Proposed NEPA Rules Address Climate Change, Environmental Justice, and Efficiency of Environmental Reviews

On July 28, 2023, the Council on Environmental Quality (CEQ) proposed reforms to the National Environmental Policy Act (NEPA) regulations governing how federal agencies review the environmental effects of major federal projects. The proposed rules follow amendments to NEPA itself that were enacted in June 2023 through the Fiscal Responsibility Act of 2023, which addressed, among other things, the federal debt ceiling.

The proposed rules make significant changes to the previous NEPA regulations as amended in 2020 during the Trump administration. Before those amendments, the regulations had remained largely unchanged since 1978. The proposed rules undo many of the Trump-era changes, restore several of the 1978 provisions, and add new provisions—in particular, giving a much more prominent role to climate change and environmental justice in the NEPA review process.

The proposed changes will no doubt be significant for projects that substantially increase greenhouse gas emissions and other pollutants. The rules, if finalized, could make it harder for agencies reviewing those projects to justify their impacts and could lead agencies and project proponents alike to pursue more environmentally beneficial alternatives and more stringent mitigation measures. They could also lead to a more uniform and thorough approach to agency assessments of climate impacts, particularly in conjunction with CEQ’s recently issued interim NEPA guidance that instructs agencies regarding how to assess greenhouse gas emissions.

Still, the proposed rules may not live up to the Biden administration’s stated goal of making reviews more efficient, particularly for clean energy and regional transmission projects intended to reduce emissions and benefit the climate. Many are concerned that lengthy reviews of such projects could prevent them from coming online quickly and helping to stave off the worst effects of climate change. While the proposed rules do include some efficiency provisions, regarding setting milestones and establishing timeframes for reviews, for example, the proposed rules largely codify existing guidance and current agency practice. And when it comes to timing of reviews, the proposed rules also do not explicitly distinguish between projects that benefit the climate compared with projects that increase emissions.

CEQ’s proposal is subject to public comment, so the final rules may end up addressing these concerns. Yet given that the recent NEPA legislative reforms themselves were quite modest, there may be only so much CEQ can do on its own through rulemaking. Nonetheless, this isn’t the Biden administration’s only chance to quicken energy permitting: pending actions in the Federal Energy Regulatory Commission and Department of Energy aim to streamline the interconnection process and interregional transmission permitting, while Congress continues to debate the nature and scope of legislative permitting reforms. Put in that context, CEQ’s proposed changes to the NEPA regulations represent a notable, albeit incremental, piece in a larger permitting reform puzzle.

We analyze the key provisions in the proposed NEPA reforms below. Stakeholders have until September 29, 2023 to submit comments.

  • Defining “Effects” to Include Climate Change and Environmental Justice: The proposed rules add climate change and environmental justice to the definition of environmental “effects” agencies must consider. Adding climate change is consistent with recent interim NEPA guidance on how agencies should assess a project’s greenhouse gas emissions. The proposed rules don’t go as far as the guidance in suggesting that agencies prioritize projects with climate benefits. Yet the regulatory requirement that agencies consider climate effects, in conjunction with the guidance, suggests that climate-beneficial projects will generally receive more favorable treatment than projects that substantially increase emissions. The addition of environmental justice is also important and consistent with the administration’s policies that prioritize vulnerable communities. CEQ’s proposal will codify environmental justice considerations in environmental reviews at the federal level. To date, such considerations have been primarily addressed at the state level—for instance, in Massachusetts and New York under their state NEPA equivalents.
  • Project Alternatives: CEQ’s proposal revives language proclaiming the “alternatives section” to be “the heart of the environmental impact statement.” It also requires consideration of “reasonably foreseeable environmental effects of the proposed action,” consistent with recent legislative amendments. It’s possible that this “reasonably foreseeable” standard will limit agencies to considering a narrower range of alternatives, thus streamlining reviews. Yet other proposed changes may provide agencies with discretion to consider more, rather than fewer, alternatives. For instance, the proposed rules strike a requirement that agencies to limit their consideration to a “reasonable number” of alternatives and replace it with a requirement that agencies identify—but not necessarily require the selection of—an “environmentally preferable alternative or alternatives” that best promotes NEPA’s goals of “maximizing environmental benefits, such as addressing climate change-related effects or disproportionate and adverse effects on communities with environmental justice concerns,” among others. Time will tell whether this meaningfully affects the efficiency of reviews.
  • Programmatic Reviews: CEQ has proposed several changes regarding programmatic reviews of projects with common characteristics in a given geographical area. Programmatic reviews have been used, for example, to assess groups of offshore wind projects in light of state goals, such as New York and New Jersey’s goals of developing many gigawatts of offshore wind generation within leaseholds established in the New York Bight. While programmatic assessments can help streamline project reviews, the proposed rules largely codify 2014 guidance and are largely consistent with current practices.
  • Categorical Exclusions: CEQ previously set rules for establishing “categorical exclusions” (CEs), defined as “categories of actions that normally do not have a significant effect on the human environment” and thus do not require preparing either an environmental assessment (EA) or environmental impact statement (EIS), except in “extraordinary circumstances.” The current proposal builds on these provisions by allowing agencies to establish CEs through planning or programmatic decisions. Once a CE is established in a plan or program, agencies can apply CEs to future actions within that plan or program.
  • Deadlines and Schedules: The proposed rules maintain the current deadlines of 1 year for EAs and 2 years for EISs, which were codified in the recent legislative amendments. The proposed rules, however, clarify agency authority to extend the deadlines for certain project reviews: any such extensions must provide “only so much additional time as is necessary to complete” the EA or EIS. CEQ also proposes to require lead agencies to develop review schedules based on key milestones while also giving them discretion to tailor schedules to particular projects.
  • Records of Decision with Enforceable Mitigation: CEQ proposes to clarify that any mitigation that is included “as a component of the proposed action” and upon which the agency has relied “to analyze the reasonably foreseeable environmental effects” “shall be enforceable” through “permit conditions, agreements, or other measures.” The agency must identify the authority for enforceable mitigation and “adopt a monitoring and compliance plan.” While the current regulations indicate that agencies must adopt and summarize monitoring and enforcement programs “for any enforceable mitigation” “where applicable,” the proposed rules strengthen this language to increase accountability in the use of mitigation measures.
  • Innovative Approaches: A new section would allow CEQ to authorize an “innovative approach to NEPA compliance . . . to address extreme environmental challenges,” such as by “bolstering resilience of infrastructure to increased disaster risk due to climate change.” According to the notice of proposed rulemaking, this provision is designed “to maximize agency flexibility, creativity, and efficiency while still meeting the requirements of NEPA.” Examples of innovative approaches include “new ways to use information technology; cooperative agreements or work with local communities; methods more fully incorporating, while protecting, Indigenous Knowledge; new ways to work with project proponents and communities to advance proposals; and innovative tools for engaging the public and providing public comment opportunities.” It’s unclear what effect, if any, this might have on projects or whether, if finalized, agencies would choose to engage in “innovative approaches” rather than approaches specified in rules and guidance.

The proposed rules must still clear a few hurdles before they are finalized, including the public comment period, which ends on September 29, 2023. Republicans in Congress have already sharply criticized CEQ’s proposal. They see it as imposing significant hurdles in environmental reviews writ large and are particularly concerned with the focus on climate change and the rules’ potential to bog down projects with significant anticipated greenhouse gas emissions. If finalized, the rules may also be challenged in court. Stay tuned for more updates as the rulemaking process unfolds.

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