Key Points

• New CEQ rule updating NEPA to go into effect September 14, 2020.
• Development and other projects funded, assisted, or regulated by federal agencies will receive less scrutiny in the future.

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Highlights

The Council on Environmental Quality (CEQ) issued a final rule to update its regulations for federal agencies implementing the National Environmental Policy Act (NEPA). NEPA requires the government to assess the environmental impacts of any "major Federal action," and consider alternative options that are less damaging to the environment. The new rule will become effective September 14, 2020. Major changes in the final rule include:

• A presumptive time limit of 1-2 years to complete all environmental studies
• Federal projects with only minimal federal involvement are exempt from review
• Federal agencies are not required to consider all reasonable alternatives nor alternatives outside the agency's jurisdiction
• Federal agencies need not consider the indirect or cumulative effects of a project, only impacts that are reasonably foreseeable

The final rules will now be reviewed by Congress and the Government Accountability Office for review. If the House and Senate pass a resolution of disapproval and the president signs it (or if both houses override a presidential veto), the rule becomes void and cannot be republished without again going through Congressional approval. Since 1996, Congress has only disapproved one rule.

Summary

The new rule assigns a presumptive time limit of 1-2 years to complete all environmental studies to ensure a more timely and efficient review process. Environmental assessments (EA), which are analogous to Initial Studies under the California Environmental Quality Act (CEQA), "should" be completed within a year, and environmental impact statements (EIS), which are akin to Environmental Impact Reports under CEQA, within two years. CEQ acknowledges that certain projects will require more time. To that effect, senior agency officials who oversee the agency's compliance with NEPA, may approve longer time periods in writing. Ultimately, these presumptive time limits appear to be aspirational, and not obligatory.

Several government-approved and funded projects are exempt from NEPA review. Under the new rule, "major Federal actions" do not encompass projects having only some degree of federal involvement, including those with minimal federal funding and actions where a federal agency cannot control the outcome of a project. For instance, a project where only a small percentage of federal funding is earmarked for an infrastructure project that is otherwise funded through private or local funds does not require NEPA review. Similarly, some loans are now excluded from NEPA review if federal agencies lack control over the effects of such assistance, such as a loan guarantees for farm ownership. As another example of an action that is outside federal control, agencies that exercise responsibilities over activities that involve land held in trust by the United States for a Native American Tribe may delineate activities that are NEPA exempt because the Federal Government does not have control of the effects of actions on Native American lands. Under existing rules, NEPA review was required for projects that were partially financed, assisted, conducted, regulated, or approved by federal agencies. Federal agencies will further define these non-major actions in developing or amending their own administrative NEPA procedures, which the agencies are obligated to do pursuant to 40 CFR § 1507.3(d). Finally, whereas existing rules provided that a project that normally doesn't have environmental impacts would nevertheless be subject to NEPA review if "extraordinary circumstances" were present, the new rule provides that, even if extraordinary circumstances are present, an agency "nevertheless may categorically exclude the proposed action if the agency determines that there are circumstances that lessen the impacts or other conditions sufficient to avoid significant effects."

Federal agencies are not required to consider all reasonable alternatives nor alternatives existing outside the agency’s jurisdiction. Under the old rule, agencies were to "rigorously explore" and evaluate all reasonable alternatives, including those not within the jurisdiction of the lead agency. With the proposed changes, agencies are required to “limit their consideration to a reasonable number of alternatives.” Accordingly, the list of alternatives to the proposed agency action "need not be exhaustive" so long as it allows the agency to reasonably evaluate practicable alternatives. Moreover, agencies are not required to consider alternatives existing outside agency jurisdiction. Only if it is "necessary for the. . . decision-making process"—such as preparing an EIS to address specific congressional directives—may the agency consider reasonable alternatives outside their jurisdiction.

Federal agencies are not required to analyze a project's indirect or cumulative effects on the environment. Instead, agencies must only analyze reasonably foreseeable impacts. The new rule alters the definition of "effects" to encompass only the direct effects of a proposed Federal action, and to strike the definitions of and distinctions between cumulative, indirect, and direct effects so that agencies focus on effects that are reasonably foreseeable, and have a close causal relationship to the proposed action. An agency need not consider every "but for" effect, as the new rule indicates (expressly borrowing terminology from tort law), nor does an agency have to consider cumulative effects, a term that refers the aggregated effects of a subject Federal action in combination with other projects. It is often the case that a project might have no individual impact but will, when considered in tandem with other projects, significantly impact the environment. In sum, the final rule provides that effects “should generally not be considered if they are remote in time, geographically remote, or the product of a lengthy causal chain.”

Similarly, an agency conducting NEPA review no longer will have to evaluate effects that the agency has no authority to prevent or that would happen without agency action. In articulating these new regulations, the final rule seeks to codify, in part, holdings in Department of Transp. v. Public Citizen (2004) 541 U.S. 752, where the Supreme Court held that the Federal Motor Carrier Safety Administration (FMCSA) was not required to consider the environmental impacts of increased presence of Mexican trucks in the United States under NEPA after FMCSA issued new rules regarding carrier safety inspections. The new rules caused the president to lift the existing moratorium that prevented Mexican motor carrier from operating within the United States. The Supreme Court determined that because FMCSA lacks discretion to prevent the operations of Mexican motor carrier, NEPA did not require FMCSA to evaluate the environmental effects of such operations.

Miscellaneous but important changes. The new rule also: (1) sets presumptive page limits on NEPA documents, including a 150-page limit for an EIS and a 75-page limit for an EA; (2) consolidates environmental review where more than one federal agency are involved, requiring that lead and cooperating agencies evaluate a project in a single EIS or EA; (3) removes obligations to consider the degree to which a project's effects are likely to be "highly controversial" in determining the significance of an impact, on the premise that controversy is "subjective;" and (4) provides that "predictable environmental trends," such as foreseeable consequences of climate change, can now be built into an environmental baseline, rather than as an effect of the action. With regard to this last change, the practical result is that impacts attributable to a project will be minimized. This change appears to be consistent with the final rules focus on direct impacts of a project, and not indirect or cumulative impacts.

Implications for the Future

Under the new rule, fewer projects will require NEPA review, and those that do require NEPA review will undergo a streamlined review process. Fewer alternatives to proposed actions will be considered, and agencies will no longer consider the indirect or cumulative effects of a project. As a result, Federal projects will receive less scrutiny in the future. Projects that trigger both NEPA and CEQA, however, will still undergo the high level of scrutiny that CEQA demands, as the changes to federal regulation do not effect California's environmental protection laws.