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CEQ Proposes First Phase of Revisions to NEPA Regulations

October 12, 2021

On October 7, 2021, the Council on Environmental Quality (CEQ) published proposed revisions to the regulations implementing the National Environmental Policy Act (NEPA) (“Proposed Revisions”). If finalized, these Proposed Revisions would undo certain changes to the NEPA regulations that took effect in September 2020, 85 Fed. Reg. 43,304 (July 16, 2020) (“2020 Rule”).

The Proposed Revisions would make three general changes to the CEQ regulations: 1) revise the definition of “effects” to expressly include direct, indirect, and cumulative effects; 2) reduce the emphasis on an applicant’s purpose and need; and 3) allow agencies to adopt NEPA regulations that are more rigorous than the CEQ regulations. CEQ cited the directions in Executive Order 13,990, Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis (Jan. 20, 2021), and Executive Order 14,008, Tackling the Climate Crisis at Home and Broad (Jan. 27, 2021), as justification for these revisions.

CEQ has described the Proposed Revisions as a “Phase 1” rulemaking. CEQ anticipates a second phase rulemaking (“Phase 2”), in which CEQ will “more broadly revisit the [2020 Rule] and propose further revisions to ensure that the NEPA process provides for efficient and effective environmental reviews that are consistent with the statute’s text and purpose; provides for regulatory certainty to [f]ederal agencies; promotes better decision making consistent with NEPA’s statutory requirements; and meets environmental, climate change, and environmental justice objectives.”

CEQ is accepting comments on the Proposed Revisions until November 22, 2021.

I. Definition of “Effects”

The 2020 Rule merged the distinct concepts of “direct” and “indirect” into one definition of “effects” and eliminated the concept of “cumulative” effects from the impacts an agency must examine in NEPA analysis. Particularly, the 2020 Rule defines “effects” as “changes to the human environment from the proposed action or alternatives that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives, including those effects that occur at the same time and place as the proposed action or alternatives and may include effects that are later in time or farther removed in distance from the proposed action or alternatives.” 40 C.F.R. § 1508.1(g).

Additionally, the 2020 Rule excludes from the definition of “effects” impacts that result solely from a “but for” causal relationship because “[e]ffects should generally not be considered if they are remote in time, geographically remote, or the product of a lengthy causal chain.” 40 C.F.R. § 1508.1(g)(2). Finally, the 2020 Rule excludes from the definition of “effects” impacts that “the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action.” 40 C.F.R. § 1508.1(g)(2).

The Proposed Revisions would expressly incorporate “direct,” “indirect,” and “cumulative” effects into the definition of “effects” and would not exclude impacts resulting from a “but for” causal relationship or effects outside of an agency’s authority. The Proposed Revisions would define “effects” as:

[C]hanges to the human environment from the proposed action or alternatives and include the following:

(1) Direct effects, which are caused by the action and occur at the same time and place.

(2) Indirect effects, which are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable. Indirect effects may include growth inducing effects and other effects related to induced changes in the pattern of land use, population density or growth rate, and related effects on air and water and other natural systems, including ecosystems.

(3) Cumulative effects, which are effects on the environment that result from the incremental effects of the action when added to the effects of other past, present, and reasonably foreseeable actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions. Cumulative effects can result from individually minor but collectively significant actions taking place over a period of time.

(4) Effects include ecological (such as the effects on natural resources and on the components, structures, and functioning of affected ecosystems), aesthetic, historic, cultural, economic, social, or health, whether direct, indirect, or cumulative. Effects may also include those resulting from actions which may have both beneficial and detrimental effects, even if on balance the agency believes that the effects will be beneficial.

CEQ’s proposal to reinstate cumulative impacts into the definition of “effects” is the most significant proposed change. CEQ rejected the 2020 Rule’s elimination of the obligation to analyze cumulative impacts, stating that “[d]ecades of agency practice and CEQ guidance affirm the interpretation that NEPA requires analysis of cumulative effects.” CEQ further reasoned that “[c]umulative impacts analysis is an essential component of NEPA analysis, as it allows agencies and the public to understand how the incremental impacts of a proposed action contribute to cumulative environmental problems such as air pollution, water pollution, climate change, and biodiversity loss, among others.”

