Environmental update

Environmental update

June 23, 2023 | By Andrew Skroback in New York

The bill President Biden signed on June 2 to raise the federal debt ceiling also amended the US National Environmental Policy Act, or NEPA, in a bid to streamline and fast-track its environmental review procedures.

Since 1970, NEPA has required federal agencies to analyze the potential impacts of major government actions that could affect the environment – such as federal permitting decisions, federal funding and allowing the use of federal lands.

Federal agencies will now be required to focus on "reasonably foreseeable environmental effects" in their reviews of projects, in contrast to more abstract or downstream impacts. However, this language is largely consistent with current case law. It also does nothing to limit the analysis of climate change-related impacts under NEPA.

Under the NEPA amendments, the range of alternatives to a proposed project that must be analyzed now need only include those that are technically and economically feasible.

The changes also expand agency authority to use "categorical exclusions" approved by other agencies to excuse NEPA analyses, though that decision will be subject to oversight by the Council on Environmental Quality.

Most importantly, the law looks to fast-track NEPA environmental reviews.

The law now creates a default deadline of two years for agencies to complete an environmental impact statement, if one is needed, with a one-year cap imposed where a less complex environmental assessment will suffice.

The new law allows agencies to extend deadlines in consultation with a project sponsor. However, it both requires the relevant lead permitting agencies to report all missed deadlines to Congress and creates a new mechanism by which project sponsors can challenge delays in court.

In addition, the law also requires a lead agency be set for each environmental review, sets page limits for environmental impacts statements and environmental assessments, and streamlines procedures for reviewing energy storage projects.

NEPA ensures that federal agencies will assess the environmental impact of a project before they approve it. However, there is general agreement in Washington that NEPA too often imposes significant time and monetary burdens on infrastructure projects. These burdens hit all projects, including those needed to combat climate change. Delays in NEPA and other permitting reviews can also be blamed on understaffing. Unless the understanding is addressed, accelerating deadlines will lead to shallower reviews.

Nevertheless, the new fast-tracking of the NEPA review process will benefit all infrastructure projects requiring federal involvement, including projects driven by renewable power as well as by fossil fuels. While the new deadlines allow some flexibility, they are at least likely to prod agencies to issue assessments within a more reasonable amount of time.

The final deal negotiated between House Speaker Kevin McCarthy and President Joe Biden does nothing special to expedite transmission line permitting.

Speeding the transmission line approval process is crucial to advance the US renewable power industry. Such transmission is needed to bring renewable energy from areas where it is best produced to areas where the power is most needed.

Suggestions that the law should require grid regions to improve transmission to neighboring areas went unheeded. Instead, the law only requires the North American Electric Reliability Corp. to consult with regions and utilities and conduct a two-year study of "prudent additions" to total power "transfer capability" between regions.

The NEPA amendments also clarify when when a federal action does not rise to the level of a "major federal action" that requires NEPA review.

Projects that will not trigger NEPA review as a major federal action now include those that have no "or minimal federal funding" and no other triggering agency involvement or where a project uses federal loans or other financial assistance but no federal agency exercises "sufficient control and responsibility" over the use of the funds. NEPA review will also not be required in the future where a project relies on business loan guarantees provided by the Small Business Administration, where the federal actions result solely from nondiscretionary agency activities, and where they represent extraterritorial activities or decisions with effects located completely outside US jurisdiction.

An unintended consequence of the new law is that its passage will probably delay release of a "phase 2" NEPA rule by the Council on Environmental Quality.

The CEQ completed the first of a two-phase process of amending the federal implementing regulations for NEPA on May 20, 2022. The administration reversed a number of changes made to NEPA during the Trump administration. Phase 2 of those rules has been undergoing interagency review since January and was expected to be published this June. Now, the proposed regulations will have to be revised to take the statutory amendments to NEPA into account.

The new law did not advance other permitting reform agendas being debated in Congress, such as streamlining review processes under other statutes like the Endangered Species Act.


