Nuclear Regulatory Commission Issues Proposed Rule Streamlining Environmental Analysis

The Nuclear Regulatory Commission (NRC) has released a draft rule revising its regulations for implementation of the National Environmental Policy Act (NEPA). The public will have 45 days (until August 21) to submit comments at https://www.regulations.gov.

The draft rule fundamentally restructures the NRC’s approach to NEPA in light of Executive Orders (most notably Executive Order 14300) requiring licensing reviews to be expedited; limitations imposed by Congress on the length and nature of agency-prepared environmental reviews; and Supreme Court precedent, including, most recently, Seven County Infrastructure Coalition v. Eagle County. If finalized and upheld on judicial review, the draft rule—together with existing and anticipated categorical exclusions from NEPA analysis—will substantially reduce, if not eliminate, case-by-case environmental review of most NRC licensing actions. This new regime would undoubtedly expedite the environmental review process, but it also faces significant pitfalls that could curtail its effectiveness.

We address some of the major changes and offer our initial insights about them below.

Major Change #1: Redefining the Effects that Must Be Considered

Perhaps the biggest change in the draft rule is its new approach to identifying the impacts of agency action. As the NRC explains, it is “redefining the scope of the environmental effects to those effects from the proposed agency action that are within the agency’s substantive authority to take action to address (e.g., by denying or conditioning a license).” Stated differently, this means that for most licensing actions—where, by statute, the only inputs relevant to the NRC’s decision-making process are whether an applicant’s proposal presents an undue risk to safety from radiation hazards or the common defense and security—the agency will consider only those effects that have a nexus to radiological safety. 

Under the proposed rule, except in the case of licenses for the possession and processing of byproduct material such as mill tailings, the NRC will not consider those impacts, even those that have a close causal connection to the proposed action, that the agency lacks legal authority to prevent or mitigate. The agency specifically identified dust, noise, and non-radiological water, air quality, and ecological impacts as examples of impacts that might be proximately caused by licensee operations but that need not be considered. This list is only the tip of the iceberg; while other statutory schemes, such as the Endangered Species Act and the National Historic Preservation Act, still require consideration of issues that the agency has historically performed in conjunction with its NEPA analysis, a substantial number of subject matters that the agency’s environmental analyses previously included will no longer be required because they do not affect radiological safety or the common defense and security.

Insight: This change is derived largely from the Supreme Court’s decision in Seven County Infrastructure, which endorsed prior case law that had held that an agency need not examine impacts that it has no authority to prevent. It also quotes from Justice Sotomayor’s concurring opinion in Seven County, which emphasized that NEPA analysis should be governed by the scope of the statutory considerations that are relevant to an agency’s decision. And while Justice Kavanaugh’s majority opinion referred in passing in a footnote to this rationale, it is important to note that his opinion also recognized that agencies should consider the direct environmental impacts of a proposed project, if for no other reason than to satisfy NEPA’s obligation that it consult with other agencies concerning the scope of potential environmental impacts. 

It remains to be seen whether the lower courts, and ultimately the Supreme Court, will accept the NRC’s narrowed view of its obligations under NEPA. A key litigation question will be whether Seven County Infrastructure permits the NRC to exclude consideration of foreseeable environmental effects that are directly caused by a licensed activity solely because those effects fall outside the agency's substantive regulatory authority. Opponents are likely to argue that the decision narrowed NEPA's scope but did not eliminate consideration of project-related environmental consequences.

Major Change #2: Reexamining the Nature of the Federal Action

The agency has also changed its approach for identifying the proposed action. Relying on Congress’s directive in the Fiscal Responsibility Act that the term “proposed action” be replaced with “proposed agency action,” the NRC has made clear that the federal action that must be evaluated under NEPA is its own decision to approve, condition, or deny an applicant’s request, and not the applicant’s underlying project. 

This shift in focus is critical because it makes clear that the agency’s analysis of alternatives—which is often described as the lynchpin of its NEPA undertaking—would be “limited to the no-action alternative (e.g., not issuing the license) because not engaging in regulatory or licensing decisions is the only reasonable alternative to the agency action.” This change would eliminate the need to consider facility siting and energy sources alternatives that are choices that an applicant—but not the agency—is entitled to pursue.

