The Role of Categorical Exclusions in Achieving Net-Zero by 2050

Letter from the Task Force

With over $1 trillion worth of infrastructure projects in the pipeline following enactment of the Bipartisan Infrastructure Law and the Inflation Reduction Act, there should be a renewed focus on ensuring this funding is spent efficiently to maximize the economic, climate, and quality-of-life benefits. One critical path to accelerating infrastructure delivery and decreasing project costs is increasing efficiency in the environmental review and permitting process. The recent release of draft legislation in the Senate to improve permitting and siting of energy infrastructure projects shows that Democrats and Republicans are focused on this issue.

While this is a multifaceted issue, one specific aspect, the National Environmental Policy Act (NEPA) categorical exclusion, is particularly deserving of attention—and clarification.

“A categorical exclusion (CE) is a class of actions that a federal agency has determined, after review by the CEQ, do not individually or cumulatively have a significant effect on the human environment and for which, therefore, neither an environmental assessment nor an environmental impact statement is normally required. The use of categorical exclusions can reduce paperwork and save time and resources.” (Source: CEQ)

In a world of limited resources, time, and capacity, efficiency is paramount. Time spent reviewing federal actions that will not have any significant environmental impacts is time that cannot be spent reviewing those that might. For that reason, the Council on Environmental Quality (CEQ) regulations that implement NEPA outline a process for federal agencies to review certain actions that do not have a significant effect on the environment and assign these categories of actions as excluded from future review—i.e., categorical exclusions (CEs).

In May 2021, we proposed accelerating the deployment of clean infrastructure by maximizing the use of CEs for much needed infrastructure projects. Expounding on our previous recommendation, this whitepaper explains in additional detail the critical, but routine, nature of categorical exclusions and outlines opportunities to expand the use of this tool.

We recognize that decarbonizing the U.S. economy is necessary, urgent, and profoundly challenging. We hope this is a useful resource for implementing policies and programs that more efficiently support economic growth and reduce greenhouse gas emissions to meet net zero goals, while continuing to safeguard the environment.

Introduction

With the urgent challenge of achieving net-zero emissions by 2050 in mind, we must prioritize building the clean infrastructure required to achieve that goal as quickly as possible and without sacrificing any environmental standards.

A 2020 CEQ study found that the median time to complete an Environmental Impact Statement across all federal agencies is 3.5 years, while the average completion time is even longer at 4.5 years.¹ Of the 1,276 EISs reviewed by CEQ, half took longer than 3.5 years to complete and one quarter took more than 6 years.

Due to the amount of time, effort, and interagency coordination involved in the creation of an EIS, or even a briefer Environmental Assessment (EA), NEPA reviews can significantly delay project delivery and increase the costs of infrastructure projects even when an agency ultimately concludes that a project will have no significant environmental impact. Completion times for project environmental review and authorization—including the permitting required beyond the NEPA review—and litigation risk are highly unpredictable. This creates uncertainty for project developers and their investors which discourages private capital investment and can jeopardize the financial viability of critical projects.

Legislation like the Fixing America’s Surface Transportation Act of 2015, which established a federal Permitting Council and added a degree of predictability for larger projects, and administrative actions like Executive Order 13807, which first outlined the “One Federal Decision” initiative, represent efforts to improve the federal environmental review and permitting process that have frequently targeted the most high-priority, costly, and complex infrastructure projects—which nearly always require an EIS. Yet, as this whitepaper outlines, better use of and updates to categorical exclusions, which apply to a broad set of routine actions and which have been determined to have no significant environmental impact, can also help improve project delivery for many types and sizes of projects, relieve administrative burdens at all levels of government, and advance long-term climate goals without significant short-term effects.

BPC’s Smarter Cleaner Faster Infrastructure Task Force included the following recommendation on categorical exclusions as one of 23 policy recommendations released in May 2021:

Congress should direct the administration to coordinate and transparently maximize the use of categorical exclusions (CEs) for clean infrastructure projects. CEs are categories of actions that agencies have determined, by regulation and CEQ approval, do not have a significant effect on the environment and for which, therefore, neither an environmental assessment nor an environmental impact statement normally is required. Maximizing the use of CEs to exclude certain actions from detailed NEPA review is a valuable time-saving approach. CEs reduce paperwork and allow agencies to focus their resources on actions that may significantly affect the quality of the environment. The regulatory process required for CEs allows for public participation and transparency.