The US Supreme Court stripped federal protection under the US Clean Water Act from more than 50% of the nation's previously regulated wetlands in a 5-4 decision at the end of May.

The case is called Sackett v. EPA. A slim majority ruled that only wetlands that are "indistinguishable" from adjacent protected water bodies are protected by the Clean Water Act.

The court endorsed the previously divisive "continuous surface connection" test for federal Clean Water Act jurisdiction over wetlands and protected waters that was first suggested by the late Justice Antonin Scalia in a 2006 case called Rapanos v. United States. The court has now clearly rejected the broader "significant nexus" standard that emerged from a competing opinion in the same case.

The core of the Sackett decision reads as follows: "To determine when a wetland is part of adjacent 'waters of the United States,' the Court agrees with [Justice Scalia in] Rapanos . . . that the use of 'waters' in [Clean Water Act] §1362(7) may be fairly read to include only wetlands that are 'indistinguishable from waters of the United States.' This occurs only when wetlands have 'a continuous surface connection to bodies that are 'waters of the United States' in their own right, so that there is no clear demarcation between 'waters' and 'wetlands'."

That is a much narrower standard than the Environmental Protection Agency and Army Corps of Engineers used in a 2022 regulation defining "waters of the United States." The decision effectively guts the approach the Biden administration has taken to wetlands protection.

It goes farther than even the Trump administration's approach that allowed wetlands that are cut off from downstream waters by such things as roads and berms to remain within federal jurisdiction. Now, only wetlands with a continuous surface water connection to waters such as rivers and lakes appear to receive Clean Water Act protection.

The ruling creates a bright-line test that could help landowners better identify regulated wetlands or streams that are subject to federal protection. Such clarity has been elusive.

Despite that clarity, the implications from the decision are not yet fully understood, but they will be as wide ranging as they are surprising.

The court established a new, much narrower reading of which streams and tributaries are covered. The Clean Water Act now covers "only those relatively permanent, standing or continuously flowing bodies of water 'forming geographic features' that are described in ordinary parlance as 'streams, oceans, rivers, and lakes.'" That can be read to eliminate federal protection for thousands of miles of streams that flow only when it rains, which is common today in the drought-stricken West.

All nine justices seem to have agreed that the specific wetland at issue in the underlying case should not have been subjected to regulation under the Clean Water Act.

It is well known that wetlands function as natural sponges that trap and slowly release surface water, rain, groundwater, melting snow and flood waters. This combined water storage and braking action lowers flood heights and reduces erosion.

In a minority opinion supported by three other justices, Justice Kavanaugh found that
"[b]y narrowing the Act's coverage of wetlands to only adjoining wetlands, the court's new test will leave some long-regulated adjacent wetlands no longer covered by the Clean Water Act, with significant repercussions for water quality and flood control throughout the United States."

The difference between "adjacent" and "adjoining" in this context is not merely semantic or academic. The court's rewriting of "adjacent" to mean "adjoining" will matter a great deal in the real world. In particular, the court's new and overly narrow test may leave long-regulated and long accepted-to-be-regulable wetlands suddenly beyond the scope of the agencies' regulatory authority, with negative consequences for waters of the United States.

For example, the Mississippi River features an extensive levee system to prevent flooding. Under the court's "continuous surface connection" test, the presence of those levees (the equivalent of a dike) would seemingly preclude Clean Water Act coverage of adjacent wetlands on the other side of the levees, even though the adjacent wetlands are often an important part of the flood-control project.

The Sackett decision only limits the reach of the federal Clean Water Act.

President Biden is promising to use other legal authorities to try to fill in the regulatory gaps created by the Supreme Court decision and is calling on states to strengthen their water quality regimes.

States technically have the power to impose broader regulations if they choose to do so. However, about half the states currently have laws that prohibit their regulators from adopting stricter standards than that the federal government has done, and the federal limits have suddenly become far less strict.