Updating the National Environmental Policy Act (NEPA)

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society’s Environmental Law & Property Rights Practice Group, was recorded on Tuesday, March 24, 2020, during a live teleforum conference call held exclusively for Federalist Society members. 

 

Dean Reuter:  Welcome to The Federalist Society's practice group teleforum conference call. This afternoon's call is about NEPA. My name is Dean Reuter. I’m Vice President, General Counsel, and Director of Practice Groups at The Federalist Society.

 

      Please note that all expressions of opinion are those of the experts on today's call.

 

      We’re very pleased to welcome five guests to our call today, one of whom will be our moderator. I’m going to turn things over to our moderator, and that’s Brent Fewell. He is General Counsel at ConservAmerica, and you can find more information about him The Federalist Society’s website. But with that, Brent Fewell, the floor is yours.

 

Brent Fewell:  Well, thank you, Dean. My name is Brent Fewell, and I’m with ConservAmerica. For those unfamiliar with ConservAmerica, we are a nonpartisan, nonprofit environmental organization dedicated to the development and advancement of sound environmental and conservation policies that leverage private investment, embrace local solutions, and spur innovation.

 

      ConservAmerica is pleased to be cohosting today’s debate with The Federalist Society, and I’m pleased to be introducing our speakers, Mario Loyola, Professor Richard Epstein, and Professor Robert Glicksman, and Tim Male. Each of our speakers will have ten minutes to provide their remarks and perspectives, and then we will allow a two to three minute rejoinder to allow our speakers to respond to each other’s remarks. And then at the end, we will open the line for Q&A for you all on the phone.

 

      Before turning it over to our speakers, I wanted just to offer a brief reflection on NEPA, including my own experience with the NEPA process. As an environmental practitioner, my professional career got its start preparing NEPA documentation and permitting for both private and public infrastructure projects. The NEPA process was critically important, and there’s no doubt in my mind that it forced my clients to think hard about the planning of their developments to minimize the environmental footprint and adverse impacts on local communities. I also found myself being asked at times by opponents of locally unpopular projects to help them use the NEPA process to delay and, where possible, stop certain projects from advancing.

 

      So while I’ve witnessed firsthand the important benefits of NEPA, I’ve also witnessed its abuse at the hands of some to stop projects vital to America’s economy. ConservAmerica has aligned with many who have called for NEPA reform, first because we believe it is critically important to have a rational, well-functioning environmental review process that helps to focus agencies on those issues that matter most, and second because our nation’s robust environmental protections and standards exist because of a strong economy, not in spite of it.

 

      So a little bit about NEPA. NEPA was enacted on January 1, 1970, six months after the Cuyahoga River last caught fire, eleven months prior to the creation of the U.S. EPA, and within the two to three year period that spawned today’s modern environmental laws. NEPA was enacted during a time when America’s collective conscience was focused on addressing the unguided and destructive forces of federal action and inaction.

 

      I offer the following quote, 1969, from Senator Henry “Scoop” Jackson, who wrote in a Senate report, “The public’s growing concern has figured prominently in many different areas of federal activity. Most often, it is seen in the form of citizen indignation and protest over the actions or, in some cases, the lack of action of federal agencies. Examples of the rising public concern over the manner in which federal policies and activities have contributed to environmental decay and degradation may be seen in the Santa Barbara oil well blowout, the current controversy over the lack of an assured water supply, and the impact of a Superjet airport on the Everglades National Park. And the list goes on and on.”

 

      So fast forward 50 years. Our environment is far cleaner, and the federal government’s actions are far more environmentally mindful than they were five decades ago. And a large part of that improvement can be attributed to NEPA and our modern federal and state environmental laws. However, NEPA has not been substantively updated since it was first signed into law and needs to be modernized along with the nation’s aging infrastructure. While the noble intent of NEPA remains intact, the process to ensure agencies are making informed permitting decisions is too often used as a tool to obstruct investment and block new infrastructure that in many cases is causing the very environmental harm that the law was intended to correct.

 

      For example, an airport runway expansion in Taos, New Mexico, was delayed for more than 20 years due to problems with the NEPA review process. And even in suburban Maryland, a few miles from the nation’s capital, the 16 mile Purple Line public transit project was bogged down by 14 years of NEPA review associated litigation before finally being approved. This paralysis by analysis and endless litigation does nothing to enhance environmental protections. Instead, it causes significant delays, it adds cost, and sometimes blocks projects entirely, including those projects that seek to expand renewable energy and public transit. For example, one last example, the Cape Wind Energy Project off Nantucket Sound would have reduced carbon emissions by 1.6 million metric tons per year but was delayed for 16 years and ultimately canceled, not because of environmental concerns but because of local nimbyism.

