In January, 2020, the Council on Environmental Quality (“CEQ”) released a proposed regulatory overhaul for the National Environmental Policy Act (“NEPA”). First enacted in 1970, NEPA requires federal agencies to consider the environmental impacts of their proposed actions prior to taking those actions. Because NEPA requirements apply to major federal actions, it is important to know define the types of actions that are included in that definition. The proposed regulations released by CEQ contain a provision specifically stating that major federal actions “do not include farm ownership and operating loan guarantees by the Farm Service Agency […] and business loan guarantees by the Small Business Administration.” If that specific change goes into effect, it would eliminate the possibility that private agricultural activity connected to a federal agency only through funding from the Farm Service Agency (“FSA”) would be subject to NEPA review.

Under NEPA before beginning any “major federal action,” federal agencies are required to complete the two-step NEPA review process in order to evaluate the impact of the proposed action on the environment. First, any agency seeking to carry out a major federal action must prepare an Environmental Assessment (“EA”). This document typically provides an analysis of the expected environmental impacts of the proposed action and an overview of possible alternative actions that would reduce the expected impact of the project. The purpose of the EA is to determine whether or not the proposed action will have significant environmental impacts. If it does, then the federal agency will move onto the second step of the NEPA process which is the development of an Environmental Impact Statement (“EIS”) which is similar to an EA but goes into greater depth. If the EA determines that the proposed project will not cause significant environmental impacts, then the agency will make a finding of no significant impact (“FONSI”) and conclude the NEPA process.

Although the NEPA process can appear simple and straightforward upon first glance, it is often a long and complex process in reality. If a project requires an EIS, the EIS must go through notice and comment rulemaking which can result in multiple draft EIS documents before a final EIS is determined. Additionally, federal agencies always face the possibility that a private party may initiate a lawsuit challenging the sufficiency of a NEPA review process.

Because the NEPA process can be so complex, it is important for agencies to know what actions are subject to the statute. The exact language of the statute limits NEPA jurisdiction to “major federal actions.” Currently, regulations define major federal actions as “actions with effects that may be major and which are potentially subject to Federal control and responsibility.” This is a broad definition that covers some obvious actions, like a decision by the Bureau of Reclamation to build a dam, to less obvious actions, such as a decision by the Bureau of Land Management to grant a license to a private company to build a power line across public land. Some federal actions have been specifically exempted from the NEPA process because they are either too small or are conducted on such a routine basis that requiring them to go through the NEPA process would bring an agency to a standstill, for example routine road maintenance conducted by the United States Forest Service. Each agency develops its own regulations specifying which of its actions are excluded from NEPA.

Currently, FSA identifies only some of its loans as exempt from the NEPA process. Those loans exempt from the process are “involve no new ground disturbance.” 7 CFR § 799.31(a). Examples of such actions include deferrals of loan payments and loans for family living expenses. However, loans that are not specifically exempted are subject to NEPA review, which means that any agricultural operation that receives such a loan currently must go through the NEPA process. Any agricultural operation receiving FSA or SBA funds also faces the possibility of a private party suit for an allegedly insufficient NEPA review.

In 2013, several environmental organizations filed a lawsuit against the United States Department of Agriculture (“USDA”) over the environmental review and authorization of loan guarantee assistance to C&H Hog Farms (“C&H”), an animal feeding operation located within the Buffalo River watershed in Arkansas. The plaintiffs alleged that the FSA had violated NEPA by conducting insufficient NEPA review on the loans it guaranteed to C&H. In Buffalo River Watershed All. v. Dep’t of Agric., No. 4:13-CV-450-DPM, 2014 WL 6837005 (E.D. Ark. Dec. 2, 2014) the judge agreed with the plaintiffs and concluded that FSA “arbitrarily determined that C&H would have no significant impact on the environment.” As a result, the judge ordered that the loan guarantees not go into effect until FSA came into NEPA compliance.

If the proposed NEPA regulations excluding FSA operating loan guarantees from NEPA jurisdiction take effect, cases such as Buffalo River Watershed All. v. Dep’t of Agric. would not occur. FSA would not need to conduct NEPA review for loan guarantees. As a result, agricultural operations funded through such loans would not face the possibility of a court order preventing them from receiving the loans until additional NEPA review had been conducted. Although the change in the proposed regulations is slight, it could have a wide-reaching impact.

To read the proposed NEPA regulations, click here.

To read the text of NEPA, click here.

To read the FSA regulations governing the agency’s NEPA procedures, click here.

To read the complaint in Buffalo River Watershed All. v. Dep’t of Agric., click here.

To read the opinion in Buffalo River Watershed All. v. Dep’t of Agric., click here.

To read a previous blog post with a more overarching analysis of the NEPA changes, click here.

For more National Agricultural Law Center resources on NEPA, click here.