CEQ’s Latest Categorical Exclusion Guidance and How Technology Can Help

Earlier this year, the Council on Environmental Quality (CEQ) issued updated guidance on “Establishing, Revising, Adopting, and Applying Categorical Exclusions Under the National Environmental Policy Act.”  The title of the guidance essentially serves as its table of contents. The first two topics – “establishing” and “revising” categorical exclusions (CEs) are straightforward and mostly administrative in nature. It’s “adopting” and “applying” categorical exclusions that introduce new policy concepts worth unpacking. It’s also in these two topics that we see opportunities for applying emerging technology to help accelerate screening and “fit” for categorical exclusions.

Does NEPA Apply?

Before considering how to adopt or apply categorical exclusions, practitioners should first determine whether the National Environmental Policy Act (NEPA) applies at all. The CEQ guidance assumes the existence of a federal action subject to NEPA, but the Fiscal Responsibility Act (FRA) narrowed the universe of actions that trigger NEPA review. Specifically, the FRA amended NEPA in several meaningful ways, including a change to the definition of a “major federal action.” Since its enactment, the “major federal action” trigger for NEPA was understood by practitioners to encompass any federal funding, permit, authorization, or other action by a federal agency. Nearly any discretionary action was considered a “major federal action” for the purposes of NEPA and thus triggering an evaluation. Although the vast majority¹ of NEPA determinations were covered by CEs, Congress chose to amend NEPA to constrain its applicability by defining the term “major federal action” in the NEPA statute. 

Central to that definition is the list of exclusions where the term “major federal action” does not apply, which includes “loans, loan guarantees, or other forms of financial assistance where the federal agency does not exercise sufficient control or responsibility over the subsequent use of those funds” and “activities or decisions that are non-discretionary and made in accordance with the agency’s statutory authority.”  This addition to the NEPA statute introduced the possibility that NEPA may not apply in some circumstances and a determination of NEPA applicability is now the first screen in a project review; the default assumption that any federal action triggered NEPA is no longer appropriate.

Adopting Categorical Exclusions

In addition to defining what is and what is not a “major federal action,” the FRA also codified the concept of CEs – something that had previously only existed in the (now rescinded) CEQ NEPA implementing regulations. The FRA also amended NEPA to allow “an agency [to] adopt a categorical exclusion listed in another agency’s NEPA procedures…” In plain English, this change authorizes one agency to adopt the CE of another agency. With more than 2,000 CEs in place across the federal government, this flexible authority allows agencies to rely on an existing CE adopted from another agency, rather than preparing a more rigorous environmental review for actions that are not expected to result in significant environmental effects. 

The new CEQ guidance also provides additional direction on how that process should work. It clarifies the requirement that the adopting agency provide public notice of its intent to adopt another agency’s CE, but the guidance is explicit that the adopting agency should not seek public comment on the adoption as it would “unduly interfere with Congress’s policy design.” To assist agencies in identifying CEs from other agencies, CEQ published a Categorical Exclusion Explorer tool. CEQ’s tool is a searchable database of all 2,105 CEs available across government, but it has limitations in finding a suitable fit for a specific type of project. It is highly effective for locating known CE but relies on the user’s understanding of which agencies and subject matter categories are most relevant. Practitioners unfamiliar with the full universe of federal CEs may struggle to identify candidate CEs outside their normal program area.

Recognizing the need for a more robust tool to narrow the universe of potential CEs, Environmental Science Associates created a custom GPT – the CE Virtual Assistant – to help users identify the right type of CE from across government for a project. This tool is built off the framework created by CEQ and introduces a conversational search ability that can help screen a project for potential CEs, ask follow-up questions to further define the project scope and potential impacts, and raise flags for possible extraordinary circumstances that may warrant additional study.

The CE Virtual Assistant takes a general project description:

Help me find a CE for utility upgrades on an existing DOE facility

And it generates a brief project understanding and a preliminary screening of likely NEPA applicability, before providing candidate CEs:

1. Project Understanding

You described utility upgrades at an existing DOE facility. Based on the information provided, I am assuming the work involves upgrades, replacement, rehabilitation, or modernization of existing utility infrastructure (e.g., electrical distribution, water, sewer, communications, steam, HVAC-related utility systems) within an existing developed facility footprint.

Unknowns:

– Type of utility being upgraded
– Whether work is entirely within existing disturbed areas
– Whether capacity is being expanded
– Whether excavation or new utility corridors are required
– Whether the facility contains historic properties, contamination, sensitive habitats, wetlands, or other extraordinary circumstances

2. Preliminary NEPA Applicability
Preliminary Determination: Clear Federal Action

Because the project occurs at an existing DOE facility and DOE would be the decision-making agency, this is likely a Federal action subject to DOE NEPA review.

For DOE actions, categorical exclusions are considered before preparing an EA or EIS. DOE may apply one or more CEs when the proposal fits an established category and no extraordinary circumstances indicate the potential for significant adverse effects.

