Introduction

On July 31, 2023, the Council on Environmental Quality (“CEQ”) proposed the Bipartisan Permitting Reform Implementation Rule (“Proposed Rule”), 88 Fed. Reg. 49,924 (July 31, 2023), which is better known as Phase 2 of the Biden Administration’s revisions to the regulations that implement the National Environmental Policy Act (“NEPA”).

NEPA imposes a procedural requirement that does not mandate outcomes, only informed decision making. Despite its procedural nature, NEPA is one of the primary mechanisms for project opponents to challenge projects and is the most litigated federal statute. CEQ describes the changes in the Proposed Rule as promoting efficient and effective environmental review while increasing regulatory certainty. Given the history of NEPA litigation, and the significant changes in the Proposed Rule, it is likely that these changes will open new pathways for litigation and require courts to interpret the changes before providing regulatory certainty.

Background Leading to the Proposed Rule

Prior to 2020, the regulations implementing NEPA, 40 C.F.R. §§ 1500-1508, had not been meaningfully updated since 1978. In 2020, CEQ finalized significant changes to the regulations, which were designed to speed up project review and limit agency discretion in considering impacts beyond the immediately proposed project. In 2021 CEQ started a phased process to revise the NEPA regulations. In April 2022, CEQ issued its Phase I Rule, 87 Fed. Reg. 23,453 (April 20, 2022), which restored the 1978 regulations’ provisions on the purpose and need statement, defined “effects of the action,” and restored agency discretion to adopt procedures beyond those contained in the CEQ regulations.

On June 3, 2023, the Fiscal Responsibility Act of 2023, Pub. L. No. 118-5 (June 3, 2023), was signed into law, resulting in some of the most significant substantive amendments to NEPA since it took effect in 1970. The statutory amendments, which focus on streamlining NEPA and narrowing the scope of environmental review for projects involving federal approval or funding, are consistent with agency practice, existing NEPA regulations, CEQ guidance documents, and case law interpreting NEPA. The Proposed Rule expands upon the NEPA amendments’ revised definition of “major Federal action” triggering NEPA review as an action subject to “substantial” federal control and responsibility, and authorizes agencies to jointly adopt categorical exclusions.

The Proposed Phase 2 Rule

The Proposed Rule makes extensive changes to the NEPA regulations. Many of the changes are designed to modernize the regulations and provide additional clarity for applicants and agencies conducting NEPA review. Other changes restore provisions of the 1978 regulations. However, there are several significant changes that go beyond the 1978 regulations or the 2020 regulations, which are discussed below.

CEQ is accepting comments on the Proposed Rule until September 29, 2023. Additionally, there are virtual public meetings on August 26 and 30, and September 11 and 21, 2023. CEQ has provided a redlined version of its Proposed Rule which highlights the extensive nature of its proposed revisions. 

1. Role of NEPA

Despite NEPA’s procedural nature, the Proposed Rule would emphasize that NEPA reviews should “contain action-forcing” procedural provisions to ensure federal agencies implement the letter and spirit of the Act. The Proposed Rule further explains that “[t]he purpose of the regulations in this subchapter is to set forth what the Federal agencies must and should do to achieve the goals of the Act.” The regulations emphasize that agencies should implement actions and their statutory mandates consistent with the restated goals of NEPA to the maximum extent possible. The Proposed Rule requires agencies to identify “environmentally preferable alternative” for each action. The Proposed Rule describes the environmentally preferable alternative as the alternative that

will best promote the national environmental policy expressed in section 101 of NEPA by maximizing environmental benefits, such as addressing climate change-related effects or disproportionate and adverse effects on communities with environmental justice concerns; protecting, preserving, or enhancing historic, cultural, Tribal, and natural resources, including rights of Tribal Nations that have been reserved through treaties, statutes, or Executive Orders; or causing the least damage to the biological and physical environment. The environmentally preferable alternative may be the proposed action, the no action alternative, or a reasonable alternative.

In many cases identifying the environmentally preferable alternative will require subjective judgment and balancing competing factors. However, the Proposed Rule would not require an agency to select the environmentally preferable alternative as the final selected alternative. Since NEPA remains a procedural statute that informs, but does not dictate, agency decision making, it is unclear what effect this provision will have on future NEPA analyses.

2. Climate Change

Agencies have, to varying degrees, considered the effects of climate change when conducting NEPA reviews in the past. The Proposed Rule would specifically require agencies to consider the actions’ potential effects on climate change and consider the effects of climate change on the action. The Proposed Rule adds climate change to “effects” that must be considered, specifically “climate-change related effects, including 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.” Additionally, the Proposed Rule emphasizes that instead of discussing climate change generally, agencies should incorporate forward-looking climate projections to assess both the effects of the action and the environmental baseline.

3. Environmental Justice

The Proposed Rule would require agencies to specifically analyze disproportionate and adverse health and environmental health effects on communities with environmental justice concerns. The Proposed Rule would define “environmental justice” 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.