To build on this recommendation and further explore the role of categorical exclusions in achieving net-zero, the first section of this whitepaper explains the benefits of categorical exclusions, the process for evaluating them, and limits on their use. The second section proposes a list of new, updated or expanded categorical exclusions that should be implemented to speed the deployment of decarbonizing infrastructure to achieve net-zero by 2050.

Categorical exclusion determinations are a type of NEPA compliance, not an exemption from NEPA.

Part I: Understanding Categorical Exclusions

• A brief overview of categorical exclusions
• A summary of the process by which agencies create new categorical exclusions
• An explanation of the differences between statutory and administrative categorical exclusions
• A description of how categorical exclusions are applied to proposed actions
• An analysis of how categorical exclusions may be impacted by proposed regulations

Part II: Recommendations to Improve the Use of Categorical Exclusions to Accelerate Decarbonization

• Extend existing categorical exclusions to additional agencies
• Create new categorical exclusions
• Issue RFIs for how agencies can better utilize categorical exclusions
• Increase resources dedicated to implementing categorical exclusions.

Part I: Understanding Categorical Exclusions

 A brief overview of categorical exclusions

NEPA requires federal agencies to assess the environmental effects of all “major federal actions” that may “significantly affect the quality of the human environment.” It ensures that agencies make informed decisions and consider a variety of possible alternatives and the environmental consequences. This process allows agencies to analyze their actions, including the consideration of alternative approaches that may avoid, minimize, or mitigate harm to the human environment while achieving the federal action goals.

NEPA establishes procedural requirements that require federal agencies to consider the environmental and related social and economic effects of their proposed actions and provide opportunities for public involvement. This obligation applies to all major actions implemented by any federal agency as well as private projects that receive federal funds, licenses, or permits. Because of the high level of federal involvement, infrastructure projects, including clean energy projects and transmission projects, are frequently considered a “major federal action” and thus subject to NEPA review.

Under NEPA, federal agencies evaluate the environmental impacts of a proposed action in one of three ways:

1. If a proposed action is expected to have significant effects on the environment, NEPA requires federal agencies to prepare a detailed EIS, identifying reasonably foreseeable effects of the proposed action and reasonable alternatives to avoid, minimize, or compensate for those effects.²
2. If a proposed action may have significant effects, but those effects can be mitigated to support a Finding of No Significant Impact (FONSI), the agency typically assesses the project environmental impacts in a shorter EA instead of a full EIS.³
3. If a proposed action is one of a category of actions that the federal agency has already determined do not have a significant environmental impact, the federal agency will conduct a brief environmental analysis to confirm that the proposed action falls into an existing categorical exclusion.

Categorical exclusions are a type of environmental review and present an opportunity for federal agencies to evaluate categories of actions in advance that under normal circumstances do not have a significant environmental impact.⁴ This decreases the administrative burden of having to conduct a more thorough EA or EIS for every future project that qualifies for the CE. In this way, the use of CEs saves agency time and resources, which can then be better spent reviewing actions that merit deeper review. Categorical exclusions also provide an opportunity for federal agencies to dramatically increase the efficiency and predictability of the NEPA review process while still satisfying their obligation to assess the environmental effects of major federal actions under NEPA.

For these reasons, federal agency actions undergo a brief environmental analysis to confirm that a categorical exclusion applies to a proposed action. Federal agencies have found that many administrative actions—such as data collection, conducting surveys, or installing security systems in existing facilities—can be categorically excluded because they are not expected to have significant effects. Sometimes CEs are referred to as an exemption from NEPA, but that characterization is incorrect. NEPA still applies to such actions; they are excluded only from the requirement to prepare an EA or EIS because they fall in a category already determined by the federal government as having no significant environmental impact.

Federal agencies frequently employ CEs for clean energy and transmission projects:

• The U.S. Forest Service created a CE for construction of utility lines in certain designated corridors.⁵
• The Department of Agriculture (USDA) Rural Development agency has designated CEs for 13 different types of small-scale energy projects for which rural development agencies frequently provide financial assistance.⁶
• The Federal Energy Regulatory Commission (FERC) has also created a CE for approval of small-scale electrical connections to the grid where interconnections do not require construction of a new substation or transmission line. This CE allows certain small-scale renewable energy projects to connect to the grid quickly.⁷

A summary of the process by which agencies create new categorical exclusions

Federal agencies are required to specifically list, in their respective NEPA-implementing regulations, actions likely to be considered categorical exclusions.⁸

Federal agencies may establish new or revised categorical exclusions in a variety of circumstances. For example, an agency may determine, based on past experience, that a class of actions can be categorically excluded because it is not expected to have significant individual or cumulative environmental effects. Other categories of actions may become appropriate for categorical exclusions as a result of mission changes. For example, when agencies acquire new responsibilities through legislation or administrative restructuring, they may propose new categorical exclusions after concluding that any resulting environmental impacts are not significant.

