CEQ Finalizes Comprehensive Changes To NEPA Regulations

• Published date: 31 July 2020
• Subject Matter: Environment, Environmental Law
• Law Firm: Arnold & Porter
• Author: Mr Edward McTiernan, Allison B. Rumsey, Ethan G. Shenkman and Emily Orler

On July 16, 2020, the Council on Environmental Quality (CEQ) finalized the overhaul of its National Environmental Policy Act (NEPA) implementing regulations. Through this rulemaking, CEQ makes changes to nearly every section of the regulations, which were last comprehensively updated in 1978. CEQ managed to complete this historic rulemaking on which it received over a million comments only six months after issuing the proposed rule. Notably, CEQ has proceeded with redefining "effects" and repealing the requirement to consider cumulative impacts, despite criticism from states and environmental groups that these revisions would limit analysis of climate change.

On July 29, 2020, environmental interest groups brought challenges to the final rule in Virginia and California federal district courts, alleging violations under NEPA and the Administrative Procedure Act (APA). They claim, among other things, that the regulations are arbitrary and capricious and contrary to the statute, improperly allow agencies to apply the rule retroactively, and invalidly amend judicial review standards.

This Advisory updates the top ten list of changes identified in our January 2020 Advisory, and describes the potential next steps and key takeaways for project proponents. Here's what you need to know:

Top Ten List of Changes

Establish presumptive time limits for Environmental Assessments (EAs) and Environmental Impact Statements (EISs). CEQ finalized language requiring agencies to complete EAs in one year and EISs in two years unless the time limit is modified by a senior agency official.

Revise the definition of major federal action. Consistent with the proposed rule, CEQ adopted a revised definition of "major federal action" that gives independent meaning to the terms "major" and "significant." The definition, which triggers NEPA's applicability through the "NEPA thresholds" section of the final rule,¹ also includes a listing of actions that do not qualify as "major federal actions," including decisions that are non-discretionary, do not result in final agency action, or that involve financing for which the government does not have "sufficient control and responsibility." CEQ also expressly excludes "extraterritorial actions" from NEPA review-a matter on which CEQ had requested comment in the proposed rule.

Refine the range of reasonable alternatives. Consistent with the proposal, CEQ included a new definition of "reasonable alternative" clarifying that agencies need only consider alternatives that are "technically or economically feasible," meet the purpose and need for the proposed action, and meet the applicant's goals (if applicable). CEQ had invited comment on establishing a presumptive maximum number of alternatives, but elected instead to direct agencies to "limit their consideration to a reasonable number of alternatives."

Restrict the scope of effects. CEQ finalized a revised definition of "effects" largely as proposed that will narrow the scope of "effects" analyzed in the NEPA process. Indeed, CEQ included new language specifying that agencies "are bound" and "should not go beyond" the definition of "effects" in the final rule-curtailing federal agencies' discretion to evaluate a broader scope of effects.

In the final rule, CEQ abandons the terminology "direct" and "indirect", though these concepts remain in substance. CEQ has defined effects as those that are "reasonably foreseeable and have a reasonably close causal relationship to...