Once the Virtual Assistant defines the project as it understands it, the Assistant will produce possible CEs that could cover the proposed action:

Candidate CE #1

Agency: DOE
CE Citation: B1.3 – Routine Maintenance

CE Title/Description: Routine maintenance, repair, replacement, and refurbishment of existing facilities, equipment, utility systems, and infrastructure.

Authority Link: DOE NEPA Implementing Procedures, Appendix B (10 CFR Part 1021)

Fit Rationale:
– Often the strongest fit for utility upgrades at existing DOE facilities.
– Typically applicable where existing utility components are being repaired, replaced in kind, upgraded, or refurbished.
– Generally aligns with electrical distribution upgrades, utility line replacement, pump replacement, HVAC utility components, controls upgrades, and similar maintenance activities.

Fit Flags / Uncertainties:
– Need to confirm whether upgrades are replacement/rehabilitation versus expansion.
– Need to know whether new utility corridors or major ground disturbance are involved.

Candiate CE #2

Agency: DOE

CE Citation: B2.5 – Facility Safety and Environmental Improvements

CE Title/Description: Safety, reliability, environmental protection, and operational improvements to existing facilities and infrastructure.

Authority Link: DOE NEPA Implementing Procedures, Appendix B (10 CFR Part 1021)

Fit Rationale:
– Frequently used when utility upgrades are intended to improve reliability, resilience, efficiency, safety, or environmental performance.
– Common for modernization projects within existing developed facilities.

Fit Flags / Uncertainties
– Need to understand project purpose (maintenance vs. modernization vs. capacity expansion)

Applying CEs to Agency Actions

The CEQ guidance also provides direction on how to apply CEs to agency actions and introduces the concept of “stacking” CEs to cover multiple components of a single agency action. The guidance reads in part:

“…agency NEPA procedures may provide for applying multiple categorical exclusions to cover a single agency action. In some circumstances, the combination of categorical exclusions can cover all aspects of the action and support the agency’s determination that the project considered in its entirety is not likely to have a reasonably foreseeable significant adverse effect.”

The concept of “stacking” CEs is not new but its inclusion in official CEQ guidance is. With CEQ’s implicit encouragement here, agencies can combine multiple CEs to cover a single project that has no significant environmental effects, obviating the need for a more rigorous and time-consuming environmental assessment. This reinforces the policy intent to make NEPA less burdensome and to seek alternative approaches to satisfy NEPA requirements without reducing environmental protections.

Here again, ESA’s CE Virtual Assistant provides helpful suggestions on ways to approach this new flexibility. Consider the following project prompt:

Prompt: USDA is proposing a modernization project at an existing research campus. The project includes: Replacement of aging underground electrical distribution lines within existing utility corridors. Installation of new energy-efficient transformers and switchgear within existing substations. Interior renovation of an existing operations building to accommodate upgraded control systems. Demolition of a small, non-historic utility support structure. Installation of environmental monitoring equipment at several locations on the developed campus. All work would occur within previously developed areas of the existing DOE facility. No expansion beyond the current site boundary is proposed. No wetlands, threatened or endangered species habitat, or known historic properties would be affected.

With this information, the Virtual Assistant can generate an approach that considers CE stacking:

3. Candidate Categorical Exclusions
This is a good example of a project where multiple candidate CEs may be applicable to different components of a single action, consistent with CEQ guidance regarding use of multiple CEs for different project elements.

Candidate CE #1 – Electrical Distribution Line Replacement

Agency: DOE

CE Citation: B1.3 (Routine Maintenance)

CE Title/Description: Routine maintenance, repair, replacement, and refurbishment of existing facilities and infrastructure.

Authority Link: DOE NEPA Implementing Procedures (Appendix B)

Fit Rationale:
– Existing underground electrical distribution lines are being replaced within existing utility corridors.
– Work remains within previously developed areas and existing infrastructure footprints.

Flags:
– Confirm replacement is substantially within existing corridors.
– Confirm no substantial increase in transmission capacity requiring new disturbance.

Candidate CE #2 – Transformer and Switchgear Modernization

Agency: DOE

CE Citation: B2.5 (Facility Safety and Environmental Improvements)

CE Title/Description: Improvements to existing facilities for safety, reliability, environmental protection, and operational efficiency.

Authority Link: DOE NEPA Implementing Procedures (Appendix B)

Fit Rationale:
– Replacement of transformers and switchgear is consistent with modernization and reliability improvements to existing utility infrastructure.
– Work occurs within existing substations.

As agencies continue implementing the FRA reforms and CEQ guidance, practitioners are being asked to evaluate a larger universe of CEs, adoption opportunities, and screening pathways than ever before. Tools that help organize those options can support faster, more consistent environmental reviews while preserving agency discretion and environmental safeguards.

Try the CE Virtual Assistant GPT for your own project or test scenario and reach out to Eric Beightel with any feedback or questions.

1 There is little reliable data on the use of CEs across government, but a useful proxy is the FHWA estimate that 95% of Federal Aid projects do not have significant environmental impacts and are covered by a CE.