On July 16, 2020, the Council on Environmental Quality (CEQ) published its long-awaited final rule to amend its regulations implementing the National Environmental Policy Act of 1969 (NEPA), introducing important changes to the 40-year-old review process. The statute requires federal agencies to take a “hard look” at the environmental impacts of certain proposed projects, but does not mandate any particular outcome. The final rule follows CEQ’s June 2018 Advanced Notice of Proposed Rulemaking (ANOPR) and the January 2020 Notice of Proposed Rulemaking (NOPR), which we previously discussed here.

CEQ’s revisions represent the first update to the NEPA rules in 40 years. While they codify many streamlined practices federal agencies already use, they also introduce important changes to the review process. Many of the significant aspects of the final rule remain largely unchanged from the NOPR, including reduced timeframes agencies have to complete NEPA reviews; page limit, content, and recommended format for NEPA documents; and process for referral to CEQ of actions causing unsatisfactory environmental effects. Below is a breakdown of the most important changes, which while sure to be challenged, will apply to projects commencing after September 14, 2020.

Definitions of Effects & Major Federal Action

As expected, CEQ’s most significant revision is to the definition of “effects” or “impacts” of a proposed action. Just as initially proposed, CEQ has done away with the definitions of direct, indirect, and cumulative impacts. Perhaps most significant and controversial, the cumulative impacts analysis is no longer required as part of a NEPA review under the final rule.

For the first time in the final rule, CEQ has defined effects as changes to the human environment from the proposed action or alternatives that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives. The language in italics is a change from the NOPR. CEQ has further clarified this definition by stating that these effects can occur at the same time and place as the proposed action or alternatives but also may include effects that are later in time or farther removed in distance from the proposed action or alternatives. CEQ has also explained that more than a “but for” causal relationship is needed to make an agency responsible for a particular effect under NEPA, and also that effects should generally not be considered significant if they are remote in time, geographically remote, or the product of a lengthy causal chain. By adding this qualifier in italics, the final rule departs from firmer language in the NOPR by acknowledging that there may be circumstances where these remote effects are nonetheless reasonably foreseeable, have a reasonably close causal relationship to the proposed action, and thus an agency should consider them.

With respect to climate change, CEQ has explained in the preamble to the final rule that “the analysis of the impacts on climate change will depend on the specific circumstances of the proposed action” and that agencies “will consider predictable trends in the area in the baseline analysis of the affected environment.” This is a significant clarification difference from the proposed rule, which would have limited the analysis of greenhouse gas impacts to reasonably foreseeable effects with a reasonably close causal relationship to the proposed action or alternatives. Under the final rule, while CEQ removed the definition of cumulative impacts from the rule, it left open the ability for agencies to consider effects of greenhouse gases, indicating that consideration of the cumulative and indirect effects of climate change are not precluded by the final rule.

Another significant change is to the definition of “major federal action,” which the final rule revises and restructures. First, CEQ has changed the definition from “an action subject to Federal control and responsibility with effects that may be significant” to “an activity or decision subject to Federal control and responsibility.” CEQ deleted the reference to significant impacts because the inquiry of what constitutes a major federal action is limited to determining the federal agency’s role and its control over environmental impacts. The term “significant,” on the other hand, describes the impacts stemming from the action, which is a separate analysis.

Second, CEQ has now provided a list of activities that are non-major federal actions. These actions include extraterritorial activities with effects located entirely outside of the U.S., non-discretionary actions, non-final agency actions, judicial or administrative civil or criminal enforcement actions, general revenue sharing funding assistance with no federal agency control over the use of funds, certain loans and guarantees, and non-federal projects with minimal federal funding or involvement. With respect to this last category of projects with minimal federal involvement, CEQ expects that federal agencies will further define these non-major actions in their NEPA procedures. Although CEQ considered doing so, it decided not to establish a monetary threshold to quantify how minimal the funding should be.

