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May 3, 2022

Council on Environmental Quality Finalizes Revisions to National Environmental Policy Act Implementing Regulations

On April 19, 2022, the Council on Environmental Quality (CEQ) within the Executive Office of the President finalized its revisions to the National Environmental Policy Act (NEPA), implementing regulations (Phase I Regulations) that were revised by the Trump administration in 2020 (2020 Regulations). NEPA requires federal agencies to assess the environmental impacts of their proposed actions prior to making decisions, including approving and permitting infrastructure and other projects. The finalization of the Phase I Regulations is part of the Biden administration’s effort to strengthen environmental reviews, broaden the scope of the impacts that can be evaluated, and clarify that agencies are authorized to create their own stricter rules. 

The CEQ’s final Phase I Regulations restore three basic elements of the NEPA regulations that were modified for the first time in 2020:

  • Restored the requirement that federal agencies evaluate direct, indirect, and cumulative impacts. 

For decades, CEQ regulations had defined “effects” of an action to include direct and indirect effects and also required consideration of cumulative impacts. The 2020 Regulations removed the distinction between direct and indirect effects and required consideration only of those changes to the human environment that were reasonably foreseeable and had a reasonably close causal relationship to the proposed action or alternatives. The 2020 Regulations also removed references to cumulative impacts. The CEQ has reinstated the distinction between direct, indirect, and cumulative effects as they existed prior to the 2020 Regulations. However, the CEQ has clarified that “effects” and “impacts” include only those changes to the human environment from the proposed action or alternatives that are reasonably foreseeable.

  • Restored the full authority of agencies to work with communities to develop and analyze alternative approaches that could minimize environmental and public health costs.  

The 2020 Regulations had limited federal agencies’ ability to develop and consider alternative designs or approaches that do not fully align with the stated goals of the project’s sponsor, often a private company. The Phase I Regulations give agencies the flexibility to determine the “purpose and need” of a proposed project based on a variety of factors and to work with project proponents and communities to mitigate or avoid environmental harms.

  • Established the CEQ’s NEPA regulations as the baseline for the environmental review standards that federal agencies should be meeting. 

The 2020 Regulations mandated that the CEQ’s NEPA rules were the maximum requirements an agency could include in its agency-specific NEPA procedures. The Phase I Regulations reinstate the approach adopted in 1978, which indicated that agency-specific NEPA procedures may go beyond those required under CEQ regulations.

The CEQ is now working on a broader Phase II changes to the NEPA regulations and expects to issue proposed rules within the coming months. 

If you have any questions regarding the content of this alert, please contact Emma Marshall, associate, at emarshall@barclaydamon.com; Tom Paul, counsel, at tpaul@barclaydamon.com; or another member of the firm’s Environmental or Regulatory Practice Areas or Energy Team.

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