Week Ending January 10, 2020

White House Plan for NEPA Reform Welcomed by Industry, Other Sectors

This Article Appears as Published in Foster Report No 3281
White House Plan for NEPA Reform Welcomed by Industry, Other Sectors

The White House proposal to update the regulations for carrying out the National Environmental Protection Act (NEPA) was applauded by the oil and natural gas industry January 9, with construction trade unions and others praising the planned reforms as long overdue.

President Donald Trump announced the proposal at a White House event, along with White House Council on Environmental Quality (CEQ) Chairman Mary Neumayr, Interior Secretary David Bernhardt, and other cabinet members.

The proposed rulemaking is subject to a 60-day comment period, and CEQ will hold two public forums to gather input, one in Denver and one in Washington, D.C. A final rule could be issued after comments are received, with legal challenges expected, which could halt it from taking effect during the current administration.

The timing of the proposed changes makes them somewhat dependent on the outcome of the 2020 presidential election, analysts noted. A different president could reverse the CEQ proposal, much like the Trump administration has done, and if Trump fails in his re-election bid, the regulatory reform efforts could prove temporary, said Christine Tezak of ClearView Energy Partners LLC.

For the pipeline industry and others in the energy sector, groups are poring over the language of the proposed rule on what would be covered and whether projects would qualify for categorical exclusions from the law. The proposed rule modifies the threshold applicability analysis that agencies take to determine whether NEPA applies to various actions and provides agencies the ability to make such determinations on a case-by-case basis.

Numerous groups and Trump administration officials noted that the NEPA regulations have not undergone modernization in more than 40 years. The head of the Bipartisan Policy Center (BPC), Jason Grumet, said every president since Jimmy Carter has sought to improve the cumbersome process for NEPA reviews of major infrastructure projects.

Grumet said the current NEPA process actually harms the nation’s ability to move towards decarbonization to address climate change by slowing down construction of low-carbon or carbon-free energy projects. “Absent meaningful improvement to the permitting process, it is hard to imagine the nation dramatically revamping its energy and transportation systems in time to avoid the worst effects of climate change or strengthening our resilience against the climate driven risks that are already unavoidable,” Grumet said in a statement.

Trump has emphasized infrastructure investment essentially since he took office, and an executive order to streamline environmental reviews preceded an advanced notice of proposed rulemaking from CEQ in 2018. The proposed rule is the next step in the process that aims to cut the NEPA review process to a maximum of two years, with size limits for documents and a lead agency responsible for a schedule and eliminating duplication by other agencies.

The goal is to have agencies request information from applicants earlier in the process, improve coordination to reduce delays and reduce the scale and scope of environmental impact statements (EIS) and other analyses to more manageable documents, officials said. Because EIS documents have grown so unwieldy over time, agency personnel often do not have time to go through them to ensure the conclusions are correct, defeating the purpose of the law, a senior administration official said.

Because NEPA is a procedural statute that directs agencies to consider significant environmental effects as they consider various projects, such as road, bridges, pipelines or any major construction or land use, it has been the most litigated element of environmental reviews, Neumayr said. The underlying statutes such as the Clean Air Act, Clean Water Act and Endangered Species Act remain in place and nothing in the proposal would eliminate the protections that Congress has enacted to safeguard the environment, she said.

The average time for reviewing projects has grown to more than four years, and for certain projects well past 10 years, Neumayr said, with EIS documents exceeding 600 pages on average. Over time, implementation of NEPA has become increasingly complex and time consuming for federal agencies and project applicants, and the reforms laid out in the proposed rule are sorely needed, officials said.

Numerous Trump administration officials commended the plan, asserting that the regulations to implement the law have bogged down development and hindered private investment in infrastructure. “The purpose of NEPA is noble; its application, however, has gone off the rails. The action by CEQ is the first step in bringing common sense to a process that has needlessly paralyzed decision-making,” said Bernhardt.

During his remarks at the White House, Trump said NEPA has become “big government at its absolute worst, and other countries look at us and they can’t believe it.” Surrounded by transportation officials, construction workers and others, Trump said America is a nation of builders. He said it took five years to build Hoover Dam and less than a year to build the Empire State Building, but today it can take 10 years to gain a permit for a simple road project.

The proposed rule would modernize and simplify the environmental review process, avoid duplication by facilitating use of documents required by other statutes or prepared by state, local or tribal agencies.

It would set a presumptive time limit of two years for an EIS, with a single record of decision and a lead agency to resolve any disputes. The proposal would clarify terms and the scope of NEPA reviews as it is applied to particular actions and ensure environmental protection is maintained, officials said.

While media reports before the proposed rule was issued indicated that the plan would have agencies dismiss the effects of climate change or emissions from project reviews, it would not strip anything that is currently considered for such reviews, officials said. Effects that are reasonably foreseeable and have a close causal relationship with the proposed action would be considered.

The proposed rule also states that analysis of cumulative effects is not required under NEPA, and that “major federal action” does not include non-discretionary decisions and non-federal projects — those with minimal federal funding or involvement. It aims to clarify that reasonable alternatives to a project requiring consideration must be technically and economically feasible.