Notably, the Proposed Rule does not define “communities with environmental justice concerns,” but explains that these would be communities that do not experience environmental justice.

The Proposed Rule also encourages agencies to adopt mitigation measures that specifically address impacts to communities with environmental justice concerns.

4. Beneficial Effects

The Proposed Rule states that actions with significant adverse effects require an environmental impact statement (“EIS”). However, even in circumstances where there are significant adverse effects, if the agency determines that a proposed action would be beneficial, then no EIS would be required. Additionally, if an action has only beneficial effects, then an EIS would not be required. The Proposed Rule gives the example of actions that have short-term adverse effects, but long-term beneficial effects, such as renewable energy projects or forest restoration projects.

5. Significance – Context and Intensity

CEQ describes the threshold question of whether NEPA applies based on whether the effects of the action are significant. The Proposed Rule would require agencies to consider the context of the action and intensity of the effects of the action. With respect to context, the Proposed Rule states that agencies should analyze the significance of an action in context, including global, national, regional, and local. With respect to intensity, CEQ indicates that agencies should consider the duration of effects of the action. The Proposed Rule includes a list of considerations for use in determining intensity, such as the degree to which the action may adversely affect public health, cultural resources, or wetlands, among others.

6. Categorical Exclusions

Categorical Exclusions (“CE”) allow agencies to designate certain categories of activities that do not require an environmental assessment or EIS. The Proposed Rule would add flexibility for agencies establishing a CE and would allow agencies to develop CEs outside of the normal NEPA process, such as through a land use plan or programmatic EIS. Additionally, the Proposed Rule would allow agencies to establish CEs with other agencies jointly.  This proposed revision could be particularly helpful in complex federal permitting processes with multiple federal agencies.

7. Public Participation

As part of the modernization of the regulations, the Proposed Rule includes multiple provisions requiring agencies to publish NEPA documents and supporting materials on their websites and requires the agencies to establish tracking numbers for environmental assessments and EISs.

8. Innovative Approaches

The Proposed Rule would also add provisions allowing agencies to use, following CEQ review, innovative approaches to NEPA review. The Proposed Rule does not establish procedures for innovative approaches but envisions that these approaches would be used to address extreme environmental challenges, such as sea level rise, increased wildfire risk, water scarcity, and species loss, among others.

To utilize an innovative approach the action agency would need to submit a proposal outlining its approach to CEQ for approval. CEQ is specifically seeking public comments on whether these provisions are needed and how they might be implemented.

Conclusion

Although the Proposed Rule aims to increase meaningful NEPA review and efficiency, it remains to be seen whether those goals will be achieved. The Proposed Rule is sure to garner significant public attention and comment. Any changes to the NEPA regulations will almost certainly result in more legal challenges to both the regulations and the projects analyzed under those regulations.   

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Photo of Barbara Craig Barbara Craig

Barbara Craig is a partner of the firm practicing in the Natural Resources and Land Use group. She focuses her practice on federal environmental and natural resources law with an emphasis on endangered species compliance, and forestry and energy facility permitting and compliance…

Barbara Craig is a partner of the firm practicing in the Natural Resources and Land Use group. She focuses her practice on federal environmental and natural resources law with an emphasis on endangered species compliance, and forestry and energy facility permitting and compliance issues. Barbara has extensive experience on issues involving the Endangered Species Act (ESA), National Forest Management Act (NFMA), Federal Land Policy and Management Act, Federal Power Act (FPA), Natural Gas Act, Marine Mammal Protection Act (MMPA), Migratory Bird Treaty Act (MBTA), Bald and Golden Eagle Protection Act (Eagle Act), National Environmental Policy Act (NEPA), National Historic Preservation Act (NHPA), Clean Water Act (CWA) and Administrative Procedures Act. Representative clients include forestry companies and associations, ports, pulp and paper interests, developers and owners of hydropower dams, wind energy projects, utilities, and oil and gas facilities in complex permitting matters. Governor Kulongoski appointed Barbara to the Oregon  Board of Forestry, where she served from 2004 through 2008.

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Photo of Wade Foster Wade Foster

Wade Foster is an environmental attorney based in Stoel Rives’ Boise office. Wade’s primary focus areas include mining, state water rights, and compliance counseling for clients subject to federal and state environmental laws.

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Photo of Lindsay Puckett Lindsay Puckett

Lindsay Puckett is an of counsel attorney in Stoel Rives’ Environment, Land Use & Natural Resources group. She represents public and private clients in transactional and litigation matters involving the California Environmental Quality Act (CEQA), the National Environmental Policy Act (NEPA), endangered species…

Lindsay Puckett is an of counsel attorney in Stoel Rives’ Environment, Land Use & Natural Resources group. She represents public and private clients in transactional and litigation matters involving the California Environmental Quality Act (CEQA), the National Environmental Policy Act (NEPA), endangered species and habitat conservation plans, land use entitlements, conservation easements, alternative energy, coastal development, water issues, and Native American tribes.

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