When an agency drafts a new categorical exclusion, CEQ guidance states that agencies should do the following:

1. Consider broadly defined criteria which characterizes types of actions that, based on the agency’s experience, do not cause significant environmental effects.
2. Offer several examples of activities frequently performed by that agency’s personnel which would normally fall in these categories.
3. Consider whether the cumulative effects of multiple small actions would cause sufficient environmental impact to take the actions out of the categorically-excluded class.
4. Clearly define the eligible category of actions, as well as any physical, temporal, or environmental factors that would constrain its use.

Federal agency NEPA procedures also require agencies to consider whether there are “extraordinary circumstances” that require further environmental review of a particular application of a categorical exclusion. Extraordinary circumstances are listed as part of an agency list of categorical exclusions and are usually referenced as a checklist for the application of a categorical exclusion to a proposal for agency action.⁹ Should an action have extraordinary circumstances that may result in significant impacts, the action would not be eligible for the CE, but would go through the EA or EIA process.

In addition, because drafting categorical exclusions is an agency action subject to the Administrative Procedure Act (APA), it is important that the drafting agency establish an administrative record to support the categorical exclusion. Agencies must develop a record that shows that the proposed CE meets the regulatory definition of a CE sufficiently to withstand an APA challenge. For actions that do not obviously lack significant environmental effects, CEQ guidance states that agencies should rely on other agencies’ experiences, past projects of a similar nature, demonstration projects, other information from professional staff, expert opinions, and scientific analysis to develop a record.

Once a CE has been drafted, the agency consults with the Office of Management and Budget (OMB) and CEQ on the proposed CE, as required by regulation. CEQ guidance also recommends the agency consult with other federal agencies that conduct similar activities to coordinate with their current procedures. OMB may require interagency review under Executive Order 12866. Following a public comment period, the agency must consider the comments received and consult again with OMB and CEQ. CEQ is required to complete its review within 30 days of receiving the final text of the agency’s proposed CE. CEQ must then issue a written statement that the categorical exclusion was developed in conformity with NEPA and CEQ regulations. Lastly, the final CE is published in the Federal Register and filed with CEQ. This process can take between 6 months and a year.

As an example, the Department of Energy (DOE) lists 25 categorical exclusions applicable to conservation and fossil and renewable energy activities, including small-scale renewable energy research, development, and pilot projects, small-scale solar photovoltaic systems, and a small number of wind turbines.¹⁰ In addition, many land management agencies list available categorical exclusions in their departmental manuals.¹¹

 

An explanation of the differences between statutory and administrative categorical exclusions

Statutory CEs are distinct from administrative CE (referred to as CEs through the rest of this whitepaper). Statutory CEs refer to federal actions conducted pursuant to a particular act of Congress where Congress finds a federal action to have minimal environmental impact. Congress exercises this power both to broadly exempt federal actions taken under a certain statute from NEPA review altogether and to create tailored exclusions for certain activities taken under a statute that are not expected to have a significant environmental impact.

Because statutory CEs are creatures of statute, they can effectively exempt a federal activity from the NEPA process entirely. These statutory exclusions generally apply to actions that are emergency in nature or are necessary for the preservation of life and property. For example, section 316 of the Stafford Act states that certain federal actions taken in the wake of a disaster or emergency that restores a facility substantially to its condition prior to the disaster or emergency “shall not be deemed a major federal action significantly affecting the quality of the human environment within the meaning of [NEPA].”¹² The exempted activities include providing essential relief to victims and implementing protective measures necessary to reduce immediate threats to life, property, and public health and safety. Likewise, the 2020 CARES Act created an exemption from NEPA for the General Services Administration’s acquisition of real property and improvements in real property in response to the coronavirus and in conjunction with the provision of additional funding to prevent, prepare for, and respond to the coronavirus.¹³

More frequently, however, Congress enacts narrowly targeted statutory CEs. Such exclusions only apply in pre-specified circumstances where Congress concludes the action will have minimal environmental impacts. In addition, statutory CEs often require the agency to document the application of the exclusion and confirm that there are no extraordinary circumstances that could result in significant environmental impacts.

