National Environmental Policy Act Regulations: Phase 2 – What Else Has Changed?

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This is the fifth in a series of six eAlerts on the Bipartisan Permitting Reform Implementation Rule published in the Federal Register on May 1, 2024 ...
United States Environment
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This is the fifth in a series of six eAlerts on the Bipartisan Permitting Reform Implementation Rule published in the Federal Register on May 1, 2024 (Final Rule) by the Council for Environmental Quality (CEQ). The Final Rule amends CEQ's National Environmental Policy Act (NEPA) regulations (40 CFR Parts 1500-1508). Previously, we providedeAlerts focusing on changes made to the circumstances triggering NEPA review, NEPA streamlining provisions, and public involvement in the NEPA process.

In this eAlert, we focus on a number of other changes in the Final Rule that may have significant impacts to projects undergoing NEPA review, including: (1) the ability of an agency to enforce the mitigation supporting a mitigated finding of no significant impact (FONSI), consider alternatives outside the lead agency's jurisdiction, and conduct or require additional studies or gather additional data; (2) a requirement to address the greenhouse gas (GHG) impacts associated with the project or action under review; and (3) a requirement that an agency identify the environmentally preferable alternative in the relevant NEPA document.

Monitoring and Compliance Plans for a Mitigated FONSI

Under NEPA, where an agency concludes in an environmental assessment (EA) that a project will have no significant environmental impacts, the agency will issue a FONSI. For many years, agencies have issued FONSIs where mitigation measures are included as part of an action in order to avoid or lessen an action's potentially significant environmental effects. These "mitigated FONSIs" lacked basis in statute or regulation despite their longstanding use by federal agencies and the existence of guidance supporting use of the same. In its July 16, 2020 rulemaking (2020 Regulations), CEQ explicitly codified the ability of agencies to rely on mitigated FONSIs, and required agencies to describe both the authority for any mitigation adopted and any applicable monitoring or enforcement provisions. The Final Rule builds on those provisions, requiring agencies, among other things, to include detailed information in monitoring and compliance plans relating to mitigation. This information includes identifying the party responsible for both implementing and monitoring mitigation, how monitoring information will be made available to the public, the timeframe in which the mitigation will be implemented, standards for determining compliance with mitigation, the consequences of non-compliance, and how mitigation will be funded. While the implementation of the commitments in a monitoring and compliance plan may occur after the NEPA process is complete, the Final Rule clarifies that the ongoing implementation of such a plan does not constitute an ongoing Federal action. Finally, while the Final Rule did not codify specific standards regarding the effectiveness of mitigation, the preamble to the Final Rule (Preamble) explains that if substantial uncertainty exists over the effectiveness of a mitigation measure, the agency should utilize adaptive management techniques.

Considering Alternatives Outside an Agency's Jurisdiction

From the time NEPA regulations were adopted in 1978, agencies were required to consider effects associated with the proposed alternative, as well as those associated with reasonable alternatives even if the alternatives were not within the lead agency's jurisdiction. The 2020 Regulations removed the requirement for agencies to consider alternatives outside the lead agency's jurisdiction based on CEQ's position at that time that requiring such a broad alternatives review was neither efficient nor technically feasible for agencies. In the Final Rule, CEQ once again revises provisions relating to alternatives analyses, allowing—rather than requiring—an agency to consider alternatives outside its jurisdiction. According to CEQ, this change recognizes that there are infrequent circumstances where it would be proper for an agency to consider reasonable alternatives outside its jurisdiction, such as when an agency is considering program-level decisions or anticipating funding for a project not yet authorized by Congress. The Final Rule requires that where an agency considers an alternative outside its jurisdiction, the alternative must nevertheless be both a "reasonable alternative" and "technically and economically feasible" for the action agency or underlying applicant.

Considering the Environmentally Preferable Alternative in an Environmental Impact Statement

Historically, NEPA regulations required an agency to expressly identify the environmentally preferable alternative only in the record of decision (ROD). Under the Final Rule, an agency must identify the environmentally preferable alternative not only in the ROD, but also in the draft and final environmental impact statement (EIS). In the Preamble, CEQ explained that the environmentally preferable alternative must be identified from among the alternatives examined in the EIS—including the preferred action and no action alternatives—and that an agency is not required to subsequently select the identified environmentally preferable alternative for implementation. CEQ anticipates this requirement will increase public transparency and improve public participation.

