Summary of the Interim Final Rule on the Removal of National Environmental Policy Act (NEPA) Implementing Regulations and Its Impact on Wetlands
Overview of the Regulation Change
The Council on Environmental Quality (CEQ) has issued an interim final rule removing its NEPA implementing regulations from the Code of Federal Regulations (CFR), effective April 11, 2025. This decision follows Executive Order (E.O.) 14154, Unleashing American Energy, issued by President Trump on January 20, 2025, which rescinded E.O. 11991—the original directive that required CEQ to issue binding NEPA regulations. The rule is open for public comment until March 27, 2025.
The removal of CEQ’s regulations means that individual federal agencies will now be responsible for developing and implementing their own NEPA procedures without CEQ’s oversight. This shift aims to streamline environmental reviews and expedite project approvals, particularly for energy and infrastructure projects. However, it also raises concerns about weakened environmental protections, including for wetlands, mitigation banking, and stormwater management.
Background and Justification for CEQ’s Decision
NEPA, enacted in 1969, requires federal agencies to assess the environmental impacts of major projects before approval. In 1978, CEQ issued its first binding NEPA regulations under E.O. 11991, issued by President Carter. These regulations standardized environmental review procedures across federal agencies.
E.O. 14154 revokes CEQ’s authority to issue NEPA regulations and instead directs CEQ to issue non-binding guidance while allowing agencies to develop their own NEPA compliance rules. CEQ argues that without E.O. 11991, it may lack legal authority to maintain its NEPA regulations. Furthermore, recent court rulings—such as a D.C. Circuit Court decision in 2024 and a North Dakota district court ruling in February 2025—have questioned whether CEQ has the power to issue legally binding NEPA rules.
By removing its regulations, CEQ asserts that agencies will have greater flexibility in designing environmental review processes while reducing bureaucratic delays in permitting. However, critics argue that this move will weaken environmental oversight, particularly for projects that impact wetlands, mitigation banks, and floodplains.
Impact on Wetlands Management and Mitigation Banking
1. Increased Risk of Wetland Impacts
NEPA plays a crucial role in wetlands protection by requiring federal agencies to evaluate environmental impacts before permitting activities that may drain, fill, or alter wetlands. Without CEQ’s standardized regulations, wetlands may be at a higher risk for impacts due to:
- Weakened Federal Oversight: Agencies like the U.S. Army Corps of Engineers (USACE) and the EPA may adopt less rigorous environmental review standards for projects that impact wetlands.
- Increased Wetland Fill Permits: Developers seeking permits under Section 404 of the Clean Water Act (CWA) could face less scrutiny, leading to more wetland impacts from highways, pipelines, and industrial sites.
- State-Level Disparities: Some states have strong wetland protections, while others rely heavily on federal oversight. Without CEQ-mandated consistency, states with weaker regulations may approve more projects affecting wetlands.
2. Potential Risks to Mitigation Banking
Mitigation banking allows developers to offset wetland impacts by purchasing credits from restored or created wetlands. While mitigation banking can be an effective tool for conservation, removing CEQ’s NEPA regulations introduces several risks:
- Easier Approval of Low-Quality Mitigation Banks: Without consistent federal review standards, mitigation banks with lower ecological value may receive approval.
- “Paper” Mitigation Banks: Some mitigation banks may meet legal requirements but fail to provide meaningful wetland restoration.
- More Development Without Adequate Offsets: Weaker NEPA reviews could lead to increased development in wetlands, without requiring developers to provide sufficient compensatory mitigation.
3. Possible Positive Outcomes
- Faster Approvals for Wetland Restoration Projects: NEPA reviews can sometimes delay beneficial wetland restoration efforts. If agencies streamline their review processes, projects aimed at restoring degraded wetlands could proceed more quickly.
- More Private Investment in Mitigation Banking: A less burdensome regulatory process could attract more private investors to mitigation banking markets, potentially expanding wetland restoration efforts.
Broader Implications of CEQ’s NEPA Regulation Removal
1. Who Benefits?
- Developers and industries seeking faster permitting for infrastructure, energy, and construction projects.
- Mitigation bankers looking for less regulatory red tape in establishing new mitigation sites.
- State agencies that want more control over their environmental review processes.
2. Who Loses?
- Conservation groups and environmental advocates, who rely on NEPA-mandated reviews to prevent wetland impacts.
- Communities at risk of flooding, as wetlands play a key role in stormwater retention and flood control.
- Future mitigation banking credibility, if lower-quality mitigation projects receive approval without strong oversight.
Regulatory Considerations and Legal Challenges
The interim final rule raises several legal and procedural issues:
- Uncertainty Over NEPA Compliance: Agencies must now develop their own NEPA procedures, leading to inconsistencies in how environmental reviews are conducted.
- Increased Litigation Risks: Environmental groups may challenge weaker agency-led NEPA reviews, leading to more lawsuits that delay projects.
- State and Tribal Government Impacts: The rule shifts responsibility to states and tribal governments, which may lack resources to develop robust NEPA compliance frameworks.
Conclusion: More Risks Than Benefits for Wetlands and Environmental Protection
The removal of CEQ’s NEPA implementing regulations marks a major shift in federal environmental policy, reducing national oversight and placing more responsibility on individual agencies. While the intent is to streamline permitting, the greatest risks lie in the potential for weaker environmental reviews, particularly for projects impacting wetlands and mitigation banking.
- Short-term impact: Increased approvals of development projects, with fewer environmental safeguards for wetlands.
- Long-term impact: Uneven environmental protection, with some agencies tightening their NEPA procedures while others loosen them.
- Biggest risk: Increased wetland impacts, weaker mitigation banking oversight, and a higher likelihood of legal challenges.
- Potential benefit: Faster approvals for wetland restoration projects and increased private investment in mitigation banking.
The overall effect depends on how federal agencies respond—whether they strengthen their own NEPA processes or weaken environmental oversight to prioritize faster project approvals.