NRC Proposes Sweeping NEPA Overhaul

Highlights

• The U.S. Nuclear Regulatory Commission (NRC) has published a proposed rule to comprehensively revise its regulations implementing the National Environmental Policy Act (NEPA).
• Key changes include limiting NEPA reviews to impacts within the NRC's authority, expanding categorical exclusions, authorizing applicant-prepared environmental documents, and codifying review deadlines and page limits.
• The NRC is soliciting comments on several specific topics related to the proposed rule, which are due on August 21, 2026.

The U.S. Nuclear Regulatory Commission (NRC) published a proposed rule on July 7, 2026, to comprehensively revise its regulations to streamline and modernize the implementation of the National Environmental Policy Act (NEPA). The proposal represents the most significant overhaul of the NRC's environmental review framework in decades and, if finalized, would dramatically reduce the scope, duration and procedural complexity of NEPA reviews for nuclear facility licensing actions.

The proposed rule is driven by a convergence of executive, legislative and judicial developments:

• At the executive level, Executive Order (EO) 14300, "Ordering the Reform of the Nuclear Regulatory Commission," signed May 23, 2025, specifically directed the NRC to revise its NEPA regulations consistent with EO 14154, "Unleashing American Energy," and EO 14192, "Unleashing Prosperity Through Deregulation."
• On the legislative front, the Fiscal Responsibility Act of 2023 (Pub. L. 118-5) amended NEPA to add procedural streamlining provisions immediately applicable to the NRC. In addition, the One Big Beautiful Bill Act (OBBB) of 2025 (Pub. L. 119-21) added NEPA Section 112, creating a new fee-based mechanism for expedited environmental reviews.
• The U.S. Supreme Court's 2025 decision in Seven County Infrastructure Coalition v. Eagle County, Colorado, 605 U.S. 168 (2025), provided further impetus by holding that NEPA does not require agencies to evaluate effects of projects over which they lack regulatory authority.

Meanwhile, the Council on Environmental Quality (CEQ) rescinded its own regulations implementing NEPA – codified in Title 40, Parts 1500-1508, of the Code of Federal Regulations (40 CFR Parts 1500-1508) – effective April 11, 2025. CEQ issued new government-wide guidance, leaving agencies to develop their own updated NEPA procedures. The council's rescission was precipitated by EO 14154 and the U.S. Court of Appeals for the District of Columbia Circuit's opinion in Marin Audubon Society v. Federal Aviation Administration, 121 F.4th 902 (D.C. Cir. 2024), followed shortly thereafter by the U.S. District Court for the District of North Dakota's decision in State of Iowa v. Council on Environmental Quality, 765 F. Supp. 3d 859 (D.N.D. 2025), which determined that CEQ does not have rulemaking authority.

The proposed rule contains numerous changes to NRC's NEPA framework. This Holland & Knight alert highlights four of the proposal's most consequential features for applicants and licensees.

Narrowed Definition of "Effects": Reviews Limited to Radiological Impacts

Perhaps the most consequential change in the proposed rule is the redefinition of "effects" (used interchangeably with "impacts") in revised Section 51.4. Under the proposal, and consistent with Supreme Court precedent in Department of Transportation v. Public Citizen, 541 U.S. 752 (2004), as well as Seven County, environmental reviews are limited to effects from the proposed agency action that are within the NRC's substantive statutory authority to address, generally radiological health and safety and common defense and security impacts. A mere "but-for" causal relationship will no longer suffice, and effects that are remote in time, geographically remote, the product of a lengthy causal chain or beyond the agency's ability to prevent are excluded from review.

According to the NRC, this means that non-radiological impacts – such as dust, noise, non-radiological water and air quality effects, as well as ecological impacts during construction – would no longer fall within the scope of the NRC's NEPA analysis (except for actions related to Atomic Energy Act Section 11e.(2) Byproduct Material). This change also directly narrows the scope of contested hearing contentions under 10 CFR Part 2, limiting intervenor challenges to radiological effects within NRC's authority. For applicants, this represents a potentially transformative reduction in both the breadth of information that must be developed and the surface area for litigation risk.

Expanded and More Accessible Categorical Exclusions

The proposed rule significantly expands the universe of categorical exclusions (CatExs) under Section 51.22 through four key mechanisms:

• Additional CatExs. New CatExs would be established for license renewals, construction permits, early site permits and other common licensing activities.
• Adoption from Other Agencies. The proposed rule would expressly authorize the adoption of CatExs established by other federal agencies under NEPA Section 109.
• Website Posting Pathway: A new mechanism would allow CatExs to be established outside notice-and-comment rulemaking through publication on the NRC's website, with later incorporation into the CFR.
• Petition Pathway: Licensees, applicants and other interested parties would be permitted to propose new CatExs through the Section 2.802 petition-for-rulemaking process.

The NRC recommends that prospective applicants submit proposed CatExs (with supporting rationale) at least six months before the expected application submittal so the exclusion can be established in time. This proactive engagement pathway could allow developers to effectively create a bespoke NEPA off-ramp for their specific project type.

