White House Council on Environmental Quality Finalizes NEPA Phase II Rulemaking

On May 1, 2024, the White House Council on Environmental Quality (CEQ) finalized a rule to undo most of the remaining 2020 Trump Administration changes to the federal environmental review process under the National Environmental Policy Act (NEPA). The 2020 changes being reversed were intended to streamline federal environmental reviews, but were criticized for reducing consideration of issues such as climate change and for narrowing opportunities for public input into reviews.

Effective July 1, 2024, Phase II of CEQ’s NEPA regulations aim to restore or strengthen federal agencies’ consideration of foreseeable environmental, climate change, and environmental justice effects of proposed federal actions. The final rule will apply to all federal agency NEPA processes that begin after July 1st, but it gives agencies discretion to apply it to ongoing processes that began before July 1st. The final rule requires federal agencies to develop or revise their agency-specific NEPA procedures by July 1, 2025.

Regulatory Background

CEQ first issued its NEPA regulations in 1978, and they were largely unchanged from their issuance until 2020, though CEQ has periodically issued guidance on specific NEPA and environmental issues.

On August 15, 2017, President Trump issued E.O. 13807, directing, in part, CEQ to establish and lead an interagency working group to identify and propose changes to its NEPA regulations. Subsequently, CEQ promulgated wholesale revisions to its regulations, which took effect on September 14, 2020 (2020 rule). These revisions excluded several categories of federal actions from NEPA review requirements, removed longstanding requirements that agencies consider indirect and cumulative impacts of federal actions in their NEPA reviews, narrowed the range of alternatives that agencies must consider in their NEPA reviews, and placed procedural constraints on court, challenges to NEPA decisions.

On January 20, 2021, President Biden issued E.O. 13990, directing CEQ to review existing regulations issued between January 20, 2017, and January 20, 2021, for consistency with Biden Administration policy and to take appropriate action (Phase I).

CEQ proposed Phase I changes to its NEPA regulations in October 2021, and finalized those changes in April 2022. Phase I reversed several of the major changes to CEQ’s NEPA regulation under the 2020 rule. It reinstated the requirement for federal agencies to consider indirect and cumulative impacts. It also restored federal agencies’ ability to broaden the purpose and need proposed by private applicants, with an emphasis on climate change and environmental justice.

On July 31, 2023, CEQ proposed further revisions to its NEPA regulation (Phase II). Phase II proposed restoring most of the 1978 regulation’s requirements with minor clarity adjustments and an emphasis on climate change and environmental justice. The May 1, 2024 rule finalizes the proposed Phase II rule with minor technical changes.

Climate Change

CEQ’s Phase II rule adopted several changes to ensure that agencies integrate climate change considerations into the analysis of environmental effects. The rule clarifies that, when discussing environmental consequences in an Environmental Impact Statement (EIS), agencies must address all reasonably foreseeable climate change-related effects, including the effects of climate change on the proposed action and its alternatives. Agencies are also required to address any risk reduction, resiliency, or adaptation measures included in the proposed action and alternatives.

Environmental Justice

For the first time, CEQ will integrate environmental justice into federal administrative law practice by revising the definition of “effects” in its NEPA regulation to add a definition of “environmental justice” at Section 1508.1(m):

“Environmental justice means the 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:

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
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.”

In addition, it directs agencies to work with affected communities to identify environmentally preferable alternatives that will not have adverse effects on communities with environmental justice concerns, and to mitigate any such effects that are unavoidable.

To promote the inclusion of Tribal perspectives, CEQ also clarified the meaning of the phrase “special expertise” to include “Indigenous Knowledge.” This change ensures that federal agencies respect and benefit from the unique knowledge that Tribal governments may bring to the environmental review process.

Page and Time Limits

The final rule includes page and time limits for both Environmental Assessments (EAs) and Environmental Impact Statements (EISs). It provides a one-year timeline for EAs and a two-year timeline for EISs. The page limits are set at 75 pages for an EA and 150 or 300 pages for an EIS, depending on the complexity of the project.

Other Key Takeaways:

CEQ’s final rule also makes the following changes to its NEPA regulations:

Dropping 2020 Exhaustion of Remedies Provisions: The final rule removes the 2020 regulation's requirement for parties to exhaust administrative remedies before seeking judicial review of NEPA decisions.
Removing Bonding Requirements: Agencies will no longer be allowed to impose bonding or security requirements for NEPA challenges.
Restoring Intensity Factors: The final rule restores and expands most intensity factors that were used to assess the significance of effects. Those factors include adverse impacts on public health and safety, historic or cultural resources, ecologically critical areas, endangered species habitat, and the treaty rights of Tribal Nations.
Clarifying Beneficial Effects: Agencies do not need to prepare an EIS if an action's effects are exclusively beneficial.
Requiring Comments on Draft EAs: If a draft Environmental Assessment (EA) is published, agencies must seek and consider public comments.
Mitigation and Compliance Plans: Agencies must develop mitigation and compliance plans for measures used to justify a Finding of No Significant Impact (FONSI).
Publishing EIS Schedules: Agencies must publish EIS schedules and make revisions publicly available.
Identifying Environmentally Preferable Alternatives: Agencies must identify the environmentally preferable alternative(s) in the EIS.
Enforceable Mitigation Measures: Agencies are required to enforce mitigation measures they rely on in their decisions.

Congressional Review Act Challenge

Some members of Congress have criticized CEQ’s finalization of its Phase II NEPA regulation, and are moving to disapprove it through the Congressional Review Act. President Biden would most likely veto a Congressional Review Act Resolution, and it is unlikely there would be sufficient votes to overturn such a veto.

Conclusion

CEQ’s Phase II NEPA rule largely reinstates the pre-2020 framework while incorporating some amendments to NEPA by the Fiscal Responsibility Act. The most significant policy change is the codification of environmental justice, which was previously implemented through executive orders. These changes promote the integration of climate change considerations, environmental justice, and Indigenous Knowledge into federal decision-making.

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