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Proposed Revisions to NEPA Regulations: Streamlining Federal Reviews and Incorporating Existing Case Law

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On January 9, 2020, the Council on Environmental Quality (“CEQ”) released the first major proposal to overhaul its regulations implementing the National Environmental Policy Act (“NEPA”) in over forty years. Regulations on how federal agencies should conduct environmental reviews for major federal projects under NEPA have long been due for major revisions. Many commercial and industrial developers, especially those focused on infrastructure, have seen an explosion in the size of environmental impact statements (“EIS”) and environmental assessments (“EA”), and the time it takes to prepare them sometimes threatens project viability. In its proposed revisions, CEQ responded to concerns that additional time and more exhaustive studies have not always resulted in better decisions.  The proposal is also aligned with the Trump administration’s larger efforts at streamlining reviews and accelerating infrastructure development as directed in Trump’s 2017 Executive Order.

Although the proposal contains numerous helpful and targeted revisions to effectively streamline reviews and to conform the regulations to governing caselaw, most media attention has focused on how the proposed rule changes the framework for assessing effects—particularly on cumulative effects and how agencies would consider climate change impacts from greenhouse gas emissions. The proposal collapses the categories of “direct, indirect, and cumulative effects” into a single category with a focus on studying effects that are reasonably foreseeable and have a reasonably close causal relationship to the action or alternative. This pivot from existing law is less substantial than the critics claim, as it is consistent with Supreme Court opinions clarifying what effects must be analyzed, even if it may not align with some federal district courts that continue to push the boundaries of what NEPA requires.

Regulations from the CEQ – Non-Binding But Quite Influential

CEQ, a division of the executive branch that oversees NEPA implementation, is charged with developing NEPA regulations and working with federal agencies and other executive branch divisions to develop environmental policies and initiatives. NEPA requires federal agencies to consider the effects of major federal actions that would significantly impact the quality of the human environment. Many large-scale energy and infrastructure projects that are funded or permitted through federal agencies, such as the Federal Energy Regulatory Commission, the Federal Highway Administration, or U.S. Army Corps of Engineers, must undergo NEPA review. NEPA review can be a complex, time-intensive process, and although industry and environmental groups fundamentally disagree on how to change the NEPA regulations, they both have long identified shortcomings and suggested improvements to the regulations, which were last overhauled in 1978.

A unique aspect of NEPA is that CEQ lacks authority to issue binding regulations. Though non-binding and though sometimes given less deference than regulations issued by agencies with organic authority, CEQ’s regulations function as a pacesetter. Agencies that must comply with NEPA typically incorporate CEQ’s regulations into their own procedures implementing NEPA. Thus, CEQ’s proposed changes act as the baseline for agency NEPA compliance, as CEQ’s framework and procedures filter down into agency practice.

What’s in a Name? The Controversy Over the Proposed Definition of “Effects”

The revised definition of “effects” has garnered significant attention and scrutiny. The current regulation requires an agency to consider three types of effects—direct, indirect, and cumulative—and agencies and litigants often wrestle with the outer bounds of these categories. CEQ proposes to dispense with these categories and instead codify key aspects of Supreme Court holdings on what effects should be considered in NEPA analyses.  Noting that the categories of “indirect” and “cumulative” impacts have been interpreted too expansively, “resulting in excessive documentation of speculative effects and leading to frequent litigation,” the proposed definition would extend only to effects that are “reasonably foreseeable” and show “a reasonably close causal relationship” to the project.  The definition also would incorporate holdings from the Supreme Court affirming that a “but for” causal relationship alone is insufficient to require an agency to analyze that particular effect under NEPA. CEQ provides additional clarification by stating that “effects should not be considered significant if they are remote in time, geographically remote, or the result of a lengthy causal chain.”

