[Federal Register Volume 87, Number 76 (Wednesday, April 20, 2022)]
[Rules and Regulations]
[Pages 23453-23470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08288]


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COUNCIL ON ENVIRONMENTAL QUALITY

40 CFR Parts 1502, 1507, and 1508

[CEQ-2021-0002]
RIN 0331-AA05


National Environmental Policy Act Implementing Regulations 
Revisions

AGENCY: Council on Environmental Quality.

ACTION: Final rule.

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SUMMARY: The Council on Environmental Quality (CEQ) issues this final 
rule to amend certain provisions of its regulations for implementing 
the National Environmental Policy Act (NEPA), addressing the purpose 
and need of a proposed action, agency NEPA procedures for implementing 
CEQ's NEPA regulations, and the definition of ``effects.'' The 
amendments generally restore provisions that were in effect for decades 
before being modified in 2020.

DATES: This rule is effective May 20, 2022.

ADDRESSES: CEQ established a docket for this action under docket number 
CEQ-2021-0002. All documents in the docket are listed on 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Amy B. Coyle, Deputy General Counsel, 
202-395-5750, <a href="/cdn-cgi/l/email-protection#f8b99581d6bad6bb9781949db89b9d89d69d9788d69f978e"><span class="__cf_email__" data-cfemail="a1e0ccd88fe38fe2ced8cdc4e1c2c4d08fc4ced18fc6ced7">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: CEQ is issuing this final rule to amend 
three provisions of its regulations implementing the National 
Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq., which 
are set forth in 40 CFR parts 1500 through 1508 (``NEPA regulations'' 
or ``CEQ regulations''). First, CEQ is revising 40 CFR 1502.13 on the 
requirement for a purpose and need statement in an environmental impact 
statement. The revision clarifies that agencies have discretion to 
consider a variety of factors when assessing an application for an 
authorization, removing the requirement that an agency base the purpose 
and need on the goals of an applicant and the agency's statutory 
authority. The final rule also makes a conforming edit to the 
definition of ``reasonable alternatives'' in 40 CFR 1508.1(z). Second, 
CEQ is revising 40 CFR 1507.3 to remove language that could be 
construed to limit agencies' flexibility to develop or revise 
procedures to implement NEPA specific to their programs and functions 
that may go beyond the CEQ regulatory requirements. Third, CEQ is 
revising the definition of ``effects'' in paragraph (g) of 40 CFR 
1508.1 to include direct, indirect, and cumulative effects. CEQ is 
making these changes in order to better align the provisions with CEQ's 
extensive experience implementing NEPA and unique perspective on how 
NEPA can best inform agency decision making, as well as longstanding 
Federal agency experience and practice, NEPA's statutory text and 
purpose to protect and enhance the quality of the human environment, 
including making decisions informed by science, and case law 
interpreting NEPA's requirements.

I. Background

A. NEPA Statute

    Congress enacted NEPA in 1969 by a unanimous vote in the Senate and 
a nearly unanimous vote in the House \1\ to declare an ambitious and 
visionary national policy to promote environmental protection for 
present and future generations. President Nixon signed NEPA into law on 
January 1, 1970. NEPA seeks to ``encourage productive and enjoyable 
harmony'' between humans and the environment, recognizing the 
``profound impact'' of human activity and the ``critical importance of 
restoring and maintaining environmental quality'' to the overall 
welfare of humankind. Furthermore, NEPA seeks to promote efforts that 
will prevent or eliminate damage to the environment and biosphere and 
stimulate the health and welfare of people, making it the continuing 
policy of the Federal Government to use all practicable means and 
measures to create and maintain conditions under which humans and 
nature can exist in productive harmony and fulfill the social, 
economic, and other requirements of present and future generations of 
Americans. It also recognizes that each person should have the 
opportunity to enjoy a healthy environment and has a responsibility to 
contribute to the preservation and enhancement of the environment. 42 
U.S.C. 4321, 4331.
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    \1\ See Linda Luther, Cong. Rsch. Serv., RL33152, The National 
Environmental Policy Act: Background and Implementation (2008), 
https://crsreports.congress.gov/product/details?prodcode=RL33152.
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    NEPA requires Federal agencies to interpret and administer Federal 
policies, regulations, and laws in accordance with NEPA's policies and 
to give appropriate consideration to environmental values in their 
decision making. To that end, section 102(2)(C) of NEPA requires 
Federal agencies to prepare ``detailed statements,'' referred to as 
environmental impact statements (EISs), for ``every recommendation or

[[Page 23454]]

report on proposals for legislation and other major Federal actions 
significantly affecting the quality of the human environment'' and, in 
doing so, provide opportunities for public participation to help inform 
agency decision making. 42 U.S.C. 4332(2)(C). The EIS process embodies 
the understanding that informed decisions are better decisions, and 
that environmental conditions will improve when decision makers 
understand and consider environmental impacts. The EIS process also 
serves to enrich the understanding of the ecological systems and 
natural resources important to the Nation and helps guide sound 
decision making, including development, in line with the best available 
science and data. NEPA also established the Council on Environmental 
Quality (CEQ) in the Executive Office of the President, which advises 
the President on environmental policy matters and oversees Federal 
agencies' implementation of NEPA. 42 U.S.C. 4342.
    In many respects, NEPA was a statute ahead of its time, and it 
remains relevant and vital today. It codifies the common-sense and 
fundamental idea of ``look before you leap'' to guide agency decision 
making, particularly in complex and consequential areas, because 
conducting sound environmental analysis before actions are taken 
reduces conflict and waste in the long run by avoiding unnecessary 
harms and uninformed decisions. It establishes a framework for agencies 
to ground decisions in sound science and recognizes that the public may 
have important ideas and information on how Federal actions can occur 
in a manner that reduces potential harms and enhances ecological, 
social, and economic well-being. See, e.g., 42 U.S.C. 4331, 4332(2)(A).

B. Regulatory Implementation of NEPA 1970-2020

    In 1970, President Nixon issued Executive Order (E.O.) 11514, 
Protection and Enhancement of Environmental Quality, directing CEQ to 
issue guidelines for implementation of section 102(2)(C) of NEPA.\2\ In 
response, CEQ issued interim guidelines in April 1970, and revised the 
guidelines in 1971 and 1973.\3\ In 1977, President Carter issued E.O. 
11991, Relating to Protection and Enhancement of Environmental Quality, 
amending E.O. 11514 and directing CEQ to issue regulations for 
implementation of section 102(2)(C) of NEPA and requiring that Federal 
agencies comply with those regulations.\4\ CEQ promulgated its NEPA 
regulations in 1978.\5\ Issued 8 years after NEPA's enactment, the NEPA 
regulations reflected CEQ's interpretation of the statutory text and 
Congressional intent, expertise developed through issuing and revising 
the CEQ guidelines and advising Federal agencies on their 
implementation of NEPA, initial interpretations of the courts, and 
Federal agency experience implementing NEPA. The 1978 regulations 
reflected the fundamental principles of informed and science-based 
decision making, transparency, and public engagement Congress 
established in NEPA. They directed Federal agencies to issue and update 
periodically agency-specific implementing procedures to supplement 
CEQ's procedures and integrate the NEPA process into the agencies' 
specific programs and processes. Consistent with 42 U.S.C. 4332(2)(B), 
the regulations also required agencies to consult with CEQ in the 
development or update of these agency-specific procedures to ensure 
consistency with CEQ's regulations.
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    \2\ 35 FR 4247 (Mar. 7, 1970), sec. 3(h).
    \3\ See 35 FR 7390 (May 12, 1970) (interim guidelines); 36 FR 
7724 (Apr. 23, 1971) (final guidelines); 38 FR 10856 (May 2, 1973) 
(proposed revisions to the guidelines); 38 FR 20550 (Aug. 1, 1973) 
(revised guidelines).
    \4\ 42 FR 26967 (May 25, 1977).
    \5\ 43 FR 55978 (Nov. 23, 1978).
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    In 1981, CEQ issued the ``Forty Most Asked Questions Concerning 
CEQ's National Environmental Policy Act Regulations,'' \6\ one of 
numerous guidance documents CEQ has issued. The ``Forty Questions'' 
reflected CEQ's contemporaneous interpretation of the 1978 regulations 
and grew out of meetings CEQ held in ten Federal regions to discuss 
implementation of the CEQ regulations with Federal, state, and local 
government officials, which identified common questions. The Forty 
Questions guidance is the most comprehensive guidance CEQ has issued on 
the 1978 regulations, addressing a broad set of topics from 
alternatives to tiering. Since its issuance, CEQ has routinely 
identified the Forty Questions guidance as an invaluable tool for 
Federal, state, Tribal, and local governments and officials, and 
members of the public, who have questions about NEPA implementation. 
Since 1981, CEQ has issued more than 30 additional guidance documents 
on a range of topics including efficient and coordinated environmental 
reviews, mitigation and monitoring, and effects analyses.\7\
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    \6\ 46 FR 18026 (Mar. 23, 1981) (``Forty Questions''), https://www.energy.gov/nepa/downloads/forty-most-asked-questions-concerning-ceqs-national-environmental-policy-act.
    \7\ See https://www.energy.gov/nepa/ceq-guidance-documents for a 
list of current CEQ guidance documents.
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    CEQ made technical amendments to the 1978 implementing regulations 
in 1979 \8\ and amended one provision in 1986 (referred to collectively 
as 1978 regulations).\9\ Otherwise, the regulations were left unchanged 
for over 40 years. As a result, CEQ and Federal agencies developed 
extensive experience implementing the 1978 regulations, and a large 
body of agency practice and case law developed based on them.
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    \8\ 44 FR 873 (Jan. 3, 1979).
    \9\ 51 FR 15618 (Apr. 25, 1986) (amending 40 CFR 1502.22).
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C. 2020 Amendments to the CEQ Regulations

    On August 15, 2017, President Trump issued E.O. 13807, Establishing 
Discipline and Accountability in the Environmental Review and 
Permitting Process for Infrastructure Projects,\10\ directing, in part, 
CEQ to establish and lead an interagency working group to identify and 
propose changes to the NEPA regulations.\11\ In response, CEQ issued an 
advanced notice of proposed rulemaking (ANPRM) on June 20, 2018, 
requesting comment on potential revisions to ``update and clarify'' the 
CEQ regulations and including a list of questions on specific aspects 
of the regulations.\12\ CEQ received approximately 12,500 comments.\13\
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    \10\ 82 FR 40463 (Aug. 24, 2017).
    \11\ Id., sec. 5(e)(iii).
    \12\ 83 FR 28591 (June 20, 2018).
    \13\ The comments are available on www.regulations.gov under 
Docket No. CEQ-2018-0001.
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    On January 10, 2020, CEQ published a notice of proposed rulemaking 
(NPRM) proposing broad revisions to the 1978 NEPA regulations.\14\ A 
wide range of stakeholders submitted more than 1.1 million comments on 
the proposed rule,\15\ including state and local governments, Tribes, 
environmental advocacy organizations, professional and industry 
associations, other advocacy or non-profit organizations, businesses, 
and private citizens. Many commenters provided detailed feedback on the 
legality, policy wisdom, and potential consequences of the proposed 
amendments. In keeping with the proposed rule, the final rule, 
promulgated on July 16, 2020 (``2020 regulations'' or ``2020 rule''), 
made

[[Page 23455]]

wholesale revisions to the regulations; it took effect on September 14, 
2020.\16\
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    \14\ 85 FR 1684 (Jan. 10, 2020).
    \15\ See Docket No. CEQ-2019-0003, https://www.regulations.gov/document/CEQ-2019-0003-0001.
    \16\ 85 FR 43304 (July 16, 2020).
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    In the months that followed the issuance of the 2020 regulations, 
five lawsuits were filed challenging the 2020 rule.\17\ These cases 
challenge the 2020 rule on a variety of grounds, including under the 
Administrative Procedure Act (APA), NEPA, and the Endangered Species 
Act, contending that the rule exceeded CEQ's authority and that the 
related rulemaking process was procedurally and substantively 
defective. In response to CEQ and joint motions, the district courts 
have issued temporary stays in each of these cases, except for Wild 
Virginia v. Council on Environmental Quality, which the district court 
dismissed without prejudice on June 21, 2021,\18\ and is currently on 
appeal to the U.S. Court of Appeals for the Fourth Circuit.
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    \17\ Wild Va. v. Council on Env't Quality, No. 3:20cv45 (W.D. 
Va. 2020); Env't Justice Health All. v. Council on Env't Quality, 
No. 1:20cv06143 (S.D.N.Y. 2020); Alaska Cmty. Action on Toxics v. 
Council on Env't Quality, No. 3:20cv5199 (N.D. Cal. 2020); 
California v. Council on Env't Quality, No. 3:20cv06057 (N.D. Cal. 
2020); Iowa Citizens for Cmty. Improvement v. Council on Env't 
Quality, No. 1:20cv02715 (D.D.C. 2020). Additionally, in The Clinch 
Coalition v. U.S. Forest Service, No. 2:21cv00003 (W.D. Va. 2020), 
plaintiffs challenged the U.S. Forest Service's NEPA implementing 
procedures, which established new categorical exclusions, and, 
relatedly, the 2020 rule's provisions on categorical exclusions.
    \18\ Wild Va. v. Council on Env't Quality, 544 F. Supp.3d 620 
(W.D. Va. 2021) (appeal pending).
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D. CEQ's Comprehensive Review of the 2020 Regulations