Language in the proposed rule attempts to clarify that agencies should only analyze significant effects, and that “effects should not be considered significant if they are remote in time, geographically remote, or the result of a lengthy causal chain.”

CEQ proposed to codify a U.S. Supreme Court ruling from Department of Transportation v. Public Citizen that the definition of effects should not include effects that an agency has no authority to prevent or would happen even without agency action because they would not have a close causal connection to the proposed action. “CEQ invites comment on the proposed revisions to the definition of effects, including whether CEQ should affirmatively state that consideration of indirect effects is not required,” it said.

The effects language would be a major factor for whether FERC should consider emissions from downstream use of natural gas or upstream production of gas when reviewing pipeline applications.

The proposal would ensure appropriate consultation with tribal governments and eliminate provisions in the current regulations that limit tribal interests, according to a fact sheet on the proposal from CEQ.

The immediate reactions to the proposal were predictable, with the oil and natural gas sector welcoming the development and others criticizing it. The Sierra Club, Natural Resources Defense Council and others criticized the proposal, asserting that it would take Trump’s skeptical view of climate change and place it in regulations. They vowed to fight against the proposal, which they said would allow agencies to ignore the effects of climate change and the cumulative impacts of rising sea levels and extreme weather.

The Interstate Natural Gas Association of America (INGAA), American Gas Association, and other energy sector trade groups praised the move, noting that the regulations associated with the law have not undergone a significant review in roughly 40 years. The lack of clarity in the current process has led courts to try and fill in the gaps, which has resulted in lengthy litigation and project review delays, groups said.

The CEQ proposal “is an important step in restoring the intent of NEPA by ensuring that federal agencies focus their attention on significant impacts to the environment that are relevant to their decision-making authorities,” said Don Santa, president and CEO of INGAA. Restoring efficiency in the NEPA review process will enhance public safety, improve environmental outcomes and deliver cost benefits to consumers, he said in a statement.

During a media briefing before the proposed rule was released, when media reports indicated agencies would not have to consider climate change in their reviews, Santa said the focus should be on direct effects of projects. INGAA will be focusing on “how far downstream do you look in terms of the indirect effects” of a project, which is a point of contention at FERC.

Commissioner Richard Glick asserts that NEPA and the Natural Gas Act, along with directives from the courts, enable FERC to provide more analysis of GHG emissions from indirect effects of natural gas pipelines, while the majority of Chairman Neil Chatterjee and Commissioner Bernard McNamee maintain that the current analysis is sufficient and what is required under the law. Litigation may continue on the analyses done for current projects, but INGAA supports the position of the FERC majority, Santa noted.

On Capitol Hill, Republican leaders were praising the plan, with Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-Alaska) commending Trump and CEQ for trying to bring the permitting process under NEPA into the 21st century. “While I am still reviewing the details of this proposal, antiquated federal regulations often stand in the way of critical infrastructure and other important projects that can create jobs, improve our standard of living and energy security, and yet still fully protect the environment,” Murkowski said.

Not surprisingly, House Energy and Commerce Committee Chairman Frank Pallone (D-N.J.) had a different view, deeming NEPA reform an effort to prevent agencies from assessing climate effects of federal actions.

“Regardless of whatever spin comes from the White House, the fact is NEPA does not impose any constraints on construction or pipeline projects. It simply requires that we look before we leap, which is just common sense – something that appears to be in short supply in this administration, with Americans paying the price,” Pallone said.

House Energy and Commerce Committee members held a legislative markup hearing January 9 that included several measures to reduce carbon emissions, modernize the power grid, address climate change and enhance FERC’s review of energy infrastructure. The latter piece of legislation the Timely Review of Infrastructure Act (H.R. 1426), was favorably reported to the full committee following a voice vote by a subcommittee.

Reactions to the CEQ proposed rule included praise from the American Wind Energy Association, the U.S. Chamber of Commerce and others that have interests in building infrastructure. BPC’s Grumet said much of what is in the proposal is positive, such as trying to increase clarity and reduce conflicts among agencies.

But the proposal “also contains some overreaches that are unnecessary and will extend the very litigation the rule is designed to diminish. Unfortunately, the administration’s constructive proposals are being colored by its irresponsible position on climate change,” Grumet said.

Tom Donohue of the Chamber of Commerce and the National Petroleum Council have advocated for federal climate change action or legislation, along with NEPA reforms. “The Trump administration needs to get on board,” or the proposed rule will simply exacerbate the litigation delays it is trying to address, Grumet said.

Tezak of ClearView also commented that agency reviews under NEPA could fail judicial scrutiny, as evidenced by unfavorable court rulings for Atlantic Coast Pipeline and Mountain Valley Pipeline. Court orders suspending or vacating permits with flawed reviews could offset the potential time saved through faster-paced reviews under the proposal, she said.

By Tom Tiernan ttiernan@fosterreport.com

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