The Fiscal Responsibility Act of 2023 most notably raised the debt ceiling. But the legislation also made substantive changes to the National Environmental Policy Act (NEPA), with an eye toward simplifying and streamlining environmental reviews. Most significantly, these NEPA amendments create statutory guidelines for the length and scope of environmental review documents, change the definition of “major federal action” (the traditional trigger for NEPA reviews), and codify certain provisions from the existing Council on Environmental Quality (CEQ) regulations.

Applicability of NEPA. NEPA only applies when a proposed action is a “major federal action.” Congress has redefined this term to mean an action that the agency carrying out the project “determines is subject to substantial Federal control and responsibility.” Under the prior definition, an action was a “major federal action” – and therefore subject to NEPA – if it was “potentially subject to Federal control and responsibility.” The new definition appears narrower, as it turns on whether a project is subject to federal control, not whether it is potentially subject to such control. The statute further specifies actions that are not a major federal action, such as non-discretionary decisions made pursuant to the agency’s statutory authority. It also provides that, even if federal funding or input is provided to a non-federal action, it is not a “major federal action” unless the federal contribution is more than “minimal.” These definitional changes may result in fewer actions triggering NEPA review in the first place.

Scope of review. Among other noteworthy provisions, the amendments have narrowed the required scope of environmental impact statements (EISs) and environmental assessments (EAs). The revisions codify the existing regulatory requirement that such documents need only focus on the “reasonably foreseeable environmental effects” of the proposed action, not “the environmental impact.” This distinction is subtle but important. Limiting the scope of environmental review to “reasonably foreseeable” impacts means that agencies are not required to analyze speculative or indefinite impacts. Further, instead of identifying all “irreversible and irretrievable commitments of resources” associated with the proposed project, agencies need only identify only the “irreversible and irretrievable commitments of Federal resources” involved. This new language could narrow the scope of review by excluding the commitment of state, municipal, or private resources from project review. Finally, the amendments codify the existing regulatory definition of “reasonable alternatives” by limiting the alternatives agencies are required to consider to those that are “technically and economically feasible, and meet the purpose and need of the proposal.”

Page and time limits. Beyond the content of review documents, the reforms codify the page limits and deadlines in existing CEQ regulations. EISs shall not exceed 150 pages (excluding appendices and citations), unless the action is extraordinarily complex. EAs shall not exceed 75 pages, and no statutory exception is provided. In terms of timing, Congress has set deadlines of two years to complete an EIS and one year to complete an EA. For the first time, these deadlines have teeth, as a project proponent can now petition a court to compel the agency to comply with them. If a delay occurs, however, the agency can extend the deadline in consultation with the project proponent. These deadlines appear to be targeted at preventing agencies from postponing notices to prepare review documents for as long as possible.

Additional changes. The above discussion is not an exhaustive list of the NEPA reforms Congress has enacted. Among other things, when an agency prepares a programmatic environmental documents, it may rely on that document’s analysis for “related actions” for five years, unless there are “substantial new circumstances or information.” After five years, the agency can still rely on a prior programmatic review document, provided it re-evaluates it to ensure reliance on the analysis remains valid. The statute also provides that “energy storage” projects are now covered by the FAST 41 rules, which aim to streamline environmental review and approval of major infrastructure projects. In addition, Congress has ordered expedited approval of all permits for the controversial Mountain Valley Pipeline project and provides that “no court shall have jurisdiction to review” such approvals.

The fact NEPA has been amended at all is noteworthy. Since it was enacted in 1970, NEPA reform has generally only occurred via limited-scope appropriations bills or executive actions. For the first time in decades, Congress has done more than tinker with NEPA. At the same time, the amendments are no tectonic shift, as many of the revisions reflect best agency practice or standards that have been previously approved by federal court rulings. Federal agencies will still need to prepare EISs for major federal actions and EAs for actions that will likely not have significant impacts. The scoping, drafting, comment, and final decision-making procedural requirements are essentially the same. And NEPA will continue to exist as a “common law” statute, meaning courts – rather than Congress or the President – will largely be responsible for determining what the statute says and how it works. But the fact that Congress amended the country’s bedrock environmental law is a meaningful development, and raises several questions about NEPA’s future.

1. What does the new language mean? As with much in environmental law, the meaning of many of the NEPA amendments may be subject to interpretation. For example, what impacts are “reasonably foreseeable?” How does the statute’s new definition of “major federal action” limit the types of actions subject to NEPA review? When exactly will agencies be required to undertake new research as part of their NEPA reviews? How stringent will the statutory page limits be, and will they actually make NEPA documents easier to read by being more concise, or more difficult to read by discouraging the use of graphics or charts to maximize space for words? Will the new statutory timelines actually speed up reviews? Questions like these will take time to play out, and will be answered mainly in the context of specific project reviews.
2. What projects do these changes apply to? The legislation takes effect immediately, but we expect CEQ will issue guidance clarifying which federal actions are subject to these NEPA amendments. It is possible CEQ will determine that the changes apply only to projects that began NEPA review after the bill was signed. But, agencies may also take steps to align ongoing NEPA reviews with these changes.
3. Is this just the beginning? Changes to the NEPA statute itself larger than modest changes limited to specific types of projects, rather than the regulations and Executive Orders that interpret NEPA, were long viewed as off-limits. These changes show that Congress may be more willing to further revise NEPA. Already, many legislators have voiced support for NEPA reforms that were left on the cutting room floor for the debt ceiling law. Those proposals may be revisited soon.
4. What does this mean for the “Phase 2” (and “Phase 1”) NEPA regulations? In April 2022, CEQ released a final “Phase 1” NEPA rule largely repealing some components of the Trump administration’s 2020 NEPA regulations. A “Phase 2” rule that would make further changes to the 2020 NEPA regulations has long been in the works. The debt ceiling bill’s amendments to NEPA touch on issues included in both rules. CEQ will need to take a look at the proposed Phase 2 rule and may need to review the final Phase 1 rule to ensure that both comply with the new statutory language. This process may take time, a luxury the current administration does not have as the 2024 election approaches.
5. How will the deadlines play out in practice? While the addition of enforceable deadlines gives project proponents a new tool to challenge agency delay and may streamline NEPA review, analogous state-law provisions have not had this effect. The environmental review deadlines under the California Environmental Quality Act have rarely, if ever, been enforced to compel agency action. Project proponents usually prefer to work with the lead agency and tolerate some delays, rather than embarking on years of costly litigation with an uncertain result. It is also unclear how effective lawsuits to enforce these new deadlines could be when lawsuits can take a substantial amount of time to be resolved. But the threat of suit itself may be sufficient to ensure that agencies follow the time limits.