On April 20, 2022, the Council on Environmental Quality (“CEQ”) published in the Federal Register the Biden Administration’s “Phase I” final rule implementing the National Environmental Policy Act (“NEPA”). 87 Fed. Reg. 23453 (Apr. 20, 2022). Ahead of a more comprehensive “Phase II” proposal expected later this year, the Phase I rule restores certain pre-Trump era terminology found in the NEPA regulations. These changes relate to the “purpose and need” statement for projects along with the scope of “effects” evaluated in NEPA documents.

With this round of changes, the Biden Administration has taken another step toward further integrating climate change and environmental justice concerns in environmental decision making across the federal government. Moving forward, project proponents will likely experience greater emphasis on these principles when defining the purpose and need of a project and identifying project effects.

The revisions in the Phase I rule are largely consistent with the revisions proposed last year and undo several changes made by the Trump Administration, which were the first significant NEPA regulatory changes since 1978. The Phase I rule’s key changes are summarized below.

Purpose and Need

In an Environmental Impact Statement (EIS), the “purpose and need” statement serves as an important starting point for environmental analysis. The statement identifies the purpose of the proposed agency action and the need for the action. In many ways, the purpose and need statement lays the foundation for other critical parts of the NEPA review, including helping to inform the range of project alternatives that should be evaluated. In 2020, the Trump Administration modified the purpose and need provisions of the NEPA regulations to place greater emphasis on the applicant’s goals for a particular project and to take greater account of any limits to an agency’s statutory authority.

By removing language designed to focus project “purpose and need” statements on the “applicant’s goals,” the new revisions in the Phase I rule arguably re-open the door for agencies to place greater emphasis on climate change and environmental justice as well as the concerns of other stakeholders when crafting these statements. The preamble to the final revisions highlights agency “flexibility” to consider a “variety of factors” when determining the purpose and need of a project, including national and agency missions and policy objectives. As primary focal areas of the Biden Administration, climate change and environmental justice concerns may be used to justify broader purpose and need statements that could deviate from the project proponent’s actual goals. With this greater flexibility, agencies may also take a more skeptical approach to project proponents’ proposed purpose and need statements in general. Though an expected change, greater vigilance in defining, and subsequently defending, preferred purpose and need statements may be necessary going forward.

Agency-Specific NEPA Procedures

On top of the greater emphasis on climate change and environmental justice in CEQ’s NEPA rules, agencies may now further integrate those considerations into their agency-specific NEPA procedures. The final revisions remove the Trump Administration’s limitations on agencies imposing additional procedures or requirements beyond the CEQ regulations, and instead clarify that the CEQ rules are a “floor,” rather than a “ceiling.” This revision was specifically identified as allowing agencies to implement procedures tailored to the agency’s mission that further address environmental justice considerations and air impacts.

Direct, Indirect, and Cumulative Effects

The final revisions also reinstate, for the most part, the definitions of “direct effects,” “indirect effects,” and “cumulative impacts” that existed prior to the Trump Administration’s 2020 NEPA rule revisions. Importantly, however, the Phase I rule retains the Trump Administration’s “reasonably foreseeable” language in the definition of “effects.” This is noteworthy because the Phase 1 proposal would have deleted “reasonably foreseeable” from the definition of “effects.” While CEQ maintains that it always intended this interpretation, the final revisions reduce ambiguity. Despite the preservation of the Trump Administration’s definition of “reasonably foreseeable” in the final revisions, project proponents should expect agencies to interpret this principle more broadly than under the previous administration.

Summary Table

The following table spotlights the key changes announced in today’s final rule in comparison to prior versions of the NEPA regulations.

 

	2020 NEPA Rule	2022 NEPA Rule
“Purpose and need”	“The statement shall briefly specify the underlying purpose and need for the proposed action. When an agency's statutory duty is to review an application for authorization, the agency shall base the purpose and need on the goals of the applicant and the agency's authority.”	“The statement shall briefly specify the underlying purpose and need to which the agency is responding in proposing the alternatives including the proposed action.”
“Effects”	“[C]hanges 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, including those effects that occur at the same time and place as the proposed action or alternatives and may include effects that are later in time or farther removed in distance from the proposed action or alternatives. (1) Effects include ecological (such as the effects on natural resources and on the components, structures, and functioning of affected ecosystems), aesthetic, historic, cultural, economic (such as the effects on employment), social, or health effects. Effects may also include those resulting from actions that may have both beneficial and detrimental effects, even if on balance the agency believes that the effect will be beneficial. (2) A “but for” causal relationship is insufficient to make an agency responsible for a particular effect under NEPA. Effects should generally not be considered if they are remote in time, geographically remote, or the product of a lengthy causal chain. Effects do not include those effects that the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action. (3) An agency's analysis of effects shall be consistent with this paragraph (g). Cumulative impact, defined in 40 CFR 1508.7 (1978), is repealed.”	“[C]hanges to the human environment from the proposed action or alternatives that are reasonably foreseeable and include [direct effects, indirect effects, and cumulative effects]… Effects include ecological (such as the effects on natural resources and on the components, structures, and functioning of affected ecosystems), aesthetic, historic, cultural, economic, social, or health, whether direct, indirect, or cumulative. Effects may also include those resulting from actions which may have both beneficial and detrimental effects, even if on balance the agency believes that the effects will be beneficial.”
“Direct effects”	No definition provided	“[C]aused by the action and occur at the same time and place.”
“Indirect effects”	No definition provided	“[C]aused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable. Indirect effects may include growth inducing effects and other effects related to induced changes in the pattern of land use, population density or growth rate, and related effects on air and water and other natural systems, including ecosystems.”
“Cumulative” impacts/effects	No definition provided	“[E]ffects on the environment that result from the incremental effects of the action when added to the effects of other past, present, and reasonably foreseeable actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions. Cumulative effects can result from individually minor but collectively significant actions taking place over a period of time.”
“Reasonable alternatives”	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.”	A “reasonable range of alternatives that are technically and economically feasible, and meet the purpose and need for the proposed action.”
“Reasonably foreseeable”	“[S]ufficiently likely to occur such that a person of ordinary prudence would take it into account in reaching a decision.”	No change

Moving Forward

Project proponents will want to become familiar with the new regulations, and to consult experienced counsel who can work with them to ensure that supporting documents align with the new regulations to avoid project delays. While planning future projects, applicants should also remain mindful of additional upcoming NEPA rule changes that are likely to address a broader range of issues than the Phase I rule. Strategic NEPA consultation is particularly important given the anticipated sharp increase in federally funded projects under the 2021 Infrastructure Investment and Jobs Act.

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