On November 16, 2023, the Department of Energy (“DOE”) issued a notice of proposed rulemaking (“NOPR”) that would amend DOE’s regulations implementing the National Environmental Policy Act (“NEPA”) to add a categorical exclusion for certain energy storage systems and revise existing categorical exclusions for solar photovoltaic (“PV”) facilities and for upgrades and rebuilds of transmission lines on previously disturbed or developed land. The categorical exclusions contemplated in the NOPR are intended to speed up project development and reduce the time and expense for current environmental assessments (“EAs”) that DOE prepares for infrastructure projects many view as critical to the energy transition. Although government rulemaking that seeks to streamline environmental reviews under NEPA may be a welcome development for project developers, the practical effects of these categorical exclusions will depend on the degree to which DOE (and potentially other agencies) actually use them and whether litigation will follow those uses.

Agencies have several options to comply with NEPA’s environmental review requirements, depending on the potential significance of impact. Based on an agency’s experience, the agency can establish by rule an exclusion for categories of actions that do not merit the additional process that comes with preparing an EA or an even more intensive environmental impact statement. Therefore, if a project qualifies for a categorical exclusion, the environmental review and permitting timeline can be greatly truncated with very little risk regarding the adequacy of the environmental review process. Here, the NOPR contemplates three specific changes to DOE’s already expansive list of categorical exclusions.

• First, DOE proposes to modify its categorical exclusion for upgrading and rebuilding existing powerlines (existing categorical exclusion B4.13). DOE previously limited this categorical exclusion to upgrades or rebuilds that were no longer than 20 miles, but the NOPR proposes to remove that limitation. The revision also clarifies that small segments may be relocated within existing rights of way or within otherwise disturbed or developed lands.
• Second, DOE proposes a new categorical exclusion for certain energy storage systems (categorical exclusion B4.14). In proposing this new categorical exclusion, DOE implicitly recognizes that storage will be crucial to the integration of new renewable resources. The new categorical exclusion would specifically apply to constructing, operating, upgrading or decommissioning electrochemical-battery or flywheel energy storage systems in a “small” area contiguous to or within either previously disturbed or developed areas. Whether the applicable area is “small” would be determined in the context of the particular proposal, as further set forth in DOE’s current regulations. Even then, small contiguous areas may contain environmentally sensitive resources, which DOE would review to determine if they qualify as extraordinary circumstances that prohibit use of the categorical exclusion. This is an area where projects may experience disparate results, both with regard to DOE discretion and potential for project-specific litigation (especially since DOE publishes its categorical exclusion determinations on its website).
• Third, DOE proposes to modify the categorical exclusion for the installation, modification, operation, and removal of solar PV systems (categorical exclusion B5.16) by removing the acreage limitation, currently 10 acres, and applying the exclusion to “decommissioning” activity rather than just “removal” activity. DOE believes that decommissioning is more inclusive of activities like recycling that are necessary when a solar PV system is taken out of service. Thus, if adopted, the categorical exclusion for solar PV systems would include the installation, modification, operation, and decommissioning of solar PV systems located on a building or other structure or, if located on land, within a previously disturbed or developed area with no acreage restriction.

The NOPR acknowledges that the current mileage and acreage limitations for projects on previously disturbed or developed lands are not reliable indicators of potential environmental impacts; DOE argues that removing these limitations and making the other proposed changes included in the NOPR will reduce the cost and time for environmental analysis of needed infrastructure.

Comments on the NOPR are due by January 2, 2024. DOE will consider any comments filed and then potentially proceed to issue a final rule on the new and modified categorical exclusions.