U.S. Federal Agencies Significantly Modify Environmental Review Regulations and Policies

To implement Executive Order 14154, Unleashing American Energy, (the “Executive Order”) federal agencies have started to overhaul their National Environmental Policy Act (“NEPA”) regulations and policies. While the Executive Order calls for federal agencies to revise their implementing NEPA regulations to support President Trump’s energy policies, many federal agencies have decided to take the drastic approach of stripping their NEPA regulations to the bare necessities and instead push all NEPA policies and procedures into non-binding guidance documents. This will result in a significant shift in NEPA implementation. This client alert provides an overview of these significant NEPA changes and the potential implications. 

Background

On January 20, 2025, the Executive Order directed the Council on Environmental Quality (“CEQ”) to propose to rescind its regulations and to “coordinate the revision of agency-level implementing regulations for consistency” with the clear intent of streamlining and expediting environmental reviews to implement President Trump’s energy policies. On February 19, 2025, in a Memorandum for Heads of Federal Departments and Agencies on the Implementation of NEPA (the “Memorandum”), the CEQ Chief of Staff instructed federal agencies, in consultation with CEQ, to revise or establish their NEPA implementing procedures within 12 months to expedite permitting approvals and align with NEPA’s 2023 amendments. In the interim, agencies were told to adhere to their existing NEPA practices and procedures, adjusting as necessary for consistency with the Fiscal Responsibility Act of 2023 NEPA amendments. The Memorandum recommends that agencies consider voluntarily relying on the rescinded CEQ regulations when completing ongoing NEPA reviews or defending challenges to previously completed reviews conducted under those regulations. The Memorandum suggests that the 2020 version of CEQ’s NEPA regulations may serve as an “initial framework” for any updates. CEQ seemed to indicate with these suggestions that agencies should preserve the coordinated approach that was set by the CEQ regulations for the last five decades. On February 25, 2025, CEQ published an interim final rule rescinding its NEPA regulations. 

Reducing NEPA Regulations and Updating Policy Documents

While the Executive Order directed CEQ to coordinate consistent revisions to agency-level CEQ regulations and the Memorandum proposed the 2020 CEQ NEPA regulations as a framework for modifying agency-level regulations, federal agencies have taken a different approach and have issued interim final rules that significantly reduce their longstanding NEPA regulations and instead push the bulk of their NEPA policies and procedures to non-binding guidance documents. This is a significant shift in NEPA implementation. 

The Department of the Interior’s (“DOI”) recent interim final rule portrays this significant change. On July 3, 2025, DOI issued an interim final rule that was effective immediately and largely rescinds its existing NEPA regulations to instead rely on Departmental non-binding guidance. DOI states that its regulations were originally promulgated to supplement and be used on conjunction with the CEQ regulations that have been repealed, and, as such, its regulations are “in obvious need of fundamental revisions.”

Specifically, DOI retained and updated the following DOI regulatory provisions: (1) emergency response provisions to ensure their continued validity, which President Trump in Executive Order 14156, Declaring National Energy Emergency, directed DOI to rely on for certain energy and infrastructure projects; (2) categorical exclusions (“CEs”) and their uses, including new provisions regarding DOI bureaus relying on CE determinations made by other agencies; and (3) applicant and contractor preparation of environmental documents to add standards and procedures to ensure the process is efficient and legally defensible. All other provisions in the DOI NEPA regulations were removed and instead will be maintained in the DOI NEPA handbook that is separate from its NEPA regulations. By placing most of the NEPA procedures in guidance, they are now non-binding on the agency and DOI retains discretion to adopt different approaches on a case-by-case basis.

Importantly, DOI states that “revised agency procedures will have no effect on ongoing NEPA reviews, where DOI, following CEQ guidance, will continue to apply the preexisting procedures to applications that are sufficiently advanced.”

Similar interim final rules were recently issued by other federal agencies (e.g., US Department of Energy and U.S. Department of Transportation) with the intent of stripping their NEPA regulations to what they consider the bare necessity and instead pushing their NEPA policies and procedures to non-binding guidance documents.