    On January 20, 2021, President Biden issued E.O. 13990, Protecting 
Public Health and the Environment and Restoring Science to Tackle the 
Climate Crisis,\19\ to establish an Administration policy to listen to 
the science; improve public health and protect our environment; ensure 
access to clean air and water; limit exposure to dangerous chemicals 
and pesticides; hold polluters accountable, including those who 
disproportionately harm communities of color and low-income 
communities; reduce greenhouse gas emissions; bolster resilience to the 
impacts of climate change; restore and expand the Nation's treasures 
and monuments; and prioritize both environmental justice and the 
creation of well-paying union jobs necessary to achieve these 
goals.\20\ The E.O. calls for Federal agencies to review existing 
regulations issued between January 20, 2017, and January 20, 2021, for 
consistency with the policy it articulates and to take appropriate 
action. The E.O. also revokes E.O. 13807 and directs agencies to 
promptly take steps to rescind any rules or regulations implementing 
it. An accompanying White House fact sheet, published on January 20, 
2021, specifically directs CEQ to review the 2020 regulations for 
consistency with E.O. 13990's policy.\21\
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    \19\ 86 FR 7037 (Jan. 25, 2021).
    \20\ Id., sec. 1.
    \21\ White House Fact Sheet: List of Agency Actions for Review 
(Jan. 20, 2021), https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/fact-sheet-list-of-agency-actions-for-review/.
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    On January 27, 2021, the President signed E.O. 14008, Tackling the 
Climate Crisis at Home and Abroad, to establish a government-wide 
approach to the climate crisis by reducing greenhouse gas emissions and 
an Administration policy to increase climate resilience, transition to 
a clean-energy economy, address environmental justice and invest in 
disadvantaged communities, and spur well-paying union jobs and economic 
growth.\22\ E.O. 14008 also requires the Chair of CEQ and the Director 
of the Office of Management and Budget (OMB) to ensure that Federal 
permitting decisions consider the effects of greenhouse gas emissions 
and climate change.\23\
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    \22\ E.O. 14008, 86 FR 7619 (Feb. 1, 2021). E.O. 14008's 
direction to advance environmental justice reinforces and reflects 
the policy established in E.O. 13985, Advancing Racial Equity and 
Support for Underserved Communities Through the Federal Government, 
that the Federal Government ``pursue a comprehensive approach to 
advancing equity for all, including people of color and others who 
have been historically underserved, marginalized, and adversely 
affected by persistent poverty and inequality.'' 86 FR 7009 (Jan. 
20, 2021).
    \23\ Id., sec. 213(a); see also sec. 219 directing agencies to 
make achieving environmental justice part of their missions by 
developing programs, policies, and activities to address the 
disproportionately high and adverse human health, environmental, 
climate-related and other cumulative impacts on disadvantaged 
communities.
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    Consistent with E.O. 13990 and E.O. 14008, CEQ is engaged in a 
comprehensive review of the 2020 regulations to ensure that they 
provide for sound and efficient environmental review of Federal 
actions, including those actions integral to tackling the climate 
crisis, in a manner that enables meaningful public participation, 
advances environmental justice, respects Tribal sovereignty, protects 
our Nation's resources, and promotes better environmental and community 
outcomes. CEQ is taking a phased approach to its comprehensive review, 
which includes this Phase 1 rulemaking and a planned, more 
comprehensive Phase 2 rulemaking. Additionally, as a preliminary 
matter, CEQ issued an interim final rule on June 29, 2021, amending the 
requirement in 40 CFR 1507.3(b) for agencies to propose changes to 
existing agency-specific NEPA procedures by September 14, 2021, to make 
those procedures consistent with the 2020 regulations.\24\ CEQ extended 
the date by 2 years to avoid agencies proposing changes to agency-
specific implementing procedures on a tight deadline to conform to 
regulations that are undergoing extensive review and will likely change 
in the near future. CEQ requested comments on the interim final rule 
and received approximately 20 written submissions; summaries and 
responses to those comments are included in the response to comments 
document posted to the docket for this rulemaking.
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    \24\ 86 FR 34154 (June 29, 2021).
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    As a next step in the phased approach, CEQ published a proposed 
rule \25\ for the Phase 1 rulemaking on October 7, 2021. In the Phase 1 
proposed rule, CEQ identified a discrete set of provisions that pose 
significant near-term interpretation or implementation challenges for 
Federal agencies; would have the most impact to agencies' NEPA 
processes during the interim period before a ``Phase 2'' rulemaking is 
complete and make sense to revert to the 1978 regulatory approach. In 
proposing to revert to language conforming to the approach in the 1978 
regulations, the proposed rule addressed issues similar or identical to 
those the public and Federal agencies recently had the opportunity to 
consider and comment on during the rulemaking for the 2020 rule.
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    \25\ 86 FR 55757 (Oct. 7, 2021).
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    Publication of the proposed rule initiated a 45-day public comment 
period that concluded on November 22, 2021. CEQ received approximately 
94,458 written comments in response to the proposed rule. Seventy-six 
comments were shared with CEQ during two virtual public meetings CEQ 
hosted on the proposed rule on October 19, 2021, and October 21, 2021. 
In total, CEQ received 94,534 comments on the proposed rule, which CEQ 
considered in the development of this final rule. A majority of the 
comments (approximately 93,893) were campaign form letters sent in 
response to an organized initiative and identical or very similar in 
form and content. CEQ received approximately 573 unique public 
comments, of which 362 were substantive comments raising a variety of 
issues related to the rulemaking approach and contents of the proposed 
rule. The vast majority of the unique comments expressed some level of 
support for the proposed rule. Many supportive comments included 
suggestions for Phase 2 or expressed general support for Phase 1 while 
also

[[Page 23456]]

indicating that the commenters would have preferred for CEQ to have 
proposed more comprehensive changes in Phase 1. CEQ provides a summary 
of the comments received on the proposed rule and responses to those 
comment summaries in the document, ``National Environmental Policy Act 
Implementing Regulations Revision Phase 1 Response to Comments'' (Phase 
1 Response to Comments) and provides below brief summaries of comments 
and responses related to the provisions in the final rule.
    Separately, CEQ is developing a Phase 2 rulemaking to propose 
comprehensive revisions to the 2020 regulations and intends to issue a 
second proposed rule for notice and public comment. Both the Phase 1 
and Phase 2 rulemakings are intended to ensure that the NEPA process 
provides for efficient and effective environmental reviews that are 
guided by science and are consistent with the statute's text and 
purpose; enhance clarity and certainty for Federal agencies, project 
proponents, and the public; inform the public about the potential 
environmental effects of Federal Government actions and enable full and 
fair public participation; and ultimately promote better informed 
Federal decisions that protect and enhance the quality of the human 
environment and advance environmental, climate change mitigation and 
resilience, and environmental justice objectives.

E. Public Comments on the Phased Approach

    CEQ received multiple comments related to the phased approach that 
it has selected to organize its review of the 2020 regulations. 
Numerous commenters suggested that CEQ set aside the 2020 regulations 
entirely and reissue the 1978 regulations to serve as a baseline for 
consideration of further regulatory reforms. These commenters expressed 
overall support for the content of the Phase 1 proposed rule, but 
contended that other provisions in the 2020 regulations also pose near-
term challenges and also should be revised to revert to the 1978 text. 
Some of these commenters expressed the view that a full repeal of the 
2020 regulations is needed to prevent conflicts between existing agency 
NEPA procedures and the CEQ regulations. Some commenters also requested 
that CEQ reissue the 1978 regulations and not pursue additional 
revisions. CEQ also received many comments expressing support for the 
Phase 1 rulemaking and encouraging CEQ to quickly initiate and complete 
a Phase 2 rulemaking. Some of these commenters also identified 
additional provisions that the commenters contended Phase 1 should 
address or provided recommendations for consideration in Phase 2.
    Other commenters requested that CEQ pursue one overall rulemaking, 
rather than a phased approach. These commenters expressed views that 
one rulemaking has advantages, including enabling stakeholders and the 
public to understand and comment on the full scope of changes at one 
time, rather than in two phases. Some of these commenters also 
expressed concern that the phased approach could result in confusion 
and inefficiency.
    CEQ appreciates the views expressed by commenters on the phased 
approach and acknowledges that a single rulemaking process would have 
entailed different tradeoffs and conferred different benefits. However, 
CEQ considers the phased approach for its review of the 2020 
regulations to strike the appropriate balance between the need to act 
quickly to address critical issues and the need to conduct a thorough 
review of the 2020 regulations. As explained above, CEQ determined that 
the phased approach will address important near-term implementation 
challenges while allowing sufficient time to conduct a thorough review 
of the 2020 regulations to determine what other changes, including 
additional reversions to the 1978 regulations and new revisions, may be 
necessary or appropriate. CEQ decided against proposing a full 
reversion to the 1978 regulations in Phase 1 to focus time and 
resources on the most pressing issues and avoid the administrative 
burdens associated with analyzing each provision in the 2020 
regulations, considering whether to revert each provision to the 1978 
language and the reasoning for doing so, and responding to comments on 
the large number of regulatory provisions that would be affected. CEQ 
is a small agency with limited resources and had concerns about 
undertaking two large rulemakings--one to revert to the 1978 
regulations and a second to propose new updates.
    With this final rule, CEQ is concluding Phase 1 and will continue 
its work on Phase 2. In Phase 2, CEQ will consider the NEPA regulations 
comprehensively and assess whether to revise additional provisions to 
revert to the language of the 1978 regulations or to propose other 
revisions based on its expertise, NEPA's policies and requirements, 
relevant case law, and feedback from Federal agencies and the public. 
Further information on the phased approach can be found in the Phase 1 
Response to Comments.

III. Summary of and Rationale for Final Rule

    This section summarizes and identifies CEQ's rationale for the 
regulatory changes included in the final rule. This section also 
briefly summarizes and responds to the comments CEQ received in 
response to the NPRM. CEQ has provided more detailed summaries and 
responses in the Phase 1 Response to Comments document,\26\ which CEQ 
incorporates by reference and has made available in the docket for this 
rulemaking.
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    \26\ The National Environmental Policy Act Implementing 
Regulations Revision Phase 1 Response to Comments is available under 
``Supporting & Related Materials'' in the docket on 
www.regulations.gov under docket ID CEQ-2021-0002, available at 
https://www.regulations.gov/docket/CEQ-2021-0002/document?documentTypes=Supporting%20%26%20Related%20Material.
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    Many commenters expressed general support for CEQ's proposal and 
the general return to the language from the 1978 regulations for the 
provisions on purpose and need; agency NEPA procedures; and the 
definition of effects. These commenters stated that the 2020 rule 
weakened NEPA and that parts of the 2020 regulations were misguided and 
reflected a bias in favor of project proponents to the possible 
detriment of environmental values or the public interest. Several of 
these commenters indicated that the proposed revisions are important 
for providing clarity, certainty, and consistency.
    Commenters who expressed general opposition to the proposed rule 
were generally supportive of the 2020 regulations. These commenters 
expressed disappointment about CEQ rescinding portions of the 2020 rule 
and expressed concerns that the proposed rule would slow down efforts 
to improve the nation's infrastructure or harm certain economic 
sectors. Some of these commenters agreed with the goals that CEQ 
identified as guiding this rulemaking, but stated that the 2020 rule 
advanced those goals.
    CEQ acknowledges that there is both support for and opposition to 
the changes outlined in the NPRM, and that there are many additional 
provisions that commenters suggested CEQ should change in either the 
Phase 1 rulemaking or in future rulemakings. CEQ is considering these 
comments as it develops its proposed Phase 2 rule.
    This Phase 1 final rule is guided by the extensive experience of 
CEQ and Federal agencies implementing NEPA for the last 50 years. CEQ 
is charged with overseeing NEPA implementation across the Federal 
Government and reviews every agency's proposed new or

[[Page 23457]]

updated NEPA implementing procedures. Through this iterative process, 
CEQ engages with agencies to understand their specific authorities and 
programs to ensure they integrate consideration of environmental 
impacts into their decision-making processes. Additionally, CEQ 
frequently consults with agencies on the efficacy and effectiveness of 
NEPA implementation. Where necessary or appropriate, CEQ engages with 
agencies on NEPA reviews for specific projects or project types to 
provide advice and identify any emerging or cross-cutting issues that 
would benefit from CEQ issuing formal guidance or assisting with 
coordination. For example, CEQ has convened interagency working groups 
to promote efficient and effective environmental reviews for 
transportation and broadband projects. CEQ also has extensive 
experience providing written guidance to Federal agencies on a wide 
range of NEPA-related issues, including environmental justice, 
emergency actions, climate change, and more.\27\ In addition, CEQ meets 
regularly with external stakeholders to understand their perspectives 
on the NEPA process. Finally, CEQ coordinates with other Federal 
agencies and components of the White House on a wide array of 
environmental issues, such as endangered species consultation or 
impacts to Federal lands and waters from federally authorized 
activities.
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    \27\ See https://www.energy.gov/nepa/ceq-guidance-documents for 
a list of current CEQ guidance documents.
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    CEQ relied on this body of experience and expertise in developing 
this final rule. As discussed in detail in the following sections, CEQ 
is generally reverting to the approach in the 1978 regulations for 
these three provisions with non-substantive changes to the 1978 
regulatory text to accommodate the current structure of the CEQ 
regulations. In doing so, CEQ intends for the Phase 1 final rule 
provisions to have the same meaning as the corresponding provisions in 
the regulations in effect from 1978 to September 2020.

