On July 17, 2020, the Council on Environmental Quality (CEQ) published a Final Rule updating regulations to the National Environmental Policy Act (NEPA). The Final Rule closely tracks the Proposed Rule released in January 2020. The final rule makes a number of notable changes to existing NEPA regulations.

I.                   Setting Presumptive Time and Page Limits for EAs and EISs

Like the Proposed Rule, the Final Rule sets presumptive time limits of two years for the completion of an environmental impact statement (EIS) and one year for the completion of an environmental assessment (EA), unless a senior agency official of the lead agency approves a longer period in writing and establishes a new time limit.

The Final Rule also sets presumptive page limits for NEPA documents. An EIS is now limited to 150 pages or fewer, and an EA shall be no more than 75 pages (excluding appendices) “unless a senior agency official approves in writing” that the EIS or EA may exceed the presumptive page limit and establishes a new page limit. For “proposals of unusual scope or complexity” the presumptive page limit is 300.

II.                Consolidating Environmental Reviews Under a Lead Agency and Expanding Use of Contractors

The Final Rule requires that for proposals involving action by more than one Federal agency, the lead and cooperating agencies shall evaluate the proposal in a single EIS or EA and issue a joint record of decision (ROD) or finding of no significant impact (FONSI). This rule change is aimed at unifying the schedule of review across multiple agencies and consolidating responsibility for moving the process along. This change follows the Trump Administration’s stated “One Federal Decision” framework by requiring agencies to prepare a joint EA, EIS, or FONSI and issue joint RODs.

The Final Rule also allows an expanded role for applicants and contractors in the preparation of EISs or EAs under the supervision of the agency. The Final Rule includes regulations that require the decision-making or lead agency to provide guidance, independently evaluate the EIS or EA, and take ultimate responsibility for the accuracy, scope, and content of the assessment.

III.             Changes to the Definition and Applicability of Categorical Exclusions

Prior NEPA regulations defined “categorical exclusion” (CE) as a “category of actions which do not individually or cumulatively have a significant effect on the human environment and which have been found to have no such effect in procedures adopted by a Federal agency in implementation of these regulations … and for which, therefore, neither an environmental assessment nor an environmental impact statement is required.” 40 C.F.R. § 1508.4 (old regulations). The Final Rule modifies the definition by eliminating the terms “individually or cumulatively.” 40 C.F.R. § 1508.1(d).

The Final Rule further adds that an action is eligible for a CE if it is one that “normally” does not have a significant effect on the environment. Id. Previously, an agency would evaluate a project for “extraordinary circumstances,” which might make a normally excluded project subject to review because of significant adverse effects on the environment. The Final Rule maintains this process, but modifies it by providing that if “an extraordinary circumstance is present, the agency nevertheless may categorically exclude the proposed action if the agency determines that there are circumstances that lessen the impacts or other conditions sufficient to avoid significant effects.” 40 C.F.R. § 1501.4(b)(1).

IV.             A New NEPA Thresholds Section Defines NEPA Applicability

A new section in the Final Rule establishes a framework, drawn from prior judicial decisions, to guide agencies in making a determination regarding the applicability of NEPA. Under the Final Rule, NEPA is inapplicable when an agency’s statutory obligations clearly conflict with NEPA compliance, when Congress has established requirements under another statute that displace NEPA or when an agency is carrying out a non-discretionary duty or obligation.

Similarly, the Final Rule describes the three levels of review (EA, EIS, and CEs) and adds a section entitled “Determine the appropriate level of NEPA review,” which prescribes the way in which agencies shall determine which level of NEPA review is required for a project. 40 C.F.R. § 1501.3.

The Final Rule also revises the separate definition of “major federal action,” expressly excluding, inter alia, “extraterritorial activities or decisions,” non-discretionary activities of an agency, non-federal projects with minimal federal funding or control, and loans, loan guarantees or other forms of financial assistance where the Federal agency does not exercise sufficient control and responsibility over the outcome of such assistance. Id. § 1508.1(q).

V.                Changes to Effects or Impacts that Must Be Considered

The Final Rule changes an agency’s obligation to evaluate cumulative or indirect environmental effects of a project. The new definition of “effects or impacts” eliminates “cumulative effects” and the term “cumulative effects” is no longer separately defined. The Final Rule also eliminates the term “indirect effects” from the regulations. The Final Rule provides that a “but for” causal relationship is insufficient to make an agency responsible for a particular effect and states that effects “should generally not be considered if they are remote in time, geographically remote, or the product of a lengthy causal chain.” Id. § 1508.1(g)

Further, the Final Rule states that “effects” do not “include those effects that the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action.” Id.

VI.             New Definition of Reasonable Alternatives

The Final Rule provides a new definition of “reasonable alternatives,” specifying that such alternatives must be “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).

VII.          Changes to Exhaustion and Public Participation Rules

The Final Rule requires that comments be specific and timely, and directs that agencies find that comments that are not specific and timely will be deemed “unexhausted and forfeited.” Departing from the Proposed Rule, the Final Rule will not require those challenging an action or analyses to first object within 30 days after a Final EIS.

Conclusion

The Final Rules purport to be consistent with and codify case law and agency practice. Numerous states and environmental groups, however, opposed the proposed changes and have stated their opposition to the Final Rule, so that the prospect of litigation over its terms seems likely.

In addition, the Final Rule expressly states that it is a “major rule” subject to congressional review under the Congressional Review Act and, accordingly, that CEQ will submit a report, including the final rule to both houses of Congress and the Government Accountability Office for review. It states that the Final Rule will become effective September 14, 2020, and that if congressional review changes the effective date, CEQ will publish a document in the Federal Register to establish the actual effective date or to terminate the rule. Given this possibility and the potential that legal challenges may be filed, parties with an interest in projects subject to NEPA will wish to monitor these developments. While companies undertaking projects subject to NEPA will likely welcome changes that simplify and expedite the NEPA process, they should carefully consider how best to protect their desired outcomes during this period of uncertainty.