On May 1, 2024, the Council on Environmental Quality (“CEQ”) released the final version of its Bipartisan Permitting Reform Implementation Rule, otherwise known as the Phase 2 National Environmental Policy Act (“NEPA”) rule. As the name suggests, the new final rule is the second part of CEQ’s rulemaking process to revise NEPA regulations. The process started in 2021 when the Biden Administration directed all federal agencies to review regulations that had been adopted from January 2017 to December 2020. Phase 1 of the rulemaking process was completed and went into effect in May 2022. With the finalization of Phase 2, the NEPA rulemaking process has come to an end, marking only the second time that NEPA regulations have been meaningfully revised since they first finalized in 1978. While this rulemaking process has restored a considerable amount of the familiar 1978 regulations, it has added new language to clarify page limits for NEPA documents, and requirements for agencies to take environmental justice considerations into account for the first time. Because most agency actions require some level of NEPA review, these regulations may have far-reaching impacts.
Background
NEPA was signed into law on January 1, 1970, and is widely regarded as the first major environmental law in the United States. According to the text of NEPA, the overall purpose of the statute is to “declare a national policy which will encourage productive and enjoyable harmony between man and his environment[.]” 42 U.S.C. § 4321. NEPA is often referred to as a procedural statute because it does not require a specific substantive result, but rather lays out a process for federal agencies to assess the environmental impacts of their agency actions before finalizing certain decisions.
Under NEPA, all federal agencies must examine the environmental impacts of any action that is expected to “significantly affect[t] the quality of the human environment[.]” 42 U.S.C. § 4332(2)(C). NEPA requires federal agencies to produce a detailed written statement analyzing the potential environmental impacts of a proposed action. Known as an Environmental Impact Statement (“EIS”), this written statement is required to include information related to: the environmental impact of the proposed agency action; any adverse environmental effects that cannot be avoided if the action is carried out; alternatives to the proposed action, including a “no action” alternative; the relationship between local short-term uses of the environment and long-term productivity; and any irreversible commitments of resources which would be made if the proposed action were implemented. 42 U.S.C. § 4332(2)(C).
Importantly, drafting an EIS is only the final step in NEPA’s environmental review process. First, a federal agency must determine whether its proposed action is subject to NEPA review. Typically, NEPA review is mandatory for any “major federal action” that a federal agency would like to carry out. 42 U.S.C. § 4332(2)(C). Under NEPA, a major federal action is typically an action that is subject to a federal agency’s control. 40 C.F.R. § 1508.1(w). Once an agency has determined that its proposed action is a major federal action subject to NEPA review, the next step is to determine whether the action falls under a Categorical Exemption (“CE”). A CE is a type of action that an agency has already determined does not have a significant effect on the environment. 40 C.F.R. § 1508.1(e). Each federal agency is tasked with developing its own list of CEs specific to its agency operations. Some examples of CE activities include trail maintenance in public parks, routine administrative or business actions, and land surveys.
If an agency finds that its proposed action is considered a CE, then the NEPA process is at an end. However, if the action does not meet the requirements for a CE, then the agency will move on to the next step and begin preparing an Environmental Assessment (“EA”) to determine whether the preparation of an EIS is required. An EA is similar to an EIS, but is typically more concise. In general, an EA should include information on the purpose and need of the agency’s proposed action, alternatives to the action, and the environmental impacts of both the proposed action and the alternatives. 40 C.F.R. § 1501.5(b). After finalizing an EA, the agency will either determine that further analysis is needed and will go on to draft an EIS, or it will issue a Finding of No Significant Impact (“FONSI”). An agency will issue a FONSI only if, based on the EA, it concludes that the action will not have any significant effects on the environment. 40 C.F.R. § 1501.6(a)(1). If an agency issues a FONSI, that is the end of the NEPA process. However, if an agency completes an EA and does not issue a FONSI, it must proceed to the final stage of NEPA environmental review and prepare an EIS.
As discussed, an EIS is a written document that provides a comprehensive overview of the environmental impacts of an agency’s proposed action, and possible action alternatives. When drafting an EIS, the agency will consider direct effects that are caused by the agency action and occur at the same place and time as the action; indirect effects that will occur at a later time, but are still a reasonably foreseeable result of the action; and cumulative effects which result from the effects of the proposed action when added to the effects of other agency actions in roughly the same area. 40 C.F.R. § 1508.1(i). After preparing an EIS, the agency will make it available for public comment before issuing a final version. Once a final EIS is issued, the NEPA process is at an end. Importantly, NEPA does not require agencies to choose the most environmentally sustainable alternative described in an EIS. Instead, the purpose of NEPA is to require agencies to consider the overall environmental impacts of their actions.
After NEPA first became law, CEQ issued a series of interim guidelines which described how agencies should draft an EIS. Actual regulations were not issued until 1978. Except for some minor amendments made in 1979 and 1986, the 1978 regulations remained unchanged until 2020 when CEQ implemented the first comprehensive overhaul to the NEPA regulations in 40 years. Changes made in 2020 included setting page limits for EAs and EIS reports; setting time limits for when environmental review had to be completed; and replacing language directing agencies to consider the direct, indirect, and cumulative impacts of their proposed actions with language directing them to consider only those impacts that were “reasonably foreseeable.” For more information on the 2020 regulations, click here.
