Regulatory Alert: FAA Releases Updated Guidance on NEPA CATEX for Projects with Limited Federal Financial Assistance

The Federal Aviation Administration (FAA) has released updated guidance on the National Environmental Policy Act (NEPA) categorical exclusion (CATEX) that applies to any project receiving limited federal financial assistance. The CATEX, commonly known as the Section 788(a) CATEX, was approved by Congress in the FAA Reauthorization Act of 2024 and applies to any project that (a) receives less than $6 million in federal funding or PFC revenue or (b) has a total estimated cost of no more than $35 million and federal funding comprises less than 15 percent of those total costs.

When FAA released its original guidance on the Section 788(a) CATEX in December 2024, the agency inappropriately limited its scope and took the position that the CATEX could not be applied to projects receiving zero federal funding or PFC revenue. In the updated guidance, FAA reversed its position and will now allow the Section 788(a) CATEX to apply to projects that receive no federal funding or PFC revenue. FAA indicated that the agency updated its guidance to “address input received” and align it “with current administration priorities regarding improving the efficiency of the environmental review process.”

Since the original guidance was released in December 2024, AAAE has repeatedly urged FAA to address the misapplication of the Section 788(a) CATEX in its instructions to agency staff. We urged FAA to revise its guidance in our “Commonsense Recommendations for Regulatory Reform,” which AAAE submitted to the administration in March, and again made the recommendation in our comments to the agency in August in response to the new NEPA guidance document, FAA Order 1050.1G. The recommendations were part of our broader effort to advocate for a more streamlined and expedited NEPA review process.

Background. Under NEPA, FAA must conduct environmental reviews for any “major Federal action” and prepare an environmental document—either an environmental assessment or environmental impact statement—unless the proposed action is excluded by a CATEX. In the 2024 FAA reauthorization law, section 788 provided that an “action by the Administrator to approve, permit, finance, or otherwise authorize any airport project” must be presumed to be covered by a CATEX if the project (a) receives less than $6 million in federal grant funding or PFC revenue or (b) has a total estimated cost of not more than $35 million and federal funding comprises less than 15 percent of those total costs.

Updated Section 788(a) CATEX Guidance. FAA Office of Airports’ new “revised instructions” replace the “initial instructions” that the agency published in December 2024 and explain to FAA environmental protection specialists how to apply the Section 788(a) CATEX. There are two major changes between the December 2024 and November 2025 instructions:

• First, as previously mentioned, FAA will now apply the CATEX to any projects that receive no federal funding or PFC revenue, provided that extraordinary circumstances are not present.

• Second, as required by the FAA reauthorization law, FAA adjusted the applicable thresholds to reflect increases in inflation. Thus, the CATEX is applicable to any project that (a) receives less than $6.27 million in federal funding or PFC revenue or (b) has a total estimated cost of no more than $36.43 million and federal funding comprises less than 15 percent of those total costs.