CEQ attempted to justify its proposal to reinstate the concepts of direct and indirect effects by reasoning that “this change would better reflect NEPA’ statutory purpose and intent and be more consistent with case law[.]” CEQ also explained that this change “would ensure that agencies consider the full range of reasonably foreseeable effects in the NEP process, consistent with NEPA’s goal of facilitating reason-based decision making that protects public health and the environment, as well as this Administration’s policies to be guided by science and to address environmental protection, climate change, and environmental justice.”

Further, CEQ championed its proposed changes related to the causal relationship between an action and its effects. CEQ explained that the pre-2020 version of its NEPA regulations “gave agencies the discretion to identify the reasonably foreseeable effects of a proposed action and its alternatives in light of NEPA’s goals” and that “this approach provides for more sound decision making, including decisions informed by science, and a more knowledgeable and engaged public than the definition of ‘effects’ in the 2020 [Rule].”

Finally, CEQ defended its proposal to eliminate the limitation that agencies need not analyze effects that they lack the authority or ability to prevent, reasoning that “agencies may conclude that analyzing and disclosing such effects will provide important information to decision makers and the public.”

II. Applicant’s Purpose and Need

The 2020 Rule emphasizes a private applicant’s purpose and need for a proposed action when an agency has a statutory duty to review an application. Particularly, 40 C.F.R. § 1502.13 directs that the purpose and need statement in an environmental impact statement “briefly specify the underlying purpose and need for the proposed action. When an agency’s statutory duty is to review an application for authorization, the agency shall base the purpose and need on the goals of the applicant and the agency's authority.”

The Proposed Revisions would eliminate the reference to an applicant’s purpose and need. The Proposed Revisions would revise 40 C.F.R. § 1502.13 to state simply: “The statement shall briefly specify the underlying purpose and need to which the agency is responding in proposing the alternatives including the proposed action.”

Additionally, the Proposed Revisions would make a conforming edit to the definition of “reasonable alternatives” at 40 C.F.R. § 1508.1(z). The 2020 Rule defines “reasonable alternatives” as “a reasonable range of alternatives that are technically and economically feasible, meet the purpose and need for the proposed action, and where applicable, meet the goals of the applicant.” 40 C.F.R. § 1508.1(z) (emphasis added). The Proposed Revisions would eliminate the italicized language.

As justification for the proposed changes, CEQ expressed concern that the language of the 2020 Rule “could be construed to require agencies to prioritize the applicant’s goals over other relevant factors, including the public interest.” CEQ reasoned that, instead, “[a]gencies should have discretion to base the purpose and need for their actions on a variety of factors, which include the goals of the applicant, but not to the exclusion of other factors,” including “other regulatory requirements, desired conditions on the landscape or other environmental outcomes, and local economic needs, as well as an applicant’s goals.”

III. Agency NEPA Procedures

The 2020 Rule limits agencies’ ability to develop NEPA regulations or guidance that require more rigorous review than the CEQ regulations, effectively establishing a ceiling of NEPA review. The 2020 Rule provides that, “[w]here existing agency NEPA procedures are inconsistent with the regulations in this subchapter, the regulations in this subchapter shall apply . . . unless there is a clear and fundamental conflict with the requirements of another statute.” 40 C.F.R. § 1507.3(a). Similarly, the 2020 Rule directs that “agency NEPA procedures shall not impose additional procedures or requirements beyond those set forth in the regulations in this subchapter.” 40 C.F.R. § 1507.3(b). The 2020 Rule also instructs agencies, by September 14, 2020, to “eliminate any inconsistencies” with the 2020 Rule.

The Proposed Revisions would eliminate these provisions, consistent with the regulatory requirements that predated the 2020 Rule. CEQ reasoned that “[a]gencies should be able to tailor their procedures to meet their unique statutory mandates and include additional procedures or requirements beyond those outlined in CEQ’s NEPA regulations, especially if doing so will promote better decisions, improve environmental or community outcomes, or spur innovation that advances NEPA’s policies.”

IV. Conclusion

The Proposed Revisions may impact energy projects requiring federal permits, such as those located on federal public lands. The 2020 Rule was intended to streamline NEPA analysis and promote efficiencies, and a final rule undoing the 2020 Rule may contribute to lengthy NEPA reviews.

Land users concerned with, or who support, the proposed regulatory changes should submit comments on the Proposed Revisions to ensure a strong administrative record that reflects their positions on the rules. Moreover, land users should anticipate additional proposed revisions to CEQ’s NEPA regulations.