CEQ Final NEPA Regulations and Department of Energy Actions Aim to Responsibly Accelerate Clean Energy, Transmission, and Other Infrastructure Development

On May 1, 2024, the White House Council on Environmental Quality ("CEQ") published its final "Phase 2" National Environmental Policy Act ("NEPA") regulations, formally called the Bipartisan Permitting Reform Implementation Rule ("Final Rule"). Publication of the Final Rule completes a multi-year effort by the Biden Administration that included publication of final, narrower "Phase 1" rule in April 2022. The Final Rule is predominantly consistent with the 2023 proposed rule, which is analyzed in an earlier blog post.

CEQ's Final Rule is notable in many respects. It advances sound environmental analysis to inform the public and decisionmakers while implementing new efficiencies to help accelerate the environmental permitting process for infrastructure projects, from solar, wind, and transmission lines to federally-funded domestic manufacturing projects. In this regard, the Final Rule is a key component of the Biden Administration's commitment to advancing domestic infrastructure, including projects aligned with the Biden Administration's climate and clean goals that are being further propelled by federal grants and tax incentives pursuant to the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA).

Attention to Climate Change and Environmental Justice in Final NEPA Rule

For the first time in the NEPA regulations' more than 40-year history - yet consistent with existing best practice - the regulations include specific direction to account for both climate change and environmental justice effects. With respect to climate change, the Final Rule codifies elements of CEQ's January 2023 Guidance on Consideration of Greenhouse Gas Emissions and Climate Change in NEPA reviews. For example, the environmental consequences provision (40 C.F.R. § 1502.16) includes the direction to analyze, where applicable, "climate change related effects, including, where feasible, quantification of greenhouse gas emissions, from the proposed action and alternatives and the effects of climate change on the proposed action alternatives." CEQ also encourages agencies to identify reasonable alternatives that will mitigate climate impacts and adds climate change-specific examples to the definition of "effects."

The Final Rule also contains a new definition of "environmental justice" (see 40 C.F.R. § 1508.1(m)) and encourages agencies to incorporate measures to avoid or reduce disproportionate effects on communities with environmental justice concerns, including the cumulative effects of pollution. The Rule also promotes early and "meaningful engagement" with communities and requires agencies to identify a Chief Engagement Officer responsible for facilitating the agency's community engagement for environmental reviews.

New Permitting Efficiencies in Final NEPA Rule

The Final Rule also implements new permitting efficiencies contained in the 2023 Fiscal Responsibility Act (FRA), such as setting one and two-year timelines for Environmental Assessments (EAs) and Environmental Impact Statements (EISs), respectively, and defining clear roles for lead and cooperating agencies.

In addition, the Final Rule goes beyond the FRA's requirements in seeking to increase the efficiency of the federal environmental process, including by:

• Establishing new, more flexible methods for agencies to establish categorical exclusions - the most efficient form of NEPA review - such as by establishing them jointly with other agencies and establishing them through a land use plan or other decision document supported by a programmatic NEPA review;
• Clarifying and expanding the use of programmatic environmental reviews for both EAs and EISs, that subsequent project-level reviews can tier to avoid duplicative analysis; and
• Reaffirming one and two-year deadlines for EAs and EISs, respectively, and setting clear page limits, not including appendices, to keep review focused on the most salient issues.

CEQ also restored several core elements of the NEPA regulations rolled back by the previous Administration, such as the prior long-standing approach of using "context" and "intensity" to evaluate the significance of a proposed action's environmental effects. Further, CEQ clarified that the duration of an effect is relevant to assessing significance - an addition that may help accelerate reviews for restoration and clean energy projects. And in a change from the proposal, CEQ dropped the proposed new section on innovative approaches to environmental reviews.

CEQ's final regulations apply to any NEPA process begun after July 1, 2024. Project developers, including recipients of federal funding that are navigating the NEPA process, are encouraged to pay close attention to these new rules.

Department of Energy's Transmission Reform Rule and New Categorical Exclusions

With the projected dramatic expansion in data centers and AI alongside existing clean energy and decarbonization targets at the federal and state levels, there is a pressing need for more transmission to bring more clean energy online to meet growing energy demand. On April 25, the Department of Energy (DOE) announced a final transmission permitting reform rule that establishes the Coordinated Interagency Transmission Authorizations and Permits (CITAP) Program, which aims to improve federal environmental reviews and permitting processes for qualifying transmission projects.

Pursuant to its authority in Section 216(h) of the Federal Power Act, DOE will serve as the lead coordinator in the federal interagency review process. DOE will lead an interagency pre-application process to ensure that developer submissions for federal authorizations are ready for review on binding two-year timelines, coordinate preparation of a single environmental review document, and ensure meaningful engagement with Tribes, local communities, and other stakeholders. Further, state siting authorities can also participate in the CITAP Program and take advantage of the efficiencies and resources DOE is offering through the program, including using the single environmental review document to help inform their own decision-making.

DOE also finalized three new clean energy-related categorical exclusions for certain projects upgrading or rebuilding existing powerlines, energy storage projects, and solar PV systems within previously disturbed or developed areas.

Conclusion

CEQ's final regulations apply to any NEPA process begun after July 1, 2024. Project developers, including recipients of federal funding that are navigating the NEPA process, are encouraged to pay close attention to CEQ's new regulations, as well as DOE's new actions to help coordinate and accelerate the process for certain electricity transmission, energy storage, and solar PV projects. Covington's clean energy and permitting experts in our multidisciplinary Carbon Management and Climate Mitigation practice are assisting clients in navigating these developments.

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