfeited.

• Requiring agencies to include a summary of alternatives, information, and analyses in EISs and to certify that they have considered all of that, including information submitted by public commenters, in developing the EISs, and providing that EISs thus certified “are entitled to a presumption that the agency has considered the submitted alternatives, information, and analyses” in the EISs.

CEQ may see merit in some of the reforms and decide to retain or revise them.

In the meantime, CEQ also extended the one-year deadline in the 2020 regulations for agencies to adopt their own conforming regulations, adding two more years, until September 14, 2023. CEQ said it did not want agencies to waste time and effort developing regulations to conform to rules CEQ may well change.

Also, litigation challenging the validity of the 2020 regulations grinds on. Several pending suits were stayed following President Biden’s issuance of EO 13990 directing agencies to reconsider Trump-era regulations. One was dismissed on grounds the plaintiffs lacked standing and the case was not yet ripe for judicial review, since no agency had adopted regulations conforming to the 2020 rule nor had any agency applied the rule to a specific project. An appeal of that dismissal is pending. Plaintiffs have argued that overturning the 2020 rule and restoring the 1978 regulations remain important so, if CEQ’s new Phase I and Phase II rules are challenged and set aside, CEQ would default to the 1978 regulations rather than the 2020 regulations.

David Ivester
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