Requiring Agencies to Undertake New Studies

The 2020 Regulations stated explicitly that agencies are not required to undertake new studies to inform NEPA analyses. Instead, the regulations required that where incomplete and available information relevant to the impacts analysis is "essential" to conduct an alternatives analysis and the cost of obtaining the information is not "unreasonable," the agencies must include that information. In the Final Rule, CEQ codified its longstanding position that agencies must undertake their own studies if data essential to the agency's decision between different alternatives is either incomplete or unavailable and the information is essential to a reasoned choice among alternatives. As a result of this change, in the face of incomplete or unavailable information, an agency is required to undertake additional studies if doing so would provide information "essential to a reasoned choice between alternatives" and the "overall costs of obtaining the information are not unreasonable."

In the Preamble, CEQ addressed two concerns raised by commenters with respect to this language requirement: litigation risk and timing. Regarding litigation risk, CEQ acknowledged that it is possible this change could open the door for third parties to allege that an agency did not comply with NEPA because it failed to obtain new information or undertake further studies when it otherwise should have. In response to this concern, CEQ advised agencies to sufficiently document their rationale if they choose not to conduct further studies. With respect to concerns that the requirement could delay completion of NEPA reviews, CEQ recognized the tension that exists between the time it could take to gather new information and maintaining compliance with NEPA's statutory deadlines. To address this concern, CEQ encouraged agencies to identify incomplete information as early as possible and to consider setting new deadlines as needed.

Considering Climate Change and GHG Impacts in an EIS

Among the Biden Administration's primary priorities is increasing resilience to climate change-related impacts. To address this issue, the Final Rule requires agencies to consider climate change in environmental documents, including by:

  • Considering reasonably foreseeable climate-related changes to the affected environment;
  • Describing, where applicable, potential conflicts between the proposed action and objectives of climate change-related plans and policies of federal, tribal, state, and local governmental entities; and
  • Including a discussion of climate change-related effects associated with the proposed action and alternatives, including quantification of GHG emissions.

The requirement to quantify GHG emissions from the proposed action and alternatives was a codification of a portion of CEQ's 2023 Guidance on Consideration of Greenhouse Gas Emissions and Climate Change (2023 GHG Guidance). The 2023 GHG Guidance describes how agencies should consider and evaluate the effects of GHG emissions in connection with NEPA review. While CEQ considered codifying all of the 2023 GHG Guidance, the agency ultimately adopted only the portion requiring, where feasible, a quantification of GHG emissions from the proposed action and alternatives. Nevertheless, CEQ left the door open to codifying more of the 2023 GHG Guidance in a future rulemaking.

"Innovative Approaches" to NEPA Review

In the proposed version of the regulations issued on July 31, 2023, CEQ included a provision that would have allowed CEQ to "authorize an innovative approach to NEPA compliance" to address actions with "extreme environmental challenges." CEQ intended for this provision to assist agencies in addressing extreme environmental challenges such as sea level rise, increased wildfire risk, water quality and scarcity, and species loss.

After considering feedback it received during the public comment period on the proposed rule, CEQ ultimately elected not to include the "innovative approaches" provision in the Final Rule. This decision was made based on the fact that feedback on the provision was "generally" negative and because CEQ concluded that other aspects of the regulations (e.g., programmatic reviews, tailored NEPA procedures, categorical exclusion provisions) provided sufficient flexibility for agencies to innovate and address extreme environmental challenges.

Removing Affirmative Statement that NEPA is a Purely Procedural Statute

CEQ and federal courts—including the U.S. Supreme Court—long have referred to NEPA's requirements as "essentially procedural," and designed to ensure fully informed and well-considered decision-making rather than requiring an agency to reach a substantive result. Consistent with this historic position, the 2020 Regulations included statements that NEPA "is a procedural statute" and "establishes the procedural requirements" for agencies. In the Final Rule, CEQ removes the language added in 2020, stating that, while "correct," it nevertheless suggests an inappropriately narrow view of NEPA's purpose and minimizes the broader goals of the statute.

Closing Thoughts

A number of the changes described in this eAlert have the potential to work against the streamlining provisions adopted by Congress in the Fiscal Responsibility Act and by CEQ in other sections of the Final Rule; however, the true impact of these new requirements on the timing and substance of NEPA review and the impact to project development may not be felt for some time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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