In the first week of July, the federal government launched National Environmental Policy Act (NEPA) reform fireworks intended to accelerate reviews that could reshape the NEPA process for years to come. On July 4, 2025, President Trump signed the "One Big Beautiful Bill Act," which amended NEPA to allow project developers to pay a fee for fast-tracked NEPA reviews. Simultaneously, federal agencies announced significant changes to some 20 agencies' NEPA procedures. All agencies revised their regulations and many replaced their regulations with non-binding guidance. Building on the Supreme Court's characterization of NEPA as a "purely procedural statute" in the recent Seven County decision, agencies made these changes through interim final rules and notices. The changes became effective upon publication, though agencies are accepting comments for 30 days. As the smoke clears from this declaration of independence from NEPA's red tape, project developers should carefully consider how to deploy these changes to ensure that they accelerate NEPA review and do not cause projects to be hung up in litigation.
One Big Beautiful Bill Act NEPA Provision
Section 60026 of the One Big Beautiful Bill Act allows applicants to pay 125% of the estimated cost of preparing a NEPA document to receive expedited timelines: 180 days for Environmental Assessments (EAs) and one year for Environmental Impact Statements (EISs). These timelines are even faster than those added to NEPA under the Fiscal Responsibility Act of 2023 (FRA): one year for EAs and two years for EISs. The enacted language reflects a significant scaling back from the original proposal, which would have allowed developers to pay fees to bypass judicial review entirely. Nonetheless, this provision is likely to have major implications for project developers.
Several practical concerns may need to be confronted. First, the provision lacks clear consequences if federal agencies fail to meet the accelerated deadlines, potentially leaving developers without recourse despite their payment. Second, resource-constrained agencies may struggle to fulfill their responsibilities under these compressed timelines — creating litigation risk. Third, the creation of a two-tiered system where well-funded developers receive preferential treatment could disadvantage smaller developers if it slows down their reviews.
Reform of Agency NEPA Implementing Procedures
Equally significant is the sweeping overhaul of agency-specific NEPA procedures achieved through coordinated publication of some 15 interim final rules and notices. For nearly 50 years, the NEPA legal framework included Council on Environmental Quality (CEQ) regulations that applied federal government-wide and were supplemented by agency-specific procedures (as well as CEQ and agency topic-specific guidance). The CEQ regulations went largely untouched until their revision by the first Trump administration (the 2020 Regulations). The Biden administration made its own revisions through a two-phase rulemaking: phase 1 walked back the first Trump administration's controversial changes and phase 2 implemented amendments to NEPA made in the FRA. Then, after two courts declared CEQ's NEPA regulations ultra vires (i.e., issued without legal authority), the Trump administration attempted to have the final word by entirely rescinding the regulations through an interim final rule in February 2025. Concurrently issued guidance directed agencies to revise their NEPA procedures.
Agencies are now capitalizing on the Supreme Court's decision in Seven County, reaffirming NEPA as "purely procedural" to justify major NEPA reform efforts through deregulatory tools. In the interim final rules, the agencies argue, based on Seven County, that the new NEPA procedures are exempted from notice and comment because they are "rules of agency organization, procedure, or practice," or, in the alternative, are "interpretative rules or general statements of policy." They adopted different strategies for where to establish their procedures — maintaining procedures as binding regulations, shifting procedures non-binding guidance documents, or a combination of both. For example, the U.S. Department of the Interior (DOI) moved most procedures to its non-binding NEPA handbook, and retained only three provisions in its regulations — categorical exclusions, emergency procedures, and applicant and contractor preparation of documents. In contrast, the U.S. Army Corps of Engineers (Corps) rescinded all but the categorical exclusion provisions in the NEPA regulations applicable to most of the Civil Works program, and replaces the separate NEPA regulations specific to the Civil Works Regulatory Program's issuance of permits (e.g., under Section 404 of the Clean Water Act) with new regulations.
Agencies' revisions are largely a return to the first Trump administration's approach, consistent with CEQ's direction in its February 2025 guidance and April 2025 NEPA procedure template. Among other things, the procedures no longer include explicit references to environmental justice and climate change. Some highlights relevant to project developers in the procedures of the DOI, Corps, U.S. Department of Agriculture (USDA), U.S. Department of Energy (DOE), and U.S. Department of Transportation (DOT) include:
- NEPA Exemptions: The procedures clarify and
expand the circumstances in which NEPA does not apply. For example,
DOE now exempts authorizations for presidential permits (for
international border crossings) for electric transmission lines.
Building on case law and the FRA exempting
"non-discretionary" actions from NEPA, DOI further
specifies that NEPA does not apply where a "statute has
prescribed direction with sufficient completeness and precision
that the [agency] retains no residual discretion to take
environmental factors into consideration when determining whether
to take the proposed action." The Corps, USDA, and DOT
procedures have similar language.
