This paper is a joint product of the Foundation for American Innovation and the Institute for Progress. Click here to download a pdf of the full paper.
Executive Summary
On day one, President Trump took bold executive action to streamline the National Environmental Policy Act (NEPA), revoking the 1977 Executive Order (EO) that gave regulatory authority to the Council on Environmental Quality (CEQ). President Trump’s new EO also directs CEQ to rescind existing NEPA regulations and issue new guidance that significantly accelerates permitting timelines. With these measures, the Trump administration has thrown out decades of NEPA regulations and related case law.
CEQ's NEPA regulations and related court decisions have dramatically expanded NEPA's reach far beyond its statutory mandate. These regulations imposed expansive definitions of key terms like “major federal action” and “significant effect,” required agencies to analyze indirect and cumulative impacts, and created detailed procedural requirements that became magnets for litigation by project opponents such as bad-faith, extreme environmentalists. By revoking CEQ's regulatory authority and directing the creation of streamlined guidance, the president’s EO creates an opportunity for CEQ to interpret NEPA’s requirements more narrowly, reducing the number of projects that trigger review, and limiting the scope of analysis required for projects that do trigger review.
If these regulatory changes are to survive court challenges, they must fit within NEPA’s statutory requirements. Fortunately, the Fiscal Responsibility Act (FRA) of 2023 updated the language of NEPA, providing a clear directive to simplify and streamline environmental review. The following recommendations are designed to significantly streamline NEPA while being careful to reasonably interpret the law.
CEQ and implementing agencies can leverage reasonable interpretations of statutory NEPA and FRA language to achieve three significant goals:
1. Narrow the set of actions that trigger NEPA in the first place.
2. Expand the set of actions that are eligible for a Categorical Exclusion (CatEx).
3. Narrow the set of actions that require an Environmental Impact Statement (EIS).
We offer three reforms to pare NEPA back to fulfill its true statutory goals. First, to narrow the set of actions that trigger NEPA, CEQ should redefine “major federal action” to ensure that projects with low levels of federal involvement do not trigger NEPA. Second, to expand the set of actions that are eligible for a CatEx, CEQ should set a clear and broad standard for actions that “normally [do] not have a significant effect on the human environment.” Third, to narrow the set of actions that require an EIS, CEQ should set a high standard for what constitutes a “reasonably foreseeable” significant effect. In each case, CEQ should be careful to reduce the litigation attack surface for agencies, advising agencies to consider issues like indirect effects under minimal scrutiny.
These recommendations embrace the principle that NEPA review should focus on analyzing large, disruptive infrastructure projects. Federal actions with no significant impact on the environment should be cleared as quickly as possible, or not reviewed at all. Limiting the definitions of “major federal action” and "significant," as well as expanding the use of categorical exclusions, will help reduce the procedural burden on actions with little environmental impact. Transparency and public input are good, and the public deserves to know the costs of proposed projects. But obstructionist litigation is not legitimate input. Complex analyses — like cumulative impacts — should not be subject to the same legal scrutiny that direct costs are.
