[co-author: Sarah Nagle]

On June 3, 2023, President Biden signed the Fiscal Responsibility Act of 2023 (“FRA”) into law, extending the U.S. debt limit into 2025. As part of the Congressional deal, FRA also contains amendments to the National Environmental Policy Act (“NEPA”), including narrowing NEPA’s scope of consideration, streamlining the documentation of NEPA, and setting time limits, among other things. These amendments are notable as they are a rare statutory amendment to NEPA in nearly four decades. But for the most part, FRA incorporates existing regulations and case law developed over the years to flesh out NEPA requirements. Thus, the amendments are unlikely to significantly change the current practice of NEPA. But those opposing FRA’s NEPA amendments argue that more projects would now sidestep stringent scrutiny and would curb the public’s ability to voice input on projects. Others note, however, that these amendments will prevent repeated and unnecessary delays of important infrastructure projects.

FRA proposes the following substantive and procedural amendments to NEPA:

Substantive Changes to NEPA

The substantive NEPA changes that could result in narrowing the NEPA analysis and streamline a project’s environmental analysis include:

• Reasonably Foreseeable Environmental Effects: Previous requirements under NEPA stated that federal agencies must consider the environmental impacts of and alternatives to a proposed action. In 2020, then President Trump issued an executive order to narrow NEPA’s scope by only requiring review of the direct effects of a proposed project. However, as reported in Downey Brand’s previous post, the Biden Administration’s 2022 Final Rule, broadened the scope of review by requiring consideration of the indirect and cumulative impacts of a proposed action. The FRA’s NEPA amendments include a requirement that environmental analysis of the project be limited to the reasonably foreseeable environmental effects of the project, instead of more indirect or speculative impacts.
• Reasonable Range of Alternatives: FRA amendments also narrows an agency’s consideration of alternatives under NEPA to a “reasonable range . . . that are technically and economically feasible and meet the purpose and need of the proposal.” The agency would also have to consider “an analysis of any negative environmental impacts of not implementing the proposed agency action in the case of a no action alternative.”
• Major Federal Action: The included NEPA changes also define “Major Federal Action” as where the federal government maintains “substantial” control and responsibility over them. This language has potentially significant implications for certain projects where federal issues are limited and the remainder issues are state and local issues. Such projects are unlikely to now trigger substantial control and are likely to be exempt from NEPA review. The FRA amendments also exclude extraterritorial activities or decisions from the definition of “Major Federal Action” so that agency activities with effects that are located entirely outside of the United States fall outside NEPA jurisdiction.

Streamlining the NEPA Review Process

FRA also incorporates certain procedural NEPA streamlining provisions, including adopting certain elements of the “One Federal Decision” framework of the “Infrastructure Investment and Jobs Act” as part of the NEPA statute. See Downey Brand’s previous alert regarding “One Federal Decision” framework. FRA’s procedural changes to NEPA includes:

• Lead Agency: When multiple federal agencies have jurisdiction over different parts of the project, a single lead agency would be designated to develop and coordinate the environmental review to avoid duplicative efforts, as determined by the agencies involved. FRA also includes a mechanism to appoint state, tribal, or local agencies as “joint lead agencies,” and in case there is a dispute over which agency should be the lead or joint lead agency, FRA also allows interested parties to request the White House’s Council of Environmental Quality (“CEQ”) to designate these agencies.
• Need for Environmental Documents: The amendments clarify that no further NEPA analysis is required if the proposed agency action is not a discretionary or a final agency action, is categorically excluded, or would conflict with another provision of law.
• Page Limits: Implementation of page limits for 75 pages for Environmental Assessments (“EA”), 150 pages for the majority of Environmental Impact Statements (“EIS”), and 300 pages for EIS of actions of extraordinary complexity. However, the page limits do not include appendixes, which could include the otherwise omitted information and render the page restrictions moot. But the critics of the FRA’s NEPA amendments argue that imposing page limits could lead to the omission of materials that are important to add context and understanding to the document.
• Deadlines: The changes to NEPA include the imposition of a one year deadline for the completion of EAs and a two year deadline for the completion of EIS, and provides and explicit path for judicial review for agency’s purported failure to meet these deadlines
• Programmatic Environmental Review Documents: Agencies can now rely on a final programmatic review document for five years absent “substantial new circumstances or information about the significance of adverse effects that bear on the analysis.”
• Categorical Exclusions: FRA also codifies a federal agency’s ability to adopt categorical exclusions listed in another federal agency’s NEPA procedures, if that category of proposed agency action applies to the project at hand. While some agencies already permit borrowing internally, this allowance was previously not included in the statute.
• Third-Party NEPA Document Preparation: Consistent with current NEPA regulation, FRA amendments allow a government agency to grant responsibility over preparation of the environmental review documents to the project sponsor with agency supervision, provided that the agency to “independently evaluate[s] the environmental document and … take[s] responsibility for the contents”
• E-NEPA: CEQ is required to evaluate the potential for a single online portal to increase communication between agencies and applicants within one year.

Other FRA Environmental Review Provisions

The FRA also qualifies energy storage projects to be eligible for the FAST-41’s faster and streamlined NEPA review process. A previous Downey Brand alert provided a detailed discussion of FAST-41’s, an act signed in to law in 2015, provisions to streamline the federal environmental review and authorization process for covered infrastructure and transportation projects. FRA also expedites the federal permitting and authorization of the Mountain Valley Pipeline in West Virginia, and precludes judicial review of such federal permits and approvals.

Conclusion

Taken as a whole, while the FRA amendments mostly make statutory changes that are already in effect due to regulations and court decisions, it does provide avenues to streamline the NEPA process and potentially allows more projects to be exempt from NEPA in the future. These statutory amendments to NEPA also provides some certainty to project applicants by restricting the ability to administratively alter NEPA’s provisions upon a change in presidential administration. It also remains to be seen how CEQ recalibrates its ongoing efforts for revising NEPA’s regulations as a draft of CEQ’s Phase 2 NEPA revisions were expected to be published in summer of 2023.

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