Agencies have also integrated into their procedures the FRA exemption of certain financial assistance actions from NEPA. For example, consistent with case law, DOE clarifies that the determination of whether funding is "minimal" (and exempted from NEPA) should be based on a comparison to other, private funding sources. DOE explains that NEPA may not apply "where Federal funding constitutes a small percentage of an infrastructure project's overall funding that is provided only to help design an infrastructure project that is otherwise funded from non-Federal sources." USDA similarly appears to be signaling that it will be determining through future guidance that NEPA does not apply to many of its popular Rural Development financial assistance programs. - Reasonable Alternatives: The procedures also impose limitations on the scope of reasonable alternatives subject to analysis. Agencies have reinstated the requirement from the 2020 Regulations that reasonable alternatives "meet the goals of an applicant." DOI also requires analysis of only those alternatives "within the[ir] jurisdiction."
- Effects/Impacts Analysis: The provisions
related to the scope of effects analysis now look more like the
2020 Regulations and mirror language from Seven County.
The concepts of "direct," "indirect," and
"cumulative" effects are gone. Effects are defined as
changes "that are reasonably foreseeable and have a reasonably
close causal relationship to the proposed action or action
alternatives." The agencies all also clarify that effects: (1)
need not be considered based solely on "but for"
causation; (2) generally should not be considered "if they are
remote in time, geographically remote, or the product of a lengthy
causal chain"; and (3) "do not include those effects that
the agency has no ability to prevent due to the limits of its
regulatory authority, or that would occur regardless of the
proposed action, or that would need to be initiated by a third
party."
Echoing Seven County, agencies must document "where and how it drew a reasonable and manageable line relating to its consideration of any environmental effects from the proposed action that extend outside the geographical territory of the project or might materialize later in time." The DOI, Corps, DOT, and USDA also allow, but do not require, analysis of "environmental effects from other projects separate in time, or separate in place, or that fall outside of the [agency's] regulatory authority, or that would have to be initiated by a third party." - Applicant Document Preparation: Agencies have now promulgated the requirements necessary for applicants to prepare EISs. The FRA laid the foundation to allow applicant preparation of EISs (something previously limited to EAs). But, the FRA specifically required that agencies "prescribe procedures to allow a project sponsor" to do so. Those procedures — though brief — are now in place.
- Public Involvement: Most agencies have eliminated guaranteed public comment opportunities and have also limited agencies' obligations to respond to comments and narrowed meaningful participation opportunities. For example, the procedures make publication of draft EISs optional. In addition, the procedures only require response to "substantive" comments, and the Corps and USDA procedures list additional scenarios where no response is necessary, including, but limited to, that "[t]he comment is outside the scope of what is being proposed" and "[t]he commenter misinterpreted the information provided."
- Categorical Exclusions: Agencies have also made it easier to both establish and apply categorical exclusions, which are a simpler means of complying with NEPA than preparing an EA or EIS. They can be established simply through notice in the Federal Register (as opposed to notice and comment), and some agencies now permit their application even where there are extraordinary circumstances.
These changes are not without significant risks, including:
- Judicial Challenges to the IFRs: As an initial matter, the use of interim final rules will undoubtedly be challenged in the courts.
- Implementation Challenges: Gone are the restraints of the CEQ regulations, which at least attempted to ensure uniformity among agencies' NEPA processes. Also gone are the restraints on modifying those processes. And, streamlining NEPA procedures does not eliminate requirements under other federal, state, local, or tribal laws (such as Section 106 of the National Historic Preservation Act, Section 810 of the Alaska National Interest Lands Conservation Act, or state environmental review statutes).
- Changes to Project-Specific Judicial Review: Whether these regulatory changes will enable the "course correction" called for by the Supreme Court in Seven County to bring NEPA "back in line with the statutory text and common sense" remains uncertain. Agency decisions still cannot be "arbitrary and capricious" and must meet the "hard look" standard. Acting consistently with guidance carries less weight than compliance with binding regulations on these questions. Moreover, agencies that have converted regulatory provisions to guidance may, on balance, be afforded less deference from courts. And, the absence of uniform regulations increases the likelihood of conflicting case law. Collectively, these changes may undermine the legal certainty and predictability that project developers most value in NEPA reform.
Whether these July 4 NEPA reform fireworks will prove to be a fleeting spectacle that burns out in the courts or the opening salvo of a lasting transformation remains to be seen. For questions or additional information, please reach out to the authors of this Blog or your Arnold & Porter contact, and stay tuned for more detailed analyses.
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