CEQ publishes Phase 1 changes to NEPA

On April 20, 2022, the Council on Environmental Quality (CEQ) published in the Federal Register a final Phase 1 Rule revising certain provisions of the National Environmental Policy Act (NEPA) implementing regulations. This Phase 1 Rule is, for the most part, the same as the Phase 1 Proposed Rule issued in October 2021. This mostly comprised of undoing the changes made in 2020 to the NEPA Regulations by the Trump administration and moving back towards the original 1978 NEPA Regulations. 

What are the key changes in the final Phase 1 Rule?

The Phase 1 Rule makes three key changes to the NEPA implementing regulations:

1. Definition of effects. CEQ restored the definitions of “effects” and “cumulative impacts” contained in the 1978 NEPA Regulations. The 2020 NEPA regulations used the term effects and eliminated the terms indirect and cumulative effects. It retained direct effects, but without a definition. In restoring the traditional scope of effects to be assessed, CEQ made one important change in the effects language between the proposed Phase 1 rule and the final rule. The latter added the phrase that the direct, indirect, and cumulative impacts must be “reasonably foreseeable.” This is the only change CEQ made between the proposed and final Phase 1 language and was made in response to public comments.
2. Purpose and need. The 1978 NEPA Regulations required that each environmental impact statement briefly state the purpose and need to which the agency is responding in proposing alternatives, including the proposed action. The 2020 NEPA Regulations required those agencies that complete NEPA documents for requested authorizations and permits to base the purpose and need on the goals of an applicant and the agency's statutory duty. CEQ now believes this 2020 language required agencies to inappropriately prioritize the applicant's goals over other relevant factors, and therefore reverted to the language of the 1978 NEPA Regulations. In the Phase 1 Rule’s Preamble, CEQ states that when considering the purpose and need for a project sponsored by an outside party, in addition to the applicant’s goals, other relevant factors include: the agency’s mission and policy directives; the specifics of the agency’s decision; local needs; desired conditions on the landscape; other environmental outcomes; plus, the purpose and need of any other federal agencies completing the NEPA process for the same proposed project.
3. Scope of agency NEPA procedures. Prior to the 2020 NEPA Regulations, federal agencies could develop their own NEPA procedures to augment the CEQ regulations, if those procedures met or exceeded the degree of environmental review required by the CEQ regulations. The 2020 NEPA Regulations changed that by adding ceiling provisions such as stating that where existing agency NEPA procedures are “inconsistent” with the CEQ regulations, the CEQ regulations apply “unless there is a clear and fundamental conflict with the requirements of another statute.” Phase 1 removes these ceiling provisions and supports agencies' prior understanding and practice that CEQ's NEPA regulations provide a floor for environmental review procedures. 

What is the practical effect of the final Phase 1 Rule on federal agencies’ current NEPA practice?

In Phase 1’s Preamble, CEQ states that the Phase 1 changes are “non-substantive.” CEQ “intends for the final Phase 1 provisions to have the same meaning as the corresponding provisions in the regulations in effect from 1978 to September 2020. The amendments generally restore provisions that were in effect for decades before being modified in 2020.” Because all federal agencies’ NEPA procedures were developed to conform to the 1978 CEQ regulations, and none were changed to conform to the 2020 NEPA Regulations, agencies can implement Phase 1 seamlessly under their existing procedures.

What happens next? 

CEQ will continue to consider Phase 2 revisions, but it is unlikely these will be proposed in the near-term. Until Phase 2 is finalized, those provisions of the 2020 Rule that were not superseded by Phase 1 remain in effect.

As CEQ declined to specify in the Phase 1 rule how the May 20, 2022, effective date applies to NEPA documents previously initiated but not completed by that date, federal agency decisions will need to be made on a case-by-case basis on how or whether to incorporate into these ongoing NEPA documents. It is highly likely that most agencies will start to implement the Phase 1 changes into ongoing NEPA documents given that the changes are non-substantive. 

There are two key Phase 1 changes affecting the content of NEPA documents that agencies need to consider:

1. Possible increased scope of impacts requiring assessment. Agencies that may have omitted in their ongoing NEPA documents addressing either cumulative impacts or indirect impacts not having a close causal connection, but reasonably foreseeable, will need to reconsider the scope of their impact analyzes prior to finalizing these documents after May 20th. 
2. Broader consideration of purpose and need. For ongoing environmental impact statements on projects sponsored by outside parties (e.g., proposed actions for authorizations and permits), agencies will need to relook at how the purpose and need was developed and if they are inappropriately prioritizing the applicant's goals over other relevant factors.

How and when would Phase 2 differ from Phase 1? 

In Phase 2, CEQ plans to issue a second notice of proposed rulemaking (NPRM) to revisit more broadly the 2020 NEPA Regulations. CEQ states that it intends to propose further revisions to ensure that the NEPA process provides for efficient and effective environmental reviews and meets environmental, climate change, and environmental justice objectives. According to the Unified Agenda of Regulatory and Deregulatory Actions, the second NPRM is scheduled for the summer of 2022. 

ICF has worked with federal agencies to comply with NEPA for many decades through changing interpretations of CEQ regulations, guidance, court rulings, and administrations. Wherever NEPA goes next, ICF is here to help.