Key Takeaways from CEQ’s Recent NEPA Rule Changes
It will be impossible to hit net-zero by 2050 unless we build a staggering amount of decarbonizing infrastructure and build it quickly. Every delay on a new solar farm, wind turbine, advanced nuclear reactor, carbon capture facility, transmission line, or direct air capture facility (just to name a few) means more carbon dioxide in the atmosphere and makes achieving our climate goals more difficult. Our environmental laws, such as the National Environmental Policy Act (NEPA), are crucial to protecting our environment, but the bureaucracy involved in implementing them unnecessarily delays important projects that would advance our climate goals.
The Biden administration wants to both successfully implement the landmark Bipartisan Infrastructure Law—a new source of billions of federal dollars to support the construction of decarbonizing infrastructure—and to make progress against climate change. To achieve those goals, they must significantly improve our permitting regulatory system. There is simply no time to waste.
This week, the White House Council on Environmental Quality (CEQ), the federal agency responsible for NEPA implementation, published its “Phase 1” final rule, revising regulations implementing NEPA. The Phase 1 rule reverses some of the changes made by the Trump administration in 2020 and restores much of NEPA’s prior regulatory framework.
Generally, the Biden administration’s approach will steer federal agencies to carry out more complex environmental reviews. While thorough scrutiny for legitimate, detrimental environmental effects such as climate impact is important, these changes can also slow federal review and approval of important infrastructure projects.
Here are some key Biden administration changes in the Phase 1 final rule that meaningfully depart from the Trump administration’s 2020 revision and their potential impact:
1. It removes the requirement to weigh the goals of project applicants.
The “purpose and need” section is the part of an environmental impact statement that outlines why an agency action is proposed and the need it serves.
- Trump administration CEQ rule: The 2020 rule required agencies considering project applications, including those for permits or licenses, to base the purpose and need section of the Environmental Impact Statement (EIS) on the goals of a project applicant and the agency’s authority. This change was designed to align agency goals with the project sponsor goal.
- Biden administration CEQ rule: The new rule eliminates the sentence requiring agencies to consider the goals of an applicant and an agency’s authority, stating that agencies have the authority to consider a wider range of factors.
2. It allows agencies to develop review procedures beyond CEQ’s rules.
While CEQ regulates the broader procedures all agencies must follow while implementing NEPA, each agency incorporates CEQ’s rules into its own implementing regulations which address their own, agency-specific regulations.
- Trump administration CEQ rule: The 2020 rule prohibited agencies from going beyond NEPA review procedures for NEPA implementation. It also required agencies to eliminate any of their own existing procedures that went beyond CEQ’s NEPA provisions.
- Biden administration CEQ rule: The new rule eliminates this prohibition—which the Biden administration calls “ceiling requirements”—and allows agencies to develop procedures beyond CEQ’s requirements to address their needs and goals.
3. It restores specific consideration of direct, indirect and cumulative environmental effects such as climate change.
Under NEPA, agencies are required to evaluate the environmental effects of federal actions, as well as alternative options. Regulations from 1978 define “effects” to include direct, indirect, and cumulative effects.
- Trump administration CEQ rule: The 2020 rule substituted the inclusion of direct, indirect, and cumulative effects from the definition of effects with a different test based on reasonably foreseeable, causally related effects. Although this change, based on a Supreme Court case, did not change the requirement for agencies to consider climate impacts, critics said it would deter them from weighing the impact of a wide range of GHG emissions that contribute to climate change.
- Biden administration CEQ rule: The Phase 1 final rule restores the specific reference to direct, indirect, and cumulative effects as part of the definition of effects. This measure reestablishes previous guidance on how environmental reviews should work and longstanding NEPA practice, which some believe will restore clarity on climate change assessments.
The new CEQ rule takes effect on May 20, 2022. CEQ plans to more comprehensively assess NEPA regulations, developing a “Phase 2” rule, that will make further changes to its implementation. CEQ expects to release this proposal in the coming months.
Because NEPA requires federal agencies to assess the environmental impact of their decisions, most major infrastructure projects receiving federal funding require some level of NEPA review. The Biden administration’s NEPA rule changes will certainly apply to projects greenlit by the Infrastructure Investment and Jobs Act. While the Biden administration is endeavoring to restore, in part, previous NEPA-implementing regulations and provide its own updates, its changes may create some uncertainty and litigation risk, resulting in delayed project timelines.
Fortunately, the IIJA did include provisions to accelerate clean infrastructure permitting and the environmental review process. Specifically, the bill enhanced the Federal Permitting Improvement Steering Council (FPISC), which was created by the FAST Act in 2016 and implemented during the Obama administration. These changes are geared towards improving interagency coordination, reducing timelines, and increasing transparency for major project approvals.
FPISC recently released its annual report to Congress. Projects undergoing the council’s review have a cumulative investment value of nearly $100 billion and are projected to create over 50,000 jobs—with wind, solar, and other renewable energies accounting for 44% of the projects’ economic investment. Increasing the number of projects reviewed by FPISC—along with other measures for more efficient environmental review—is critically important to ensure the timely delivery of IIJA projects.
But these permitting improvements included in the IIJA, while an improvement, are not enough. The administration’s Phase 2 rules must be designed to cut down approval timelines while maintaining high environmental standards and make full use of FPISC’s authority. These are not mutually exclusive; they simply require focusing on efficiency, improved interagency cooperation and keeping necessary oversight while removing unnecessary bureaucracy.
BPC—and our Smarter, Cleaner, Faster Infrastructure Task Force—have outlined how essential improving the federal environmental review and permitting process is to accelerating the development of clean infrastructure and achieving net-zero carbon emissions by 2050. Building enough clean infrastructure to hit net-zero in time will require moving significantly faster than we have in recent decades—a feat that is simply not possible without greater speed, transparency, and certainty in our regulatory processes.
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