For instance, the Agricultural Act of 2014 provides that projects to carry out forest restoration treatments in areas experiencing an insect or disease epidemic may be “considered an action categorically excluded from the requirements of [NEPA]” as long as they are limited in scope and implemented through a collaborative process representing diverse interests.¹⁴ This statutory CE was intended to provide the U.S. Forest Service with “critically needed tools and flexibility” required in the “fight against the pine beetle in the Black Hills.”¹⁵

In a more recent example, the Infrastructure Investment and Jobs Act designated certain forest management activities, such as establishing and maintaining linear fuel breaks to reduce the risk of uncharacteristic wildfire on federal land or catastrophic wildfire for an adjacent at-risk community, as “categorically excluded” from the preparation of an EA or an EIS under NEPA as long as “the categorical exclusion is documented through a supporting record and decision memorandum.”¹⁶ To encourage meaningful public participation during the preparation of a project under this section, the U.S. Forest Service or Bureau of Land Management must facilitate, during the preparation of each project, (1) collaboration among state and local governments and Indian Tribes and (2) participation of interested persons.

In practice, there are several distinctions between a statutory CE and an administrative CE. First, as mentioned above, because statutory CEs are law, they can create a complete exemption of an action from the NEPA process. In addition, statutory CEs are not established under the APA so they are not supported by a comprehensive administrative record. Lastly, Congress is not bound by agency regulations or guidance when drafting statutory CEs. As a result, statutory CEs can be broader than administrative CEs, the latter of which must always include as assessment of extraordinary circumstances.

A description of how categorical exclusions are applied to proposed actions

As described above, when applying a CE to a proposed action, federal agencies analyze first whether the proposed action fits within the category of actions described in the CE and then whether there are any potentially significant impacts expected as a result of extraordinary circumstances. Extraordinary circumstances are factors or circumstances in which a normally excluded action may have a significant environmental effect that then requires further analysis in an EA or EIS.

The extent of documentation that may be required to demonstrate that a project is categorically excluded depends on the nature and extent to which a project involves extraordinary circumstances that may cause a normally excluded action to have a significant environmental effect. Typically, this analysis is documented by the federal agency with a checklist or a worksheet. This documentation cites the CE being used and documents the agency’s conclusion that (1) the proposed action fits within the category of actions described in the categorical exclusion; and (2) there are no extraordinary circumstances that would preclude the proposed action from being categorically excluded. The extent of the documentation is tailored to the type of action involved, the potential for extraordinary circumstances and environmental effects, and any applicable requirements of other laws, regulations, and policies.

If an extraordinary circumstance is present, the federal agency may still categorically exclude the proposed action if the agency determines that there are circumstances that lessen the impacts or other conditions sufficient to avoid significant effects, such as the potential to affect protected natural or cultural resources.¹⁷ The NEPA procedures of the U.S. Forest Service provide that the “mere presence” of a resource condition listed as an extraordinary circumstance does not preclude the application of a CE; rather, it is the “existence of a cause-effect relationship between a proposed action and the potential effect on these resource conditions, and if such a relationship exists, the degree of the potential effect of a proposed action on these resource conditions that determines whether extraordinary circumstances exist.”¹⁸ For example, the fact that the Kirtland’s warbler, an endangered songbird, is “known to occur” in the area of national forest where a pipeline is located does not preclude the U.S. Forest Service from applying a categorical exclusion for reissuance of a permit “when the only changes are administrative” and “there are not changes to the authorized facilities or increases in the scope or intensity of authorized activities.”¹⁹ However, if the agency determines that it cannot categorically exclude the proposed action, the agency must prepare an EA or an EIS.²⁰

Also, the fact that a project does not have a significant impact as defined under NEPA does not mean that it will not trigger statutory requirements of other environmental laws. For example, if historical sites, endangered species habitat, wetlands, or property in minority neighborhoods, to name a few, would be affected by a proposed federal action, compliance with related environmental laws or requirements, in addition to NEPA, may be required.

An analysis of how categorical exclusions may be impacted by proposed regulations

In July 2020, the Trump administration CEQ made wholesale revisions to its NEPA-implementing regulations for the first time in more than 40 years. These revisions were designed to increase the efficiency and predictability of the NEPA review process. Under the Biden administration, CEQ began a comprehensive reconsideration of the 2020 updates to its NEPA procedures. CEQ finalized the first phase of a two-phase rulemaking in April 2022.

