On July 16, 2026, the Federal Energy Regulatory Commission (FERC or Commission) unanimously approved measures in two orders streamlining its National Environmental Policy Act (NEPA) review procedures for certain hydropower-related actions with minimal environmental impacts. In the first order, FERC issued a final rule that expands an existing Categorical Exclusion (CE)—a designation that allows an agency to skip preparing a detailed environmental review document—to cover Commission-initiated terminations and revocations of hydropower licenses and exemptions where there will be little to no ground disturbance and little to no change in reservoir conditions or downstream water flows. In the second order, FERC adopted two recreation-related CEs implemented by Tennessee Valley Authority (TVA) that will allow FERC to skip detailed environmental review when authorizing small-scale recreation facility improvements, such as trails, fishing access sites, campgrounds, and parking areas, at FERC-licensed hydropower projects.
In her comments on the orders at the Commission’s July 16 open meeting, Chairman Swett stated that the Commission “must move important approvals forward quickly while ensuring we fully meet our NEPA obligations. Today’s actions are practical, common-sense solutions that streamline our hydropower environmental review process and allow us to better focus our efforts on reviewing large-scale projects.”
Background
NEPA requires federal agencies to evaluate the environmental impacts of their proposed actions, typically through either an Environmental Impact Statement (EIS) for actions with significant environmental effects, or an Environmental Analysis (EA), for actions with unknown or lesser effects. However, a federal agency may find that a CE applies, which is a category of actions that an agency has concluded “normally does not significantly affect the quality of the human environment.” Where a CE applies, an agency may satisfy its NEPA obligations without preparing either an EA or EIS.
RM26-7-000 – Categorical Exclusion Under the National Environmental Policy Act for Certain Terminations or Revocations of Water Power Licenses or Exemptions
Prior to this final rule, FERC’s existing CE regulations at 18 C.F.R. § 380.4(a)(13) addressed only licensee-initiated surrenders of licenses, resulting in a regulatory gap for FERC-initiated terminations and revocations with no specific NEPA process.
To fill that gap, on February 19, 2026, FERC issued a Notice of Proposed Rulemaking (NOPR) (see March 2, 2026 edition of the WER here)proposing to expand the existing CE to cover Commission-initiated license terminations and revocations. FERC received nine comments on the NOPR, seven in opposition and two in support, with opponents raising concerns about the potential loss of meaningful environmental review and supporters endorsing the expanded CE as a practical efficiency measure that will reduce the regulatory burden for low-impact actions without compromising environmental protection.
The final rule adopted on July 16 amends 18 C.F.R. § 380.4(a)(13) to add a new category of actions: terminations or revocations of water power licenses and exemptions that will result in minor or no ground-disturbing activity and minor or no changes in reservoir conditions and downstream flows. Where those conditions are met, FERC may rely on the CE rather than preparing an EA or EIS. FERC explained that the final rule is intended to accelerate hydropower project approvals and effectively use FERC staff resources, while simultaneously upholding FERC’s compliance with environmental standards under NEPA for low-impact license terminations and revocations.
FERC found that its history of issuing 13 prior EAs for terminations and revocations—none of which ever required an EIS—demonstrated that such actions normally do not result in significant environmental effects, particularly where ground-disturbing activity and changes to reservoir conditions or downstream flows are minor or nonexistent. FERC rejected comments arguing that the expanded CE would eliminate meaningful environmental review, highlighting that the CE does not alter FERC’s obligation under the Federal Power Act (FPA), the Clean Water Act, the Endangered Species Act, or other applicable federal statutes, and that extraordinary circumstances review remains available to initiate an EA or EIS where warranted.
The final rule becomes effective August 17, 2026.
CX26-2-000 – Order Adopting Categorical Exclusions from Tennessee Valley Authority Under the National Environmental Policy Act
The Fiscal Responsibility Act of 2023 amended NEPA to codify the practice of one agency adopting another agency’s CEs. TVA is a federal agency that owns, operates, and maintains generating and transmission facilities throughout the Tennessee Valley. As part of its NEPA procedures, TVA has established 50 CEs, including several recreation CEs. FERC staff consulted with TVA between June 2024 and December 2025 to consider the appropriateness of adopting TVA’s recreation-related CEs for use in conjunction with actions at FERC-jurisdictional hydropower projects. Following that consultation, FERC identified two TVA CEs as appropriate for adoption:
- CE 22 covers the development of dispersed recreation sites generally not exceeding 10 acres — such as trails, primitive campsites, fishing access improvements, and boat portage enhancements — including installation of guardrails, gates and signage, hardening and stabilization of sites, trail construction, and access improvements.
- CE 23 covers the development of public use areas resulting in physical disturbance of no more than 10 acres, including construction of parking areas, campgrounds, stream access points, and day use areas.
FERC found that authorized recreation activities at FERC-licensed hydropower projects are substantially similar to the activities covered by TVA CEs 22 and 23, and a review of 26 similar past Commission actions confirmed that they would not result in significant environmental impacts, absent extraordinary circumstances. FERC explained that it will determine whether there are extraordinary circumstances that would cause a normally excluded action to have a significant environmental effect, such that an EA or EIS might be required.
The adopted CEs take effect August 16, 2026.
Commissioners LaCerte and Rosner issued a joint concurrence expressing support for the adopted CEs as “a pragmatic step toward regulatory efficiency” that will “reduce the administrative burden for approving activities that pose minimal or no environmental impact.” The Commissioners noted that the adopted CEs may draw further attention to FERC’s November 2025 Notice of Inquiry on its processes for reviewing certain post-licensing activities at hydroelectric projects under Part I of the FPA. In that context, the Commissioners raised questions about whether FERC’s current framework creates unnecessary delays and costs for activities such as upgrading aging turbine components, rewinding a generator, or undertaking routine maintenance, and whether activities consistent with FPA section 10(b), which reserves prior Commission approval for “substantial alteration[s] or addition[s] not in conformity with the approved plans” should be covered by a blanket authorization.
A copy of FERC’s final rule, issued in Docket No. RM26-7-000, is available here. FERC’s order, issued in Docket No. CX26-2-000, can be accessed here.