On April 20, 2022, the Council on Environmental Quality (CEQ) published a final rule revising its National Environmental Policy Act (NEPA) regulations. This rule (the "Phase 1 Rule") originates from two executive orders (E.O. 13990 and E.O. 14008) issued by President Biden in January 2021, which directed CEQ to review regulations issued during the Trump administration. The Phase 1 Rule represents the first half of a two-phase, comprehensive review of the 2020 NEPA revisions. The final rule, which becomes effective on May 20, 2022, largely adopts the changes proposed in CEQ's October 2021 Notice of Proposed Rulemaking (NPRM), but includes a few minor modifications.
The Phase 1 Rule restores key provisions of CEQ's NEPA regulations to their state prior to the Trump-era revisions. In its April 19 press release announcing the final rule, CEQ noted that the 2020 revisions "caused implementation challenges for agencies and sowed confusion among stakeholders and the general public." CEQ Chair Brenda Mallory justified the most recent changes by stating that "[r]estoring these basic community safeguards will provide regulatory certainty, reduce conflict, and help ensure that projects get built right the first time . . . [and patching] these holes in the environmental review process will help projects get built faster, be more resilient, and provide greater benefits to people who live nearby."
First, the Phase 1 Rule allows agencies more flexibility to determine a project's "Purpose and Need" and the corresponding range of reasonable alternatives. The 2020 revisions required agencies to create a project's Purpose and Need in recognition of the applicant's goals for the project and in consideration of the agency's own statutory jurisdiction. The Phase 1 Rule rescinds this requirement, with CEQ stating expressly that a broader range of issues should be considered in adopting a project's Purpose and Need, including broader environmental goals and policies and an agency's own mission. While an agency should also consider an applicant's goals for the project, that should not be a limiting factor.
Second, by restoring the presumption that CEQ's NEPA regulations are a regulatory "floor" rather than a "ceiling," the Phase 1 Rule allows agencies to tailor their own NEPA processes to meet their specific needs. In the context of this change, CEQ also finalized its two-year extension of the deadline by which agencies are required to update their individual NEPA regulations. The deadline is now set for September of 2023.
Third, the Phase 1 Rule restores the definitions of "direct effects," "indirect effects," and "cumulative impacts" that were removed by the 2020 revisions. It also adds the phrase "that are reasonably foreseeable" to the definition proposed in the NPRM: "Effects or impacts means changes to the human environment from the proposed action or alternatives that are reasonably foreseeable and include [direct effects, indirect effects, and cumulative effects.]"
While the Phase I changes are significant, it appears that the Phase 2 revisions could be even more impactful. CEQ has stated that its upcoming Phase 2 proposals will be "broader" and will "ensure full and fair public involvement in the environmental review process; meet the nation's environmental, climate change, and environmental justice challenges; provide regulatory certainty to stakeholders; and promote better decision-making consistent with NEPA's goals and requirements." Venable will continue to monitor CEQ's revisions to its NEPA regulations and will track anticipated guidance on Greenhouse Gas emissions analyses and environmental justice best practices.