A. Purpose and Need (Sec.  1502.13)

i. Regulatory History and Proposed Changes
    The purpose and need section of an EIS identifies the agency's 
purpose for the proposed action and the need it serves. Developing a 
statement of the purpose and need is a vital early step in the NEPA 
process that is foundational to other elements of an EIS. For example, 
the purpose and need statement informs the range of reasonable 
alternatives that the agency analyzes and considers.
    The 1978 regulations required that each EIS briefly state the 
underlying purpose and need to which the agency is responding in 
proposing the alternatives, including the proposed action. 40 CFR 
1502.13 (2019). The 2020 regulations modified this requirement by 
adding specific language to address circumstances in which an agency's 
``statutory duty'' is to consider an application for authorization, 
such as applications for permits or licenses. In those circumstances, 
the 2020 regulations require agencies to base the purpose and need on 
the goals of an applicant and the agency's authority. The 2020 rule 
added conforming language to a new definition of ``reasonable 
alternatives'' in Sec.  1508.1(z). Specifically, the 2020 regulations 
define ``reasonable alternatives'' to mean ``a reasonable range of 
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.'' \28\ In the NPRM for this rulemaking, CEQ 
proposed to revert to the language of the 1978 regulations in Sec.  
1502.13 and make a conforming edit to the definition of ``reasonable 
alternatives'' in Sec.  1508.1(z) by deleting the reference to the 
goals of the applicant from the definition.
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    \28\ As noted in the 2020 rule, the definition of ``reasonable 
alternatives'' was based in part on CEQ's longstanding guidance, the 
``Forty Most Asked Questions Concerning CEQ's National Environmental 
Policy Act Regulations,'' 46 FR 18026 (Mar. 23, 1981), as amended, 
1986, https://www.energy.gov/sites/default/files/2018/06/f53/G-CEQ-40Questions.pdf. Specifically, the guidance states in response to 
Question 2A, ``Reasonable alternatives include those that are 
practical or feasible from the technical and economic standpoint and 
using common sense, rather than simply desirable from the standpoint 
of the applicant.''
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ii. Summary of NPRM Comments on Purpose and Need
    CEQ received comments that both supported and opposed the proposed 
changes in the NPRM to Sec. Sec.  1502.13 and 1508.1(z). Some 
commenters supported the changes in the proposed rule, expressing the 
view that the changes would result in better decisions because agencies 
would consider a full range of alternatives and their effects without 
any arbitrary limitations tied to a project applicant or specific 
agency authorities. Commenters also expressed the view that the 2020 
rule could be interpreted to allow or encourage agencies to prioritize 
an applicant's goals over the needs and goals of the public or the 
agency's own goals, and that the proposed rule would remedy these 
problems. Some commenters also specifically supported the retention of 
``technically and economically feasible'' in the definition of 
``reasonable alternatives,'' stating this is in alignment with previous 
CEQ guidance on the 1978 regulations. Many commenters agreed with CEQ's 
statements in the NPRM that the purpose and need statement should 
reflect understanding of an agency's statutory authority, the public 
interest, and an applicant's goals but that these should be framed in 
the context of the general goal of an action and not through an 
evaluation of whether an applicant can reach its specific goals. Some 
comments also indicated that the reference to agency authority is 
redundant and supported the proposed removal of this reference to avoid 
unnecessary confusion.
    Other commenters opposed the proposed changes to Sec. Sec.  1502.13 
and 1508.1(z), contending that the language adopted in the 2020 rule 
provides clarity that agencies must base the purpose and need on the 
applicant's goals and agency's statutory authority. Commenters also 
expressed the view that the 1978 regulation resulted in some Federal 
agencies prioritizing agency goals over the goals of the applicant, and 
therefore, that the proposed rule would have the same effect. They 
further argued that analyses considering alternatives that do not meet 
an applicant's goals or that cannot be implemented by the applicant or 
agency are wasteful of both the applicant's and the agency's resources. 
Commenters also expressed the view that the proposed changes to purpose 
and need are not required by NEPA. For example, some commenters stated 
that there is no requirement to consider the public interest when 
developing a purpose and need statement for a non-Federal project. 
These commenters also objected to CEQ's statements in the NPRM that the 
2020 regulations could be interpreted to require that an applicant's 
goals be the sole or primary factor for articulating purpose and need. 
These commenters contended that the 2020 rule's requirement that 
agencies consider alternatives that the applicant is capable of 
implementing does not foreclose consideration of potential 
environmental impacts or public interests. Further, these commenters 
stated that basing alternatives on the needs of an applicant does not 
unreasonably narrow the range of alternatives that an agency must 
consider because agencies still must consider the ``no action 
alternative'' and other reasonable alternatives that align with the 
goals of the applicant. Some commenters who supported retaining the 
reference to agency statutory

[[Page 23458]]

authority agreed with CEQ that the language is confusing, but contended 
that CEQ should clarify it and that deleting the reference also will 
create confusion.
    The inconsistent interpretations of the language in 40 CFR 1502.13 
(2020) expressed by commenters to the NPRM, as well as commenters on 
the 2020 rule, demonstrate the ambiguity of the language and underscore 
the need for clarification. Some commenters read the language in the 
2020 rule to make the applicant's goals and the agency's statutory 
authority the sole factors an agency can consider in formulating a 
purpose and need statement when considering an application for 
authorization. Other commenters read the language as allowing agencies 
to consider other, unenumerated factors. These comments demonstrate the 
ambiguity of the 2020 text, which CEQ is clarifying in this final rule.
    CEQ specifically requested comment on the potential effects of the 
proposed changes to Sec. Sec.  1502.13 and 1501.8(z) to the 
environmental review process, including timeframes for environmental 
review. In response, some commenters indicated they do not believe the 
proposed changes will affect the average timeline for the environmental 
review process. Other commenters stated that CEQ's proposed revisions 
to purpose and need will lead to unnecessarily time-consuming and 
costly expansions of the consideration of alternatives by agencies with 
little focus on the project's stated purpose. Some commenters expressed 
concern that the change to purpose and need would result in additional 
EISs as opposed to more efficient environmental assessments. CEQ did 
not receive any specific data or evidence from commenters that would 
address whether or not the proposed change would have an effect on the 
environmental review process, including timelines.
iii. Rationale for Final Rule
    In the final rule, CEQ makes the changes as proposed. Specifically, 
the final rule amends the first sentence in Sec.  1502.13 to require an 
EIS to state the purpose and need to which the agency is responding in 
proposing alternatives, including the proposed action. The rule removes 
the second sentence requiring agencies base the purpose and need on the 
goals of the applicant and the agency's authority when the agency is 
reviewing an application for authorization. Finally, the final rule 
removes the reference to the goals of the applicant from the definition 
of ``reasonable alternatives'' in Sec.  1508.1(z).
    CEQ makes these changes to address the ambiguity created by the 
2020 rule language and ensure agencies have the flexibility to consider 
a variety of factors in developing the purpose and need statement and 
are not unnecessarily restricted by misconstruing this language to 
require agencies to prioritize an applicant's goals over other 
potentially relevant factors, including effectively carrying out the 
agency's policies and programs or the public interest. While CEQ does 
not interpret the 2020 rule language to require agencies to prioritize 
an applicant's goals above or to the exclusion of other relevant 
factors, CEQ finds that removing the language on applications for 
authorization and restoring the 1978 regulatory text is appropriate. 
The language of the 2020 rule could be misconstrued to inappropriately 
constrain the discretion of agencies in formulating a purpose and need 
statement, which would be inconsistent with fully informed decision 
making and sound environmental analysis. And even if interpreted to 
merely direct agencies to consider the applicant's goals and the 
agency's statutory authority alongside other relevant factors, CEQ 
deems it appropriate to strike the text because it is unnecessary and 
confusing.
    Consistent with longstanding practice and to ensure informed 
decision making, agencies should have discretion to base the purpose 
and need for their actions on a variety of factors, which include the 
goals of the applicant, but not to the exclusion of other factors. 
Agencies have long considered myriad factors in developing a purpose 
and need statement. These include the agency's mission and the 
specifics of the agency decision, including statutory and regulatory 
requirements. Factors also may include national, agency, or other 
policy objectives applicable to a proposed action, such as a 
discretionary grant program targeted to achieve certain policy goals; 
desired conditions on the landscape or other environmental outcomes; 
local needs; and an applicant's goals. Additionally, when considering a 
project sponsored by an outside party, there may be actions by multiple 
Federal agencies for which the lead agency, in consultation with 
cooperating agencies, will need to craft the purpose and need statement 
in a manner to address all of the Federal agency actions (e.g., funding 
and permits) covered by the NEPA document.
    Finally, the goals of the applicant are an important, but not 
determinative, factor in developing a purpose and need statement for a 
variety of reasons, including helping to identify reasonable 
alternatives that are technically and economically feasible. Both the 
development of purpose and need statements and the identification of 
alternatives are governed by a rule of reason; the range of 
alternatives should be reasonable, practical, and not boundless. This 
approach is consistent with CEQ's longstanding position as set forth in 
the Forty Questions issued shortly after the promulgation of the 1978 
regulations, where CEQ acknowledged that agencies must consider 
practicality and feasibility, without relying solely on the applicant's 
preference for identifying what alternatives are reasonable.\29\ 
Additionally, removing this language does not foreclose an agency from 
considering the goals of the applicant.
---------------------------------------------------------------------------

    \29\ See Forty Questions, 2A, supra note 28 (``In determining 
the scope of alternatives to be considered, the emphasis is on what 
is `reasonable' rather than on whether the proponent or applicant 
likes or is itself capable of carrying out a particular alternative. 
Reasonable alternatives include those that are practical or feasible 
from the technical and economic standpoint and using common sense, 
rather than simply desirable from the standpoint of the 
applicant.''). See also Simmons v. U.S. Army Corps of Engineers, 120 
F.3d 664, 669 (7th Cir. 1997) (``An agency cannot restrict its 
analysis to those `alternative means by which a particular applicant 
can reach his goals'. . . . The Corps has the `duty under NEPA to 
exercise a degree of skepticism in dealing with self-serving 
statements from a prime beneficiary of the project.' '').
---------------------------------------------------------------------------

    The final rule also removes the reference to the agency's statutory 
authority from Sec.  1502.13 because it is confusing and unnecessary. 
Federal agency discussions with CEQ and public comments, as reflected 
in both the 2020 Rule Response to Comments and the Phase 1 Response to 
Comments, demonstrate that some interpret this language to limit 
agencies' discretion in developing the purpose and need statement. The 
implication that an agency's authority is only relevant when the 
proposed action is for an authorization, such as a permit or license, 
is incorrect because an agency's statutory authority for its action is 
always a relevant consideration for developing a purpose and need 
statement irrespective of whether the proposed action is an 
authorization. The 2020 rule's addition of the text also is confusing 
because it suggested that a change in practice was intended. In fact, 
agencies have always considered their statutory authority and the scope 
of the agency decision when developing purpose and need statements. In 
CEQ's experience implementing the 1978 regulations, there has been 
little or no confusion among the agencies regarding these issues; 
therefore, the additional language is unnecessary. Furthermore,

[[Page 23459]]

for projects involving multiple agency actions under different 
statutory authorities, the lead agency should have flexibility in 
crafting a purpose and need statement to address multiple agency 
decisions both for efficiency and effective decision making.
    CEQ also makes these changes in the final rule because the language 
added by the 2020 rule may be interpreted in a manner that does not lay 
the appropriate groundwork for environmentally sound decision making 
when an agency considers a request for an authorization or reflect the 
best reading of the NEPA statute or case law. A properly drafted 
purpose and need statement should lead to consideration of the 
reasonable alternatives to the proposed action, consistent with NEPA's 
requirements. See 42 U.S.C. 4332(2)(C), 4332(2)(E). CEQ disagrees with 
commenters assertions that consideration of alternatives that do not 
meet an applicant's goals or cannot be implemented by the applicant 
will always waste applicant or agency resources or result in delays. 
There may be times when an agency identifies a reasonable range of 
alternatives that includes alternatives--other than the no action 
alternative--that are beyond the goals of the applicant or outside the 
agency's jurisdiction because the agency concludes that they are useful 
for the agency decision maker and the public to make an informed 
decision. Always tailoring the purpose and need to an applicant's goals 
when considering a request for an authorization could prevent an agency 
from considering alternatives that do not meet an applicant's stated 
goals, but better meet the policies and requirements set forth in NEPA 
and the agency's statutory authority and goals. The rule of reason 
continues to guide decision making in such contexts.
    CEQ's concern that the 2020 regulation's change to Sec.  1502.13 
may be interpreted to unduly constrain the discretion of agencies 
leading to the development of unreasonably narrow purpose and need 
statements is consistent with a similar concern raised by the courts in 
reviewing agencies' purpose and need statements under the 1978 
regulations. It is contrary to NEPA for agencies to ``contrive a 
purpose so slender as to define competing `reasonable alternatives' out 
of consideration (and even out of existence).'' Simmons v. U.S. Army 
Corps of Engineers, 120 F.3d 664, 666 (7th Cir. 1997) (citing 42 U.S.C. 
4332(2)(E)). Constricting the definition of the project's purpose could 
exclude ``truly'' reasonable alternatives, making an EIS incompatible 
with NEPA's requirements. Id. See also, e.g., Nat'l Parks & 
Conservation Ass'n v. Bureau of Land Mgmt., 606 F.3d 1058, 1070 (9th 
Cir. 2010) (``Agencies enjoy `considerable discretion' to define the 
purpose and need of a project. However, `an agency cannot define its 
objectives in unreasonably narrow terms.''' (internal citations 
omitted)).
    Other court decisions have deferred to agencies' purpose and need 
statements developed under the 1978 regulation that put weight on 
multiple factors rather than just an applicant's goals, recognizing 
those factors as appropriately within the scope of the agency's 
consideration. Citizens Against Burlington, Inc. v. Busey, 938 F.2d 190 
(D.C. Cir. 1991), which the 2020 final rule relied upon as the 
justification for language added to the purpose and need provision, is 
consistent with the language in the 1978 regulations that CEQ is 
restoring, and, in fact, interpreted and applied that language. In that 
case, in applying the traditional ``rule of reason,'' the court held 
that the agency's consideration of the applicant's goals to develop the 
purpose and need of the action was reasonable. Id. at 196-99. However, 
the court did not require all agencies to make the applicant's goals 
the sole (or even primary) factor in the formulation of the purpose and 
need in all factual and legal contexts. See id. Returning to the 1978 
framework is consistent with case law affirming agency discretion to 
formulate purpose and need statements based on a variety of relevant 
factors.
    Removing the language regarding an applicant's goals from Sec.  
1502.13 does not mean that an agency should consider a boundless set of 
alternatives. This final rule does not amend language in 40 CFR 1502.14 
directing agencies to ``[e]valuate reasonable alternatives to the 
proposed action,'' and Sec.  1508.1(z), as amended in this final rule, 
continues to define ``reasonable alternatives'' as ``a reasonable range 
of alternatives that are technically and economically feasible and meet 
the purpose and need for the proposed action.'' The principle that the 
range of alternatives should be reasonably related to the purpose and 
need is well-settled. See Westlands Water Dist. v. U.S. Dep't of the 
Interior, 376 F.3d 853, 868 (9th Cir. 2004); Process Gas Consumers Grp. 
v. U.S. Dep't of Agric., 694 F.2d 728, 769 (D.C. Circ. 1981).
    The final rule will reduce confusing and unnecessary text and align 
the regulations more closely to the purposes underlying NEPA. These 
changes reaffirm agency discretion to identify and consider the factors 
relevant to formulating statements of purpose and need in view of the 
specific circumstances before the agency and the agency's 
responsibilities, including effectively carrying out agency policies 
and programs and considering the public interest and the goals of an 
applicant. CEQ disagrees with the assertions that returning or 
reaffirming agency discretion to consider multiple factors even where a 
private applicant is involved will result in significant additional 
burdens or negatively affect timelines. Agencies have significant 
experience under the 1978 regulations in considering a variety of 
factors when crafting purpose and need statements, including an 
applicant's goals. Furthermore, CEQ did not receive any data, but only 
general and speculative statements, in response to its specific request 
for comment on potential effects of the proposed changes to Sec. Sec.  
1502.13 and 1501.8(z) on the environmental review process, including 
timeframes for environmental review. CEQ notes that it is ultimately 
for the agency to determine what alternatives are needed to inform its 
decision making. Exploring and evaluating reasonable alternatives helps 
decision makers and the public examine other ways to meet the purpose 
and need of an action, including options with different environmental 
consequences or mitigation measures, and demonstrate to the public that 
the agency made an informed decision because it has explored such 
tradeoffs. CEQ also disagrees with the assertion that the changes to 
purpose and need in the final rule will directly result in an increase 
in the number of certain types of environmental review documents like 
EISs. Development of a purpose and need statement is separate from the 
assessment of whether a potential effect is significant, and therefore, 
whether an EIS is required. The changes made in the final rule will 
ensure agencies can make these determinations based on all relevant 
factors.

