The Bureau of Land Management (the “BLM”) recently announced competitive lease sales for solar and geothermal development on public lands in the western U.S.

On November 9, 2021, the BLM will close the bidding period
to lease over 4,800 acres in the Milford Flats South Solar Energy Zone in Beaver County, Utah for solar energy development. If these parcels are leased and fully developed, they have the potential to generate over 600 megawatts of electricity, enough electricity to power approximately 100,000 homes. In Nevada, the BLM is seeking public comment
for the Luning Solar Energy Project, which will cover 560 acres dedicated to the expansion of an existing solar facility in Nevada.

Regarding geothermal energy development, on October 5, 2021, the BLM sold approximately 83,544 acres across eight different Nevada counties. The BLM decided to lease these 32 parcels after preparing environmental assessments (linked on the BLM’s ePlanning website) and finding no significant impact. Here, the leases allow for exploration and development of geothermal resources and may be extended if the lessee establishes production or proof of diligent exploration.

Similarly, in New Mexico, the BLM will offer almost 4,000 acres for geothermal lease on November 18, 2021 via a virtual sale. The parcels for these leases are in Hidalgo and Sierra counties. The environmental assessment resulted in a finding of no significant impact.

Additionally, on October 13, the Biden administration announced plans to promote expanded offshore wind development across the U.S. coasts. The Secretary of the Interior intends to sell wind leasing and development rights in state coastal waters, the central Atlantic and the gulfs of Maine and Mexico. The Interior Department is aiming for seven offshore wind lease sales by 2025, to help the United States generate power from the gusty winds at sea.

These lease sales support President Biden’s Executive Order, 14,008, Tackling the Climate Crisis at Home and Abroad (January 27, 2021), which requires an increase in renewable energy across the U.S. Specifically, the Biden administration announced a goal to achieve net-zero emissions, economy-wide, by 2050 and to double offshore wind energy production by 2030. As a result of these climate goals, in the past 10 months, 13 renewable energy lease sales have been initiated in the U.S.

On October 7, 2021, the Council on Environmental Quality (CEQ) published proposed revisions to the regulations implementing the National Environmental Policy Act (NEPA) (“Proposed Revisions”). If finalized, these Proposed Revisions would undo certain changes to the NEPA regulations that took effect in September 2020, 85 Fed. Reg. 43,304 (July 16, 2020) (“2020 Rule”).

The Proposed Revisions would make three general changes to the CEQ regulations: 1) revise the definition of “effects” to expressly include direct, indirect, and cumulative effects; 2) reduce the emphasis on an applicant’s purpose and need; and 3) allow agencies to adopt NEPA regulations that are more rigorous than the CEQ regulations. CEQ cited the directions in Executive Order 13,990, Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis
(Jan. 20, 2021), and Executive Order 14,008, Tackling the Climate Crisis at Home and Broad (Jan. 27, 2021), as justification for these revisions.

CEQ has described the Proposed Revisions as a “Phase 1” rulemaking. CEQ anticipates a second phase rulemaking (“Phase 2”), in which CEQ will “more broadly revisit the [2020 Rule] and propose further revisions to ensure that the NEPA process provides for efficient and effective environmental reviews that are consistent with the statute’s text and purpose; provides for regulatory certainty to [f]ederal agencies; promotes better decision making consistent with NEPA’s statutory requirements; and meets environmental, climate change, and environmental justice objectives.”

CEQ is accepting comments on the Proposed Revisions until November 22, 2021.

I. Definition of “Effects”

The 2020 Rule merged the distinct concepts of “direct” and “indirect” into one definition of “effects” and eliminated the concept of “cumulative” effects from the impacts an agency must examine in NEPA analysis. Particularly, the 2020 Rule defines “effects” as “changes to the human environment from the proposed action or alternatives that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives, including those effects that occur at the same time and place as the proposed action or alternatives and may include effects that are later in time or farther removed in distance from the proposed action or alternatives.” 40 C.F.R. § 1508.1(g).

Additionally, the 2020 Rule excludes from the definition of “effects” impacts that result solely from a “but for” causal relationship because “[e]ffects should generally not be considered if they are remote in time, geographically remote, or the product of a lengthy causal chain.” 40 C.F.R. § 1508.1(g)(2). Finally, the 2020 Rule excludes from the definition of “effects” impacts that “the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action.” 40 C.F.R. § 1508.1(g)(2).

The Proposed Revisions would expressly incorporate “direct,” “indirect,” and “cumulative” effects into the definition of “effects” and would not exclude impacts resulting from a “but for” causal relationship or effects outside of an agency’s authority. The Proposed Revisions would define “effects” as:

[C]hanges to the human environment from the proposed action or alternatives and include the following:

(1) Direct effects, which are caused by the action and occur at the same time and place.