Insight: The NRC notes at the end of its discussion of this subject that “[t]he reasonably foreseeable effects of the no-action alternative would continue to include the negative environmental impacts of not implementing the proposed agency action.” This caveat may be of interest, as it appears to countenance the consideration of the negative impacts of other alternative energy sources, such as an increase in greenhouse gases or air pollution caused by the combustion of fossil fuels, in establishing that a nuclear facility is a preferable option. 

Such a comparison could arguably artificially skew the agency’s cost-benefit analysis, as it would include benefits of approving the project that are outside the agency’s authority to regulate (e.g., avoiding excess air pollution by foregoing the no-action alternative of denying the license application) yet exclude the detrimental impacts of granting the application on the ground that they are not required to be considered under NEPA. This asymmetry may provide a distinct basis for challenge because it arguably permits consideration of effects outside the agency's authority when they support approval of a project, while excluding similar effects when they weigh against approval.

Major Change #3: Setting the Stage for Expanded Use of Categorical Exclusions

Largely in light of its new limitations on the of impacts that the agency proposes to analyze (i.e., those with a nexus to radiological safety), the NRC is “proposing to expand the categories of actions that normally do not significantly affect the quality of the human environment to the list of categorical exclusions in § 51.22, such as categorical exclusions related to license renewal, construction permits, early site permits, and other common licensing activities.” The expanded list of and justifications for categorical exclusions expressly includes licensing actions undertaken pursuant to 10 C.F.R. Parts 50, 52, Part 53 for sites that fall within the plant parameter and site parameter envelopes identified in 10 CFR 51, Subpart A, Appendix C, Table C-1.  The agency likewise proposes to rely on categorical exclusions recognized by other federal agencies. 

Insight: The NRC’s expanded use of categorical exclusions would undoubtedly reduce the amount of consideration of the environmental impacts of proposed licensee action.  However, challengers are likely to argue that the agency has failed to adequately justify, on a categorical basis, its conclusion that broad classes of licensing actions lack the potential for significant environmental effects. 

The expanded use of categorical exclusions is likewise consistent with the agency’s determination, reflected, for example, in its recently published Generic Environmental Impact Statement for Licensing of New Nuclear Reactors, that the agency’s robust regulatory regime renders the environmental impacts of most licensee actions, including the probability-weighted consequences of a severe accident, to be small. The premise underlying NRC’s determination could be tested in a highly anticipated decision of the D.C. Circuit in Beyond Nuclear v. NRC.

Major Change #4: Elimination of Draft Environmental Impact Statement

The proposed rules contain a number of changes in the manner through which NRC conducts its NEPA analysis. One notable change is the elimination of the requirement that the agency issue a draft environmental impact statement and respond to public comments about the document.

Insight: This development will change the way that the issues related to NEPA compliance are raised before the agency. The agency intends to seek public comment upon a determination that preparation of an environmental impact statement is warranted. However, these circumstances are likely to be rare, and, in any event, the public will not have an opportunity to comment on the agency’s environmental analysis. And while the agency has substantially changed its adjudicatory procedures, parties dissatisfied with the agency’s examination of environmental impacts may still challenge its determinations through that process. Thus, the public’s sole opportunity to challenge the agency’s environmental analysis will be through adjudication. 

Conclusion

The NRC’s new NEPA-implementing rules de-emphasize the agency’s evaluation of environmental impacts in its decision-making processes and will largely confine its environmental conclusions to those that it already addresses through its processes for ensuring public health and safety and common defense and security. Certainly, the Supreme Court’s decision in Seven County Infrastructure will provide support for the agency’s determination that, in the main, its decision-making processes will not be enhanced by environmental considerations that its safety regime already implements. However, the dramatic shift in the agency’s approach to NEPA may give lower courts pause as they are asked to bless the reduction in the depth and breadth of the agency’s analysis of environmental considerations.