Applicant-Prepared Draft Environmental Documents

New Section 51.46 introduces a second pathway for environmental review. With the NRC's discretionary authorization, applicants may now hire a qualified contractor to prepare a draft environmental assessment (EA) or environmental impact statement (EIS) under NRC supervision, pursuant to NEPA Section 107(f). This is in addition to the traditional approach of submitting an environmental report for NRC staff to use in preparing its own EA/EIS.

Key requirements include:

• The opt-in request must be submitted in writing before preparation of the draft document begins and before that application is submitted.
• The contractor must have no financial or other interest in the outcome (a disclosure statement is required); the applicant itself cannot prepare the document.
• The applicant and contractor must cooperate with the NRC's supervision and meet NRC-established schedules.
• The NRC retains ultimate responsibility for all final determinations. Though this option offers applicants significant control over timeline and document quality, the NRC may terminate the arrangement at any time with 30 days' notice if commitments are not met.

Entities that may be interested in pursuing a self-directed environmental assessment for future projects should consider commenting on potential inconsistencies between the proposed rule and the Fiscal Responsibility Act amendments to NEPA. For example, the requirement to hire an independent contractor to perform the evaluation may conflict with NEPA Section 107(f). Additionally, the requirement to prepare the report prior to submitting an application, while triggering review deadlines based on the docketing date after a completed application, may conflict with NEPA Section 107(g).

Codified Deadlines, Page Limits and Fee-Based Expedited Review

The proposed rule codifies firm timelines and document length constraints that provide unprecedented predictability for project planning, including:

• Deadlines. EAs must be published no later than one year, and EISs no later than two years, after the NRC determines that a NEPA review is required (generally triggered by the docketing of a complete application, which is arguably inconsistent with NEPA Section 107(g)). The NRC must consult with the applicant before extending any deadline.
• Page Limits. EAs are limited to 75 pages, excluding citations and appendices, while EISs are limited to 150 pages, or 300 pages for actions of "extraordinary complexity."
• Expedited Review Fees. New Section 51.15(b) implements NEPA Section 112 (added by the OBBB), allowing project sponsors to pay a fee to the CEQ for shortened EA/EIS deadlines. Sponsors are encouraged to consult with the NRC before submitting a request to the CEQ to ensure the project description accurately reflects anticipated review costs.

Additionally, the rule narrows the purpose-and-need statement and alternatives analysis to the "proposed agency action" (i.e., the licensing decision itself). In most cases, this limits the range of alternatives to the no-action alternative, because the NRC lacks authority to implement alternatives such as facility siting or generation technology choices. The rule also eliminates the requirement to prepare and circulate draft EISs for public comment (NEPA does not mandate draft EISs), although the NRC will still solicit public input through the notice of intent.

Potential Pitfalls for Project Applicants

Though the proposed rule offers substantial benefits, applicants should be aware of several risks and traps:

• Sequencing Risk for Applicant-Prepared Documents. The opt-in request must be submitted before the draft preparation begins and before submitting the application. Submitting the opt-in simultaneously with an application could disrupt the review schedule. Applicants must plan this sequencing carefully to avoid procedural missteps.
• Other Environmental Statutes Remain. The narrowed definition of "effects" does not reduce applicants' obligations under other environmental laws. The NRC will still require information relevant to compliance with the Endangered Species Act, National Historic Preservation Act, Clean Water Act and other statutes. Non-radiological impacts may still require analysis for other permitting purposes.
• Vulnerability of Website-Posted CatExs. Categorical exclusions established via website posting (outside notice-and-comment rulemaking) do not receive the protection of 10 CFR Section 2.335 until formally incorporated into Section 51.22, meaning they may be more vulnerable to challenge in contested adjudicatory proceedings.
• Litigation Risk. If finalized in its current form, the rule will likely invite legal challenges. Early movers relying on the new framework face particular uncertainty during any such litigation.
• Transition Timing. New applications must comply with the revised requirements within six months of the effective date of the final rule (which takes effect 30 days after its publication). Those with ongoing applications should evaluate timing and transition issues now.

Next Steps

The proposed rule would represent a paradigm shift in how the NRC conducts environmental reviews – one that is broadly favorable to nuclear project developers and license applicants.

Applicants and licensees should consider the following near-term actions:

• monitor the rulemaking and review the accompanying draft guidance (NUREG-2270) for operational detail on how the NRC intends to implement the new framework
• consider submitting comments by August 21, 2026, particularly on provisions that could affect project-specific review timelines or the scope of information to be developed
• evaluate whether to petition for project-specific categorical exclusions under the new Section 2.802 pathway
• assess whether the applicant-prepared environmental document option under proposed Section 51.46 offers strategic advantages for upcoming projects
• consult with counsel regarding the sequencing and timing implications of the rule for applications currently in preparation

Public comments on the proposed rule must be submitted online no later than 11:59 p.m. ET on August 21, 2026, referencing Docket ID NRC-2025-0478.