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Council on Environmental Quality Publishes Final NEPA Phase 1 Rule

The White House Council on Environmental Quality (CEQ) recently published its final Phase 1 Rule to Amend the 2020 National Environmental Policy Act (NEPA) implementing regulations. The final rule was published in the Federal Register.

In the final rule CEQ reverted to the 1978 NEPA regulatory text, with additional “non-substantive changes ... to accommodate the current structure of the CEQ regulations.”

CEQ intends for the Phase 1 rule provisions to have the same meaning as the corresponding provisions that were in effect from 1978 through September 2020.

The final rule is effective on May 20, 2022, and challenges to the rule are likely and may be filed in multiple district courts across the country.

CEQ, which was created in 1969 by NEPA, advises the President and develops policies on climate change, environmental justice, federal sustainability, public lands, oceans, and wildlife conservation, among other areas.

Purpose and Need Statement

The purpose and need section of an Environmental Impact Statement (EIS) details the rationale for an agency’s proposed action and sets the parameters for the range of reasonable alternatives that an agency must consider and analyze in any EIS.

The 2020 regulations directed agencies to focus the purpose and need statement on the goals of the applicants within the agency’s statutory authority.

 The final rule amends CEQ’s regulations to require an EIS to state the purpose and need to which the agency is responding in proposing alternatives, including the proposed action.

The rule removes the second sentence from the 2020 regulations that required agencies to base the purpose and need on the goals of the applicant and the agency’s authority when the agency is reviewing an application and removes the reference to the goals of the applicant from the definition of “reasonable alternatives.”

The revision, according to CEQ, is intended to clarify that agencies have discretion to consider a variety of factors when assessing an application for an authorization, which include the goals of the applicant, but not to the exclusion of other factors.

Factors considered may include “national, agency, or other policy objectives applicable to a proposed action,” “desired conditions on the landscape or other environmental outcomes,” and “local needs.”

Ceiling Provisions

The 2020 rule resulted in the inclusion of ‘‘ceiling provisions’’ that made the CEQ regulations the maximum requirements agencies could include in their agency NEPA procedures.

The final rule removes language from the 2020 regulations that stated the CEQ regulations were the maximum requirements agencies could include in their agency NEPA regulations and that CEQ’s regulations would control where existing agency NEPA procedures were “inconsistent.”

The 2020 rule also required agencies to propose new or revised procedures within 12 months to eliminate any inconsistencies. CEQ issued an interim final rule in June 2021 that extended that deadline by 2 years—to September 14, 2023. CEQ finalizes that deadline extension in the final rule.

Definition of ‘‘Effects’’ or ‘‘Impacts’’

NEPA requires federal agencies to examine the environmental effects of their proposed actions and alternatives and any adverse environmental effects that cannot be avoided if the proposed action is implemented.

The 2020 NEPA regulations consolidated the definition of effects, by requiring consideration of reasonably foreseeable effects that have a reasonably close causal relationship to the proposed agency action.

The intent behind this “consolidated effects” definition was not to avoid consideration of effects caused by agency actions, but rather to help agencies avoid wasting time and resources on categorizing the type of effect.

The final rule restores the definitions of “direct” and “indirect” effects and “cumulative impacts” contained in the 1978 regulations and removes language from the 2020 regulations, which defined effects as those that “have a reasonably close causal relationship,” and language stating that “but for” causation is insufficient and generally excluding effects that are remote in time or geography, the product of a lengthy causal chain, or effects over which the agency has no statutory authority.

The final rule, therefore, removes language from the 2020 regulations that qualified the effects that could be considered. CEQ expects that reverting to the 1978 regulatory text will avoid any constraints on agency discretion and ensure that “reasonably foreseeable effects,” including climate effects, are not omitted from disclosure.

CEQ emphasized that these changes are intended to ensure agency decision makers have a complete view of reasonably foreseeable effects of their proposed action but “will not result in consideration of a limitless universe of effects.” Rather, the effects analysis will be bounded by a “reasonableness standard.” The definition of “effects” will continue to include the phrase “reasonably foreseeable.”

The final rule is available here.

APPA Comments

In November 2021, the American Public Power Association (APPA) submitted comments on CEQ’s proposed rule, “National Environmental Policy Act Implementing Regulations Revisions.”

In the comments, APPA expressed support for proposed revisions to NEPA regulations that focused limited agency resources on the most pertinent environmental issues while also reducing duplication and providing parties with more certainty.

Now that the Phase 1 rulemaking is complete, CEQ will turn its attention to the Phase 2 NEPA proposal, which will more broadly revisit the 2020 NEPA regulations and propose further revisions that, according to CEQ, will promote better decision making and meet environmental, climate change, and environmental justice objectives.

The Phase 2 proposal is expected later this year and could have significant importance to APPA member projects.