One of the changes that the Biden administration CEQ finalized in this first phase restored the definition of “effects or impacts” to reference the concepts of direct, indirect, and cumulative effects explicitly. CEQ noted in this Final Rule that they recognize that nothing in the CEQ regulations requires agencies to categorize effects separately as direct, indirect, or cumulative. Rather, CEQ provides that agencies can holistically discuss “all reasonably foreseeable direct, indirect, and cumulative effects, rather than delineating the categories in separate sections of a NEPA document.” CEQ’s changes also removed the potential limitations in the 2020 Rule on consideration of temporally or geographically removed environmental effects, effects that are the product of a lengthy causal chain, and effects that the agency has no ability to prevent due to its limited statutory authority or that would occur regardless of the proposed action. The Biden administration CEQ contends that their 2022 Final Rule “will not result in consideration of a limitless universe of effects,” but will instead continue to be “bounded by a reasonableness standard.” Consistent with this intention, CEQ included language in the definition of effects, which makes clear that effects are “changes to the human environment from the proposed action or alternatives that are reasonably foreseeable.”

These changes have the greatest potential to affect the creation and application of CEs. From 1978, when CEQ provided for categorical exclusions in its whole-of-government NEPA procedures, until 2020, when CEQ updated its NEPA procedures, CEQ had defined categorical exclusion as “a category of actions which do not individually or cumulatively have a significant effect on the human environment…”²¹ In 2020, CEQ updated its definition to “a category of actions that the agency has determined in its NEPA procedures . . . normally do not have a significant effect on the human environment.” ²² This change was intended to allow agencies to focus on holistically evaluating reasonably foreseeable, causally related impacts rather than categorizing potential impacts as “direct,” “indirect,” or “cumulative.” The 2022 Final Rule once again explicitly describes these reasonably foreseeable causally related impacts as direct, indirect, and cumulative environmental impacts of a proposed decision or action, as described above. This will clarify the standard by which agencies create CEs because it will require agencies to explicitly consider and document whether the direct, indirect, and cumulative environmental impacts of a proposed CE will be significant.

In its phase two rulemaking, CEQ indicates that it will propose more comprehensive amendments to the 2020 NEPA regulations, however, no other changes to the process or standards by which agencies create CEs are anticipated.

Part II: Recommendations to Expand and Improve the Use of Categorical Exclusions

We propose four recommendations that would increase the utilization and effectiveness of CEs for clean energy and carbon management projects: a) extend existing categorical exclusions to additional agencies, b) create new categorical exclusions, c) issue RFIs for how agencies can better utilize categorical exclusions, and d) increase federal resources dedicated to implementing categorical exclusions.

Below we provide additional detail on each recommendation and examples.

Extend existing categorical exclusions to additional agencies

Several agencies have already reviewed and approved CEs for actions applicable to clean energy and carbon management projects. These CEs should be extended to other relevant agencies. For example, the DOE has approved CEs for several types of projects that other agencies should adopt:

• Electric vehicles: The DOE has an existing CE (DOE CE B5.23) that covers the installation, modification, operation, and removal of electric vehicle charging stations, using commercially available technology, within a previously disturbed or developed area. The Infrastructure Investment and Jobs Act authorized the creation of an EV Working Group to make recommendations on a broad range of EV topics including charging infrastructure permitting and regulatory issues. Extending this CE to other federal agencies, such as the Department of Transportation (DOT), who will be involved in building this network of charging stations, could be an advantage for a quicker, more efficient build-out.
• Wind siting and monitoring: Increasing the use of wind energy in the US will require streamlined siting and increased wind manufacturing and installation capacity for both onshore and offshore projects. The DOE has a CE addressing site characterization activities and environmental monitoring, such as the installation and operation of meteorological towers and associated activities like assessment of potential wind energy resources (DOE CE B3.1(h)). The Department of the Interior (DOI) also has a CE addressing nondestructive data collection, inventory, study, research, and monitoring activities for wind energy transmission infrastructure (40 CFR 46.210€). These CEs could be adopted across federal agencies to improve coordination between the agencies on both private and federal lands
• Semiconductors: High power semiconductors are key components of clean energy and are required for wind turbines and photovoltaic cells. There is an existing DOE CE that addresses the installation or relocation and operation of machinery and equipment such as electronic hardware, manufacturing machinery, or maintenance equipment (B1.31). This CE could be extended to the Department of Commerce for use in semiconductor facilities and other departments such as the Department of Defense for use in semiconductor fabrication facilities. Implementing this CE at the Department of Commerce would also further the aims of the recently passed CHIPS and Science Act, which authorizes the Secretary of Commerce to provide funding to spur investment in semiconductor facilities for fabricating, assembling, testing, advanced packaging, and research and development in the United States.
• Retrofitting: Retrofitting older, inefficient building infrastructure and systems, such as building management systems, and weatherization with energy efficient equipment can have an enormous and positive climate impact. DOE has four existing CEs that address retrofitting buildings and cover temperature control for operation of existing equipment (DOE CE B1.4), energy and water conservation activities (DOE CE B5.1), electronic equipment such as electricity transmission control and monitoring devices (DOE CE B1.7), and the installation and operation of machinery and other equipment (DOE CE B1.31). Expanding the use of these DOE CEs to all applicable federal agencies could be an important measure to advance Executive Order 14057, under which federal agencies are required to modernize their buildings portfolios to reach net-zero emissions by 2045, including a 50 percent reduction in building emissions by 2032.
• Transmission: Electric transmission line improvements are an important tool for decarbonization of the grid as wind and solar resources are often located far from demand centers and require new transmission to reach customers. The DOE has three existing CEs related to electric transmission, covering: 1) activities such as tower modifications or replacements of transmission components within a previously disturbed or developed facility (DOE CE B4.6); 2) upgrading and rebuilding existing powerlines that are approximately 20 miles in length or less of an existing electric powerline (DOE CE B4.13); and 3) routine maintenance activities and custodial services for buildings, structures, rights-of-way, and localized vegetation and pest control, during which operations may be suspended and resumed. These three CEs could be expanded to include minor, environmentally beneficial relocations and extended to other federal agencies involved in this type of project in federal rights-of-way authorizations, such as DOT and FERC, or on public lands managed by agencies like the Bureau of Land Management.
• Waste methane gas fuel: Using waste for energy can be an inexpensive, renewable and readily available form of energy for many cities. DOE has an existing CE that covers the installation, modification, and operation of commercially available methane gas recovery and utilization systems installed within a previously disturbed or developed area or near an existing landfill or wastewater treatment plant that would not have the potential to cause a significant increase in the quantity or rate of air emissions. Covered actions would incorporate appropriate control technologies and best management practices (DOE CE B5.21). This CE could be used by other federal agencies such as the Rural Utility Service and the Rural Development agency at USDA, and at the Environmental Protection Agency (EPA).
• Offshore wind: The U.S. Fish and Wildlife Service (FWS) has an existing CE for low-effect habitat conservation programs (HCP) that applies where a HCP would result in minor or negligible effects on federally listed, proposed, and candidate species and their habitats and other environmental values or resources and impacts that would not result in significant cumulative effects to environmental values or resources over time (ESA section 10(a)(1)(B)). Extending this CE to the National Oceanic and Atmospheric Administration (NOAA) could ensure that offshore wind projects benefit from this CE.
• Federal financing: Routine federal financing of projects often triggers a NEPA review because it is considered a major federal action. However, the financing action itself does not necessarily involve the actual project planning so it could be categorically excluded from NEPA where federal funding does not determine the outcome of the project. Two agencies have CEs that address this. The Rural Utility Service (RUS) at USDA has a CE for Routine Financial Actions, including financial assistance for the purchase, transfer, lease, or other acquisition of real or personal property when no or minimal change in use is reasonably foreseeable, financial assistance for operating (working) capital for an existing operation to support day-to-day expenses, sale or lease of Agency-owned real property, and additional financial assistance for cost overruns (7 CFR 1970.53(a)). DOI has a CE that excludes routine financial transactions, including financial assistance (42 CFR § 46.210(c)). The purpose of these CEs could be converted into one CE focused on clean energy projects and adopted across the federal government.