B. Agency NEPA Procedures (Sec.  1507.3)

i. Regulatory History and Proposed Changes
    The 1978 regulations required Federal agencies to develop NEPA 
procedures through a notice and comment process to integrate NEPA 
reviews into their decision-making processes. Over the 40-year period 
that the 1978 regulations were in place, approximately 85 agencies 
issued procedures to facilitate agency compliance with NEPA.\30\

[[Page 23460]]

Agencies have taken a wide range of approaches to their agency-specific 
NEPA procedures. Some have essentially incorporated the CEQ regulations 
by reference without much additional detail; others have issued 
procedures that tailor the NEPA process to the contexts in which they 
operate and integrate NEPA compliance with the agency's other statutory 
responsibilities or environmental requirements.\31\ Consistent with 42 
U.S.C. 4332(2)(B) and 40 CFR 1507.3 (2019), agencies consulted with CEQ 
in developing agency-specific procedures and CEQ determined that the 
procedures conformed with NEPA and the CEQ regulations before the 
agencies issued final procedures.
---------------------------------------------------------------------------

    \30\ A list of agency NEPA procedures is available at https://ceq.doe.gov/laws-regulations/agency_implementing_procedures.html. No 
agency has updated its procedures to implement the 2020 regulations 
and, as discussed above, CEQ promulgated an interim final rule to 
extend the deadline for agencies to propose updates.
    \31\ Compare the U.S. Department of Agriculture's procedures, 7 
CFR part 1b, with NOAA Administrative Order 216-6A and Companion 
Manual, https://www.noaa.gov/nepa.
---------------------------------------------------------------------------

    The 2020 rule amended 40 CFR 1507.3 to include ``ceiling 
provisions'' that made the CEQ regulations the maximum requirements 
agencies could include in their agency NEPA procedures. In adopting the 
ceiling provisions, the 2020 rule asserted that the ceiling provisions 
were intended to eliminate inconsistencies among agency-specific 
procedures and between agency procedures and the CEQ regulations by 
requiring that the 2020 regulations apply where existing agency NEPA 
procedures are inconsistent with the CEQ regulations absent a clear and 
fundamental conflict with another statutory requirement. The 2020 rule 
also required agencies to propose new or revised procedures within 12 
months to eliminate any inconsistencies and prohibited agencies from 
imposing procedures or requirements additional to the CEQ regulations 
unless those additional procedures promote agency efficiency or are 
required by law.
    In the Phase 1 NPRM, CEQ proposed to revise Sec.  1507.3(a) and (b) 
to delete the ceiling provisions to provide that while agency NEPA 
procedures need to be consistent with the CEQ regulations, agencies 
have discretion and flexibility to develop procedures beyond the CEQ 
regulatory requirements, enabling agencies to address their specific 
programs, statutory mandates, and the contexts in which they operate. 
Specifically, the NPRM proposed to remove language from Sec.  1507.3(a) 
stating that where existing agency NEPA procedures are ``inconsistent'' 
with the CEQ regulations, the CEQ regulations apply ``unless there is a 
clear and fundamental conflict with the requirements of another 
statute.'' The NPRM did not propose to amend the determination made in 
the 2020 rule in Sec.  1507.3(a) that categorical exclusions 
established in agency NEPA procedures as of September 14, 2020, are 
consistent with the CEQ regulations. The NPRM also proposed to remove 
from Sec.  1507.3(b) the language requiring agencies ``to eliminate any 
inconsistencies'' with the CEQ regulations and the prohibition on 
agencies imposing additional procedures or requirements beyond the CEQ 
regulations unless those additional procedures promoted agency 
efficiency or were required by law. The NPRM did not propose to further 
amend the requirement for agencies to propose new or revised NEPA 
procedures within 36 months, by September 14, 2023, as revised in the 
interim final rule,\32\ as well as the encouragement for major subunits 
of departments to adopt their own procedures with the consent of the 
department.
---------------------------------------------------------------------------

    \32\ As noted in part I of the preamble, CEQ revised this time 
period from 12 months to 36 months in its interim final rule. See 86 
FR 34154 (June 29, 2021).
---------------------------------------------------------------------------

ii. Summary of NPRM Comments on Agency NEPA Procedures
    Many commenters supported the proposed changes to Sec.  1507.3, 
stating that the 2020 ceiling provisions were unnecessary and unhelpful 
because agencies should have flexibility to add additional requirements 
or detail to their NEPA procedures tailored to their unique needs and 
missions. Commenters also noted that the proposed change would assist 
agencies during the transition period before the completion of a Phase 
2 rulemaking because it clarifies that agencies can and should continue 
to apply their existing NEPA procedures while CEQ finishes its review 
of the 2020 rule. They noted that without this change, agencies might 
be in the position of developing agency procedures that either conflict 
with NEPA or the 2020 regulations. Many commenters stated that the 
proposal would restore the ability of Federal agencies to develop 
agency-specific NEPA procedures to implement NEPA to the ``fullest 
extent possible'' consistent with 42 U.S.C. 4332. Some commenters who 
supported removing the ceiling provision noted that removing the 
provision may reduce, but will not eliminate, all of the harms of the 
2020 rule because the 2020 rule is not being repealed.
    Other commenters opposed the proposed changes to Sec.  1507.3 as 
unnecessary because the 2020 regulations contain language allowing 
flexibility for agencies to tailor their NEPA procedures to improve 
efficiency. Some commenters also suggested that CEQ's proposed changes 
invite agencies to disregard the 2020 rule. Commenters indicated that 
the NPRM's proposed changes would result in inconsistencies and 
conflicts among agencies' NEPA procedures, increased litigation, costs, 
delays, and paperwork, and impede the Administration's goals. 
Commenters also requested that CEQ provide additional rationale and 
examples of agency confusion about the 2020 regulations.
    Some commenters suggested additional changes CEQ should consider to 
Sec.  1507.3, including to develop a framework for CEQ review of agency 
NEPA procedures to ensure agency discretion is not boundless; require 
agencies to affirm their procedures were reviewed for consistency by 
CEQ; and require that Federal agencies make revisions to their 
procedures only with public notice and comment. While such changes are 
beyond the scope of this rulemaking, CEQ notes that agencies cannot 
make changes to their NEPA procedures without consulting with CEQ, 
providing notice and comment, and receiving a determination from CEQ 
that the proposed changes are consistent with NEPA and the CEQ 
regulations. See 40 CFR 1507.3(b)(1)-(2). CEQ will consider the ideas 
included in these comments in the development of its Phase 2 
rulemaking.
iii. Rationale for Final Rule
    The 2020 final rule did not include a detailed rationale for 
adoption of the ``ceiling'' provisions, although the 2020 proposed rule 
stated that they were intended to ``prevent agencies from designing 
additional procedures that will result in increased costs or delays.'' 
(85 FR 1693). The 2020 Final Rule Response to Comments document also 
stated that ``it is important that agencies do not revise their 
procedures in a way that will impede integration'' with other 
environmental review requirements or ``otherwise result in heightened 
costs or delays.'' \33\ CEQ also asserted in the 2020 Final Rule 
Response to Comments that it had the authority to place limits on 
agency procedures pursuant to 42 U.S.C. 4344(3) and E.O. 11991.\34\
---------------------------------------------------------------------------

    \33\ CEQ, Update to the Regulations Implementing the Procedural 
Provisions of the National Environmental Policy Act Final Rule 
Response to Comments, p. 436 (June 30, 2020), https://www.regulations.gov/document/CEQ-2019-0003-720629.
    \34\ Id.
---------------------------------------------------------------------------

    CEQ has reexamined the rationales provided for the 2020 rule and 
the

[[Page 23461]]

comments received on the Phase 1 NPRM and determined that finalizing 
the changes as proposed in the Phase 1 NPRM is appropriate. Doing so 
clarifies that agencies can and should continue to apply their existing 
NEPA procedures, consistent with the CEQ regulations in effect, while 
CEQ completes its review of and revisions to the 2020 regulations in 
its Phase 2 rulemaking. The final rule makes clear that agencies have 
this discretion by removing the ceiling provisions. The removal of the 
ceiling provisions allows agencies to exercise their discretion to 
develop and implement procedures beyond the CEQ regulatory 
requirements; however, agency procedures cannot conflict with current 
CEQ regulations. More generally and as discussed further below, these 
changes to Sec.  1507.3 will promote better decisions, improve 
environmental and community outcomes, and spur innovation that advances 
NEPA's goals by giving agencies the flexibility to follow their 
existing procedures or develop new or revised NEPA procedures that best 
meet the agencies' statutory missions and enable integration of 
environmental considerations in their decision making in a flexible 
manner. Giving agencies the flexibility to innovate should increase the 
likelihood that agencies identify process improvements and efficiencies 
that benefit Federal agencies as well as project sponsors and other 
stakeholders, including the public. CEQ disagrees with the 2020 rule's 
assertions and some NPRM commenters' contentions that this change will 
result in increased costs and delays due to conflicts among agency NEPA 
procedures or between agency NEPA procedures and the CEQ regulations. A 
primary purpose of the longstanding process by which CEQ engages with 
agencies in the development of their NEPA procedures is to identify and 
resolve potential conflicts and ensure that agency-specific procedures 
conform with the CEQ regulations. Furthermore, the public has an 
opportunity to provide public comments on proposed agency NEPA 
procedures before they are finalized. These processes facilitate 
identification of potential conflicts, costs, or delays and give 
agencies opportunities to balance various policy and process 
considerations before establishing or changing their procedures.
    The final rule's changes to Sec.  1507.3 also will better achieve 
NEPA's objectives and statutory requirements. First, while CEQ is 
responsible for interpreting and overseeing NEPA implementation, all 
agencies are charged with administering the statute's requirements. See 
42 U.S.C. 4332. NEPA expressly instructs agencies to develop methods 
and procedures in consultation with CEQ to ensure consideration of 
``environmental amenities and values'' in decision making. See 42 
U.S.C. 4332(2)(B). NEPA and the CEQ regulations, see 40 CFR 1507.3, 
call for agencies to take responsibility for their own procedures, even 
while consulting with CEQ. Agencies should be allowed to pursue the 
environmental aims of the statute, including by adopting and carrying 
out procedures that require additional or more specific environmental 
analysis than called for by the CEQ regulations. Furthermore, CEQ plays 
a critical role in reviewing and determining that an agency's NEPA 
procedures comply with NEPA and the CEQ regulations, which ensures that 
agency procedures integrate the NEPA process with agency decision 
making so that the public and decision makers are informed of the 
environmental consequences of agency decisions. See 40 CFR 1507.3(b), 
(e).
    Second, removing these ceiling provisions improves alignment of the 
NEPA regulations with NEPA's statutory text, which directs agencies to 
pursue the statute's goals ``to the fullest extent possible.'' 42 
U.S.C. 4332. The legislative history of NEPA indicates that the intent 
behind this statement was to ensure that all Federal agencies comply 
with NEPA as well as their statutory authorities and that ``no agency 
shall utilize an excessively narrow construction of its existing 
statutory authorizations to avoid compliance.'' \35\ This final rule 
provides agencies the flexibility to comply with NEPA, including by 
allowing agencies to adopt agency-specific NEPA procedures that align 
with their unique missions, circumstances, and statutory mandates.
---------------------------------------------------------------------------

    \35\ H. Rep. No. 91-765, at 9-10 (1969).
---------------------------------------------------------------------------