Appropriate Level of Review

Generally, the final rule adopts most of the changes set forth in the NOPR regarding the level of review needed for a given action, but there are some notable differences:

  • The final rule provides additional clarity on when an agency may issue a Finding of No Significant Impact (FONSI). Whereas the NOPR would have allowed a federal agency to issue a FONSI when the proposed action is “not likely to have significant effects,” the final rule takes a firmer stand and provides that an agency may only use a FONSI when the proposed action “will not have significant effects.”
  • On the other hand, CEQ has softened the requirements for when an agency may use categorical exclusions (CEs) to define certain categories of actions. The NOPR provided that agencies can use CEs to define categories of actions which do not have a significant effect on the human environment, but the final rule provides that agencies may use CEs to define actions that normally do not have a significant effect, and may adopt another agency’s CE determination or portions thereof if the two actions subject to the determinations are substantially similar.

Public Participation & Comment

The final rule generally eases public participation requirements during the NEPA process by eliminating the NOPR’s direction that agencies provide a 30-day comment period on draft EISs and on the “alternatives, information, and analysis” section of a final EIS. The final rule instead stipulates that agencies may set a deadline for providing such comments. Additionally, it omits the requirement that comments should “identify any additional alternatives, information, or analyses not included in the Draft EIS,” and requires that agencies consider the ability of affected persons and agencies to access electronic media when selecting the appropriate methods for providing public notice.

Scoping & Alternatives

The final rule goes a step further than the NOPR in limiting the scope of actions—in addition to the proposed action—that an agency must consider when developing a NEPA document. Specifically, the final rule deletes the requirement that an agency must consider “similar actions” to the proposed action, which, when viewed with other reasonably foreseeable or proposed agency actions, are similar enough that their environmental consequences should be evaluated together. With respect to reasonable alternatives, the final rule is consistent with the NOPR, confirming that the federal action agency must only consider those alternatives “that are technically and economically feasible, meet the purpose and need for the proposed action, and, where applicable, meet the goals of the applicant.” This new definition for “reasonable alternatives” clarifies that agencies are not required to give detailed consideration to alternatives that are unlikely to be implemented because they are infeasible, ineffective, or inconsistent with the purpose and need for agency action.

Additionally, agencies should limit their consideration of alternatives to a “reasonable” number of alternatives relevant to the proposed action, and their analysis of the affected environment to the “reasonably foreseeable environmental trends and planned actions in the area.” CEQ specifically declined to establish a presumptive maximum number of alternatives for the evaluation of a proposed action.

Next Steps for Agencies

The final rule requires federal agencies to develop new or revised NEPA-specific procedures to align with the final rule within one year of the rule’s effective date. In case of any inconsistencies during this transition period, CEQ’s final NEPA regulations control. Further, for projects in progress, agencies may continue using their existing NEPA procedures and CEQ’s 1978 regulations, but they should indicate so to interested and affected parties.

Going forward, CEQ expects that the final rule will provide much-needed transparency to the public regarding agency costs to complete EIS-level NEPA reviews. The final rule follows the NOPR instructing agencies to track costs by preparing review cost estimates, including costs of the agency’s full-time equivalent personnel hours, contractor costs, and other direct costs related to the proposed action’s environmental review.

What’s Next for the Final Rule?

The rule will apply to reviews commencing after September 14, 2020, although project proponents may seek to petition agencies to apply the rule’s principles earlier. The final rule is expected to face litigation, however, and many environmental groups have already promised to challenge it. Even if the new rule is able to withstand a facial challenge, environmental groups will continue to challenge projects on an individual basis.

Notably, litigation is not the only hurdle that this final rule may face. Given the current timing in the congressional legislative session, the final rule falls within the Congressional Review Act (CRA) “carry over” period, meaning that the next Congress will have an opportunity to nullify the rule. Although the use of the CRA was uncommon in the past, it was used at least 15 times at the beginning of the Trump Administration to repeal controversial Obama-era rules.