After the Biden administration took office in 2021, it instructed all federal agencies to review any regulations that had been adopted during the Trump administration with a particular focus on environmental regulations. Following that review, CEQ initiated a two-phase rulemaking process to modify or rollback changes made by the 2020 regulations. CEQ completed Phase 1 of its rule-making process in 2022, and began Phase 2 in 2023. The recently issued Phase 2 final rules conclude that rule-making by restoring some of the original 1978 language, and adding new language to clarify certain aspects of NEPA and codify statutory changes made to NEPA by the Fiscal Responsibility Act of 2023 (“FRA”)..
New Regulations
The Phase 2 final regulations are detailed and comprehensive. They make numerous changes to NEPA’s regulatory framework, from changing most uses of the word “impact” to “effect” for general clarity to imposing page limits and establishing deadlines. Some of the most impactful changes in the final Phase 2 regulations include page and time limits for EAs and EIS reports, requirements for agencies to consider impacts proposed actions could have on climate change and environmental justice concerns, changes to how agencies may establish CEs, and procedural changes to increase public engagement.
Under the final Phase 2 regulations, codified both page and time limits for EAs and EIS reports. Going forward, an EA must be completed within one year, unless the agency extends the deadline. However, any extension of the deadline must be only so much time as is necessary to complete the EA. The regulations also state that the text of an EA may not exceed 75 pages. Similarly, the regulations provide that an EIS must be prepared within two years unless the agency seeks to extend the deadline. Like with an EA, an agency may only extend the EIS deadline for as much time as necessary to complete the report. The rules also set a 150-page limit on EIS reports, with a limit of 300 pages for “proposals of extraordinary complexity.” Both the page and time limits were first introduced in the 2020 rules, and were included in statutory updates to NEPA made under the FRA.
Climate change and environmental justice concerns are given a new focus under the Phase 2 rules. While the NEPA process has included consideration of climate effects as part of an agency’s requirement to consider the cumulative impacts of their actions during environmental review, the Phase 2 rules formally codify this requirement. Under the new regulations, “effects” is defined to include “the contribution of a proposed action and its alternatives to climate change, and the reasonably foreseeable effects of climate change on the proposed action and its alternatives.” Going forward, agencies will need to consider the possible impacts their actions may have on the climate when considering the “effects” of those actions. Environmental justice concerns have also been given a new focus under the Phase 2 regulations. Along with adding “adverse effects on communities with environmental justice concerns” to the expanded definition of “effects,” the regulations also include a separate definition of “environmental justice” for the first time. Under the new rules, environmental justice is defined as:
[T]he just treatment and meaningful involvement of all people, regardless of income, race, color, national origin, Tribal affiliation. Or disability, in agency decision making and other Federal activities that affect human health and the environment so that people:
(1) Are fully protected from disproportionate and adverse human health and environmental effects (including risks) and hazards, including those related to climate change, the cumulative impacts of environmental and other burdens, and the legacy of racism or other structural or systemic barriers; and
(2) Have equitable access to a healthy, sustainable, and resilient environment in which to live, play, work learn, grow, worship, and engage in cultural and subsistence practices.
Going forward, federal agencies will be required to take environmental justice impacts into account when going through the NEPA process.
Other aspects of the FRA amendments that were codified under the Phase 2 regulations included changes made to help streamline the CE process. Under the new rules, agencies will be able to establish CEs jointly with other agencies. Going forward, agencies will be able to “adopt and apply a Categorical Exclusion listed in another agency’s NEPA procedures” so long as the agency adopting the CE consults with the other agency to ensure that the proposed action meets the requirements of the CE, and the public are given sufficient notification. Agencies will also be able to establish CEs through land use plans or other decision documents supported by an EIS. The goal of these provisions is to make it easier for agencies to establish new CEs and avoid duplicative efforts from agencies seeking to exempt similar activities from NEPA review.
The Phase 2 regulations made numerous changes to expand the scope of public engagement in the NEPA process. For the first time, agencies will be required to make draft EAs available for public comment and will be required to take the public’s input into consideration when making the final draft. Agencies will also be required to provide public notification of NEPA-related hearings and meetings, and will need to make a draft EIS available at least fifteen days in advance if it is the subject of a public meeting. Importantly, the Phase 2 rules have changed the title of section 1501.9 from “Scoping” – a process done early on in NEPA review to determine the overall scope of analysis required for a proposed action – to “Public and Government Engagement.” The new regulations emphasize that the public should be included in the scoping phase of the NEPA process and require agencies to engage the public where possible.
Conclusion
The changes made by the Phase 2 regulations are extensive. They both restore language from the original 1978 regulations, and add new updates to reflect amendments from the FRA. Under the new rules, agencies will need to evaluate the climate change and environmental justice impacts of their proposed actions, and take steps to engage the public earlier in the NEPA process than was previously required. This combined emphasis on climate and environmental justice concerns along with increased public transparency is in-line with other regulatory overhauls of environmental statutes made by the Biden administration. The final rules will go into effect on June 30, 2024.
To view the Phase 2 regulations, click here.
To read the text of NEPA, click here.
For more resources on NEPA from the National Agricultural Law Center, click here.