    Agencies may more fully pursue NEPA's twin aims to consider 
environmental effects and inform the public by establishing procedures 
that provide for additional environmental review and public 
participation or evaluation of certain issues such as air and water 
quality impacts, environmental justice considerations, or habitat 
effects. See 42 U.S.C. 4332. Agency procedures could include more 
specific requirements for the development of environmental assessments 
to facilitate the decision-making process, such as requiring multiple 
alternatives or documentation of alternatives considered but dismissed. 
For example, the National Oceanic and Atmospheric Administration 
(NOAA), which, among other things, is responsible for the stewardship 
of the Nation's ocean resources and their habitat, might adopt agency-
specific procedures on the analysis of impacts to species or habitats 
protected by the Endangered Species Act, the Marine Mammal Protection 
Act, or the Magnuson-Stevens Fishery Conservation and Management Act, 
as well as other vulnerable marine and coastal ecosystems. Removing the 
ceiling provision allows agencies to include such specificity, which 
can help lead to more effective reviews and provide efficiencies by 
fostering better integration of NEPA with other statutory requirements.
    Third, upon further consideration, CEQ no longer agrees with the 
assertions in the 2020 Final Rule Response to Comments that setting the 
CEQ regulations as the ceiling puts agencies in the best position to 
reduce costs and delays in NEPA implementation, or that doing so will 
promote integration of NEPA and compliance with other environmental 
review requirements. The 2020 rule did not provide any support for the 
assertion that these changes would achieve those goals. It also did not 
explain why the process laid out in Sec.  1507.3--requiring agencies to 
collaborate with CEQ on the development of their NEPA procedures, seek 
public comment on proposed procedures, and obtain CEQ conformity 
determinations--does not sufficiently advance the goal of ensuring an 
efficient and effective NEPA review. CEQ has reconsidered the ceiling 
provisions in light of this longstanding process, CEQ's experience 
implementing it, and the comments CEQ received on the proposed rule, 
and determined that the ceiling provisions create unnecessary rigidity 
in light of other mechanisms to promote consistency and coordination, 
and reduce costs and delays. CEQ also finds that the processes included 
in the 1978 regulations effectively promoted the integration of NEPA 
and other environmental reviews. See 40 CFR 1502.25 (2019). CEQ's 
review of agency procedures allows CEQ and the agency to discuss the 
rationale for any new or additional procedures or requirements proposed 
by agencies, and allows CEQ to promote consistency across the Federal 
Government, as appropriate, without limiting agencies' flexibility to 
do more than the CEQ regulations describe or otherwise inhibit 
innovation, including innovation and

[[Page 23462]]

flexibilities that can improve agency efficiency.
iv. Deadline Extension
    As explained in section I.D, CEQ issued an interim final rule in 
June 2021 that extended by 2 years--to September 14, 2023--the deadline 
in 40 CFR 1507.3(b) for agencies to propose changes to their existing 
agency-specific NEPA procedures to make them consistent with the 
current CEQ regulations. The interim final rule explained that the 
extension would avoid agencies having to propose changes to their 
implementing procedures on a tight deadline to conform to regulations 
that are undergoing extensive review and will likely change in the near 
future.
    The Administrative Procedure Act did not require CEQ to provide 
notice and an opportunity for public comment prior to extending the 
deadline. See, e.g., 86 FR 34156. Nevertheless, CEQ requested comments 
on the interim final rule and received approximately 20 written 
submissions. CEQ has provided summaries and responses to these comments 
in the response to comments document posted to the docket for this 
rulemaking. For the reasons set forth in the interim final rule and the 
response to comment document, and having now considered public 
comments, CEQ is finalizing in this rule the deadline extension 
originally made effective in the interim final rule.

C. Definition of ``Effects'' or ``Impacts'' (Sec.  1508.1(g))

i. Regulatory History and Proposed Changes
    NEPA requires Federal agencies to examine the environmental effects 
of their proposed actions and alternatives and any adverse 
environmental effects that cannot be avoided if the proposed action is 
implemented. 42 U.S.C. 4332(2)(C). The 1978 regulations defined 
``effects'' to include ``direct effects'' and ``indirect effects'' and 
separately defined ``cumulative impact.'' See 40 CFR 1508.7, 1508.8 
(2019). Section 1508.8(a) of the 1978 regulations defined ``direct 
effects'' as effects ``caused by the action and occur at the same time 
and place.'' Section 1508.8(b) of the 1978 regulations defined 
``indirect effects'' as effects ``caused by the action and are later in 
time or farther removed in distance, but are still reasonably 
foreseeable.'' Section 1508.8 of the 1978 regulations also provided 
examples of indirect effects and effects generally, and noted that the 
terms ``effects'' and ``impacts'' as used in the regulations were 
synonymous. The 1978 regulations defined ``cumulative impact'' as ``the 
impact on the environment which results from the incremental impact of 
the action when added to other past, present, and reasonably 
foreseeable future actions regardless of what agency (Federal or non-
Federal) or person undertakes such other actions.'' Id. Sec.  1508.7. 
The definition also stated that cumulative impacts ``can result from 
individually minor but collectively significant actions taking place 
over a period of time.'' Id.
    The 2020 rule made several major changes to these definitions. The 
2020 rule provided a single definition for ``effects'' or ``impacts,'' 
deleting the subcategorization of ``direct'' and ``indirect'' effects 
and the definition of ``cumulative impacts.'' The definition includes 
introductory text followed by three paragraphs designated (g)(1) 
through (3). The first clause of the introductory text provides that 
``[e]ffects or impacts means 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 second clause provides that the definition of 
``effects'' or ``impacts'' includes ``those effects that occur at the 
same time and place as the proposed action or alternatives and may 
include effects that are later in time or farther removed in distance 
from the proposed action or alternatives.'' The phrase ``those effects 
that occur at the same time and place as the proposed action or 
alternatives,'' is drawn verbatim from the description of direct 
effects in the 1978 regulations' definition of effects. The clause 
``may include effects that are later in time or farther removed in 
distance,'' is a modified version of the language describing indirect 
effects in the 1978 regulations' definition of effects; the 2020 rule 
qualified this description by adding ``may include.'' 40 CFR 1508.1(g) 
(2020) (emphasis added).
    Following the introductory text, paragraph (g)(1) includes language 
identifying examples of effects, which is modified from the last 
paragraph of the 1978 definition of ``effects.'' Paragraph (g)(2) 
includes new text providing that a ```but for' causal relationship is 
insufficient to make an agency responsible for a particular effect 
under NEPA'' and that agencies generally should not consider effects 
``if they are remote in time, geographically remote, or the product of 
a lengthy causal chain.'' This paragraph also explicitly excludes 
``effects that the agency has no ability to prevent due to its limited 
statutory authority or would occur regardless of the proposed action.'' 
Paragraph (g)(3) requires an agency's analysis of effects to be 
consistent with the definition of ``effects'' and explicitly repeals 
the definition of cumulative impact.
    In the NPRM, CEQ proposed to revise the definition of ``effects'' 
or ``impacts'' in Sec.  1508.1(g) to restore the substance of the 
definitions of ``effects'' and ``cumulative impact'' contained in the 
1978 regulations. The NPRM also proposed to continue to provide one 
combined definition for the two terms, rather than reinstating separate 
definitions for ``effects'' and ``cumulative impacts'' as existed in 
the 1978 regulations, because separate definitions are unnecessary as 
reflected in the 1978 regulation's statement that the terms ``impacts'' 
and ``effects'' were synonymous.
    The NPRM proposed the following specific amendments to Sec.  
1508.1(g). First the NPRM proposed to revise the introductory paragraph 
in Sec.  1508.1(g) to define ``effects'' or ``impacts'' as ``changes to 
the human environment from the proposed action or alternatives'' that 
include ``direct effects,'' ``indirect effects,'' and ``cumulative 
effects'' as described in Sec.  1508.1(g)(1) through (3), and remove 
the phrase ``that are reasonably foreseeable and have a reasonably 
close causal relationship.''
    Second, the NPRM proposed to revise each of the paragraphs (g)(1) 
through (3) and add a fourth paragraph (g)(4). Proposed paragraphs 
(g)(1) through (3) describe ``direct effects,'' ``indirect effects,'' 
and ``cumulative effects,'' and proposed paragraph (g)(4) provides a 
list of examples of effects similar to paragraph (g)(1) of the 2020 
regulation. The NPRM proposed to move text included in the introductory 
paragraph of the 2020 regulations, but which originated in the 1978 
regulations, into the relevant paragraphs. Specifically, the phrase 
``effects that occur at the same time and place'' would be moved to the 
description of direct effects in paragraph (g)(1), and the phrase 
``effects that are later in time or farther removed in distance'' would 
be moved to the description of indirect effects in paragraph (g)(2). 
The definition of cumulative effects in paragraph (g)(3) is made up of 
the language defining ``cumulative impact'' in the 1978 regulations 
with non-substantive edits for consistency with the current 
regulations. Paragraph (g)(4) includes proposed amended text from 
paragraph (g)(1) of the 2020 regulation providing a list of examples of 
effects. In paragraph (g)(4), the NPRM proposed to restore the language 
of the 1978 regulations and

[[Page 23463]]

delete minor and non-substantive modifications made in the 2020 rule. 
Following the proposed amendments, the text in paragraph (g)(4) would 
be identical to the final sentence of the effects definition in the 
1978 regulation.
    Third, the NPRM proposed to delete in its entirety the text 
included in paragraph (g)(2) of the 2020 regulations, which states that 
a ``but for'' causal relationship is insufficient to make an agency 
responsible for a particular effect under NEPA; generally excludes from 
the definition of ``effects'' those that are remote in time, 
geographically remote, or the product of a lengthy causal chain; and 
fully excludes effects that the agency has no ability to prevent due to 
its limited statutory authority or that would occur regardless of the 
proposed action.
    Fourth, the NPRM proposed to delete in its entirety the text 
included in paragraph (g)(3) of the 2020 regulations, which requires 
agencies to analyze effects consistent with the definition of 
``effects'' and explicitly repeals the definition of ``cumulative 
impact'' from the 1978 regulations.
    Finally, CEQ notes that the NPRM did not propose to include in the 
definition of ``effects'' or ``impacts'' the statement in the 1978 
regulations' definition of ``effects'' that ``[e]ffects and impacts as 
used in these regulations are synonymous.'' See 40 CFR 1508.8(b) 
(2019). Because the NPRM proposed to continue to provide a single 
definition for ``effects'' or ``impacts,'' including that statement 
would be unnecessary and redundant.
ii. Summary of NPRM Comments on the Definition of ``Effects''
General Comments
    CEQ received numerous comments on the proposed changes to Sec.  
1508.1(g), both expressing support for and opposition to the proposed 
changes. Many commenters supported the proposed revisions and restoring 
the concepts of direct, indirect, and cumulative effects or impacts to 
the regulations. Commenters expressed support for the proposed changes 
for a variety of reasons, including because the proposed changes better 
reflect NEPA principles and case law; help ensure the proper scope of 
analysis that NEPA requires, including analysis of effects on climate 
change, communities with environmental justice concerns, and wildlife; 
and provide clarity and consistency for the environmental review 
process. Many of these commenters identified the changes to the 
definitions of effects and impacts as the most damaging changes put in 
place by the 2020 rule. Some commenters specifically pointed to the 
importance of considering indirect and cumulative effects for 
addressing environmental justice concerns and climate change in 
environmental reviews, consistent with E.O. 13990 and the 
Administration's priority to assess and mitigate climate pollution. 
Commenters also contended that central to an agency considering whether 
an action will cause or contribute to undue burdens to a community is a 
review of cumulative impacts resulting from past, present, and 
reasonably foreseeable future actions and effects in a project area, 
including the impacts of climate change. Other commenters raised 
concerns about the 2020 rule's removal of language on direct, indirect, 
and cumulative effects and impacts and emphasized the importance of 
considering these categories of effects on wildlife and other natural 
resources. Some commenters agreed with the NPRM that the proposed 
changes will provide clarity to agencies, practitioners, and the public 
by helping agencies and the public evaluate and understand the full 
scope of reasonably foreseeable effects in NEPA reviews.
    CEQ also received multiple comments expressing overall opposition 
to the proposed changes. Some commenters raised concerns that restoring 
the approach to impacts and effects in the 1978 regulations would lead 
to wider and more complex analysis in the NEPA process, require 
evaluation of impacts that are outside the scope of the decision, and 
go beyond the intent of the statute. These commenters stated that the 
proposed changes to the definition of effects will not improve NEPA 
compliance or agency certainty. Some commenters expressed the view that 
the proposed changes will result in undue burden on agencies, increased 
costs and litigation, and lengthier review times. Some commenters 
indicated that if CEQ restores the definition of effects in the final 
rule then the definition should include sideboards or other bounding 
criteria to prevent misuse, unnecessary delays, and increased costs. 
These commenters contended that requiring agencies to expend time and 
resources on analyzing and disclosing speculative effects adds time and 
cost to the NEPA process without providing value to decision makers or 
the public. Some commenters expressed concern specifically about the 
proposed rule's potential to delay critical infrastructure projects.
    As discussed further in section II.C.iii and in the Phase 1 
Response to Comments, CEQ has considered the comments in support of and 
opposed to the changes to the definition of ``effects'' in the proposed 
rule. With respect to the potential impacts to NEPA review timelines, 
CEQ is not aware of--and commenters did not provide--data supporting 
the claim that evaluation of direct, indirect, and cumulative effects 
necessarily leads to longer timelines, especially given the long 
history of agency and practitioner experience with analyzing these 
categories of impacts and effects under the 1978 regulations, as well 
as modern techniques leveraging science and technology to make 
environmental reviews comprehensive yet efficient.\36\ CEQ considers 
the importance of clear and robust analysis of effects to informed 
agency decision making to outweigh the speculative potential for 
shorter NEPA documents or timeframes.
---------------------------------------------------------------------------

