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On May 21, 2024, a group of 20 states, including Louisiana and Texas, filed an action in North Dakota district court challenging the Council on Environmental Quality’s (“CEQ”) finalized amendments to its National Environmental Policy Act (“NEPA”) regulations, arguing that the rule seeks expanded environmental review without statutory authority. State of Iowa v. CEQ, 1:24-cv-00089. This suit is a facial challenge to the NEPA regulations that CEQ finalized on May 1, 2024.

The finalized CEQ regulations are very similar to the proposed changes, published on July 31, 2023, and they seek to make significant changes to the NEPA process. For example, the final rule includes:

  • Additional language to implement the changes that the Fiscal Responsibility Act made to NEPA, including setting clear one-year deadlines for environmental assessments and two-year deadlines for environmental impact statements, 40 C.F.R. § 1501.10(b), and expanding how agencies can use categorical exclusions, 40 C.F.R. § 1501.4.
  • Additional and clarifying language on how agencies should work together in completing NEPA reviews and develop programmatic environmental reviews. See, e.g., 40 C.F.R. § 1501.11.
  • Added requirements that environmental justice and climate change be considered when determining whether an action has a significant adverse effect, requiring an environmental impact statement, 40 C.F.R. § 1501.3, as well as in other steps of the NEPA process, such as when considering alternatives and mitigation measures, see, e.g., 40 C.F.R. §§ 1502.13, 1502.16, 1505.2.

While the CEQ asserts that these regulations create a more efficient NEPA process, the state lawsuit argues that the final NEPA regulations will increase the burden on states and make the NEPA process more time consuming and cumbersome. They argue that the scope of the regulations is beyond the authority granted to the CEQ under NEPA (specifically noting that neither “climate change” nor “environmental justice” are included in the statute), and that the regulations do not comply with the requirements of the Administrative Procedure Act and NEPA. For example, they assert:

The Final Rule: (a) removes language in the prior regulations’ describing NEPA as a procedural statute, and substitutes language suggesting that NEPA is, instead, an “action forcing” statute intended to preserve or even “enhance” the environment; (b) directs mitigation measures to address environmental justice and other perceived concerns, assigns mitigation types a “general order of priority,” and requires a mitigation and compliance plan even after a federal agency has completed the NEPA process; and (c) emphasizes an “environmentally preferable alternative” based on new criteria that are not defined in NEPA’s text. Those regulatory changes, among others in the Final Rule, improperly transform the process carefully delineated in NEPA into a substantive statute and a tool for achieving specific policy goals.

The outcome of this challenge will have great importance to industry, as it will impact what type of environmental review will be required for permits and other federal decisions. The current finalized NEPA regulations are set to go into effect on July 1, 2024.  While it remains unknown whether the challenge or any potential injunction will be successful, it seems likely that this state-led lawsuit will seek to enjoin that effective date. Regardless, industry should be prepared to comply with the new regulations. Liskow is carefully following developments on these regulations and this lawsuit.

For further questions regarding these regulations or this lawsuit, contact Liskow attorneys Clare Bienvenu, Emily von Qualen, and Amy Tomlinson and visit our Environmental practice page.

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