In the context of direct and indirect effects, this proposed revision does not represent a sea change in how agencies currently undertake their effects analyses and how courts apply this Supreme Court precedent. To the contrary, the proposal’s language closely tracks existing Supreme Court case law from Department of Transportation v. Public Citizen, 541 U.S. 752 (2004), and is unlikely to meaningfully change agencies’ NEPA review process. The language in Public Citizen contains some ambiguities and thus, has been subject to slight variations in interpretation by agencies and courts across the nation. By codifying the language from Public Citizen, CEQ’s proposal provides agencies with uniform interpretation of existing case law. The proposal would likely rein in some courts that have begun to stray from Supreme Court precedent in rejecting agency analyses for failure to consider effects that are too far down the causal chain to be fairly imputed to an agency’s action, or that would occur regardless of agency action.

“Ignoring” Climate Change? The Shift in Position on Cumulative Effects

Some opponents of the proposed rule decry the revisions for not mentioning climate change, as they see the revisions to the definition of “effects” as an attempt to circumvent analyzing the impacts of climate change. As CEQ notes in the proposal, CEQ does not consider it appropriate to address a single category of impacts in the regulations. Calling out climate impacts in a proposal revamping the procedural aspects of NEPA reviews would elevate one category of impacts above all others, such as impacts to water quality, or soils, or visual resources.  Furthermore, the proposal notes CEQ’s June 2019 draft guidance on how federal agencies should consider greenhouse gas emissions and climate change in NEPA reviews, and the proposal seeks comment on whether CEQ should codify any aspects of its July 2019 proposal in the regulations.

The shift away from cumulative effects, however, reflects a proposed change in agency position. CEQ notes that NEPA does not require an analysis of cumulative effects, and agencies’ pursuit of assessing such effects has been difficult and often diverts agencies from focusing on effects that are likely to be potentially significant and within the agencies’ control. Opponents charge that this is a step in the wrong direction and suggestive that federal agencies would be putting blinders up to known impacts, particularly with respect to climate change and greenhouse gas emissions. However, the proposed rule would not alter an agency’s obligations under NEPA, so the extent to which an agency must consider impacts caused by its action in the context of larger ecosystems would not be changed. Specifically, as this relates to the assessment of climate change impacts from individual projects, the proposal is not likely to result in a significant departure from current agency practices, particularly for those agencies that most often deal with projects likely to emit large volumes of greenhouse gases, such as those authorized by the Federal Energy Regulatory Commission, the Department of Energy, and the Department of the Interior. That is because the current state of the science is that climate change is not caused by any individual action, and, consistent with Public Citizen, is therefore neither a direct nor an indirect effect of any action. Calculating an individual project’s greenhouse gas emissions may be straightforward, but emissions of GHGs alone are not “impacts,” and agencies are not equipped to identify or determine the significance of the incremental contribution of such emissions to global climate change impacts caused by the aggregate global emissions of GHGs.

What’s in the Details?  Other Benefits from Streamlining in the Proposal

Although not the focus of much of the media attention, the proposed rule is nevertheless replete with changes designed to streamline and simplify the NEPA review process and address miscellaneous issues to enhance the NEPA process.