    \36\ For example, CEQ's NEPA.gov website provides a list of 
greenhouse gas (GHG) accounting tools, https://ceq.doe.gov/guidance/ghg-accounting-tools.html, and the Environmental Protection Agency's 
(EPA's) NEPAssist tool, https://www.epa.gov/nepa/nepassist, a 
web[hyphen]based application that draws environmental data 
dynamically from EPA's Geographic Information System databases and 
web services and provides immediate screening of environmental 
assessment indicators for a user[hyphen]defined area of interest.
---------------------------------------------------------------------------

    Furthermore, the deletion of the definition of ``cumulative 
impacts'' in the 2020 rule did not absolve agencies from evaluating 
reasonably foreseeable cumulative effects, and therefore, it is unclear 
that the deletion would narrow the scope of effects analyzed by 
agencies. Numerous commenters on the NPRM noted that the 2020 rule's 
changes to the definition of ``effects'' created uncertainty and 
confusion in agencies implementing NEPA. CEQ expects that substantively 
restoring these definitions, which were in place and in use for 
decades, will better clarify the effects agencies need to consider in 
their NEPA analyses and could help avoid delays or deficiencies in NEPA 
reviews caused by agency uncertainty over the proper scope of effects 
analysis. Furthermore, conducting a robust consideration of all 
reasonably foreseeable effects of a proposed action is not a delay; 
rather, doing so constitutes sound decision making and fulfills NEPA's 
statutory mandate. See 42 U.S.C. 4332. Therefore, based on CEQ's 
experience and expertise, this final rule strikes the proper balance of 
promoting informed decision making and completing environmental reviews 
expeditiously.
    CEQ also considered comments regarding the potential for increased 
litigation. Both commenters in favor of and opposed to the NPRM's 
proposal to restore language from the 1978 regulations on direct, 
indirect, and

[[Page 23464]]

cumulative effects raised concerns over increased litigation. CEQ 
considers the effect of the proposed changes on litigation to be 
difficult to predict, and therefore not a useful factor in determining 
the approach for this final rule.
Consistency With the NEPA Statute
    Some commenters stated that Federal agencies have a statutory 
obligation to assess all of the relevant environmental effects of their 
proposed actions and argue that restoring the 1978 definition of 
``effects'' would align the regulations with longstanding agency 
practice and judicial precedent. Commenters expressed the view that 
NEPA's plain language requires Federal agencies to address impacts to 
future as well as present generations, that this statutory mandate 
cannot be met without analyzing cumulative and indirect effects, and 
that courts have consistently affirmed this legal obligation. Other 
commenters stated that the changes to the definition of effects and 
impacts made by the 2020 rule are at odds with the statute's plain 
language, clear congressional intent, and decades of legal precedent 
and have created confusion and uncertainty.
    Other commenters objected to the proposed rule contending that 
because NEPA does not include the terms ``direct,'' ``indirect,'' or 
``cumulative'' effects, including those terms in the regulations is 
contrary to the plain language of the statute. Commenters also 
contended that the 2020 rule's elimination of those terms and 
replacement with a simplified definition of ``effects'' focused on 
reasonable foreseeability is in better alignment with NEPA's statutory 
language, the goals of the statute, and case law.
    The restoration of direct, indirect, and cumulative effects as part 
of the definition of ``effects'' better reflects NEPA's statutory 
purpose, policy, and intent and is more consistent with the case law 
interpreting NEPA's requirements. NEPA sets forth a policy to encourage 
productive and enjoyable harmony between humans and their environment; 
to promote efforts that will prevent or eliminate damage to the 
environment and biosphere, and stimulate the health and welfare of 
people; and to enrich the understanding of the ecological systems and 
natural resources important to the Nation. 42 U.S.C. 4321. Accordingly, 
the U.S. Supreme Court has stated that NEPA promotes a ``sweeping 
commitment to `prevent or eliminate damage to the environment and 
biosphere' by focusing Government and public attention on the 
environmental effects of proposed agency action.'' Marsh v. Oregon 
Natural Resources Council, 490 U.S. 360, 371 (1989) (citing 42 U.S.C. 
4321). The Court explained that NEPA requires agencies to take a ``hard 
look'' at the environmental effects of their planned actions, including 
indirect effects relevant to the dam project at issue in the case, such 
as potential changes in downstream water temperature that could reduce 
species survival. Id. at 374, 385.
    Similarly, courts have long applied the concept of cumulative 
impacts or effects as identified in the 1978 regulations to NEPA 
analysis. See, e.g., NRDC v. Hodel, 865 F.2d 288, 297-98 (D.C. Cir. 
1988) (stating, ``NEPA, as interpreted by the courts, and CEQ 
regulations both require agencies to consider the cumulative impacts of 
proposed actions,'' and holding that NEPA required the Secretary of the 
Interior to consider the cumulative impacts of offshore development in 
different areas of the Outer Continental Shelf). Even before CEQ issued 
regulations defining ``effects'' to include cumulative effects, the 
U.S. Supreme Court had interpreted NEPA to require consideration of 
``cumulative or synergistic environmental impact.'' Kleppe v. Sierra 
Club, 427 U.S. 390, 410 (1976). Although this case focuses on 
programmatic review, the Court recognized the importance of considering 
the collective environmental effects of agency actions to inform the 
decision-making process. Id. (``Only through comprehensive 
consideration of pending proposals can the agency evaluate different 
courses of action.'').\37\
---------------------------------------------------------------------------

    \37\ See also CEQ's 1970 interim guidelines, interpreting the 
requirement in section 102(2)(C)(iv) to mean that ``[t]he 
relationship between local short-term uses of man's environment and 
the maintenance and enhancement of long-term productivity . . . 
requires the agency to assess the action for cumulative and long-
term effects from the perspective that each generation is trustee of 
the environment for succeeding generations.'' 35 FR 7390, 7392 (May 
12, 1970) (emphasis added).
---------------------------------------------------------------------------

Comments on Department of Transportation v. Public Citizen
    Some commenters agreed with CEQ's statements in the NPRM about 
Department of Transportation v. Public Citizen, 541 U.S. 752 (2004), 
contending that the 2020 rule's interpretation of the decision to 
justify limits on effects analysis was incorrect and that the changes 
in the Phase 1 proposed rule align with the Supreme Court's decision. 
Commenters also expressed the view that the 2020 rule's reliance on or 
interpretation of Public Citizen to impose a categorical limitation on 
the scope of effects that agencies may permissibly analyze was 
fundamentally misguided because the decision identified the effects 
that an agency must consider, but did not limit the effects that an 
agency may consider. Commenters also expressed the view that the 
holding in Public Citizen is limited to the narrow circumstance in 
which an agency has no discretion to alter the activity that causes the 
effects in question. Additional commenters contended that if the Court 
intended to exclude cumulative effects or impacts from environmental 
review, the Court would have clearly said so. Based on these 
interpretations of Public Citizen, these commenters generally supported 
the NPRM's proposed definition of effects and requested that CEQ 
clarify that the case applies only in limited circumstances.
    Commenters who disagreed with the NPRM's interpretation of Public 
Citizen contended that the Court stated clearly that NEPA requires a 
reasonably close causal relationship between the environmental effect 
and alleged cause and that a ``but for'' causal relationship is 
insufficient to make an agency responsible for a particular effect 
under NEPA. Commenters also argued that the 2020 rule aligned with 
Public Citizen, because the Court held that consideration of actions 
beyond an agency's statutory authority serves no purpose and fails to 
satisfy NEPA's rule of reason. Commenters also asserted that the NPRM 
did not adequately explain CEQ's change in interpretation of Public 
Citizen in light of the 2020 rule's heavy reliance upon it.
    CEQ has reexamined its interpretation of and reliance on the Public 
Citizen decision in the 2020 rule. The 2020 rule relied upon the 
decision to provide a broadly applicable statement on effects analysis 
that is not compelled by the opinion itself and that does not comport 
with CEQ's view of the proper scope of effects analysis in line with 
NEPA's informational purpose and longstanding agency practice and 
discretion. At issue in Public Citizen was whether the Federal Motor 
Carrier Safety Administration (FMCSA) had appropriately excluded from 
its NEPA analysis effects from Mexican trucks entering the United 
States that would occur if the President followed through on his 
intention to lift a moratorium on those trucks following FMCSA 
promulgating vehicle safety regulations. The Supreme Court explained 
that NEPA and the 1978 regulations are governed by a ``rule of 
reason.'' Id. at 767. FMCSA had no ability to deny certification if 
trucks met minimum requirements, and as a result, the Supreme Court 
held that FMCSA had

[[Page 23465]]

lawfully defined the scope of its analysis, and that it was not 
arbitrary and capricious for FMCSA to exclude from its NEPA analysis 
effects that would occur if the President lifted the moratorium. Id. at 
758-59.
    In reaching that conclusion, the Court rejected application of ``a 
particularly unyielding variation of `but for' causation, where an 
agency's action is considered a cause of an environmental effect even 
when the agency has no authority to prevent the effect.'' Id. at 767. 
The Court stated that ``NEPA requires `a reasonably close causal 
relationship' between the environmental effect and the alleged cause.'' 
Id. And then it explained that ``inherent in NEPA and its implementing 
regulations is a `rule of reason,' which ensures that agencies 
determine whether and to what extent to prepare an EIS based on the 
usefulness of any new potential information to the decisionmaking 
process.'' Id. It further explained that ``it would . . . not satisfy 
NEPA's `rule of reason' to require an agency to prepare a full EIS due 
to the environmental impact of an action it could not refuse to 
perform. Put another way, the legally relevant cause of the entry of 
the Mexican trucks is not FMCSA's action, but instead the actions of 
the President in lifting the moratorium and those of Congress in 
granting the President this authority while simultaneously limiting 
FMCSA's discretion.'' Id. at 769.
    The 2020 rule quoted the Court's statement on ``but for'' causation 
as a categorical limitation on effects analysis without recognizing the 
factual and legal context in which the statement was made, including 
the statements that immediately surrounded it. In fact, the Court tied 
its analysis of ``but for'' causation to a ``critical feature'' of the 
case--that FMCSA had no statutory authority to stop the process by 
which the trucks would operate. The Court explained that requiring 
FMCSA to consider the environmental impacts of those operations as 
effects of its action would violate the ``rule of reason,'' because the 
consideration would not fulfill NEPA's purpose of informing the 
decision maker. See id. at 768-69. Moreover, the Court affirmed FMCSA's 
consideration of effects under the 1978 regulations. See id. at 770. 
The Court did not hold that agencies may not consider a broader range 
of effects in other circumstances. The Court's focus was on situations 
``where an agency has no ability to prevent a certain effect due to its 
limited statutory authority.'' Id. The 2020 rule could be read to apply 
universally the proximate causation principle of tort law when 
determining the scope of their NEPA analyses. This result is not 
compelled by the Public Citizen decision and is in significant tension 
with the Supreme Court's recognition that tort law and NEPA are 
governed by different principles that serve different policy 
objectives. See Metro. Edison Co. v. People Against Nuclear Energy, 460 
U.S. 766, 775, FN 7 (1983). Instead, the Court held that FMCSA's 
effects analysis in the specific factual and legal context of its 
proposed action was reasonable and not arbitrary and capricious.
    For these reasons, CEQ has reconsidered its reasoning and approach 
taken in the 2020 rule and does not deem it useful to include the 
``reasonably close causal relationship'' and ``but for'' language drawn 
from Public Citizen, which dealt with a unique context in which an 
agency had no authority to direct or alter an outcome, in the broadly 
applicable NEPA regulations. Doing so inappropriately transforms a 
Court holding affirming an agency's exercise of discretion in a 
particular factual and legal context into a rule that could be read to 
limit agency discretion. Instead, as further discussed below, agencies 
are better guided by the longstanding principle of reasonable 
foreseeability and the rule of reason in implementing NEPA's 
directives.
Comments on Reasonably Foreseeable and Reasonably Close Causal 
Relationship
    Some commenters supported the removal of the 2020 language 
contending that it limits effects analysis to effects that are 
``reasonably foreseeable and have a reasonably close causal 
relationship'' and because consequential reasonably foreseeable 
environmental effects may occur remote in time or place from the 
original action or be the product of a causal chain; for example, toxic 
releases into air or water and greenhouse gas emissions that contribute 
to climate change often occur remote in time or place from the original 
action or are a product of a causal chain. As such, these commenters 
stated that restoring the definition of effects to the 1978 regulations 
would provide for more sound decision making. Commenters also stated 
that the 2020 regulations' definition of ``effects'' requiring a close 
causal relationship potentially narrowed and improperly limited the 
scope of effects agencies would consider for proposed Federal actions. 
Commenters specifically pointed to the ``but for'' language in the 2020 
regulations as adding uncertainty and noted that, under the 1978 
regulations, agencies shared an understanding of how to assess the 
effects of a proposed action based on agency procedures and case law.
    On the other hand, commenters opposing changes to the 2020 rule's 
definition of ``effects'' argued that limiting the NEPA analysis to 
those effects that are reasonably foreseeable and have a reasonably 
close causal relationship to the proposed action is in line with common 
sense and jurisprudence. Others emphasized that the 2020 definition 
reasonably limits the scope of potential effects analysis and prevents 
reviews from considering impacts that bear little or no relationship to 
the proposed action, and therefore improves clarity and relevance of 
NEPA documents. These commenters asserted that the 2020 rule's addition 
of ``reasonably foreseeable and reasonably close causal relationship'' 
made a practical clarification that may reduce unnecessary analysis and 
inefficiencies. Other commenters suggested that, if CEQ reintroduces 
direct, indirect, and cumulative effects, the rule should clarify that 
these effects are limited to those that are ``reasonably foreseeable.''
    CEQ has reexamined the phrase ``reasonably close causal 
relationship,'' which the 2020 rule added to the definition of 
``effects'' in part on the basis that consideration of effects should 
be limited by proximate cause principles from tort law.\38\ CEQ now 
considers this phrase unnecessary and unhelpful because an agency's 
ability to exclude effects too attenuated from its actions is 
adequately addressed by the longstanding principle of reasonable 
foreseeability that has guided NEPA analysis for decades. See Robertson 
v. Methow Valley Citizens Council, 490 U.S. 332, 356 (1989). See also 
Sierra Club v. FERC, 867 F.3d 1357, 1371 (D.C. Cir. 2017) (citing 
EarthReports, Inc. v. FERC, 828 F.3d 949, 955 (D.C. Cir. 2016)). 
Furthermore, CEQ no longer deems it necessary to import principles of 
tort law into the NEPA regulations. Environmental review under NEPA 
serves different purposes, such as guiding sound agency decision making 
and future planning, that may reasonably entail a different scope of 
effects analysis than the distinct tort law context. See Metro. Edison 
Co., 460 U.S. at 775, FN 7 (1983) (``[W]e do not mean to suggest that 
any cause-effect relation too attenuated to merit damages in a tort 
suit would also be too attenuated to merit notice in an EIS; nor do we 
mean to suggest the converse. In the context of both tort law and NEPA, 
courts must look to the underlying policies or legislative intent in 
order to draw a manageable line between those causal

