[co-author: Connor McRobert - Summer Associate]

On May 1, 2024, the White House Council on Environmental Quality (CEQ) published notice in the Federal Register of a final rule amending its regulations implementing the National Environmental Policy Act (NEPA). The final rule, known as the Phase II revisions to NEPA, comes nearly a year after CEQ issued its proposed rule and is mostly consistent with the proposed rule. Notably, the final rule emphasizes that NEPA contains action-forcing procedural requirements to implement the letter and spirit of the Act. This shifts the traditional view that NEPA is a purely procedural statute that only informs decision-making and does not mandate outcomes. Although CEQ intends these changes to add regulatory certainty, it is highly likely the final rule will be subject to court challenges. In addition to the new NEPA characterization, the final rule adopts multiple changes that substantially expand NEPA in scope and impact several aspects of the NEPA review process. Key changes in the final rule include:

Consideration of Climate Change. The final rule requires agencies to analyze the effects of climate change on projects and, conversely, the potential effects of projects on climate change. Specifically, where feasible, projects must quantify greenhouse gas emissions from the proposed action and alternatives. Broadly, the final rule adds climate change to a host of effects that an agency must already consider.

Consideration of Environmental Justice. The final rule requires agencies to analyze the potential effects of projects on communities that may not be experiencing environmental justice. The final rule defines environmental justice as:

The just treatment and meaningful involvement of all people, regardless of income, race, color, national origin, Tribal affiliation, or disability, in agency decision making and other Federal activities that affect human health and the environment so that people:

(1) Are fully protected from disproportionate and adverse human health and environmental effects (including risks) and hazards, including those related to climate change, the cumulative impacts of environmental and other burdens, and the legacy of racism or other structural or systemic barriers; and

(2) Have equitable access to a healthy, sustainable, and resilient environment in which to live, play, work, learn, grow, worship, and engage in cultural and subsistence practices.

To assist agencies in identifying these communities, the final rule cites two tools: EJScreen, which is available on EPA’s website, and the Climate and Economic Justice Screening Tool (CEJEST), which is available on CEQ’s website.

Consideration of an Environmentally Preferable Alternative. The final rule requires agencies to identify an environmentally preferable alternative in the EIS for each action. However, the final rule does not require an agency to select this alternative as the final project action. The final rule describes the environmentally preferable alternative as the one that maximizes environmental benefits, such as addressing effects to climate change or communities with environmental justice concerns, protecting cultural or Tribal resources, or causing the least damage to the environment.

More Flexible Methods to Establish Categorical Exclusions. The final rule allows agencies to work jointly with other agencies in establishing categorical exclusions (CEs), which can streamline federal permitting processes, especially for renewable energy projects. Agencies designate certain actions as CEs when they do not significantly affect the environment, removing the need for an environmental assessment (EA) or an EIS. Additionally, agencies can now establish CEs outside the normal NEPA process, such as through a land use plan or programmatic EIS.

Consideration of Context and Intensity in Significance Determination. The final rule requires agencies to evaluate the context and intensity of a proposed action’s environmental effects, just as it did prior to 2020. Context and intensity evaluations partly determine the significance of a proposed action’s environmental effects and the appropriate level of NEPA review. Context evaluation involves determining an action’s effects on four levels: global, national, regional, and local. The final rule broadens the host of context factors to include proximity to unique resources and communities with environmental justice concerns. Intensity evaluation involves determining the duration of an action’s effects on a host of factors, including public health, prime farmlands, wetlands, and rivers, among others. The final rule adds to its intensity factors the extent to which an action affects resources listed or eligible for listing in the National Register of Historic Places. The final rule clarifies that agencies cannot offset an action’s adverse effects with other beneficial effects to determine significance.

Page and Time Limits. The final rule requires page and time limits for NEPA review documents: EAs must be under 75 pages and completed within one year, and EISs must be between 150 and 300 pages and completed within two years. Extensions are allowed if necessary. The final rule also requires agencies to establish NEPA review schedules, in consultation with applicants, for all environmental reviews and authorizations, and to make EA schedules public. Further, the final rule notes all agencies are responsible for meeting deadlines. If an agency misses a deadline, project applicants can challenge in federal court to enforce compliance schedules.

Greater Public Engagement. The final rule requires agencies to publish NEPA documents and supporting materials on their websites, establish tracking numbers for EAs and EISs, and to provide increased opportunities for public engagement on draft EAs and EISs. Specifically, agencies must invite comment on published draft EAs and make draft EISs available at least 15 days in advance when subject to a public meeting or hearing. In addition, the final rule requires public notification of NEPA-related hearings and public meetings. Finally, the rule introduces the role of a “Chief Public Engagement Officer” in each agency to facilitate community engagement.

The final rule will apply to all NEPA reviews beginning after July 1, 2024. For ongoing NEPA reviews begun before July 1, 2024, agencies have discretion to apply the final rule.