The Fiscal Responsibility Act of 2023, signed into law on June 3, raised the U.S. debt limit and ushered in the most significant revisions of the National Environmental Policy Act (NEPA) in its 50+ year history. While the statutory changes are notable and important to understand, most of the changes codify longstanding agency practice and are expected to have only modest effects on environmental reviews, primarily with respect to timelines for completion.

In addition to these statutory changes, energy and infrastructure developers and other stakeholders are awaiting the White House Council on Environmental Quality’s (CEQ’s) “Phase 2” proposed NEPA rule. CEQ will likely seek to harmonize its proposed rule with the new statutory changes and could pose questions for public comment regarding new provisions that may warrant interpretation by CEQ. Congress may pursue additional permitting-related changes in the coming months, as well.

The following is a summary of the key changes to NEPA, placed in relevant context.

Effects and Alternatives Analysis

The law provides that NEPA analysis should focus on “reasonably foreseeable environmental effects.” It also states that agencies shall evaluate “a reasonable range of alternatives to the proposed agency action … that are technically and economically feasible, and meet the purpose and need of the proposal.”

Is this novel? These amendments largely codify longstanding agency practice and are consistent with CEQ’s existing NEPA regulations, CEQ guidance, and case law. See, e.g., 40 CFR §§ 1508.1(g), 1508.1(z). The language does not eliminate analysis of reasonably foreseeable climate change effects, consistent with CEQ’s approach in its final “Phase 1” NEPA rule published last year and its January 2023 Guidance on Consideration of Greenhouse Gas Emissions and Climate Change.

Lead Agency

A lead federal agency will develop a schedule for reviews and be responsible for the preparation of a single environmental document. The lead agency will coordinate with participating federal agencies, and State, Tribal, or local agencies can serve as joint lead agencies.

Is this novel? The new language is generally consistent with the existing NEPA regulations and agency practice. See 40 CFR § 1501.7.

Timelines and Court Involvement

The law sets a 2-year limit on preparation of Environmental Impact Statements (EISs) and a 1-year limit on Environmental Assessments (EAs). The deadline can be extended, in consultation with the applicant, if necessary.

The law creates a new avenue for project sponsors to petition a court if a deadline is missed, and a court can create a new schedule and deadline for the agency to act as soon as practicable.

Is this novel? While the timelines are present in CEQ’s 2020 regulations in a similar manner, the ability to petition for a court-imposed schedule and deadline is entirely new.

Notably, the Inflation Reduction Act of 2022 provided $1 billion to federal agencies and the Federal Permitting Improvement Steering Council to assist them in conducting reviews more efficiently and effectively — funding that may prove essential to meeting these new deadlines given historical median completion times of more than 3 years for an EIS.

Page limits and Preparation of Environmental Documents

The law imposes page limits of 75 pages for EAs, 150 pages for EISs, and up to 300 pages for EIS’s analyzing actions of “extraordinary complexity” – not including appendices.

Lead agencies are directed to prescribe procedures to allow project sponsors to prepare environmental review documents under agency supervision, with the lead agency required to independently evaluate the environmental document and take responsibility for its contents.

Is this novel? The page limits are not expected to usher in major changes, given the ability to use appendices, and similar limits are present in CEQ’s regulations. Sponsor preparation of environmental documents is not a new practice; however, CEQ’s regulations have more detail on the requirements for such arrangements.

Major Federal Action

The law, for the first time, defines the concept of “major federal actions” subject to NEPA as actions the agency “determines [are] subject to substantial Federal control and responsibility.”

The definition also includes examples of actions that are not major federal actions, including:

• Actions with no or minimal federal funding;
• Actions with no or limited federal involvement where the Federal agency cannot control the outcome of the project;
• Loans and guarantees where a federal agency does not exercise sufficient control and responsibility over the use of that assistance or the effect of the action;
• Business loan guarantees provided by the Small Business Administration, among others;
• Bringing judicial or administrative enforcement actions; and
• Activities or decisions that are non-discretionary.

Is this novel? The term as defined in CEQ’s 2020 NEPA regulations was somewhat broader: “an activity or decision subject to Federal control and responsibility…,” but the list of exclusions is very similar. See 40 C.F.R. § 1508.1(q). The term was defined more broadly in CEQ’s 1978 NEPA regulations prior to the 2020 regulatory revisions. Because of the centrality of this definition to federal environmental reviews, this may be an area with heightened legal and regulatory attention.

In short, while these statutory changes do not present a sea change, they come amidst a dynamic regulatory and political backdrop and merit ongoing attention.