[[Page 23466]]

changes that may make an actor responsible for an effect and those that 
do not.''). Keeping the 2020 limitation also would suggest that agency 
NEPA practitioners are required to apply a tort law legal standard 
where they would still have to exercise professional judgement in 
determining the scope of the effects analysis. CEQ is removing the 
phrase ``reasonably close causal relationship'' from the definition of 
``effects''; the definition will continue to include the phrase 
``reasonably foreseeable'' consistent with longstanding interpretation 
to allow agencies the flexibility to conduct appropriate effects 
analysis in line with their discretion and NEPA's requirements.
---------------------------------------------------------------------------

    \38\ 85 FR 43304 (July 16, 2020).
---------------------------------------------------------------------------

Comments on Potential Phase 2 Changes
    CEQ also requested public comments on whether a Phase 2 rulemaking 
should provide more specificity about the manner in which agencies 
should analyze certain categories of effects. In response, some 
commenters suggested that the Phase 2 rulemaking should address how 
agencies address impacts from climate change and provide more 
specificity about how agencies analyze environmental justice impacts. 
Others emphasized that a Phase 2 rule should make the effects analysis 
more objective and less speculative or provide additional clarification 
to the definition of effects to produce more effective and focused 
environmental reviews. Some commenters requested CEQ issue guidance on 
analysis of effects, and some indicated that guidance might be more 
efficient than updating the regulations further in a Phase 2 rule. CEQ 
is considering these comments in the development of its Phase 2 
rulemaking and its guidance on assessing greenhouse gas emissions and 
climate change in environmental reviews.
iii. Rationale for Final Rule
    The final rule makes the changes proposed in the NPRM with minor 
modification. The final rule revises the introductory paragraph of 
Sec.  1508.1(g) defining ``effects'' and ``impacts'' as ``changes to 
the human environment from the proposed action or alternatives that are 
reasonably foreseeable.'' The NPRM did not include the clause ``that 
are reasonably foreseeable,'' but the final rule retains this clause in 
response to comments. Doing so is consistent with the preamble to the 
NPRM, which consistently states that direct, indirect, and cumulative 
effects must be reasonably foreseeable. 86 FR 55765-67. While the NPRM 
proposed to remove the clause from the definition because reasonable 
foreseeability has always been central to defining the scope of 
effects, after considering comments, CEQ agrees that this clause 
enhances clarity in line with longstanding agency practice and NEPA 
case law. Therefore, CEQ has determined to retain this phrase in the 
final rule.
    The final rule otherwise makes the changes as proposed in the NPRM. 
CEQ is including direct, indirect, and cumulative effects as part of 
the definition of ``effects'' or ``impacts'' to avoid disruption and 
uncertainty caused by the 2020 rule and clarify that agencies should 
continue to engage in the context-specific inquiry they have undertaken 
for more than 40 years to identify reasonably foreseeable effects of a 
proposed action and its alternatives, providing for sound decision 
making. The restoration of ``cumulative impacts'' from the 1978 
regulations to include cumulative effects as a component of the 
definition of ``effects'' is a non-substantive change, as the 1978 
regulations specifically provided that the terms ``impacts'' and 
``effects'' are synonymous. Agencies should treat cumulative effects 
under the final rule in the same fashion as they treated cumulative 
impacts under the 1978 regulations.
    As discussed in responding to comments above, restoring language on 
direct, indirect, and cumulative effects better promotes NEPA's 
statutory purposes and is more consistent with the extensive NEPA case 
law. See 42 U.S.C. 4321-4332. Restoring these phrases to the 
regulations also is consistent with this Administration's policies to 
be guided by science and to address environmental protection, climate 
change, and environmental justice. See, e.g., E.O. 13990 \39\ and E.O. 
14008.\40\ Returning to the approach in the 1978 regulations provides 
regulatory consistency and stability for Federal agencies, affected 
stakeholders, and the public. CEQ is not returning to these definitions 
because this is what has always been done, but because longstanding CEQ 
and Federal agency experience and practice has demonstrated that these 
interpretations promote the aims of the NEPA statute and are practical 
to implement. These interpretations also reasonably reflect the plain 
meaning of the statutory phrase ``environmental impact,'' and 
explicitly capture the indirect and cumulative nature of many 
environmental impacts.
---------------------------------------------------------------------------

    \39\ Supra note 19.
    \40\ Supra note 22.
---------------------------------------------------------------------------

    CEQ is including direct, indirect, and cumulative effects as part 
of the definition of ``effects'' or ``impacts'' because they have long 
provided an understandable and effective framework for agencies to 
consider the effects of their proposed actions in a manner that is 
understandable to NEPA practitioners and the public. CEQ considers this 
approach to result in a more practical and easily implementable 
definition than the 2020 rule's definition of ``effects'' that 
explicitly captures the indirect and cumulative nature of many 
environmental effects, such as greenhouse gas emissions or habitat 
fragmentation. Upon further evaluation of the rationale for the 2020 
rule and the comments CEQ received on the NPRM, CEQ does not consider 
the tort law standards of ``close causal relationship'' and ``but for'' 
causation to be ones that provide more clarity or predictability for 
NEPA practitioners, agency decision makers, or the public. Furthermore, 
as discussed in this section, CEQ does not consider the existing case 
law interpreting the 1978 definition of ``effects'' to require that the 
NEPA regulations limit agency discretion to identify reasonably 
foreseeable effects under such a standard. CEQ also is removing the 
potential limitations on consideration of temporally or geographically 
removed environmental effects, effects that are a product of a lengthy 
causal chain, and ``effects that the agency has no ability to prevent 
due to its limited statutory authority or would occur regardless of the 
proposed action.'' These qualifications may unduly limit agency 
discretion and stating them as categorical rules that limit effects 
analyses is in tension with NEPA's directives to produce a detailed 
statement on the ``environmental impact of [a] proposed action,'' ``any 
adverse environmental effects which cannot be avoided,'' and ``the 
relationship between local short-term uses of man's environment and the 
maintenance and enhancement of long-term productivity.'' 42 U.S.C. 
4332(2)(C). Furthermore, this language could lead Federal agencies to 
omit from analysis or disclosure critical categories of reasonably 
foreseeable effects that are temporally or geographically removed, such 
as climate effects, frustrating NEPA's core purpose and Congressional 
intent.
    Although the 2020 rule preamble suggested that agencies could 
continue to consider indirect and cumulative effects,\41\ an agency 
could

[[Page 23467]]

misunderstand the language of the rule to prohibit considering indirect 
or cumulative effects of their proposed actions given the language in 
40 CFR 1508.1(g)(3): ``An agency's analysis of effects shall be 
consistent with this [definition of effects].'' Additionally, the 
definition included inconsistent directions to agencies--the 
introductory paragraph stated that effects ``may include effects that 
are later in time or farther removed in distance'' but paragraph (g)(2) 
stated that agencies generally should not consider effects if they are 
remote in time or geographically remote. CEQ considers the 
clarification that indirect and cumulative effects are included in the 
definition of effects critical to ensuring that agency decision makers 
have a complete view of reasonably foreseeable effects of their 
proposed actions.\42\
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    \41\ In responding to comments about potential effects on 
threatened and endangered species, the preamble to the 2020 rule 
explained that ``the final rule does not ignore cumulative effects 
on listed species.'' 85 FR 43304 (July 16, 2020). Similarly, the 
2020 Final Rule Response to Comments stated that the 2020 rule did 
not automatically exclude from analysis effects falling within the 
deleted definition of ``cumulative impact[s].'' CEQ, Update to the 
Regulations Implementing the Procedural Provisions of the National 
Environmental Policy Act Final Rule Response to Comments 467 (June 
30, 2020), https://www.regulations.gov/document/CEQ-2019-0003-720629.
    \42\ CEQ's longstanding position has been that cumulative 
effects analysis is ``critical'' for the purposes of evaluating 
project alternatives and developing appropriate mitigation 
strategies. See CEQ GHG guidance at https://ceq.doe.gov/guidance/ceq_guidance_nepa-ghg.html.
---------------------------------------------------------------------------

    Defining ``effects'' to include direct, indirect, and cumulative 
effects will not result in consideration of a limitless universe of 
effects. The consideration of effects has always been bounded by a 
reasonableness standard, and, as discussed above, the final rule will 
retain language on reasonable foreseeability. While CEQ understands the 
importance of predictability, it is also critical that analyses are 
complete and scientifically accurate to ensure that decision makers and 
the public are fully informed.
    Including direct and indirect effects in the definition of 
``effects'' ensures that NEPA analyses disclose both adverse and 
beneficial effects over various timeframes, providing important 
information to decision makers. For example, a utility-scale solar 
facility could have short-term direct effects, such as adverse 
construction and land impacts. The facility also could have long-term 
indirect beneficial effects, such as reductions in air pollution, 
including greenhouse gas emissions, from the renewable energy generated 
by the solar facility that displaces more greenhouse gas-intensive 
energy sources (such as coal or natural gas) as an electricity source 
for years or decades into the future. As another example, air 
pollution, including greenhouse gas emissions, released by fossil fuel 
combustion is often a reasonably foreseeable indirect effect of 
proposed fossil fuel extraction that agencies should evaluate in the 
NEPA process, even if the pollution is remote in time or geographically 
remote from a proposed action. An agency decision maker can make a more 
informed decision about how a proposed action aligns with the agency's 
statutory authorities and policies when she has information on the 
comparative potential air pollution effects and greenhouse gas 
emissions of the proposed action and alternatives, including the no 
action alternative. The final rule's definition of ``effects'' provides 
clarity and ensures that agencies disclose such indirect effects.
    CEQ also has reevaluated its position on cumulative effects and 
disagrees with the assertions in the 2020 rule that cumulative effects 
analyses divert agency resources from analyzing the most significant 
effects to effects that are irrelevant or inconsequential. Rather, 
consideration of reasonably foreseeable cumulative effects allows 
agencies and the public to understand the full scope of potential 
impacts from a proposed action, including how the incremental impacts 
of a proposed action contribute to cumulative environmental problems 
such as air pollution, water pollution, climate change, environmental 
injustice, and biodiversity loss. Science confirms that cumulative 
environmental harms, including repeated or frequent exposure to toxic 
air or water pollution, threaten human and environmental health and 
pose undue burdens on historically marginalized communities.\43\ CEQ 
does not consider such harms to be inconsequential or irrelevant, but 
rather critical to sound agency decision making. By restoring the 
phrase ``cumulative effects,'' this final rule will make clear that 
agencies must fully analyze reasonably foreseeable cumulative effects 
before Federal decisions are made.
---------------------------------------------------------------------------

    \43\ See, e.g., Mercedes A. Bravo et al., Racial Isolation and 
Exposure to Airborne Particulate Matter and Ozone in Understudied 
U.S. Populations: Environmental Justice Applications of Downscaled 
Numerical Model Output, 92-93 Env't Int'l 247 (2016) (finding that 
long-term exposure to particulate matter is associated with racial 
segregation, with more highly segregated areas suffering higher 
levels of exposure).
---------------------------------------------------------------------------

    CEQ continues to have the goal that environmental reviews should be 
efficient and effective and will continue to evaluate the NEPA process 
for opportunities to improve timeliness consistent with NEPA's 
purposes. However, CEQ disagrees with the assertion in the 2020 rule 
that requiring analysis of reasonably foreseeable cumulative effects 
causes unacceptably long NEPA processes. CEQ considers the disclosure 
of all reasonably foreseeable direct, indirect, and cumulative effects 
to be critical to the informed decision-making process required by 
NEPA, see, e.g., 42 U.S.C. 4332, such that the benefits of any such 
disclosure outweigh any potential for shorter NEPA documents or 
timeframes. Moreover, nothing in this final rule suggests that a well-
drafted NEPA document cannot be both concise and supported by thorough 
analysis. CEQ also disagrees with the 2020 rule's assertion that 
deleting reference to direct, indirect, and cumulative effects is 
necessary because agencies have devoted substantial resources 
categorizing effects as direct, indirect, or cumulative. 85 FR 43343. 
Nothing in the CEQ regulations requires agencies to categorize effects 
separately in this manner; instead, well-organized NEPA documents 
address the direct, indirect, and cumulative effects of particular 
resources in a cohesive and comprehensive manner. Agencies may discuss 
holistically all reasonably foreseeable direct, indirect, and 
cumulative effects, rather than delineating the categories in separate 
sections of a NEPA document, to facilitate the decision maker and the 
public's comprehensive understanding of the effects of the proposed 
actions and alternatives.

