Legislation recently enacted to raise the federal debt ceiling (the Fiscal Responsibility Act of 2023 or FRA) includes major permitting reforms with the potential to streamline federal environmental reviews under the National Environmental Policy Act (NEPA).

NEPA applies to a wide range of federal actions. For many projects, the NEPA review can result in costly and time-consuming Environmental Assessments (EA) or Environmental Impact Statements (EIS). The NEPA amendments embodied in the FRA are intended to streamline future permitting reviews by narrowing the scope of analysis and alternatives, imposing time and page limits, generally facilitating coordination and communication, and allowing applicants to prepare analyses themselves. Project proponents will need to understand these new changes to the NEPA process to ensure that environmental reviews are completed in accord with the FRA.

Major NEPA Reform Provisions Under the FRA and Potential Implications

• Narrowed Scope of NEPA Review: The FRA amends several of NEPA’s core requirements to provide more specific guidelines and narrow the scope of environmental reviews.

• For instance, federal agencies are now directed to consider only those environmental impacts that are “reasonably foreseeable” rather than “the environmental impact of the proposed action.” Also, the FRA requires agencies to analyze any negative environmental impact of not implementing a proposed project, and although this slightly expands the scope of NEPA review, it could be helpful for projects with demonstrable benefits.

• The FRA specifically directs federal agencies, when conducting their reviews, to develop a “reasonable” range of alternatives to the proposed action “that are technically and economically feasible, and meet the purpose and need of the proposal.”

• Threshold NEPA applicability is also further defined in a new section outlining procedures for determining the level of NEPA review and a revised definition narrowing the scope of “major federal actions” triggering NEPA requirements to exclude projects with a limited federal nexus. In determining the level of NEPA review—for instance, whether an EA or more extensive EIS is required—the FRA clarifies that agencies can use any reliable data source and are generally not required to undertake new scientific or technical research.

Together, these provisions act as guardrails to narrow the scope of effects analysis and alternatives development.

• Time Limits: The FRA requires agencies to complete EISs within two years from the date the agency determines an EIS is required, and EAs within one year, unless the agency extends the deadline in consultation with the applicant. The FRA enables project sponsors to sue if federal agencies miss these one- and two-year deadlines. EISs currently take an average of 4.5 years to complete, so these new deadlines will significantly reduce the permitting timeline for many complex projects and provide greater certainty for project sponsors, project supporters and investors. Funding allocated by the Inflation Reduction Act for agencies to write and review environmental reviews is likely to help resource-strained agencies comply with the accelerated deadlines. Project sponsors should plan to work closely with agencies to ensure that the expedited reviews include complete and reliable analysis to withstand potential judicial scrutiny.
• Page Limits: The FRA limits EISs to 150 pages (excluding appendices), except for analyses of “extraordinary complexity” that have a 300-page cap, and the FRA limits EAs to 75 pages. This provision may have less impact than Congress intended, given the opportunity for agencies to shift analysis from the main document to unlimited appendices and attachments. Indeed, page limits could even impose additional challenges on environmental review drafters to capture the necessary analysis in fewer pages. Again, applicants and agencies should coordinate to ensure that environmental decision documents and records are complete and defensible, despite the restricted document size.
• Streamlined Agency Coordination and Communication: Under the FRA, if multiple agencies are involved in an environmental review, they must designate a lead agency responsible for supervising the preparation of a decision document, soliciting input from cooperating agencies, and managing the overall review schedule. This reform codifies various existing regulations and guidance intended to improve coordination and communication and avoid duplication of effort. Additionally, the FRA directs the White House Council on Environmental Quality to implement further communication and coordination improvements by studying the development of an online permitting portal to help project proponents more easily track and understand the administrative record and streamline coordination with the lead agency. By providing public access to project documents, the portal would also advance environmental justice initiatives by increasing agency transparency. 
• Applicant-Prepared Environmental Reviews: The FRA authorizes project applicants to prepare EISs and EAs themselves. While the contents of these documents would continue to be the responsibility of the lead agency reviewing the proposed project, this provision serves as a means for applicants to affirmatively address the delays often caused by understaffing and limited resources within federal agencies.

Takeaways

The permitting reforms and NEPA amendments included in the FRA have the potential to streamline federal permitting processes. The changes narrow the scope of analysis and alternatives development in NEPA reviews, impose time and page limits, facilitate coordination between federal agencies, allow project applicants to prepare environmental reviews, and direct the development of an online platform for NEPA-related documents. As agencies develop implementing regulations and adapt their review processes, proponents should work closely with agencies to ensure that robust, complete analyses are prepared in order to withstand judicial scrutiny.

WilmerHale regularly monitors permitting developments and helps clients navigate an increasingly complex regulatory playing field. Please contact a member of WilmerHale’s Energy, Environment and Natural Resources team to learn more.