These agencies intend to rely almost exclusively on updated NEPA guidance documents to comply with NEPA, which the agencies have updated outside of the Administrative Procedure Act process. While the agencies’ updated NEPA guidance vary, overall they share the following key revisions: (1) clarification on what agency actions are subject to NEPA; (2) limits on the scope, duration, and page limits for environmental assessments (“EAs”) and environmental impact statements (“EISs”), with a push to narrow the focus in the wake of the U.S. Supreme Court’s (“SCOTUS”) decision in Seven County Infrastructure Coalition v. Eagle County; and (3) expansion of the use of CEs to minimize the agency actions that need to be evaluated in an EA or EIS. 

Specifically, the updated procedures include the following general statements and requirements, among others:

• Agencies must comply with the time and page limits for EAs and EISs set by the Fiscal Responsibility Act’s amendments to NEPA: 75 pages and one year for an EA, and 150 pages and two years for an EIS, with a maximum of 300 pages allowed for extraordinarily complex EISs. These page limits do not include citations or appendices, and each agency must certify that they have made good faith efforts to comply with these limitations.
• Agencies have discretion to determine if public review and comment is necessary for draft EISs. Public review and comment on draft EISs were requirements set by the repealed CEQ regulations and are not required by NEPA. Notably, the duration for the discretionary public comment period varies between the agencies, with the Federal Energy Regulatory Commission NEPA procedures saying the period should “generally” last 45 days and DOI saying it “may” last 30 days.
• All environmental reviews will focus on whether the environmental effects of the proposed action are significant and identify the scope of consideration of any environmental effects that extend outside the geographical territory of the project or might materialize later in time.
• Where emergency circumstances exist, the agencies will consult with CEQ about alternative arrangements for compliance, which supplements the emergency provision retained in the bare bone NEPA regulations.

Each agency’s updated NEPA guidance documents vary and should be reviewed closely by project developers. 

Potential Implications

Federal agencies are under explicit instructions to eliminate procedural delays. To accomplish this task, it appears that agencies are taking actions to overhaul the NEPA process to remove regulatory constraints and enable faster decision making that does not need to comply with regulatory procedural safeguards and affords the agencies more discretion. By taking NEPA implementation outside of the regulatory framework, agencies will have discretion to implement their non-binding NEPA guidance as they see fit on a case-by-case basis and can quickly change their NEPA guidance without the same public notice and comment process required for regulations.

Unfortunately, this new approach will likely lead to uncertainty for project developers and the public and federal agencies implementing NEPA inconsistently. Project developers will need to work closely with the agencies to determine how the agencies will be applying the relevant NEPA guidance to their specific projects. Without the CEQ regulations to provide a framework and with the stripping of the federal agencies’ NEPA implementing regulations, it is likely that agencies will carry out NEPA implementation inconsistently. These inconsistencies may be seen in the scoping process for EISs, the public review and comment process, the interagency coordination process, and the identification of “significant” environmental effects to be analyzed, just to name a few. At least in the near term, this may lead to project delays as the agencies work through how their NEPA guidance should be implemented. In addition, project developers and the public will need to monitor the agencies’ NEPA guidance documents for changes because agencies are able to quickly modify guidance documents without a public notice and comment process. 

Depending on how the agencies apply their NEPA guidance, there may be an increase in project-level NEPA challenges. Environmental groups and project opponents may challenge agency NEPA reviews and corresponding decisions that rely on the updated NEPA regulations and guidance documents, arguing that they do not satisfy the statutory NEPA requirements. It remains to be seen if federal courts will find the agencies’ guidance approach to NEPA implementation to produce legally sufficient NEPA analyses.

These NEPA actions were issued on the heels of SCOTUS’s decision in Seven County, which limits judicial review and may significantly narrow the scope of NEPA analyses. It remains to be seen how the agencies and courts will implement the Seven County decision. See our article on the Seven County decision and its key takeaways here.

Given the number and pace of substantial developments in the NEPA space, project developers should remain mindful of the evolving NEPA regulation and guidance document of each relevant agency throughout the entire project-planning process.