IV. Rulemaking Analyses and Notices

A. Executive Order 12866, Regulatory Planning and Review

    E.O. 12866 provides that the Office of Information and Regulatory 
Affairs (OIRA) will review all significant rules.\44\ E.O. 13563 
reaffirms the principles of E.O. 12866, calling for improvements in the 
Federal Government's regulatory system to promote predictability, 
reduce uncertainty, and use the best, most innovative, and least 
burdensome tools for achieving regulatory objectives.\45\ Because this 
final rule applies to all Federal agencies, it is a significant 
regulatory action that CEQ submitted to OMB for review. The changes 
will remove uncertainty created by the 2020 rule to benefit agencies 
and the public. These changes do not obligate agencies to undertake 
longer, more complicated analyses. Furthermore, an effective NEPA 
process can save time and reduce overall project costs by identifying 
and avoiding problems, including potential

[[Page 23468]]

significant effects, that may occur in later stages of project 
development.\46\ Additionally, if agencies choose to consider 
additional alternatives and conduct clearer or more robust analyses, 
such analyses should improve societal outcomes by improving agency 
decision making. Because individual cases will vary, the magnitude of 
potential costs and benefits resulting from these proposed changes are 
difficult to anticipate. Therefore, CEQ has not quantified them. CEQ 
received a number of comments requesting that it revisit the regulatory 
impact analysis from the 2020 rule. Because this final rule mainly 
clarifies provisions,\47\ CEQ considers Phase 2 to be the more 
appropriate rulemaking for any reconsideration of the regulatory impact 
analysis to the extent Phase 2 proposes substantive changes.
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    \44\ 58 FR 51735 (Oct. 4, 1993).
    \45\ 76 FR 3821 (Jan. 21, 2011).
    \46\ See Linda Luther, Cong. Rsch. Serv., R42479, The Role of 
the Environmental Review Process in Federally Funded Highway 
Projects: Background and Issues for Congress (2012), https://crsreports.congress.gov/product/pdf/R/R42479.
    \47\ While the changes to Sec.  1507.3 are more than clarifying 
edits, agencies have not revised their NEPA procedures to address 
changes to the CEQ regulations made by the 2020 rule. Therefore, 
this change does not have costs and benefits for CEQ to consider.
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B. Regulatory Flexibility Act and Executive Order 13272, Proper 
Consideration of Small Entities in Agency Rulemaking

    The Regulatory Flexibility Act (RFA), as amended, 5 U.S.C. 601 et 
seq., and E.O. 13272 \48\ require agencies to assess the impacts of 
proposed and final rules on small entities. Under the RFA, small 
entities include small businesses, small organizations, and small 
governmental jurisdictions. An agency must prepare a Regulatory 
Flexibility Analysis at the proposed and final rule stages unless it 
determines and certifies that the rule, if promulgated, would not have 
a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 605(b). An agency need not perform an analysis of 
small entity impacts when a rule does not directly regulate small 
entities. See Mid-Tex Electric Coop., Inc. v. FERC, 773 F.2d 327 (D.C. 
Cir. 1985). This final rule does not directly regulate small entities. 
Rather, it applies to Federal agencies and sets forth the process for 
their compliance with NEPA. Accordingly, CEQ hereby certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities.
---------------------------------------------------------------------------

    \48\ 67 FR 53461 (Aug. 16, 2002).
---------------------------------------------------------------------------

C. National Environmental Policy Act

    Under the CEQ regulations, major Federal actions may include 
regulations. When CEQ issued regulations in 1978, it prepared a 
``special environmental assessment'' for illustrative purposes pursuant 
to E.O. 11991.\49\ The NPRM for the 1978 rule stated ``the impacts of 
procedural regulations of this kind are not susceptible to detailed 
analysis beyond that set out in the assessment.'' \50\ Similarly, in 
1986, while CEQ stated in the final rule amending its regulations that 
there were ``substantial legal questions as to whether entities within 
the Executive Office of the President are required to prepare 
environmental assessments,'' it also prepared a special environmental 
assessment.\51\ The special environmental assessment issued in 1986 
made a finding of no significant impact, and there was no finding made 
for the assessment of the 1978 final rule.
---------------------------------------------------------------------------

    \49\ 43 FR 25230 (June 9, 1978).
    \50\ Id. at 25232.
    \51\ 51 FR 15618, 15619 (Apr. 25, 1986).
---------------------------------------------------------------------------

    CEQ continues to take the position that a NEPA analysis is not 
required for establishing or updating NEPA procedures. See Heartwood v. 
U.S. Forest Serv., 230 F.3d 947, 954-55 (7th Cir. 2000) (finding that 
neither NEPA or the CEQ regulations required the Forest Service to 
conduct an environmental assessment or an EIS prior to the promulgation 
of its procedures creating a categorical exclusion). Nevertheless, 
based on past practice, CEQ developed a special environmental 
assessment, posted it in the docket, and invited comments. CEQ did not 
receive any comments, but made minor changes to the special 
environmental assessment, which CEQ has posted in the docket.

D. Executive Order 13132, Federalism

    E.O. 13132 requires agencies to develop an accountable process to 
ensure meaningful and timely input by state and local officials in the 
development of regulatory policies that have federalism 
implications.\52\ Policies that have federalism implications include 
regulations that have substantial direct effects on the states, on the 
relationship between the National Government and the states, or on the 
distribution of power and responsibilities among the various levels of 
government. This rule does not have federalism implications because it 
applies to Federal agencies, not states. However, CEQ notes that States 
may elect to assume NEPA responsibilities under Federal statutes. CEQ 
received comments in response to the NPRM from a number of States, 
including those that have assumed NEPA responsibilities, and considered 
these comments in development of the final rule.
---------------------------------------------------------------------------

    \52\ 64 FR 43255 (Aug. 10, 1999).
---------------------------------------------------------------------------

E. Executive Order 13175, Consultation and Coordination With Indian 
Tribal Governments

    CEQ acknowledges that it shares a government-to-government 
relationship with Tribes that differs from its relationship to the 
general public. E.O. 13175 requires agencies to have a process to 
ensure meaningful and timely input by Tribal officials in the 
development of policies that have Tribal implications.\53\ Such 
policies include regulations that have substantial direct effects on 
one or more Indian Tribes, on the relationship between the Federal 
Government and Indian Tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian Tribes. CEQ 
has assessed the impact of this final rule on Indian Tribal governments 
and has determined that the final rule would not significantly or 
uniquely affect these communities. However, CEQ recognizes the 
important role Tribes play in the NEPA process and held a government-
to-government consultation on the NEPA regulations generally on 
September 30, 2021. CEQ also held a consultation specifically on the 
Phase 1 proposed rule on November 12, 2021. CEQ also invited Tribes and 
Alaska Native Corporations to provide early input on the Phase 2 
rulemaking as well as CEQ's guidance on considering greenhouse gas 
emissions and climate change in NEPA reviews. In addition to the 
feedback provided during these consultation sessions, CEQ considered 
written comments that Tribes submitted during and after the 
consultations, as well as Tribal comments submitted during the public 
comment period. CEQ plans to continue to engage in additional 
government-to-government consultation with federally recognized Tribes 
and Alaska Native Corporations on its NEPA regulations. During 
consultation and in written comments, CEQ has received input on areas 
of importance to Tribes, many of which are around provisions that were 
not addressed in this Phase 1 rule. CEQ will consider this input for 
the Phase 2 rulemaking.
---------------------------------------------------------------------------

    \53\ 65 FR 67249 (Nov. 9, 2000).

---------------------------------------------------------------------------

[[Page 23469]]

F. Executive Order 12898, Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    E.O. 12898 requires agencies to make achieving environmental 
justice part of their missions by identifying and addressing, as 
appropriate, disproportionately high and adverse human health or 
environmental effects of their programs, policies, and activities on 
minority populations and low-income populations.\54\ CEQ has analyzed 
this final rule and determined that it will not cause 
disproportionately high and adverse human health or environmental 
effects on minority populations and low-income populations. This rule 
sets forth implementing regulations for NEPA for Federal agencies; it 
is in the agency implementation of NEPA when conducting reviews of 
proposed agency actions where consideration of environmental justice 
effects occurs.
---------------------------------------------------------------------------

    \54\ 59 FR 7629 (Feb. 16, 1994).
---------------------------------------------------------------------------

G. Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    Agencies must prepare a Statement of Energy Effects for significant 
energy actions under E.O. 13211.\55\ CEQ has determined that this 
rulemaking is not a ``significant energy action'' because it is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy.
---------------------------------------------------------------------------

    \55\ 66 FR 28355 (May 22, 2001).
---------------------------------------------------------------------------

H. Executive Order 12988, Civil Justice Reform

    Under section 3(a) of E.O. 12988,\56\ agencies must review their 
proposed regulations to eliminate drafting errors and ambiguities, 
draft them to minimize litigation, and provide a clear legal standard 
for affected conduct. Section 3(b) provides a list of specific issues 
for review to conduct the review required by section 3(a). CEQ has 
conducted this review and determined that this final rule complies with 
the requirements of E.O. 12988.
---------------------------------------------------------------------------

    \56\ 61 FR 4729 (Feb. 7, 1996).
---------------------------------------------------------------------------

I. Unfunded Mandate Reform Act

    Section 201 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1531, requires Federal agencies to assess the effects of their 
regulatory actions on state, Tribal, and local governments, and the 
private sector to the extent that such regulations incorporate 
requirements specifically set forth in law. Before promulgating a rule 
that may result in the expenditure by a state, Tribal, or local 
government, in the aggregate, or by the private sector of $100 million, 
adjusted annually for inflation, in any 1 year, an agency must prepare 
a written statement that assesses the effects on state, Tribal, and 
local governments and the private sector. 2 U.S.C. 1532. This final 
rule applies to Federal agencies and will not result in expenditures of 
$100 million or more for state, Tribal, and local governments, in the 
aggregate, or the private sector in any 1 year. This action also will 
not impose any enforceable duty, contain any unfunded mandate, or 
otherwise have any effect on small governments subject to the 
requirements of 2 U.S.C. 1531-1538.

J. Paperwork Reduction Act

    This final rule will not impose any new information collection 
burden that requires additional review or approval by OMB under the 
Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq.

List of Subjects in 40 CFR Parts 1502, 1507, and 1508

    Administrative practice and procedure; Environmental impact 
statements; Environmental protection; Natural resources.


Brenda Mallory,
Chair.

    For the reasons discussed in the preamble, the Council on 
Environmental Quality amends parts 1502, 1507, and 1508 in title 40 of 
the Code of Federal Regulations as follows:

PART 1502--ENVIRONMENTAL IMPACT STATEMENT

0
1. Revise the authority citation for part 1502 to read as follows:

    Authority:  42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 
7609; and E.O. 11514, 35 FR 4247, 3 CFR, 1966-1970, Comp., p. 902, 
as amended by E.O. 11991, 42 FR 26967, 3 CFR, 1977 Comp., p. 123.


0
2. Revise Sec.  1502.13 to read as follows:


Sec.  1502.13   Purpose and need.

    The statement shall briefly specify the underlying purpose and need 
to which the agency is responding in proposing the alternatives 
including the proposed action.

PART 1507--AGENCY COMPLIANCE

0
3. Revise the authority citation for part 1507 to read as follows:

    Authority:  42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 
7609; and E.O. 11514, 35 FR 4247, 3 CFR, 1966-1970, Comp., p. 902, 
as amended by E.O. 11991, 42 FR 26967, 3 CFR, 1977 Comp., p. 123.


0
4. Amend Sec.  1507.3 by revising paragraph (a) and the introductory 
text of paragraph (b) to read as follows:


Sec.  1507.3   Agency NEPA procedures.

    (a) The Council has determined that the categorical exclusions 
contained in agency NEPA procedures as of September 14, 2020, are 
consistent with this subchapter.
    (b) No more than 36 months after September 14, 2020, or 9 months 
after the establishment of an agency, whichever comes later, each 
agency shall develop or revise, as necessary, proposed procedures to 
implement the regulations in this subchapter. When the agency is a 
department, it may be efficient for major subunits (with the consent of 
the department) to adopt their own procedures.
* * * * *

PART 1508--DEFINITIONS

0
5. Revise the authority citation for part 1508 to read as follows:

    Authority:  42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 
7609; and E.O. 11514, 35 FR 4247, 3 CFR, 1966-1970, Comp., p. 902, 
as amended by E.O. 11991, 42 FR 26967, 3 CFR, 1977 Comp., p. 123.


0
6. Amend Sec.  1508.1 by revising paragraphs (g) and (z) to read as 
follows:


Sec.  1508.1  Definitions.

* * * * *
    (g) Effects or impacts means changes to the human environment from 
the proposed action or alternatives that are reasonably foreseeable and 
include the following:
    (1) Direct effects, which are caused by the action and occur at the 
same time and place.
    (2) Indirect effects, which are caused by the action and are later 
in time or farther removed in distance, but are still reasonably 
foreseeable. Indirect effects may include growth inducing effects and 
other effects related to induced changes in the pattern of land use, 
population density or growth rate, and related effects on air and water 
and other natural systems, including ecosystems.
    (3) Cumulative effects, which are effects on the environment that 
result from the incremental effects of the action when added to the 
effects of other past, present, and reasonably foreseeable actions 
regardless of what agency (Federal or non-Federal) or person undertakes 
such other actions. Cumulative effects can result from individually 
minor but collectively significant actions taking place over a period 
of time.

[[Page 23470]]

    (4) Effects include ecological (such as the effects on natural 
resources and on the components, structures, and functioning of 
affected ecosystems), aesthetic, historic, cultural, economic, social, 
or health, whether direct, indirect, or cumulative. Effects may also 
include those resulting from actions which may have both beneficial and 
detrimental effects, even if on balance the agency believes that the 
effects will be beneficial.
* * * * *
    (z) Reasonable alternatives means a reasonable range of 
alternatives that are technically and economically feasible, and meet 
the purpose and need for the proposed action.
* * * * *
[FR Doc. 2022-08288 Filed 4-19-22; 8:45 am]
BILLING CODE 3325-F2-P


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