HWG LLP Energy Efficiency Advisory

By: Sean A. Lev, John A. Hodges, and Jason E. Neal

The National Environmental Policy Act (NEPA)1 is a landmark statute requiring federal agencies to assess the environmental effects of their proposed actions prior to making significant decisions (known as “major federal actions”). The Office of General Counsel of the Department of Energy (DOE) has just issued a final rule revising and expanding DOE’s NEPA rules regarding categorical exclusions.2 A categorical exclusion applies to a category of actions that the agency has determined normally does not have a significant effect on the human environment and therefore does not require preparation of an environmental assessment or environmental impact statement, both of which require a higher level of information and analysis.

These changes should help ensure that DOE conducts more efficient environmental reviews of proposed projects that normally do not result in significant environmental impacts. Notably as well, DOE’s final rule indicates that it may conduct additional NEPA rulemaking.

Changes to Categorical Exclusion B4.13 for Upgrading and Rebuilding Existing Powerlines and Related Provisions (Final Rule at 34076–82, 34093). In the new final rule, DOE clarifies options for relocating powerlines within the scope of categorical exclusion B4.13.3 The prior version of B4.13 encompassed “minor relocations of small segments of the powerlines.” The final rule deletes “minor” because it is unnecessary to qualify “relocations of small segments” with “minor.” Also, DOE revises B4.13 to specify that small segments of powerlines may be relocated “within an existing powerline right of way or within otherwise previously disturbed or developed lands.”

The new final rule clarifies that categorical exclusion B4.13 could apply to proposals for DOE financial assistance, including loans and grants, as well as any other DOE action subject to NEPA, so long as the proposed action satisfies all conditions of the categorical exclusion. It also clarifies that categorical exclusion B4.13 could include improvements to, and reconstruction of, access roads, laydown areas, and related work that are part of the proposed action and would take place within the existing right-of-way or relocation area. And it adds “powerline” so that the wording in the final rule is “within an existing powerline right-of-way.”

The new final rule has also added to categorical exclusion B4.13 a clarification regarding widening existing rights of way. It states that “[u]pgrading or rebuilding existing electric powerlines also may involve widening an existing powerline right-of-way to meet current electrical standards if the widening remains within previously disturbed or developed lands and only extends into a small area beyond such lands as needed to comply with applicable electrical standards.” And DOE clarifies that the categorical exclusion does not apply to underwater powerlines.

DOE also is making a conforming change to its class of action, C4, that normally requires an environmental assessment for upgrading and rebuilding existing powerlines more than approximately 20 miles in length. That conforming change removes the reference to powerline length and, instead, clarifies that an environmental assessment normally would be prepared when the proposed action does not qualify for categorical exclusion B4.13.

New Categorical Exclusion B4.14 for Certain Energy Storage Systems and Related Provisions (Final Rule at 34077–87, 34093). In the new final rule, DOE establishes a new categorical exclusion, B4.14, for the construction, operation, upgrade, or decommissioning of an electrochemical- battery or flywheel energy storage system within a previously disturbed or developed area or within a small area contiguous to a previously disturbed or developed area.4

The final rule includes discussion of DOE’s definition of a previously disturbed or developed area and regulatory criteria for deciding whether a contiguous area will be deemed “small.” DOE’s criteria for categorical exclusion make clear that it will assess what is “small” in the context of “the particular proposal, including its proposed location.”5 DOE goes on to say:

“In assessing whether a proposed action is small, in addition to the actual magnitude of the proposal, DOE considers factors such as industry norms, the relationship of the proposed action to similar types of development in the vicinity of the proposed action, and expected outputs of emissions or waste. When considering the physical size of a proposed facility, for example, DOE would review the surrounding land uses, the scale of the proposed facility relative to existing development, and the capacity of existing roads and other infrastructure to support the proposed action.”6

DOE adds that actions covered by this categorical exclusion would be in accordance with applicable requirements (such as land use and zoning requirements) in the proposed project area and the “integral elements” listed at the start of Appendix B of Part 1021,7 and would incorporate appropriate safety standards (including the current National Fire Protection Association 855 Standard for the Installation of Stationary Energy Storage Systems), design and construction standards, control technologies, and best management practices.

