On July 16, 2020, the Council on Environmental Quality (CEQ) published its long-awaited final rule to amend its regulations implementing the National Environmental Policy Act of 1969 (NEPA), introducing important changes to the 40-year-old review process. The statute requires federal agencies to take a “hard look” at the environmental impacts of certain proposed projects, but does not mandate any particular outcome. The final rule follows CEQ’s June 2018 Advanced Notice of Proposed Rulemaking (ANOPR) and the January 2020 Notice of Proposed Rulemaking (NOPR), which we previously discussed here.

CEQ’s revisions represent the first update to the NEPA rules in 40 years. While they codify many streamlined practices federal agencies already use, they also introduce important changes to the review process. Many of the significant aspects of the final rule remain largely unchanged from the NOPR, including reduced timeframes agencies have to complete NEPA reviews; page limit, content, and recommended format for NEPA documents; and process for referral to CEQ of actions causing unsatisfactory environmental effects. Below is a breakdown of the most important changes, which while sure to be challenged, will apply to projects commencing after September 14, 2020.

Definitions of Effects & Major Federal Action

As expected, CEQ’s most significant revision is to the definition of “effects” or “impacts” of a proposed action. Just as initially proposed, CEQ has done away with the definitions of direct, indirect, and cumulative impacts. Perhaps most significant and controversial, the cumulative impacts analysis is no longer required as part of a NEPA review under the final rule.

For the first time in the final rule, CEQ has defined effects as changes to the human environment from the proposed action or alternatives that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives. The language in italics is a change from the NOPR. CEQ has further clarified this definition by stating that these effects can occur at the same time and place as the proposed action or alternatives but also may include effects that are later in time or farther removed in distance from the proposed action or alternatives. CEQ has also explained that more than a “but for” causal relationship is needed to make an agency responsible for a particular effect under NEPA, and also that effects should generally not be considered significant if they are remote in time, geographically remote, or the product of a lengthy causal chain. By adding this qualifier in italics, the final rule departs from firmer language in the NOPR by acknowledging that there may be circumstances where these remote effects are nonetheless reasonably foreseeable, have a reasonably close causal relationship to the proposed action, and thus an agency should consider them.

With respect to climate change, CEQ has explained in the preamble to the final rule that “the analysis of the impacts on climate change will depend on the specific circumstances of the proposed action” and that agencies “will consider predictable trends in the area in the baseline analysis of the affected environment.” This is a significant clarification difference from the proposed rule, which would have limited the analysis of greenhouse gas impacts to reasonably foreseeable effects with a reasonably close causal relationship to the proposed action or alternatives. Under the final rule, while CEQ removed the definition of cumulative impacts from the rule, it left open the ability for agencies to consider effects of greenhouse gases, indicating that consideration of the cumulative and indirect effects of climate change are not precluded by the final rule.

Another significant change is to the definition of “major federal action,” which the final rule revises and restructures. First, CEQ has changed the definition from “an action subject to Federal control and responsibility with effects that may be significant” to “an activity or decision subject to Federal control and responsibility.” CEQ deleted the reference to significant impacts because the inquiry of what constitutes a major federal action is limited to determining the federal agency’s role and its control over environmental impacts. The term “significant,” on the other hand, describes the impacts stemming from the action, which is a separate analysis.

Second, CEQ has now provided a list of activities that are non-major federal actions. These actions include extraterritorial activities with effects located entirely outside of the U.S., non-discretionary actions, non-final agency actions, judicial or administrative civil or criminal enforcement actions, general revenue sharing funding assistance with no federal agency control over the use of funds, certain loans and guarantees, and non-federal projects with minimal federal funding or involvement. With respect to this last category of projects with minimal federal involvement, CEQ expects that federal agencies will further define these non-major actions in their NEPA procedures. Although CEQ considered doing so, it decided not to establish a monetary threshold to quantify how minimal the funding should be.

