EPA Expands Use of Categorical Exclusions from NEPA Review

The United States Environmental Protection Agency (EPA) has published a final rule, effective October 19, 2007, expanding the use of categorical exclusions under the National Environmental Policy Act (NEPA). 72 Fed. Reg. 53651 (Sept. 19, 2007). Among other things, the amended rules exempt EPA from preparing a NEPA environmental review document when it reissues certain Clean Water Act permits. Although the new categorical exclusion only applies in states such as Idaho and Alaska where EPA is the NPDES permitting authority, it will likely expedite, and ultimately reduce the cost of, Clean Water Act permit renewals for a broad range of activities, including wastewater treatment plants, mines, drilling rigs, and feedlots. The White House Council on Environmental Quality (CEQ) is encouraging the expanded use of categorical exclusions as part of its NEPA modernization process, and it is likely that EPA and other federal agencies will continue to propose new categorical exclusions in an effort to reduce the time and expense of the NEPA environmental review process.

Statutory and Regulatory Background

NEPA requires federal agencies to take a “hard look” at the environmental impacts of their decisions, including issuing or renewing environmental permits. Specifically, agencies must prepare an environmental impact statement (EIS) for any proposed major federal action that may significantly affect the human environment.[1] If an agency is uncertain whether its proposed action will have significant environmental impacts, it must prepare an environmental assessment (EA) to determine whether an EIS is necessary.[2] If the EA threshold determination concludes that an EIS is not required, the agency may issue a Finding of No Significant Impact (FONSI), and the agencies’ obligations under NEPA are concluded.[3] However, not all proposed federal actions are subject to assessment in an EIS or EA. NEPA regulations allow agencies to “categorically exclude” from further review those actions that experience has indicated will not have significant environmental effects, individually or cumulatively.[4]

As part of its ongoing NEPA modernization process, CEQ issued draft guidance in September, 2006 to clarify and promote the use of categorical exclusions. CEQ previously determined that federal agencies were consistently preparing expensive EAs when a categorical exclusion would suffice because agencies were unclear about the level of analysis required, because CEQ’s approval process was burdensome, and because agencies believe that well documented EAs have a greater chance of surviving legal challenges.[5] In response, CEQ’s draft guidance recommended a number of methods for substantiating a proposed categorical exclusion. For example, it said that an agency may rely on assessments of completed or on-going actions and rely on profession staff opinions to substantiate an exclusion. CEQ also encouraged agencies to use records and information—i.e., “benchmark”—from other public or private entities’ experiences with similar actions so long as the environmental effects are comparable. The proposed guidance also encouraged early consultation with CEQ during the categorical exclusion creation process to facilitate quicker approval.[6] Although the public comment period on CEQ’s draft categorical exclusion guidance closed in October 2006, CEQ has not yet issued a final guidance document.

EPA Amends Its NEPA Procedures

A broad range of EPA’s actions are already statutorily exempt or categorically excluded from NEPA. For example, with the exception of issuing NPDES permits for “new sources,” Congress has explicitly exempted EPA’s actions under the Clean Water Act from NEPA review.[7] Similarly, EPA actions under the Clean Air Act are not deemed to be “major federal actions” and are therefore statutorily exempt from NEPA review.[8] Courts have also ruled that certain EPA actions are exempted from NEPA review because EPA’s compliance with the underlying statute is considered to be the “functional equivalent” of a NEPA analysis.[9]

In December 2006, EPA issued a proposed rule amending its NEPA procedures.[10] Following a period of public review and comment, EPA issued its final rule on September 19, 2007, which was substantially unchanged from the proposed rule. EPA’s new procedures establish fifteen new categorical exclusions. While the vast majority of the changes are either administrative in nature or significantly unchanged from current categorical exclusions, EPA established a new substantive categorical exclusion for NPDES permit renewals for “new sources.”

Although EPA is generally exempt from performing NEPA analyses when issuing NPDES permits under the Clean Water Act, EPA is required to perform a NEPA analysis when issuing a NPDES permit for a “new source.” Under the new categorical exclusion, EPA will still conduct a NEPA review when issuing the original NPDES new source permit, but is exempt from NEPA review when reissuing the permit, which is required every five years, so long as: 1) the original NEPA document are still valid (including the appropriate mitigation); 2) the receiving waters will not be degraded; and 3) the permit conditions do not change or are more environmentally protective.[11] The new NPDES categorical exclusion is further limited to states where EPA itself is the NPDES permitting authority. All but five states have been authorized by EPA to implement the NPDES system and issue discharge permits, and NPDES permits issued by those states do not constitute “major federal actions” subject to NEPA. However, EPA remains responsible for implementing the NPDES permit system in Alaska, Idaho, Massachusetts, New Mexico, and Oklahoma.

Conclusion

EPA’s new NPDES categorical exclusion reflects a growing trend in favor of increased use of categorical exclusions. Because preparing an EA and/or an EIS can be time consuming and expensive, CEQ has encouraged federal agencies to develop and refine categorical exclusions to promote efficiency and cost effectiveness.[12]

The use of categorical exclusions, however, is often controversial. For example, the United States Forest Service’s categorical exclusions for hazardous fuel reduction projects and post-fire timber salvage projects have generated numerous lawsuits.[13] Some commentators contend that categorical exclusions are over-used and permit agencies to ignore the cumulative impacts of numerous small projects.[14] Many government officials, on the other hand, argue that categorical exclusions do not weaken NEPA, and that streamlining the categorical exclusion process is part of a comprehensive regulatory reform process that began during the Carter administration.[15]

For more information on NEPA categorical exclusions and environmental review, please contact Dustin Till.