On July 6, 2020, the Supreme Court partially and temporarily overturned a nationwide injunction that prevented the U.S. Army Corps of Engineers (“Corps”) from using Nationwide Permit 12 (“NWP 12”) for construction of new oil and gas pipelines. NWP 12 authorizes “utility line activities” that have minimal impacts on jurisdictional waters under the Clean Water Act. In April 2020, a federal judge in the District of Montana, while considering challenges to the construction of the Keystone XL pipeline, completely vacated the Corps’ use of NWP 12 for all activities (including pipelines, broadband, electric, water, and sewer) until the Corps consulted with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service pursuant to the Endangered Species Act. Nearly a month later, following a motion from the Corps seeking relief from that vacatur, the district court amended its April 2020 ruling to apply only to new oil and gas pipeline construction projects other than “maintenance, inspection, and repair activities” on existing pipelines.

Continue Reading Update: U.S. Supreme Court Allows Use of NWP 12

We are excited to introduce you to Troutman Pepper. Effective today, Troutman Sanders and Pepper Hamilton have merged to form a new law firm, Troutman Pepper (Troutman Pepper Hamilton Sanders LLP), with more than 1,100 attorneys in 23 cities across the country. The combination expands both the capabilities and the presence of the firm in the U.S., and notably brings additional resources to the combined firm’s Pipeline and LNG group in the Northeast, Midwest and West Coast.

For more than a quarter century, our pipeline lawyers have worked closely with clients to successfully navigate the development, operation and maintenance of pipelines and pipeline facilities. The team is excited to bring new expertise to bear in the Marcellus Shale and other key locations. The Pipeline group is further supported by attorneys in other practices like Environmental, Litigation, and Labor and Employment, among others. The combined firm offers increased benefits and services to our clients, while retaining the same high commitment to client care that has been a hallmark of both firms.

Rankings like Chambers USA, The Legal 500 and Best Lawyers® consistently list Troutman Pepper as a go-to firm The U.S. News & World Report ranked Troutman as the 2020 “Law Firm of the Year” for Energy. Further, The Legal 500 recognizes Troutman Pepper nationally in three environmental disciplines: Regulatory, Litigation and Transactional.

U.S. News & World Report – Best Lawyers “Best Law Firms” 2020 National Rankings

  • Named “Law Firm of the Year” for Energy
  • Nationally ranked in Tier 1 for Environmental Law
  • Nationally ranked in Tier 1 for Litigation: Environmental
  • Nationally ranked in Tier 2 for Oil and Gas Law

U.S. News & World Report – Best Lawyers 2020 National Rankings

  • 15 individuals ranked for Environmental Law
  • 8 individuals ranked for Litigation – Environmental

Please continue to follow our Pipelaws and Environmental Law & Policy Monitor blogs to receive the latest news, analysis and commentary on your industry. You can read more about Troutman Pepper and our hallmark focus on client care at troutman.com.

The U.S. Supreme Court issued its opinion in the consolidated cases U.S. Forest Service v. Cowpasture River Preservation Assn. and Atlantic Coast Pipeline LLC v. Cowpasture River Preservation Assn. addressing the U.S. Forest Service’s authority to issue authorization for the Atlantic Coast Pipeline to cross beneath the Appalachian Trail. Reversing the Fourth Circuit’s December 2018 decision, the Court held that the Forest Service has authority under the Mineral Leasing Act to grant a right-of-way on lands within the George Washington National Forest owned by the Forest Service over which the trail crosses.

Continue Reading U.S. Supreme Court Reverses Fourth Circuit, Holds U.S. Forest Service Has Authority to Grant Right-of-Way Beneath Appalachian Trail

On June 9, 2020, FERC ordered amendments to its regulations to prohibit natural gas projects authorized under Sections 3 and 7 of the Natural Gas Act (“NGA”) from commencing construction activities until after (i) the deadline for filing a request for rehearing has lapsed without a request being filed, or (ii) FERC has acted upon the merits of any timely-filed request for rehearing (“Order No. 871”). The new regulation will become effective, without any opportunity to file comments, 30 days after the Final Rule is published in the Federal Register. Because FERC’s orders on rehearing sometimes take several months, and in some cases more than a year to be issued, both liquefied natural gas (“LNG”) and natural gas pipeline projects approved by FERC could be significantly delayed from commencing construction as a result of Order No. 871. Continue Reading FERC to Block LNG, Pipeline Project Construction Until After Rehearing Process is Complete