Appropriate Level of Review

Generally, the final rule adopts most of the changes set forth in the NOPR regarding the level of review needed for a given action, but there are some notable differences:

• The final rule provides additional clarity on when an agency may issue a Finding of No Significant Impact (FONSI). Whereas the NOPR would have allowed a federal agency to issue a FONSI when the proposed action is “not likely to have significant effects,” the final rule takes a firmer stand and provides that an agency may only use a FONSI when the proposed action “will not have significant effects.”

• On the other hand, CEQ has softened the requirements for when an agency may use categorical exclusions (CEs) to define certain categories of actions. The NOPR provided that agencies can use CEs to define categories of actions which do not have a significant effect on the human environment, but the final rule provides that agencies may use CEs to define actions that normally do not have a significant effect, and may adopt another agency’s CE determination or portions thereof if the two actions subject to the determinations are substantially similar.

Public Participation & Comment

The final rule generally eases public participation requirements during the NEPA process by eliminating the NOPR’s direction that agencies provide a 30-day comment period on draft EISs and on the “alternatives, information, and analysis” section of a final EIS. The final rule instead stipulates that agencies may set a deadline for providing such comments. Additionally, it omits the requirement that comments should “identify any additional alternatives, information, or analyses not included in the Draft EIS,” and requires that agencies consider the ability of affected persons and agencies to access electronic media when selecting the appropriate methods for providing public notice.

Scoping & Alternatives

The final rule goes a step further than the NOPR in limiting the scope of actions—in addition to the proposed action—that an agency must consider when developing a NEPA document. Specifically, the final rule deletes the requirement that an agency must consider “similar actions” to the proposed action, which, when viewed with other reasonably foreseeable or proposed agency actions, are similar enough that their environmental consequences should be evaluated together. With respect to reasonable alternatives, the final rule is consistent with the NOPR, confirming that the federal action agency must only consider those alternatives “that are technically and economically feasible, meet the purpose and need for the proposed action, and, where applicable, meet the goals of the applicant.” This new definition for “reasonable alternatives” clarifies that agencies are not required to give detailed consideration to alternatives that are unlikely to be implemented because they are infeasible, ineffective, or inconsistent with the purpose and need for agency action.

Additionally, agencies should limit their consideration of alternatives to a “reasonable” number of alternatives relevant to the proposed action, and their analysis of the affected environment to the “reasonably foreseeable environmental trends and planned actions in the area.” CEQ specifically declined to establish a presumptive maximum number of alternatives for the evaluation of a proposed action.

Next Steps for Agencies

The final rule requires federal agencies to develop new or revised NEPA-specific procedures to align with the final rule within one year of the rule’s effective date. In case of any inconsistencies during this transition period, CEQ’s final NEPA regulations control. Further, for projects in progress, agencies may continue using their existing NEPA procedures and CEQ’s 1978 regulations, but they should indicate so to interested and affected parties.

Going forward, CEQ expects that the final rule will provide much-needed transparency to the public regarding agency costs to complete EIS-level NEPA reviews. The final rule follows the NOPR instructing agencies to track costs by preparing review cost estimates, including costs of the agency’s full-time equivalent personnel hours, contractor costs, and other direct costs related to the proposed action’s environmental review.

What’s Next for the Final Rule?

The rule will apply to reviews commencing after September 14, 2020, although project proponents may seek to petition agencies to apply the rule’s principles earlier. The final rule is expected to face litigation, however, and many environmental groups have already promised to challenge it. Even if the new rule is able to withstand a facial challenge, environmental groups will continue to challenge projects on an individual basis.

Notably, litigation is not the only hurdle that this final rule may face. Given the current timing in the congressional legislative session, the final rule falls within the Congressional Review Act (CRA) “carry over” period, meaning that the next Congress will have an opportunity to nullify the rule. Although the use of the CRA was uncommon in the past, it was used at least 15 times at the beginning of the Trump Administration to repeal controversial Obama-era rules.