On July 31, 2023, the Council on Environmental Quality (CEQ) published a Notice of Proposed Rulemaking (NPRM) for its second phase of revisions to the 2020 National Environmental Policy Act (NEPA) amendments. As a brief primer, NEPA imposes procedural requirements on all federal agencies to consider the effect of a project or action on the environment, unless the action is excluded. Not only do the proposed rules restore a significant number of provisions to their pre-1978 form, but CEQ has taken the opportunity to re-articulate key policies motivating NEPA, and re-characterize others to directly incorporate climate change and environmental justice considerations into NEPA review.

The Biden Administration’s overhaul of the Trump Administration’s 2020 modifications to NEPA began with a first phase of rulemaking in May 2022. As we previously covered, Phase 1 focused on three key issues. First, it revised the factors agencies could rely on for their “purpose and need” statements, which establish a project’s necessity and value to a community. Second, Phase 1 emphasized that NEPA is a floor, rather than a ceiling, for environmental review. Third, Phase 1 revised the definition of “effects” or “impacts” to include direct, indirect, and cumulative effects. The bifurcated revisions process reflects the triage that CEQ conducted—focusing first on revising the most critical aspects of the 2020 regulations, and then allowing time for a more thorough review. On July 31, 2023, CEQ released its proposed second round of revisions (the “Phase 2 rules” or “proposed rules”), which focus on six key areas that CEQ identified as particularly salient.

Fiscal Responsibility Act of 2023

First, the proposed rules accommodate the changes made to NEPA by the Fiscal Responsibility Act of 2023 (FRA). The FRA set firm page- and time-limits on environmental reviews, and attempted to reduce the number of instances in which an Environmental Impact Statement (EIS) would need to be prepared. The proposed rules target each of the NEPA amendments the FRA promulgated, allowing agencies to adopt categorical exclusions established in other agency’s NEPA procedures, clarifying the roles and responsibilities when multiple agencies are involved in an environmental review process, promoting the development of one EIS where several agencies are involved, and implementing page- and time-limits.

Public Engagement & Transparency

Second, the proposed rules center on meaningful public engagement and transparency. In the NPRM, CEQ articulated its intent to promote transparency and engagement in the hopes of facilitating collaboration between the government and public. To this end, the revisions restore 1978-era language and re-emphasize the policies undergirding NEPA from its inception. The revisions also ratchet up substantive requirements, requiring agencies to explain assumptions, incorporate projections (including climate change-related projections), and identify any limitations of their models and methods. Finally, the revisions shift the burden away from the public. For example, the 2020 regulations had required comments to be as detailed as necessary to meaningfully participate and fully inform the agency of the commenter’s position. CEQ expressed concern that this might ask too much of the general public, so replaced “required” with “encouraged.” The revisions also clarified that any mitigation proposed by an agency must be enforceable and requires commitment to a mitigation plan from agencies that relied on or committed to one in their Record of Decision or in a mitigated Finding of No Significant Impact (FONSI), a common sticking point for those wishing to see more accountability with regards to mitigation.

Efficient Process & Regulatory Certainty

Third, the proposed rules make the environmental review process more efficient while striking a balance with the “hard look” requirement, which demands that agencies seriously consider the environmental impacts of an action rather than merely a pro forma glance. While the 2020 regulations prioritized efficiency, the Phase 2 revisions remove language that noncompliance with NEPA should be resolved “as expeditiously as possible,” noting that CEQ cannot compel members of the public or the judiciary to resolve NEPA disputes within a specific time frame. The revisions emphasize how concise documents promote informed and efficient decision-making by making the process more accessible to the public. The revisions also promote the setting of deadlines and schedules throughout the environmental review process and codify CEQ’s role in inter-agency dispute resolution.

Additionally, the Phase 2 revisions attempted to provide stakeholders with regulatory certainty by aligning NEPA regulations with background regulatory law. For example, the 2020 regulations had required plaintiffs in federal court to have first raised their concerns with the agency during the public comment period, a process that is typically referred to as “exhaustion” of administrative remedies. The NPRM stated that it was unclear that CEQ had authority to set out an exhaustion requirement, since challenges are brought under the Administrative Procedure Act (APA) not NEPA. Noting that courts have sometimes allowed legal challenges to proceed even when the plaintiff did not make the comment itself or the agency identified the violation on its own accord, CEQ removed the exhaustion requirement. The 2020 regulations had also stated that “harm from failure to comply with NEPA [could] be remedied by compliance with NEPA’s procedural requirements.” The Phase 2 revisions remove this reference entirely because it is unclear whether CEQ has the authority to direct courts about which remedies are available for plaintiffs bringing suit under the APA.

Improve Environmental & Climate Change Outcomes

The Phase 2 revisions are also very attuned to the growing environmental consequences from climate change and for the first time explicitly require the consideration of climate change in NEPA review. The revisions encourage agencies to consider whether a proposed action (e.g., a renewable energy project) has acute adverse effects but long-term beneficial effects when assessing the intensity of those adverse effects. The proposed rules also require EISs to discuss reasonably foreseeable climate change-related effects caused by a proposed action, and require agencies to address risk reduction, resiliency, or adaptation measures. Overall, CEQ encourages agencies to remember NEPA’s goals of protecting the environment for future generations. While many of these proposals are consistent with recommendations and practice for over a decade, CEQ now explicitly references these critical points in the NPRM.

Improve Environmental Justice Outcomes & Respect Tribal Sovereignty

Similarly, although environmental justice has long been a component of NEPA in practice, the proposed rules codify the importance of environmental justice considerations when undertaking NEPA review.  The proposed rules define “environmental justice” for the first time, adopting the definition from President Biden’s Executive Order 14096. The proposed rules also incorporate environmental justice examples in the definitions of “effects” and “extraordinary circumstances,” stating that both terms include “disproportionate and adverse effects on communities with environmental justice concerns.”

The proposed rules also require that when agencies assess the significance of potential effects, they consider disproportionate and adverse effects on communities with environmental justice concerns and adverse effects on rights of tribal nations, and require that lead agencies mitigate environmental effects of proposed actions that disproportionately impact communities with environmental justice concerns. Finally, the rules promote meaningful engagement with communities with environmental justice concerns and ensure agencies consider the needs of affected communities when developing outreach and notification methods.

Informed & Science-based Decision-making

Finally, the Phase 2 rules seek to restore informed and science-based decision-making to the NEPA process. To do so, the rules restore text from the 1978 regulations, including the direction to “rigorously explore and objectively evaluate” reasonable alternatives, and emphasize the use of “high-quality information, including the best available science and data,” in discussion of the affected environment to describe reasonably foreseeable environmental trends.

The comment period on the proposed rules ended September 29, 2023, with the final rule to follow. After the rules are finalized, we can expect to see federal agencies updating their implementing regulations and guidance to align with the new rules.