Four Things to Know: Upcoming Changes to NEPA Regulations and Environmental Reviews

Takeaway 1: CEQ’s efforts to rescind its NEPA regulations are quick but may face obstacles in court.

Executive Order 14154, Unleashing American Energy, directed CEQ to propose rescinding its existing NEPA regulations by February 19, 2025. Right on the Executive Order’s deadline, CEQ issued a pre-publication version of an interim final rule to revoke its regulations without providing an advanced public notice-and-comment period. The interim final rule relies on the “good cause” exception contained within the Administrative Procedure Act, which allows agencies to issue final rules without going through traditional notice-and-comment procedures when an agency finds, for good cause, that notice-and-comment is “impracticable, unnecessary, or contrary to the public interest.”¹ CEQ roots its “good cause” finding in two recent federal court decisions and their aftermath: The D.C. Circuit in Marin Audubon Society v. Federal Aviation Administration and the federal court for the District of North Dakota in Iowa v. CEQ held that CEQ lacks authority to issue binding regulations. Indeed, the North Dakota court vacated CEQ’s most recent rulemaking, where the Biden-era CEQ had promulgated revisions that replaced updates done during the first Trump administration.

Essentially, CEQ’s action here demonstrates that it agrees with those court decisions that it does not have authority to issue binding regulations: In the interim final rule, CEQ states that it has not identified any other authority to rely on in issuing binding regulations, and thus CEQ concludes that it may lack that authority. CEQ will open a 30-day public comment period and specifically asks for comments on whether it has legal authority to make a different choice than what it sets forth in the interim final rule. The interim final rule becomes effective 15 days after the close of that comment period, or 45 days after publication in the Federal Register. CEQ then plans to issue a final rule that addresses comments and makes any changes that it finds are warranted. As has become the norm for efforts to modify regulations governing NEPA practice, we expect legal challenges to CEQ’s use of the good cause exception and procedural compliance under the Administrative Procedure Act.

Takeaway 2: Until individual agencies revise their NEPA regulations, CEQ suggests that agencies voluntarily follow their (and CEQ’s) existing NEPA regulations and procedures.

Along with directing CEQ to rescind its NEPA regulations, Executive Order 14154 also directs federal agencies to revise their own NEPA implementing regulations. In the Memo, CEQ provided additional clarity on how agencies can ensure they comply with NEPA while they go through the potentially lengthy process to update their individual NEPA regulations and procedures. Many agencies incorporate CEQ’s NEPA regulations by reference, and the Memo suggests that those agencies voluntarily rely on CEQ’s to-be-repealed regulations until those revisions are complete. This should significantly reduce uncertainty for ongoing and new federal environmental reviews, as applicants and agencies can continue to do what they’ve done for years, with some minor adjustments discussed below, as they work through the NEPA review process.

Takeaway 3: Federal agencies’ revision of their NEPA regulations and procedures will use the first Trump administration’s 2020 NEPA regulations as the baseline, with additional measures to comply with the amendments set forth in the Fiscal Responsibility Act (“FRA”), such as increased focus on using categorical exclusions and streamlining environmental reviews.

The Executive Order instructed the CEQ to convene a working group to coordinate the revision of agency-level implementing regulations and prioritize cross-agency consistency, efficiency, and certainty, and CEQ will provide ongoing assistance to federal agencies through that working group as agencies work to update their individual NEPA regulations and procedures. The Memo clarifies that agencies should use the first Trump administration’s 2020 CEQ NEPA regulations as a baseline framework for developing updated agency-level NEPA regulations, which may go a long way in mooting the Biden administration’s 2022 Phase 1 and 2024 Phase 2 revisions, including those that expanded review of environmental effects related to climate change and environmental justice.

The Memo also provides guidance on how agencies should revise their NEPA-implementing regulations with an eye towards incorporating changes made to NEPA through the FRA intended to streamline federal environmental reviews, including page and time limits for agencies to issue NEPA documents. The Memo also directs agencies to prioritize project sponsor-prepared environmental documents for expedited review and opportunities to use categorical exclusions — both of which may lead to faster permitting. The Memo notes that NEPA does not use the term “cumulative” in describing the obligation to consider effects, and the Memo explains that agencies should consider only “reasonably foreseeable” effects, regardless of whether they may be considered “cumulative.” Cumulative impacts have long been a source of litigation aimed at challenging the adequacy of NEPA reviews and were targeted by the first Trump administration’s NEPA overhaul. This focus on “reasonably foreseeable” effects aligns closely with the language of the FRA amendments but does not highlight the companion limiting factor in NEPA caselaw that when considering direct and indirect effects, agencies need not consider those effects that are not caused by the agency action.

Agencies have 12 months to revise their regulations and procedures to be consistent with the Memo’s guidance, with public comment periods (where required) limited to 30–60 days. Based on this timeline, it is unlikely that new agency rules and procedures for implementing NEPA will provide significant relief to projects already under agency review, and even later-arriving projects may be clouded by uncertainty given the likely litigation that will follow agency efforts to revise how they implement NEPA in accordance with the Executive Order and CEQ’s guidance. It will also mean that those interested in participating in the revision process will have to be prepared to act fast once new regulations are proposed.

Takeaway 4: Despite an explicit directive to remove environmental justice, much of the underlying analysis will likely continue.

The Memo continues the Trump administration’s trend of denouncing environmental justice initiatives, providing that NEPA documents “should not include an environmental justice analysis, to the extent that this approach is consistent with other applicable law.” While this may initially appear to dispense with the need to include environmental justice considerations in environmental reviews, NEPA documents will likely continue to contain a similar, but potentially less detailed, analysis of impacts on affected communities, even if not labeled as an “environmental justice analysis.” Although tethered to CEQ’s 1978 NEPA regulations, there is judicial precedent that agencies should consider effects recently captured under the “environmental justice” umbrella, such as socioeconomic effect, and social and public health effects from air quality, noise, and aesthetics on affected communities. Further, agencies will likely need to respond in some form or fashion to comments in the record raising environmental justice concerns under the Administrative Procedure Act.

Some agencies are already signaling how they are approaching this issue. At a February 20, 2025 press conference, Federal Energy Regulatory Commission (“FERC”) Chairman Mark Christie confirmed that FERC will need to adapt to CEQ’s guidance and is committed to following NEPA. His statements are borne out in recent FERC Orders explaining that while environmental justice-related Executive Orders have been revoked, FERC will “continue to fulfill its NEPA responsibilities by considering impacts to all potentially affected communities.” This includes continued use of FERC’s Office of Public Participation and continued focus on environmental effects such as traffic, visual, noise, safety, and air quality impacts on affected communities. With this in mind, we expect that agencies and project proponents will (and should) continue to include much of the analysis they previously categorized under environmental justice as they look at impacts to affected communities, even if that analysis is less detailed or precise, to fare better in the face of the litigation that is likely to follow revisions in how agencies comply with NEPA and the Administrative Procedure Act.

We will continue monitoring environmental review and permitting reform efforts that may impact energy and infrastructure projects. Please reach out to your Vinson & Elkins team to discuss these matters and their implications for your business.

¹ 5 U.S.C. § 553(b)(B).