NEPA Environmental Review Changes Could Pave the Way for Faster Projects

The National Environmental Policy Act (NEPA) is a cornerstone of environmental law. It mandates environmental reviews for projects with federal participation, permitting or funding.

The landscape for compliance with NEPA has seen a significant transformation this year. The Council on Environmental Quality (CEQ) pulled back its government-wide regulations for implementing NEPA, driven by an executive order from the Trump administration and a recent decision by the D.C. Court of Appeals. In parallel, the CEQ launched a new technology initiative that aims to modernize the entire federal permitting process. Further, the Supreme Court issued an opinion narrowing the scope of NEPA review and instructing lower courts to defer to agency NEPA determinations.

These changes will have far-reaching implications for project development and environmental litigation, leaving stakeholders with questions about the practical impact of these changes and what comes next.

Judicial Scrutiny, Executive Order 14154 and CEQ’s Response

Even before the recent executive order, the CEQ's authority to issue regulations faced mounting judicial skepticism. In its November 2024 Marin Audubon Society v. Federal Aviation Administration decision, the D.C. Circuit Court of Appeals invalidated the CEQ's NEPA regulations, holding that Congress did not grant the CEQ the power to promulgate them.

Then, on Jan. 20, President Trump issued an executive order directing the CEQ to rescind its existing NEPA regulations within 30 days and provide new guidance on NEPA implementation. In response, the CEQ issued an interim final rule formally rescinding its NEPA regulations, which took effect April 11. With the overarching CEQ regulations removed, federal agencies will now operate primarily under their own NEPA implementing procedures.

CEQ also issued guidance directing federal agencies to revise their NEPA procedures within 12 months. It directed agencies to use the 2020 version of the CEQ NEPA regulations as a framework to establish their agency-level NEPA regulations for consistency, with an eye toward expediting the NEPA process. In the meantime, CEQ recommended that agencies continue following their existing procedures to avoid delays in processing reviews until the agency-level regulations are put in place.

CEQ Launches Plan to Streamline Federal Review and Permitting

To streamline the federal environmental review and permitting process, on May 30, the CEQ released its Permitting Technology Action Plan. The plan’s stated objective is to guide the government-wide implementation of modern technology to eliminate needless project delays.

The plan requires agencies to minimize uncertainty about review timelines by providing the public with current information on the status of project reviews, milestones for agency and project sponsor actions and timelines for process completion.

To meet these goals, the CEQ will create government-wide data and technology standards to build an integrated digital ecosystem across federal agencies using modern cloud-based technology. The plan outlines 10 minimum functional requirements that push agencies to adopt modern systems, such as automated case management tools, integrated geographic information system (GIS) analysis, AI-assisted comment analysis and improved document management.

The plan comes with a pressing implementation timeline. It directs certain agencies to adopt and put these standards and requirements into practice by Aug. 28, just 90 days after the plan's issuance.

U.S. Supreme Court Narrows NEPA Review and Clarifies Agency Deference

The U.S. Supreme Court added another layer to the evolving NEPA landscape in Seven County Infrastructure Coalition v. Eagle County, Colorado. This decision significantly narrows the scope of NEPA analysis and emphasizes that courts must afford "substantial judicial deference" to agency determinations in NEPA cases. This includes agency decisions about the details, depth, breadth and content of an environmental impact statement (EIS). The Supreme Court held that agency determinations should not be micromanaged by courts, provided they fall within a "broad zone of reasonableness."

The Supreme Court further held that NEPA requires agencies to analyze the environmental effects of the "proposed action"—meaning the specific project under review. Crucially, the Supreme Court stated that NEPA does not require an agency to conduct an analysis of the environmental effects of upstream or downstream projects that are separate in time or place from the proposed action, particularly if those separate projects fall outside the agency’s regulatory authority or control. The Supreme Court further clarified that a "but for" causal relationship or simple foreseeability of other projects is not enough to mandate an agency's analysis of those separate projects under NEPA.

The Supreme Court also noted that a deficient EIS does not require a court to vacate an agency's project approval, unless there is reason to believe the agency might have disapproved the project if the EIS had contained the additional information.

The Supreme Court also reiterated that NEPA is a purely procedural statute, meaning that it "does not mandate particular results, but simply prescribes the necessary process" for environmental review. The Supreme Court expressed concern that some lower courts engaged in overly intrusive reviews in NEPA cases, which caused project delays and increased costs, including for clean energy projects ranging from wind farms to geothermal wells. The Supreme Court signaled a need for a "course correction" to align judicial review more closely with NEPA's statutory text and “common sense.”

Tips for Project Proponents

These concurrent executive, regulatory and judicial actions dramatically alter the NEPA landscape. Project proponents and other stakeholders in the NEPA process should consider the following:

• While CEQ's regulations are rescinded, NEPA itself remains federal law. Federal agencies must still comply with NEPA’s requirements to conduct environmental reviews for projects involving federal participation, permitting or funding. With CEQ’s umbrella regulations gone, individual federal agencies will implement NEPA. Active monitoring of CEQ guidance and these agency-specific updates will be crucial.
• CEQ's Permitting Technology Action Plan directs federal agencies to digitize permit applications, speed up reviews, and improve interagency coordination and transparency.
• The Seven County Infrastructure decision sharply narrows NEPA analyses, focusing on the direct environmental effects of the proposed federal action itself.
• Projects requiring NEPA reviews will be less vulnerable to challenges to the adequacy of federal agencies’ NEPA reviews.

In short, the NEPA landscape has been reshaped by requiring individual agencies to implement NEPA and a Supreme Court decision that narrows the scope of environmental review. The NEPA process will likely undergo further changes as agencies implement the new technology mandate. However, this transition period will require careful attention from all stakeholders to ensure projects do not face delays and challenges due to insufficient NEPA compliance.

Please contact Blake Donewar or any member of the Phelps environmental team if you have questions or need advice or guidance.