Trump Administration Finalizes Updates to NEPA Regulations

This alert updates our January 14, 2020 alert discussing CEQ’s previously proposed revisions to the NEPA regulations. The final rule incorporates most of the major proposed changes, with some modifications discussed below.

Key Proposed Revisions to the Final CEQ Guidelines

Narrowed Scope of Projects Requiring NEPA Review. The final rule narrows the definition of “major Federal actions” requiring preparation of an Environmental Impact Statement (EIS). New Section 1508.1(q), which incorporates the language from the proposed rule with minor revisions, amends the definition of “major Federal action” to exclude non-Federal projects with “minimal Federal funding or minimal Federal involvement where the agency does not exercise sufficient control and responsibility over the outcome of the project.” For example, the preamble to the final rule states that a project would not require NEPA review if it includes “a very small percentage of Federal funding” but “is otherwise funded through private or local funds.” However, CEQ declined to adopt a precise threshold percentage or dollar figure to define “minimal Federal funding,” relying instead on individual agencies to identify exempt actions in their agency-specific NEPA regulations.

In addition, the final rule expands the application of “categorical exclusions” from NEPA, which are identified in each agency’s NEPA regulations as actions that typically do not have significant environmental impacts. New Section 1506.3(d) provides that an agency may rely on categorical exclusions adopted by another agency. Where the prior regulations prohibited reliance on categorical exclusions when a typically exempt action has significant impacts due to “extraordinary circumstances,” new Section 1501.4(b)(1) provides that an exclusion may apply despite such an extraordinary circumstance, “if the agency determines that there are circumstances that lessen the impacts or other conditions sufficient to avoid significant effects.”

Elimination of Indirect Effects and Cumulative Impacts Analysis. The new rule retains the most significant change to the regulations, eliminating the analysis of a project’s indirect impacts and contribution to cumulative impacts. For four decades, agencies were required to study a project’s environmental “effects,” including foreseeable direct, indirect, and cumulative effects, and to discuss cumulative impacts resulting from “the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions.” New Section 1508.1(g) removes the terms “direct,” “indirect,” and “cumulative” from the definition of “effects,” providing that effects must instead be “reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives.” The new rule also repeals the definition of “cumulative impact” in Section 1508.7. Section 1508.1(g)(2) codifies the holding of Department of Transportation v. Public Citizen, 541 U.S. 752 (2004) that “effects” do not include “effects that the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action.” A “but for” causal relationship is insufficient to make an agency responsible for a particular effect under NEPA, and agencies “generally” should not consider effects that are “remote in time, geographically remote, or the product of a lengthy causal chain.” Section 1508.1(g)(2).

In response to public comments, the final rule softens some of language proposed in January, deleting the assertion that “[a]nalysis of cumulative effects is not required” and adding “generally” to limit the prohibition on considering effects remote in time, space and causation. In the preamble to the Federal Register notice of the final rule, CEQ explains that the word “generally” reflects “the fact that there may occasionally be a circumstance where an effect that is remote in time, geographically remote, or the product of a lengthy causal chain is reasonably foreseeable and has a reasonably close causal relationship to the proposed action.” What occasional circumstances may trigger consideration of remote causation, or even cumulative impacts, is up to the reviewing agencies and, ultimately, the courts.

Eliminating cumulative impacts is widely seen as intended to curtail climate change analysis. Climate change is quintessentially a cumulative impact because it is attributed to greenhouse gas (GHG) emissions from a multitude of global sources. However, responding to criticism, CEQ emphasizes that the new rule “does not preclude” consideration of a proposed action on “any particular aspect of the human environment,” and that analysis of a project’s impacts on climate change “will depend on the specific circumstances of the proposed action.” Again, those circumstances remain to be determined by agencies and the courts.

It is also important to recognize that eliminating cumulative impacts will have far-reaching consequences beyond climate change analysis. Agencies considering, for example, harbor dredging or highway projects can confine their NEPA evaluations to the projects under review, without considering cumulative effects together with other dredging, highway or other types of projects in the vicinity that collectively cause greater environmental impacts.

Consideration of “Environmental Trends” as Baseline Conditions. In further response to concerns that the changes preclude consideration of climate change, CEQ added new language to Section 1502.15’s definition of “affected environment” to specify that the affected environment described in an EIS must include “reasonably foreseeable environmental trends”—which may include climate change. CEQ explains that in appropriate cases, “trends determined to be a consequence of climate change would be characterized in the baseline analysis of the affected environment rather than as an effect of the action.” Thus, under the revised rule, an agency may consider sea level rise as part of the environmental setting for a coastal infrastructure project, but not the contribution of the project’s GHG emissions to climate change-induced sea level rise.