(2) Indirect effects, which are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable. Indirect effects may include growth inducing effects and other effects related to induced changes in the pattern of land use, population density or growth rate, and related effects on air and water and other natural systems, including ecosystems.

(3) Cumulative effects, which are effects on the environment that result from the incremental effects of the action when added to the effects of other past, present, and reasonably foreseeable actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions. Cumulative effects can result from individually minor but collectively significant actions taking place over a period of time.

(4) Effects include ecological (such as the effects on natural resources and on the components, structures, and functioning of affected ecosystems), aesthetic, historic, cultural, economic, social, or health, whether direct, indirect, or cumulative. Effects may also include those resulting from actions which may have both beneficial and detrimental effects, even if on balance the agency believes that the effects will be beneficial.

CEQ’s proposal to reinstate cumulative impacts into the definition of “effects” is the most significant proposed change. CEQ rejected the 2020 Rule’s elimination of the obligation to analyze cumulative impacts, stating that “[d]ecades of agency practice and CEQ guidance affirm the interpretation that NEPA requires analysis of cumulative effects.” CEQ further reasoned that “[c]umulative impacts analysis is an essential component of NEPA analysis, as it allows agencies and the public to understand how the incremental impacts of a proposed action contribute to cumulative environmental problems such as air pollution, water pollution, climate change, and biodiversity loss, among others.”

CEQ attempted to justify its proposal to reinstate the concepts of direct and indirect effects by reasoning that “this change would better reflect NEPA’ statutory purpose and intent and be more consistent with case law[.]” CEQ also explained that this change “would ensure that agencies consider the full range of reasonably foreseeable effects in the NEP process, consistent with NEPA’s goal of facilitating reason-based decision making that protects public health and the environment, as well as this Administration’s policies to be guided by science and to address environmental protection, climate change, and environmental justice.”

Further, CEQ championed its proposed changes related to the causal relationship between an action and its effects. CEQ explained that the pre-2020 version of its NEPA regulations “gave agencies the discretion to identify the reasonably foreseeable effects of a proposed action and its alternatives in light of NEPA’s goals” and that “this approach provides for more sound decision making, including decisions informed by science, and a more knowledgeable and engaged public than the definition of ‘effects’ in the 2020 [Rule].”

Finally, CEQ defended its proposal to eliminate the limitation that agencies need not analyze effects that they lack the authority or ability to prevent, reasoning that “agencies may conclude that analyzing and disclosing such effects will provide important information to decision makers and the public.”

II. Applicant’s Purpose and Need

The 2020 Rule emphasizes a private applicant’s purpose and need for a proposed action when an agency has a statutory duty to review an application. Particularly, 40 C.F.R. § 1502.13 directs that the purpose and need statement in an environmental impact statement “briefly specify the underlying purpose and need for the proposed action. When an agency’s statutory duty is to review an application for authorization, the agency shall base the purpose and need on the goals of the applicant and the agency’s authority.”

The Proposed Revisions would eliminate the reference to an applicant’s purpose and need. The Proposed Revisions would revise 40 C.F.R. § 1502.13 to state simply: “The statement shall briefly specify the underlying purpose and need to which the agency is responding in proposing the alternatives including the proposed action.”

Additionally, the Proposed Revisions would make a conforming edit to the definition of “reasonable alternatives” at 40 C.F.R. § 1508.1(z). The 2020 Rule defines “reasonable alternatives” as “a reasonable range of alternatives that are technically and economically feasible, meet the purpose and need for the proposed action, and where applicable, meet the goals of the applicant.” 40 C.F.R. § 1508.1(z) (emphasis added). The Proposed Revisions would eliminate the italicized language.

As justification for the proposed changes, CEQ expressed concern that the language of the 2020 Rule “could be construed to require agencies to prioritize the applicant’s goals over other relevant factors, including the public interest.” CEQ reasoned that, instead, “[a]gencies should have discretion to base the purpose and need for their actions on a variety of factors, which include the goals of the applicant, but not to the exclusion of other factors,” including “other regulatory requirements, desired conditions on the landscape or other environmental outcomes, and local economic needs, as well as an applicant’s goals.”

III. Agency NEPA Procedures

The 2020 Rule limits agencies’ ability to develop NEPA regulations or guidance that require more rigorous review than the CEQ regulations, effectively establishing a ceiling of NEPA review. The 2020 Rule provides that, “[w]here existing agency NEPA procedures are inconsistent with the regulations in this subchapter, the regulations in this subchapter shall apply . . . unless there is a clear and fundamental conflict with the requirements of another statute.” 40 C.F.R. § 1507.3(a). Similarly, the 2020 Rule directs that “agency NEPA procedures shall not impose additional procedures or requirements beyond those set forth in the regulations in this subchapter.” 40 C.F.R. § 1507.3(b). The 2020 Rule also instructs agencies, by September 14, 2020, to “eliminate any inconsistencies” with the 2020 Rule.

