Avoiding Default and Streamlining NEPA—Can the Fiscal Responsibility Act of 2023 Accomplish Both Objectives?
Hiding in plain sight in the Fiscal Responsibility Act of 2023 (FRA)--which is intended to extend the nation’s debt limit into 2025 in order to avoid a federal default--are provisions that seek to amend the National Environmental Policy Act (NEPA) for the first time in over 40 years. Although the FRA’s provisions greenlighting the federal permitting process for the Mountain Valley Pipeline have garnered the most attention, the FRA contains a number of other provisions meant to streamline environmental reviews of major federal actions. While many laud streamlining the NEPA process as a necessary step to bolster efficiency, several environmental groups and democratic legislators caution that these amendments significantly roll back NEPA’s regulatory reach.
The FRA incorporates many of the provisions that were previously in Representative Garret Graves’ “Building United States Infrastructure through Limited Delays and Efficient Reviews (BUILDER) Act of 2023” that was included in its entirety in the House Republicans’ original debt ceiling bill passed in April 2023.
Specifically, the FRA proposes the following amendments to NEPA:
- Substantial Federal Control and Responsibility. Defines “Major Federal Action” as “an action that the agency carrying out said action determines is subject to substantial Federal control and responsibility.” By adding “substantial,” the FRA emphasizes that for federal actions to trigger NEPA review, the actions don’t just need to be subject to Federal control and responsibility; the control and responsibility must be “substantial.”
- No Extraterritorial Activities or Decisions. Excludes from the definition of “Major Federal Action” extraterritorial activities or decisions, which means agency activities or decisions with effects located entirely outside of the jurisdiction of the United States. This is a more restrictive standard than has been adopted by some courts that have been called upon to evaluate the scope of NEPA.
- Categorical Exclusions. Expands the use of categorical exclusions by allowing agencies to rely on other agencies’ categorical exclusions to avoid the preparation of a NEPA environmental assessment (EA) or environmental impact statement (EIS).
- Reasonably Foreseeable Effects. Narrows agency considerations by only requiring review of “reasonably foreseeable” environmental effects.
- Streamlining. Seeks to streamline the NEPA process by requiring the designation of a “lead Federal agency” for projects that involve two or more participating Federal agencies. Imposes page limits of 75 pages for EAs and 150 pages for the majority of EISs. Imposes specific deadlines for the completion of environmental reviews, with a two-year limit on the completion of an EIS and a one-year limit on the completion of an EA, as well as a mechanism to seek judicial review for alleged failures to comply with these deadlines.
- Division of Responsibilities. Requires lead agencies to prescribe procedures to allow project sponsors to prepare EAs or EISs under the supervision of the agency. The lead agency is still required to independently evaluate the environmental document and must take responsibility for its contents.
- Narrows Alternatives, Negative Impacts of No Action. Narrows agency considerations of the alternatives to a “reasonable range . . . that are technically and economically feasible and meet the purpose and need of the proposal,” and requires “an analysis of any negative environmental impacts of not implementing the proposed agency action in the case of a no action alternative.”
Although these amendments will likely result in fewer projects requiring an EIS and should streamline the NEPA review process, it is important to consider what the FRA does not change. For example, the BUILDER Act sought to significantly limit an agency’s consideration of cumulative impacts and those modifications did not carry through into the FRA. The FRA also does not explicitly limit or otherwise address an agency’s obligation to consider climate change impacts of federal projects.
If these NEPA revisions survive in the final FRA, they are likely to require the White House’s Council on Environmental Quality (CEQ) to recalibrate its ongoing efforts to revise NEPA’s implementing regulations. CEQ had sent a draft of its Phase 2 NEPA revisions to the Office of Management and Budget (OMB) for review and the draft Phase 2 revisions had been expected to be published for comment in June 2023. The statutory changes to NEPA will need to be incorporated into the Phase 2 rules, which will certainly derail CEQ’s proposed June release date.
We will continue to provide updates on the final language in the FRA and CEQ’s ongoing NEPA rulemaking activities at the Corporate Environmental Lawyer.