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Recent Debt Ceiling Legislation Includes Several Significant Changes to NEPA

On June 3, 2023, President Biden signed a legislative package lifting the federal debt ceiling that includes the first statutory amendments to the National Environmental Policy Act (NEPA) since 1982.  While the legislation modified certain aspects of NEPA practice, many of the changes codify (i.e., enact into a statute) existing regulations or executive orders, preventing future administrations from changing them through the regulatory process.

The legislation, titled the Fiscal Responsibility Act of 2023 (FRA), follows a recent flurry of changes to NEPA’s implementing regulations made by the Council on Environmental Quality (CEQ).  As we have previously written, the first set of changes was made in 2020 (2020 CEQ Rules), when the Trump Administration made wholesale revisions to the NEPA regulations that narrowed the scope of environmental review and added measures designed to streamline environmental review.  In 2022, the Biden Administration undertook “phase 1” of its planned two-phase NEPA rulemaking that rolled back some of the most controversial substantive changes enacted by the Trump Administration in 2020, but left intact the changes designed to shorten and streamline the environmental review process.  The Biden Administration had indicated that more comprehensive changes to NEPA’s regulations would be forthcoming in a “phase 2” rulemaking sometime in 2023.

The FRA’s NEPA amendments codify certain aspects of the 2020 CEQ Rules that were designed to streamline environmental reviews.  As practitioners in the area will know, the NEPA process generally results in the publication of an environmental document: (1) an Environmental Impact Statement (EIS), a detailed written statement required when a proposed action has a “reasonably foreseeable” effect on the quality of the human environment (more on the “reasonably foreseeable” caveat to follow); (2) an Environmental Assessment (EA), a theoretically shorter document prepared when a proposed action is not categorically excluded from further environmental review but when it is uncertain whether an EIS will be needed; or (3) a “finding of no significant impact” (FONSI), a document that is generally issued in conjunction with an EA and which the FRA defines as a determination that “a proposed agency action does not require the issuance of an [EIS].”  The FRA codifies the concepts of an EA/FONSI.

The FRA expands on the 2020 CEQ Rules by setting page limits intended to streamline often-lengthy drafting processes.  Under the FRA, an EIS may not exceed 150 pages, or 300 pages for a proposed action of “extraordinary complexity.”  The FRA removed a provision of the 2020 CEQ Rules that allowed a senior agency official to approve an exceedance of the 300-page limit.  An EA may not exceed 75 pages and – in a departure from the 2020 CEQ Rules – the FRA provides no exception to that page limit.  Neither of these limits include citations or appendices, so the FRA is unlikely to stop the current agency practice of relegating lengthy environmental analyses to the appendices to avoid page limits.

The FRA also fixes time limits on the preparation of environmental documents:  1 year for an EA and 2 years for an EIS, deadlines that were already set in the 2020 CEQ Rules.  In practice, federal agencies often conduct extensive pre-NEPA “planning level scoping” designed to identify and narrow alternatives before the above deadlines are triggered; this practice is likely to continue as a work-around to avoid the 1- and 2-year deadlines.  The FRA allows a lead agency to extend the deadline in consultation with the applicant.  Expanding on the 2020 CEQ Rules, the FRA also gives a project sponsor the right to petition a federal court to review an agency’s failure to comply with the deadline; if the court agrees, it must set a schedule and deadline for the agency to act “as soon as practicable,” and generally no longer than 90 days following the court order.  The FRA codifies the existing CEQ regulations by allowing an agency to adopt procedures to allow a project sponsor to prepare an EA or an EIS under the agency’s supervision, provided that the lead agency independently evaluates the document and takes responsibility for its contents.

In addition to incorporating firmer page- and time-limits, the FRA makes several other changes that have the potential to limit NEPA’s reach and shorten environmental reviews.  These changes include the following:

  • The FRA narrows the scope of “major federal actions” that are subject to review under NEPA by requiring that the action be “subject to substantial Federal control and responsibility.” (The 2020 CEQ Rules had required “actual” Federal control and responsibility; the original CEQ regulations required only “potential” control and responsibility.) The FRA also lists a series of activities that are excluded from NEPA review, such as those “with no or minimal Federal involvement where a Federal agency cannot control the outcome of the project,” actions with effects located entirely outside United States jurisdiction, and ministerial (or non-discretionary) actions “made in accordance with the agency’s statutory authority.” These changes largely adopt prior judicial decisions.
  • Under the FRA, an EIS must be prepared only when a proposed action would have “a reasonably foreseeable significant effect on the quality of the human environment.” (The 2020 CEQ Rules required an EIS when such an effect was “likely,” and the original CEQ regulations did so when an effect “may” occur.)  This change is aimed at reducing the need for an EIS in close cases.
  • Codifying a change made in the 2020 CEQ Rules, the FRA provides that an agency “is not required to undertake new scientific or technical research” unless doing so “is essentially to a reasoned choice among alternatives, and the overall cost and time frame of obtaining it are not unreasonable.”
  • The FRA formalizes a process for determining the “lead agency” – the agency supervises the preparation of an environmental review document and the overall environmental review – and provides that, to the extent practicable, the NEPA process should result in a single environmental review document that all decision-making agencies rely upon to make permitting decisions.
  • Expanding on the use of “categorical exclusions” that are exempt from further review under NEPA, the FRA codifies parts of the 2020 CEQ Rules that slightly expended the definition of a “categorical exclusion” to refer to actions that normally do not significantly affect the quality of the human environment, as well as a provision that allows a reviewing agency to adopt a categorical exclusion listed in another agency’s NEPA procedures. According to statistics from the Government Accountability Office, the vast majority of agency actions under NEPA result in the application of a categorical exclusion, so minor changes of this kind can have a meaningful impact on agency practice.
  • Finally, the FRA provides greater clarity the use of “programmatic” environmental documents, defined as an EA or EIS that analyzes the environmental effects of a larger policy, program, plan, or group of related actions. The FRA states that an agency may rely on a programmatic environmental document for 5 years without additional review, unless there are “substantial new circumstances or information about the significance of adverse effects that bear on the analysis”; after 5 years, the agency can continue to rely on the programmatic document, “so long as the agency reevaluates the analysis” and “any underlying assumption to ensure reliance on the analysis remains valid.”

As noted, the Biden Administration had signaled that it planned to issue comprehensive changes to the NEPA regulations as part of a phase 2 rulemaking in Spring 2023.  It remains to be seen how and whether the FRA’s statutory amendments will impact the forthcoming phase 2 rules, but at a minimum, the next phase of rules will have to remain consistent with the FRA’s statutory amendment.