Two months ago, we issued a post regarding oral arguments before the U.S. Court of Appeals for the Sixth Circuit in National Wildlife Federation v. Secretary of the Department of Transportation. That case asked whether approval of pipeline spill response plans by the Pipeline and Hazardous Materials Safety Administration (PHMSA) triggered consultation and review processes under the Endangered Species Act (ESA) and the National Environmental Policy Act (NEPA). In an opinion released on Friday, June 5, 2020, the Sixth Circuit answered that question in the negative. The court’s decision avoids adding another substantial burden to the review process for response plans, and, since it reaches the same result as the only other appellate court to consider the question, the decision likely will not attract the attention of the Supreme Court. Continue Reading Sixth Circuit: Spill Response Plans Do Not Trigger Endangered Species Act or NEPA Review

On June 1, 2020, the Environmental Protection Agency (“EPA”) released a final rule establishing procedural requirements for water quality certifications under section 401 of the Clean Water Act (“CWA”).  EPA’s August 2019 notice of proposed rulemaking (“NOPR”) articulated the Agency’s first-ever statutory interpretation of section 401 since its enactment nearly 50 years ago, and proposed sweeping changes to its section 401 regulations in conformance with its interpretation.  EPA’s final rule largely adopts the regulations in its NOPR, but makes important changes in promulgating new regulations that preserve authority of states and Native American tribes exercising “Treatment as a State” (“TAS”) authorization to ensure that discharges from federally licensed and permitted activities meet state and tribal water quality requirements.

Continue Reading EPA Overhauls Clean Water Act Section 401 Regulations

The Pipeline and Hazardous Materials Safety Administration (PHMSA) on May 28, 2020, issued a pre-publication Notice of Proposed Rulemaking titled Gas Pipeline Regulatory Reform.  The proposal is issued pursuant to the Administration’s executive orders directing federal agencies to reduce burdens and in response to comments from the industry.  In keeping with that intent, the proposed changes appear generally favorable to the gas pipeline industry and should ease certain regulatory burdens related to discrete areas of gas pipeline incident reporting, construction (welding requalification), operation (primarily distribution and plastic pipelines), and maintenance (rectifier inspections and low-pressure pipelines).

Continue Reading PHMSA Issues Gas Pipeline Regulatory Reform Proposal

As previously reported, the Federal District Court for Montana vacated the U.S. Army Corps of Engineers (“Corps”) Nationwide Permit (“NWP 12”) on April 15, 2020, finding that the Corps had failed to consult with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service prior to issuing NWP 12. The court’s decision vacated NWP 12 nationwide and prevents the Corps from authorizing a broad range of projects that are unrelated to the project at issue in that case, the Keystone XL Pipeline.  On April 27, 2020, the Corps requested that the court stay the effect of its ruling pending the Corps’ appeal to the U.S. Court of Appeals for the Ninth Circuit, and, on May 11, 2020, the District Court narrowed its order to allow continued authorization of maintenance on existing pipelines and construction of certain non-pipeline projects.

Continue Reading Update: Ninth Circuit Denies Emergency Stay in NWP 12 Litigation

In an effort to relieve the economic impact associated with the response to COVID-19, President Trump recently signed an Executive Order (EO) designed to promote economic recovery by reducing regulatory burdens for businesses. Under the EO, all federal agencies are directed to (1) review regulations and rescind, modify, waive, or provide exemptions to those regulations that may impair economic growth and (2) consider whether any of the temporary modifications or waivers should be permanently adopted through formal rulemaking. While the EO is intended to provide relief during the COVID-19 pandemic, it is unclear whether it will have a tangible impact on enforcement of the federal pipeline safety or environmental laws for the oil and gas pipeline industry. Continue Reading Executive Order Promotes Enforcement Discretion and Deregulation