Create new categorical exclusions

In addition to extending existing CEs to other federal agencies, it is critical for agencies to identify new CEs for actions that do not have a significant detrimental environmental impact—and would achieve climate benefits from faster approvals. For example, with the swift ramp up of manufacturing and deployment in the clean energy and carbon management industries, establishing new CEs could accelerate the deployment of promising new decarbonization technologies, such as:

• Direct air capture (DAC): The Infrastructure Investment and Jobs Act appropriated $3.5 billion for four regional DAC hubs. These hubs will consist of several elements, including DAC facilities, carbon dioxide sequestration wells, carbon dioxide transportation infrastructure, power generation, and carbon dioxide utilization facilities. These hubs will have “room to grow” and it is expected that additional DAC facilities, including pilots, demonstration projects, and commercial scale facilities, will be added on to existing hubs over time. As DOE is doing the initial permitting review for each hub, they should do a programmatic review that includes designating a categorical exclusion for adding additional DAC facilities to an operational DAC hub.
• Geothermal energy: The vast majority of viable geothermal resources exist on federal land, meaning most geothermal exploration is subject to NEPA review. Creating a new categorical exclusion at DOI for geothermal exploration on federally managed lands would facilitate investment in geothermal energy and empower clean energy companies to develop geothermal energy by reducing the high up-front costs and uncertainty associated with lengthy environmental reviews for small-scale test drilling.

Beyond merely clean energy projects, however, all agencies that oversee NEPA-compliant projects with clear climate benefits—including DOE, DOI, EPA, DOT, the Departments of Housing and Urban Development (HUD) and Homeland Security (DHS), FERC, USDA, and the Department of Commerce—should conduct a thorough review to establish which actions and projects would be most suitable for CEs to ensure that a broad range of emissions-reducing projects are able to benefit from faster timelines.

Issue Requests For Information (RFIs) for categorical exclusions

To inform their efforts to enhance the impact of CEs, agencies should issue RFIs seeking recommendations about how to improve and expand the use of CEs. Specifically, agencies should gather input from key stakeholders such as project sponsors, private sector investors, trade associations, research organizations, and non-profit advocacy groups that have the best understanding of which CEs are especially useful, where CEs fall short or require modifications, and what additional types of projects are best suited for new CEs. With input from these stakeholders, agencies would have the insights to conduct a review of their current CEs, and reform and extend CEs where appropriate. Information collected through RFIs could also help agencies to develop and propose a series of CEs targeted to achieve the maximum time and cost savings for categories of projects with the greatest climate benefits, as stakeholders understand what types of actions and projects would meet the standards of a categorical exclusion.

Increase resources dedicated to implementing categorical exclusions

Building on one of the recommendations included in BPC’s Smarter Cleaner Faster Infrastructure Task Force policy recommendations released in May 2021, Congress should provide the training, support, and staff salaries necessary to ensure agencies have sufficient federal resources to effectively utilize CEs, analyze areas where existing CEs could be modified or expanded to be more effective, and identify opportunities to create new CEs for clean energy and carbon management projects. Additionally, to prevent a bottleneck, Congress should provide additional resources and staffing to CEQ to review and consult with agencies interested in establishing new CEs or modifying existing ones. With only 17 dedicated employees, CEQ is significantly understaffed to keep pace with recently passed and incredibly ambitious climate and infrastructure policies.²³ Congress should build on recent progress and provide CEQ with resources and staffing needed to accelerate the permitting review process and handle any additional workload associated with appropriately maximizing the use of CEs.

Conclusion

While categorical exclusions are not the panacea to our permitting delays, maximizing their use where appropriate will ensure limited time and resources for environmental review is spent on complicated projects rather than on actions and projects that do not need lengthy review. Building out the infrastructure necessary to achieve net zero is an enormous task that is threatened by lengthy permitting timelines, making every possible efficiency gain meaningful. A commitment to better utilize CEs is worth the effort required for agencies to review and designate as they will be utilized for decades to come.

Staff

Xan Fishman
Director, Energy Policy and Carbon Management

John Jacobs
Policy Analyst

Owen Minott
Senior Policy Analyst

Andy Winkler
Director, Housing and Infrastructure Project

Acknowledgments

The Bipartisan Policy Center (BPC) and the Smarter, Cleaner, Faster Infrastructure Task Force would also like to thank Erin Barry, Ted Boling, and Elizabeth Stolpe for their substantial contributions and assistance with this report, and the numerous other experts who offered valuable feedback throughout this process.

The Spirit of Consensus

The BPC’s Smarter, Cleaner, Faster Infrastructure Task Force endorses these recommendations as a package. As with all principled compromise, no member should be assumed to be satisfied with every individual proposal or to support a particular idea in isolation.

