Key Takeaways from National Environmental Policy Act (NEPA) Implementing Regulations Phase 2 Revision

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The National Environmental Policy Act (NEPA) requires federal agencies to assess the potential impacts of their actions and to inform the public of the decision-making process. Since the enactment of NEPA in 1970, the law has undergone several amendments to keep pace with changing policies and priorities. The latest amendments, known as the Phase 2 NEPA Implementing Regulations, took effect on July 1, 2024. Phase 2 rulemaking, and the preceding Phase 1, built upon other recent changes to NEPA regulations. The background of the Phase 2 revisions and some of the key amendments to improve and modernize the NEPA process are described below.

The Road to Phase 2

In 2018, the White House, under the Trump Administration, directed the Council on Environmental Quality (CEQ) to review its regulations for implementing the procedural requirements of NEPA. The purpose of this review was to identify necessary changes or actions to 1) facilitate efficient, effective, and timely NEPA reviews; 2) reduce paperwork and delays; and 3) promote better decisions consistent with national environmental policy. As a result, CEQ published the 2020 Rule updating NEPA regulations.

After taking office in 2021, the Biden Administration issued Executive Order (EO) 13990, Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis and EO 14008, Tackling the Climate Crisis at Home and Abroad, directing federal agencies to review and take action to address federal regulations in conflict with national environmental, environmental justice, and climate resilience objectives. Under this direction and beginning in 2021, CEQ initiated a multiphase rulemaking process to review and revise its 2020 NEPA regulations.

CEQ published the Final Phase 1 rulemaking amendments in 2022, which revised three NEPA provisions clarifying purpose and need, agency NEPA procedures, and the definitions of “effects” and “impacts.” On May 1, 2024, the CEQ published the Final Rule for Phase 2 NEPA Implementing Regulations, which took effect on July 1, 2024. It is important to note that Phase 2 revisions do not apply to NEPA documents started before this date; however, agencies may apply them to ongoing NEPA documents.

There were major differences between the Trump Administration’s 2020 Rule and the Biden Administration’s Phase 1 and 2 NEPA updates. The 2020 Rule required wholesale changes to NEPA regulations excluding several categories of federal actions from NEPA review, removing requirements for agencies to consider indirect and cumulative impacts, narrowing the range of alternatives to be considered by agencies, and making it more difficult for NEPA decisions to be challenged in court. The Biden Administration directed CEQ to review existing NEPA regulations issued during the Trump Administration to make them more consistent with the Biden Administration’s policies. The Phase 1 and 2 revisions reversed some of the major changes to NEPA under the 2020 Rule; reinstated requirements for federal agencies to consider direct, indirect, and cumulative impacts from proposed actions; restored most of the original NEPA regulation requirements; and emphasized the need to evaluate potential impacts to climate change and environmental justice communities. The final Phase 2 rulemaking includes the following key provisions affecting agencies and NEPA practitioners.

Streamlining the NEPA Process, Improving Efficiency, and Reducing Timelines for Completion

Phase 2 placed a renewed focus and further built upon Phase 1 requirements to streamline the NEPA process, improve efficiency, and reduce the timeframe to complete NEPA analysis. Below are some of the key factors to help meet these requirements.

Timelines and Page Limits: Phase 2 reconfirmed the Phase 1 requirement for finalizing NEPA documents within clear deadlines (1 year for an Environmental Assessment [EA] and 2 years for an Environmental Impact Statement [EIS]) and establishing strict page limitations (75 pages for an EA and 150 to 300 pages for an EIS depending upon its complexity). However, Phase 2 does allow federal agencies to extend this deadline, if needed. To ensure these deadlines are more transparent, Phase 2 requires federal agencies to make the EIS schedules publicly available and for the agencies to include identified schedule milestones in consultation with joint lead, cooperating, and participating agencies and applicants. Phase 2 also requires agencies to submit a report annually to Congress documenting which NEPA documents exceeded the required deadlines with justification and whether they met page limitations.

Roles and Expectations: Phase 2 requires the designation of a lead agency for each NEPA document; sets expectations for lead, joint lead, and cooperating agencies; requires the identification of Chief Public Engagement Officers; and clearly establishes applicant and contractor roles.

