The current bill contains several provisions which would significantly alter the requirements of National Environmental Policy Act review, but it remains to be seen whether those changes will survive House review.
On August 10, 2021, the U.S. Senate passed the Infrastructure Investment and Jobs Act in a bipartisan vote after months of deliberation. The $1.2 trillion infrastructure package includes funding for roads, bridges, electric vehicles, broadband, cybersecurity, water infrastructure and grid resilience, among other priorities.
The bill has gained significant attention on account of its environmental provisions, including those that stand to streamline the review process under the National Environmental Policy Act (NEPA). These provisions reflect the latest federal attempt at reforming NEPA and, moreover, a means of reform that would be more resistant to political vicissitudes, as compared to the executive orders and regulatory amendments implemented by the Trump Administration in July 2020, or even the earlier guidance on NEPA modernization issued by the Obama Administration, which are more susceptible to being overturned or rolled back.
Given NEPA’s broad applicability, the outcome of this bill is of immense significance to domestic infrastructure development, including projects in the energy sector. Indeed, there is a tremendous need for infrastructure development over the next decade and beyond, making NEPA reform among the most pressing environmental matters.
Enacted in 1970, NEPA requires federal agencies to assess the environmental impacts of “major federal actions” before their implementation. Such actions include not just projects undertaken wholly by the federal government but also private projects that receive certain types of federal financing, require a permit or license from a federal agency, or are built and operated on federally managed lands. These triggers are far-reaching and draw many types of infrastructure projects into the ambit of NEPA review.
In general, NEPA review proceeds in stages. For example, federal actions that are not categorically exempt are usually first subjected to an Environmental Assessment (EA), which determines whether significant environmental impacts exist. If they do, the next phase in the analysis involves the preparation of an Environmental Impact Statement (EIS), which examines the potential impacts in greater detail and serves as the basis for a determination about whether the action may proceed based on its environmental effects. A key aspect of the EIS is the alternatives analysis, which requires agencies to consider potential alternatives to the proposed action to identify alternative pathways of achieving the same goal that are less harmful to the environment. Notably, certain actions are categorically excluded from the requirement to undergo NEPA analysis, while others either may be treated generically or automatically require an EIS. Moreover, states have enacted their own versions of NEPA, which generally proceed on the same principles as the federal statute.
Over the years and largely in response to litigation, the scope of what constitutes an appropriate NEPA review has steadily expanded, to the point that many proponents of projects subject to NEPA regard the environmental review process as overly burdensome and time-consuming. Indeed, in a report issued in 2020, the White House Council on Environmental Quality (CEQ) found that the average EIS completion time, across all federal agencies, is 4.5 years. Moreover, environmental groups have come to increasingly rely upon the procedural hurdles presented by NEPA as a means of initiating litigation to frustrate certain projects. Accordingly, besides delays and costs, NEPA has become a source of uncertainty to project proponents, investors, and other private stakeholders in actions that trigger the review process. This uncertainty is problematic at a time when the nation faces considerable infrastructure development needs.
All three presidential administrations of the past decade have called for NEPA reform in some capacity. The Obama Administration did so through guidance published on the fortieth anniversary of the statute, as well as through endorsing and signing into law the Fixing America’s Surface Transportation (FAST) Act (described in the next section of this alert). More aggressive were the efforts of the Trump Administration, which laid the groundwork for NEPA reform as far back as 2017, when it issued Executive Order 13807, directing the CEQ to “enhance and modernize” the federal environmental review and authorization process for infrastructure projects. The culmination of the Trump Administration’s efforts to reform NEPA were CEQ’s comprehensive amendments to the statute’s implementing regulations, which were promulgated in 2020. Although some in industry welcomed these amendments, environmental groups generally criticized them as circumventing the statute’s core objective of protecting the environment, while others observed that the amendments were internally contradictory and confusing.
For these reasons, the Biden Administration stopped the implementation of the Trump Administration NEPA reform. On January 20, 2021, President Biden’s first day in office, the White House rescinded Executive Order 13807. The White House also imposed a two-year moratorium on the implementation of the July 2020 regulatory amendments to give the administration time to develop its own proposed rule. The promise of a rulemaking signifies the Biden Administration’s acknowledgement that NEPA reform is necessary to fulfill the Administration’s ambitious goals regarding infrastructural development and decarbonization. It is against this backdrop that the NEPA provisions of the Senate bill become significant.
NEPA Provisions of the Senate Bill
The Senate bill’s key NEPA provisions include the following, all of which are intended to streamline the environmental review process:
A number of these provisions reflect requirements and objectives set forth in Executive Order 13807, which, as stated above, Biden rescinded on his first day in office. The incorporation of these concepts into the Senate bill seem to reflect concessions to Senate Republicans. The question becomes whether these concessions stray too far from the positions that House Democrats have staked out on NEPA reform. In this connection, it bears emphasis that Democrats and environmental groups were particularly staunch in their opposition to Executive Order 13807 when it was issued.
In addition to reviving elements of Executive Order 13807, the Senate bill reauthorizes those sections of the FAST Act that pertain to environmental permitting. These sections have come to be known as FAST-41. Among other things, FAST-41 created an inter-agency council to track environmental reviews in connection with federal permit issuance and to resolve potential conflicts and duplications of effort between the various agencies involved. FAST-41 was set to expire in December 2022, but the infrastructure bill would repeal that sunset provision to make FAST-41 survive indefinitely.
The Senate bill is now set to be considered by the House, which may reject the bill, pass it as is, or pass it with further amendments. The timing of the House’s vote on the infrastructure vote is unknown. Speaker Nancy Pelosi has indicated that she will not bring the bill to a vote until the Senate passes its $3.5 trillion social policy companion bill; however, some members of the House maintain that they will not vote on the companion bill until the infrastructure bill is signed into law. It remains to be seen which approach will prevail, as well as whether the President himself will approve the final bill, although it is relevant that voiced support for the bill in late June.
Companies set to undertake or invest in projects subject to NEPA in the near future should pay special attention to how the statutory amendments proposed in the infrastructure bill play out during House negotiations and may wish to lobby their representatives to shape the outcome of the legislation.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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