The Proposed Revisions would eliminate these provisions, consistent with the regulatory requirements that predated the 2020 Rule. CEQ reasoned that “[a]gencies should be able to tailor their procedures to meet their unique statutory mandates and include additional procedures or requirements beyond those outlined in CEQ’s NEPA regulations, especially if doing so will promote better decisions, improve environmental or community outcomes, or spur innovation that advances NEPA’s policies.”

IV. Conclusion

The Proposed Revisions may impact energy projects requiring federal permits, such as those located on federal public lands. The 2020 Rule was intended to streamline NEPA analysis and promote efficiencies, and a final rule undoing the 2020 Rule may contribute to lengthy NEPA reviews.

Land users concerned with, or who support, the proposed regulatory changes should submit comments on the Proposed Revisions to ensure a strong administrative record that reflects their positions on the rules. Moreover, land users should anticipate additional proposed revisions to CEQ’s NEPA regulations.

More than ever before, companies are seeking to reduce their carbon emissions into the atmosphere. One solution that energy developers are seeking to deploy is carbon capture, use, and sequestration (CCUS). Growth in the CCUS industry has been spurred by recent Section 45Q federal tax credit legislation, as detailed in Michael Snider’s article on the topic. However, difficulties remain in deploying CCUS projects at scale; some of these issues include a lack of clarity around pore space ownership and a lengthy permitting process for CCUS wells.

Setting aside the “use” component of CCUS projects, for carbon capture and sequestration projects (or CCS projects), to sequester carbon it must be stored underground through injection wells that are injected into pore space. So, what is pore space and who owns it? At its most basic level, pore space is comprised of the tiny voids in subsurface rock that are unoccupied by solid material, which could be used for the injection and permanent sequestration of carbon. In the United States, there is a general consensus that ownership of pore space belongs to the owner of the surface estate. However, uncertainty remains in this developing field, so ownership of the pore space should not be presumed to be vested in the surface owner, especially when there has been a severance of the surface estate and mineral estate.

Several states have enacted pore space ownership and use statutes, including the western states of Wyoming, North Dakota, and Montana. The breadth of the pore space definition and applicable statutes can vary considerably, which is why it is helpful to compare legislation between each state. (The Wyoming statutes can be accessed here; the North Dakota statues can be accessed here; and the Montana statutes can be accessed here.) Such legislation can provide clarity on which landowners’ consent needs to be obtained by a CCS project developer in order to access and use the pore space for drilling injection wells and sequestering carbon.

From a regulatory perspective, the Environmental Protection Agency (EPA) regulates several classes of underground injection wells under the Safe Drinking Water Act. CCS project developers should obtain a Class VI well permit for CCS injection well purposes (for geologic sequestration wells). However, only two Class VI wells have been permitted for injection, both of which are located in Illinois, and the permit application processing time was six years for both permits. States can apply for and the EPA may grant states primary authority to enforce and administer Class VI wells, as the EPA has granted for both Wyoming and North Dakota (which now administer these Class VI well programs in their states). It remains to be seen whether primacy of Class VI wells that is held by Wyoming and North Dakota will speed up the Class VI well permit process in those states.

Recent state and federal policy updates further illustrate the current momentum behind CCS projects. For example, on May 24, 2021, the Nebraska legislature signed into law Legislative Bill 650, which promulgated extensive legislation on subsurface geologic storage of carbon. Such legislation provides clarity that is lacking in many other states regarding pore space ownership, unitization, permitting, and long-term ownership upon project completion. A full copy of Legislative Bill 650 can be found here. On June 30, 2021, the White House released a report, prepared by the Council on Environmental Quality and mandated by Congress, which outlined potential actions that the federal government could take to accelerate CCS projects in the United States. The report notes President Biden’s commitment to increasing support for CCS research and enhancing the Section 45Q tax incentive for CCS project development. The 84-page report can be found here. Furthermore, Governor Polis’ 2021 Colorado Greenhouse Gas Pollution Reduction Roadmap included an announcement to form a task force on CCS starting in mid-2021, which is to report back to the governor within a year a recommended framework to align with Colorado’s emissions reduction targets.

Though there have been momentous upswings in legislation and regulations surrounding CCS projects the past few years, much legal and regulatory uncertainty remains. For assistance navigating the complexities of CCS projects, please contact Craig Gleaton, Katie Schroder, John Jacus, Kathleen Pritchard, and Katie Roux.

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