  • Time Limits. CEQ compiled information demonstrating how the review process for preparing an EIS was taking much longer than the one-year timeline CEQ originally anticipated for complex projects. CEQ found that between 2010 and 2017, the median time necessary to prepare an EIS was 3.6 years, the mean time was over 4.5 years, and 25% of projects required more than 6 years. In response, CEQ proposed a presumptive two-year limit for agencies to complete EISs and one-year limit for agencies to complete EAs.
  • Page Limits. Current CEQ regulations from 1978 recommend that an EIS should normally be less than 150 pages, and an EIS with an unusual scope or complexity should normally be less than 300 pages. CEQ guidance also recommends that EAs should normally be 25 pages or less. However, most EISs are thousands of pages long and EAs frequently exceed 100 pages. Attempting to address problems of lengthy EISs and EAs, CEQ proposed a presumptive 75-page limit for EAs. While presumptive page and time limits may appear to be a significant reduction from the historical four-year average, the page and time limits themselves would not alter an agency’s responsibilities under NEPA. Moreover, as detailed analyses are often provided to agencies by project developers for direct incorporation into the NEPA review process, it is unlikely that the sophistication of any required analysis will be significantly impacted by these new page limits.
  • Agency Coordination. The 1978 CEQ regulations established the roles of lead agency and cooperating agency for NEPA reviews. These roles are intended to help agencies coordinate and synchronize NEPA review of a single project that requires approval or authorization from multiple federal agencies. The proposed regulations require one agency to take the lead on permitting, clarify the responsibilities of a lead agency, and require agencies to “timely resolve disputes that may result in delays.” These requirements expand on prior efforts to streamline federal permitting processes and incorporate elements from President Trump’s earlier “One Federal Decision” executive order.
  • Injunctive Relief. Controversy surrounding the proper relief for NEPA violations has previously required the Supreme Court to clarify that such violations only warrant injunctive relief if the plaintiff can satisfy the traditional four-factor test for an injunction: (1) likely to succeed on the merits; (2) likely to suffer irreparable harm in absence of preliminary relief; (3) balance of equities tip in favor; and (4) injunction is in the public interest. In its proposed regulation, CEQ explicitly states that harm from failure to comply with NEPA can be remedied by compliance, establishing that a NEPA violation alone does not warrant injunctive relief or satisfy the irreparable harm requirement. This proposed revision may also resolve recent controversy regarding proper relief for NEPA violations, in particular, whether a court must vacate NEPA documents and corresponding authorizations or simply remand without vacatur. Environmental groups frequently argue that the Administrative Procedure Act requires vacatur as a remedy for NEPA violations, and vacatur is the standard remedy for NEPA violations in some Federal Circuits. However, vacatur traditionally requires a serious deficiency that likely cannot be cured upon remand, and courts have discretion to depart from the presumptive remedy of vacatur. CEQ’s clarification that an agency can remedy harm from a NEPA violation and that “minor, non-substantive errors that have no effect on agency decision making shall be considered harmless and shall not invalidate agency action” gives strength to arguments that NEPA violations can be cured upon remand and, thus, should be remanded without vacatur.
  • Small Handle Problem. An entire body of law has emerged to deal with what NEPA practitioners call the “small handle problem,” which arises when an agency must determine whether to include a large private action in the scope of its NEPA review when there is only a small component subject to federal jurisdiction. To help address this, CEQ has proposed to revise the definition of “major action” to clarify that projects with minimal federal funding and participation do not trigger NEPA review.
  • Categorical Exclusions. To streamline federal action, certain categories of actions that have been found to not have a significant effect on the human environment have been excluded from further NEPA review, except in extraordinary circumstances. The CEQ proposal encourages agencies to expand their use of such categorical exclusions where warranted. CEQ has also asked for commentary on whether the revisions should specifically allow an agency to apply a categorical exclusion established in another agency’s procedures, including any regulations that should be included to ensure such a shared exclusion was appropriately applied.

Want to Influence the Proposal? Calls for Action, and Call for Comments

Vocal critics have fed a media firestorm surrounding the proposed changes, causing some Democratic legislators to call for congressional action to override or reverse the revisions. The outcome will likely depend on how quickly these revisions are finalized and whether the current administration remains in office for a second term. The revisions would need to be finalized in short order to avoid a Congressional Review Act window that would overlap with a change of administration if President Trump does not win re-election. Similarly, a change of administration could see a new president adopt a similarly aggressive approach to regulatory revision, pulling back or otherwise interfering with CEQ’s proposed revisions if not finalized quickly. If finalized, the rules will likely be challenged in court. However, to the extent the regulations simply incorporate existing case law, it is unlikely that any challenge will have an immediate substantial impact on the NEPA review process.

CEQ is accepting public comments on the proposed changes until March 10, 2020, with hearings scheduled in Washington, D.C., and Denver, Colorado in February.

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