Smarter, Cleaner, Faster Infrastructure Task Force

The Smarter, Cleaner, Faster Infrastructure Task Force advocates for the modernization of American infrastructure to support a vibrant, globally competitive economy that creates jobs and achieves net-zero carbon emissions by 2050. Building smarter, cleaner infrastructure will require moving significantly faster than we have in recent decades. The task force highlights the economic and environmental benefits of accelerating clean infrastructure for hardworking Americans and develops bipartisan proposals to help guide the administration and Congress as they make investments to improve the country’s infrastructure.

Footnotes

¹ White House Council on Environmental Quality, “Environmental Impact Statement Timelines (2010-2018),” June 2020. Available at: https://ceq.doe.gov/docs/nepa-practice/CEQ_EIS_Timeline_Report_2020-6-12.pdf

² 40 CFR § 1508.1 – Definitions. (z) Reasonable alternatives means a reasonable range of alternatives that are technically and economically feasible, meet the purpose and need for the proposed action, and, where applicable, meet the goals of the applicant.

³ 40 CFR § 1508.1 – Definitions. (s) Mitigation means measures that avoid, minimize, or compensate for effects caused by a proposed action or alternatives as described in an environmental document or record of decision and that have a nexus to those effects. While NEPA requires consideration of mitigation, it does not mandate the form or adoption of any mitigation. Mitigation includes:
(1) Avoiding the impact altogether by not taking a certain action or parts of an action.
(2) Minimizing impacts by limiting the degree or magnitude of the action and its implementation.
(3) Rectifying the impact by repairing, rehabilitating, or restoring the affected environment.
(4) Reducing or eliminating the impact over time by preservation and maintenance operations during the life of the action.
(5) Compensating for the impact by replacing or providing substitute resources or environments.

⁴ 40 CFR § 1501.4.

⁵ 36 C.F.R. § 220.6(e)(2).

⁶ 7 C.F.R. § 1970.54(c).

⁷ 18 C.F.R. § 380.4(a)(17).

⁸ 40 C.F.R. §1507.3.

⁹ For example, the Department of the Interior’s list of extraordinary circumstances is available at 43 C.F.R. § 46.215.

¹⁰ 10 C.F.R. Pt. 1021, Subpt. D, App. B5. In addition, many land management agencies categorical exclusions are available in their departmental manuals.

¹¹ See e.g., U.S. Fish & Wildlife Service, Departmental Manual, Series 31, Part 516, Ch. 8; Bureau of Land Management, Departmental Manual, Series 31, Part 516, Ch. 11; Bureau of Reclamation, Departmental Manual, Series 31, Part 516, Ch. 14; Bureau of Ocean Energy Management, Departmental Manual, Series 31, Part 516, Ch. 15

¹² Section 316 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), as amended, 42 U.S.C. 5159.

¹³ ‘Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law 116–136 (Mar. 27, 2020), 134 STAT. 531-2 (“Provided further, That no action taken by the Administrator to acquire real property and interests in
real property or to improve real property in response to coronavirus shall be deemed a Federal action or undertaking and subject to review under the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321 et seq.), or the National Historic Preservation Act of 1966, as amended (54 U.S.C. 300101 et seq.), respectively”).

¹⁴ Agricultural Act of 2014, PL 113-79, February 7, 2014, 128 Stat 649 (Section 603).

¹⁵ Agricultural Act of 2014 – Conference Report, 160 Cong. Rec. S666-02, S670 (Feb. 13, 2014) (testimony of Dusty Johnson, North Dakota).

¹⁶ Pub. L. No. 117-58, § 40806, 135 Stat. 1110.

¹⁷ 40 C.F.R. § 1501.4(b)(1).

¹⁸ 36 CF.R. § 220.6(b)(2).

¹⁹ 36 C.F.R. § 220.6(e)(15) Sierra Club v. Forest Service, 828 F.3d 402, 410 (6th Cir. 2016).

²⁰ 40 C.F.R. § 1501.4(b)(2).

²¹ 40 CFR § 1508.4 (rescinded).

²² 40 CFR § 1508.1(d) (emphasis added). The 2020 regulations also define “effects or impacts” to mean “changes to the human environment from the proposed action or alternatives that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives. 40 CFR § 1508.1(g) (emphasis added).

²³ Robin Bravender and Kelsey Brugger, Inside Biden’s sparsely staffed, high-pressure environmental shop, E&E News, April 2022, Available at: https://www.eenews.net/articles/inside-bidens-sparsely-staffed-high-pressure-environmental-shop/