Changes to Categorical Exclusion B5.16 for Solar Photovoltaic Systems and Related Provisions (Final Rule at 34078–79, 34094). Categorical exclusion B5-168 previously included the installation, modification, operation, and removal of solar PV systems located on a building or other structure or, if located on land, within a previously disturbed or developed area generally comprising fewer than ten acres. In the new final rule, DOE changes “removal” of a solar PV system to “decommissioning.” Decommissioning encompasses recycling and other types of actions that occur when a facility is taken out of service.

DOE has also removed the acreage limitation for proposed projects. DOE states that, based on its experience, acreage is not a reliable indicator of potential environmental impacts. DOE has added a condition to categorical exclusion B5-16 that the proposed project be “consistent with applicable plans for the management of wildlife and habitat, including plans to maintain habitat connectivity.” Further, categorical exclusion B5.16 continues to require that the project must not be one that would have the potential to cause significant impacts on environmentally sensitive resources, including threatened or endangered species or their habitat.

Conclusion. NEPA reviews can be very time-consuming. The new final rule amending DOE’s NEPA procedures is intended to make them more efficient where proposed projects normally do not result in significant environmental impacts. Stakeholders played an important role in the rulemaking. They made significant points, and DOE was required to address them. As DOE undertakes additional rulemaking on NEPA procedures, stakeholders should continue to provide helpful facts to the agency so that important projects are not unnecessarily delayed where they will not have significant environmental impacts.

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For more information on HWG LLP’s energy practice, please contact Sean A. Lev, , John A. Hodges, or Jason E. Neal. Sean Lev has served as Acting General Counsel and Deputy General Counsel for Environment and Nuclear Programs at DOE.

This advisory is not intended to convey legal advice. It is circulated to clients and others as a convenience and does not reflect or create an attorney-client relationship as to its subject matter.

1      42 U.S.C. § 4321 et seq.

2      DOE, Office of General Counsel, National Environmental Policy Act Implementing Procedures, Final Rule, 89 Fed. Reg. 34074 (Apr. 30, 2024) (to be codified at 10 C.F.R. Pt. 1021).

3      10 C.F.R. Pt. 1021, Subpt. D, App. B, B4.13 (upgrading and rebuilding existing powerlines).

4      To be codified at id. B4.14 (construction and operation of electrochemical-battery or flywheel energy storage systems).

5      10 C.F.R. § 1021.410(g)(2).

6      Id.

7      DOE list several conditions as “integral elements” at the start of Appendix B of Part 1021. In summary, these include that a proposal must be one that would not: (1) threaten a violation of applicable statutory, regulatory, or permit requirements for environment, safety, and health, or similar requirements of DOE or Executive Orders; (2) require siting and construction or major expansion of waste storage, disposal, recovery, or treatment facilities (including incinerators), but the proposal may include categorically excluded waste storage, disposal, recovery, or treatment actions or facilities; (3) disturb hazardous substances, pollutants, contaminants, or CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act)-excluded petroleum and natural gas products that preexist in the environment such that there would be uncontrolled or unpermitted releases; (4) have the potential to cause significant impacts on environmentally sensitive resources as spelled out in detail in Appendix B, or (5) involve genetically engineered organisms, synthetic biology, governmentally designated noxious weeds, or invasive species, unless the proposed activity would be contained or confined in a manner designed and operated to prevent unauthorized release into the environment and conducted in accordance with applicable requirements, such as those of the Department of Agriculture, the Environmental Protection Agency, and the National Institutes of Health.

8      10 C.F.R. Pt. 1021, Subpt. D, App. B, B5.16 (solar photovoltaic systems).