Whether Project Effects are “Highly Controversial”. The final regulations remove the requirement in Section 1508.27(b)(4) that agencies consider “[t]he degree to which the effects on the quality of the human environment are likely to be highly controversial” when determining whether an impact is “significant.” CEQ explains that controversy is “subjective and is not dispositive of effects’ significance.” This change may have broad implications; for example, on July 6, 2020, the District Court for the District of Columbia ordered the Dakota Access Pipeline to be shut down while the U.S. Army Corps of Engineers prepares an EIS for its approval of the pipeline easement. (On July 14, the U.S. Court of Appeals for the D.C. Circuit granted a temporary administrative stay of the shutdown order pending oral argument in the case.) The district court’s order was based on the court’s finding that the project remained “highly controversial” under the prior Section 1508.27(b)(4) of the NEPA regulations because the Corps had failed to address concerns about the risk of oil spills. See Standing Rock Sioux Tribe v. U.S. Army Corps of Engineers, No. 16-1534 (D. D.C. 2020).

Limiting Consideration of Alternatives. The new regulations also incorporate provisions from the proposed rule narrowing the range of alternatives an agency must consider in an EIS. The former NEPA regulations required an EIS to “evaluate all reasonable alternatives” to a proposed project but did not define “reasonable alternative.” New Section 1508.1(z) 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.” The final rule does not establish presumptive maximum number of alternatives for consideration (as contemplated by the proposed rule) but adds a new Section 1502.14(f) requiring lead agencies to “limit their consideration to a reasonable number of alternatives.” CEQ notes that an EIS “need not include every available alternative where the consideration of a spectrum of alternatives allows for the selection of any alternative within that spectrum.” The final rule also removes a provision in the previous regulations requiring agencies to study “reasonable alternatives not within the jurisdiction of the lead agency.”

Timing and Page Limits. The new rule incorporates the proposed rule’s presumptive time limits of one year for completing Environmental Assessments (EA) and two years for completing EISs, subject to possible extension by a “senior agency official.” The new rule also imposes a presumptive limit of 75 pages for EAs and retains the current page limit for EISs of 150 pages or less (or 300 pages or less for projects of “unusual scope or complexity”). Like the time limits, these page limits are subject to extension by a senior agency official.

One Federal Decision Policy. The final rule incorporates key elements of the Trump Administration’s “One Federal Decision” policy, previously adopted by Executive Order. The policy aims to improve coordination among agencies in preparation of environmental documents by requiring the lead agency to develop a joint schedule setting milestones for project reviews; establishing conflict resolution procedures to address disputes between lead and cooperating agencies; and requiring lead and cooperating agencies “to the extent practicable” to prepare a single EIS and issue a joint ROD, or a single EA and issue a joint Finding of No Significant Impact (FONSI). New Section 1502.24 provides that agencies must integrate their NEPA processes to the “fullest extent possible” with other federal environmental review laws and Executive Orders.

NEPA Compliance During Emergencies. The final rule also amends Section 1506.12, which allows agencies to make “alternative arrangements” for NEPA compliance during an emergency. The new rule clarifies that such alternative arrangements must still comply with NEPA Section 102(2)(C)’s requirement for a “detailed statement.” The preamble notes that “CEQ has approved alternative arrangements to allow a wide range of proposed actions in emergency circumstances including…. infectious disease outbreaks.” In response to the COVID-19 pandemic, President Trump issued E.O. 13927 (June 4, 2020) requiring federal agencies to take “all reasonable measures” to speed infrastructure investments by, among other things, identifying planned or potential actions to facilitate the nation’s economic recovery that may be subject to emergency treatment as “alternative arrangements” under the NEPA regulations.

Other Issues. The final rule incorporates other changes from the proposed rule, including procedural changes to allow agencies to begin the scoping process for a proposed project that is “sufficiently developed” rather than requiring publication of a Notice of Intent (NOI); a new requirement to include a cost estimate in an EIS cover sheet; allowing agencies to rely on existing scientific and technical information in NEPA reviews; and encouraging agencies to identify activities or decisions not subject to NEPA in their agency-specific NEPA procedures.

Next Steps. The new regulations are scheduled to take effect on September 14, 2020, but agencies may elect to apply them to NEPA reviews that are currently in progress. (See Section 1506.13.) However, agencies and project proponents should exercise caution. Though the intent is to speed the NEPA process, for now, utilizing the new rule risks bogging projects down in litigation. The final rule itself is certain to face significant legal challenges from environmental groups, states and other stakeholders. Depending on the outcome of the election, the rule may also face challenge under the Congressional Review Act, which allows Congress to invalidate federal agency rulemakings by enacting a joint resolution of disapproval following transmittal of the rule to Congress.