Programmatic Reviews, Tiering, and Sharing: Phase 2 expands the use of programmatic environmental reviews and tiering and promotes shared analysis to avoid duplication of effort and help agencies meet the new deadlines for completing NEPA documents. Phase 2 also provides each agency with more flexibility to establish categorical exclusions and allows each agency to adopt other agencies’ categorical exclusions as needed without modifying their regulations or creating a separate rulemaking process.

Promoting Early and Robust Public and Government Engagement: Phase 2 helped clarify the purpose of the agency’s responsibility for conducting public and governmental engagement, and the requirement for agencies to conduct early engagement, where appropriate. Phase 2 also added provisions related to making documents available to the public (e.g., publication of a notice in the Federal Register for actions with effects of national concern; publication in local newspapers, newsletters, or other local media for actions with effects primarily of local concern; and adhering to the affected State or Tribe’s public notification procedures, etc.).

Clarifying NEPA Requirements: Phase 2 clarified multiple requirements in NEPA. Some of the requirements identified included that agencies must analyze the potential significance of impacts in context of duration and intensity, identify the environmentally preferred alternative in an EIS rather than waiting to declare it in the Record of Decision, analyze potential adverse impacts from the No Action Alternative, and that agencies are not required to prepare an EIS if there are only beneficial impacts. Phase 2 also emphasized transparency and accessibility of all materials incorporated in their NEPA documents by reference. Another important clarification for EAs is that agencies must prepare a mitigation and compliance plan if they used impact reduction measures to justify issuance of a Finding of No Significant Impact (FONSI) for impacts that would have otherwise been analyzed as significant effects. Agencies are also required to enforce these mitigation measures that were used to make this decision.

Emphasis on Analyzing Anticipated Impacts to Climate Change and Environmental Justice Communities

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Phase 2 codified climate change and environmental justice principles into the NEPA regulations. This is an important change in NEPA law because these types of impacts were previously specified as guidelines in EOs.

Phase 2 requires all agencies to consider reasonably foreseeable impacts to climate change and estimate greenhouse gas emissions in a quantifiable manner for their proposed actions. In addition, Phase 2 also restored context and intensity factors for these impacts, encouraged agencies to consider duration when concluding “significance determinations”, and stated that agencies cannot offset adverse effects with other beneficial effects to determine significance.

Phase 2 requires agencies to consider the needs of affected communities when developing outreach and notification strategies and encourages mitigation measures to address human health and environmental effects that could disproportionately adversely affect communities with environmental justice concerns. Phase 2 also removed the term “high” from disproportionate and noted that it does not matter if the impact is low or high – just that it is disproportionate. In addition, Phase 2 requires that agencies work directly with affected communities with environmental justice concerns to identify environmentally preferred alternatives that will not have an adverse impact on the communities and to promote the inclusion of Tribal perspectives.

PHE Analysis of Phase 2

PHE recommends several strategies for agencies to help streamline the NEPA process, reduce the timeframe to complete the NEPA analysis, and maintain compliance with the Phase 2 NEPA revisions.

First, agencies should conduct pre-planning to clearly define the proposed action, potential alternatives, and purpose and need for the action before the official clock starts on the NEPA process (i.e., the NEPA timeline for an EIS starts at publication of the Notice of Intent, and an EA starts at stabilization of the Description of the Proposed Action and Alternatives [DOPAA]).

Second, agencies should identify potential environmental impacts early in the planning process, especially those that typically cause extended review and coordination times such as potential impacts to sensitive and protected species, historical properties, and water resources requiring permits. Potential delays in the NEPA timeline could be minimized by engaging with regulatory agencies and Tribal governments in the earlier stages of the planning process to identify potential informal/formal consultations, permit requirements, and other factors which could cause delays down the road.

Third, Phase 2 requires agencies to review their specific NEPA regulations and procedures by July 1, 2025 to ensure compliance with the new rule. In order to meet this deadline, it will be important for agencies to engage in early, internal coordination to identify areas in their regulations that need to be changed or updated, explore areas to improve these regulations, and modify sections in their regulations to make them compliant with Phase 2 revisions.

Fourth, when agencies are soliciting contractors to perform the NEPA analysis, it will also be important to ensure that statements of work are clearly defined and that potential regulatory requirements and public involvement requirements are identified up front. This should help agencies avoid potential delays after the contract is awarded.

The environmental scientists at Potomac-Hudson Engineering can help you navigate the complex and changing NEPA landscape. Reach out to Sean McCain at sean.mccain@phe.com with questions regarding the impact of the Final Rule implementing Phase 2, or to see how we can support your project.