 

      It is with this backdrop that I am pleased to introduce our speakers. Professor Epstein serves as the Laurence A. Tish Professor of Law at New York University and is a Senior Fellow with the Hoover Institute. Mario Loyola currently serves as a Senior Fellow at the Competitive Enterprise Institute and, prior to CEI, served as the Associate Director for Regulatory Reform at the White House Council on Environmental Quality. Professor Glicksman is a nationally recognized expert in environmental and natural resource law and serves as the J.B. and Maurice C. Shapiro Professor of Environmental Law at George Washington University Law School. And last but not least, Tim Male currently serves as the Executive Director for the Environmental Policy Innovation Center, a sponsored project of the Sand County Foundation. And prior to that, he served as an Associate Director for Conservation at the White House Council on Environmental Quality in the Obama administration.

 

      So thank you to all our speakers for participating in today’s call. I look forward to a great discussion. Professor Epstein, the floor is yours.

 

Prof. Richard Epstein:  Thank you very much. I should say at the outset that I worked with Brent with respect to a submission that was made for ConservAmerica on the case for making a reformation of the NEPA statute, which I have long been critical of. And indeed, in 2018, I wrote an article entitled, “The Many Sins of NEPA,” which did not call for its abolition but did call for a fundamental revision of how the statute ought to work.

 

      Let me see if I can set the case up very quickly in the following way without going through particular illustrations. There’s no question that the situation on the ground in 1970 was very different from what it is today. Not only did we have the burning in Lake Erie or the Cuyahoga River, we also had the Santa Barbara oil spill which covered literally hundreds of square miles. I was living in Los Angeles at the time, and you could just watch people with greater and greater apprehension.

 

      But what has happened in the period is that in every relevant dimension of production, it turns out that industry is far, far better today, probably by at least one or two orders of magnitude than it was at those times. There are many more preventive devices. It turns out that the utilization of natural resources to get in and get and get an [inaudible 00:07:49] is sharply down. There has been what is sometimes called dematerialization, which means that you can get more and more out of less and less because of technical efficiencies. It’s also clear that when it comes to the other land, our censoring devices and our cleanup facilities are much, much greater so that mitigation can take place. 

 

      What this means, in effect, is that one has to reassess the valuation of how much protection we want to put into place before something is done relative to how much we want to do afterwards. If we know the back-end efficiencies are very, very great, what we should do is to think about NEPA in a different way and lighten up on the earlier front-end situation. This could be done in two ways.

 

      The first one is that NEPA makes a terrible mistake in policy judgements by trying to get virtually every single element on the table at the outset of a project before any approval is given. And this is not the way in which any sensible private development of projects starts to take place. In the normal construction project, what you do is you certainly have a review at the beginning, you have constant inspections, you have liability rules in place, you have insurance coverages and extra monitor and so forth, and you continue to work with the project during its life.

 

      If you try to do everything at the front end, what happens is you’re literally overloaded with information about highly remote contingencies that will never happen or happen very, very rarely. You don’t focus on the same kinds of issues. You get all sorts of delays, and delays themselves have, I think it’s absolutely critical to note, really heavy costs.

 

      There is a kind of a vision about NEPA which says that if you don’t do anything, everything is prefect in terms of environmental harms, but that’s clearly incorrect because we have all sorts of projects that are in extensive development right now, many of which are old and many of which are dirty. And so what happens is if you push the NEPA button in such a way that it becomes impossible for people to put new projects in place, what happens is to prevent a massive disruption in services from taking place, what you do is you manage to patch up with band-aids older kinds of facilities which are dirtier and more dangerous than the ones that you have in place.

 

      Essentially, the correct question and comparison you ought to make when you’re thinking about a NEPA project is are you better than the thing that you’re going to decommission? If so, you want to hasten development. If not, then you don’t want to have it at all. Now, when you hasten that development, it doesn’t mean that you do whatever is there. Certainly, to the extent that you have other rules in place, including, for example, penalties for emissions, you can improve the situation even further.

 

      So the danger that we have under the current situation and the way we think about NEPA is you have an existing project that causes, say, 100 units of environmental harm, and somebody can replace it with one that will cause 5 units of environmental harm. And the critics will start to come out and say, “Oh, no, no. You should go down to three.” The point is, you’re giving up 95 units worth of improvement in order to get what may be 2 units of gain on the other side. The correct thing to do is to put the new project on speedy development and then to monitor it to make sure that they’re going to be no mistakes, taxing various kinds of emissions so that internalization of harms will take place by the party who puts this thing into place.

 

      What happens, though, is NEPA often front loads this stuff, and it turns out it’s extremely difficult if there’s any particular mistake that’s going on to get the project going before your remedy. And so there is a huge group on the part of environmental groups, activist groups to stop this stuff. Are they really objecting to the dangers caused by, say, a pipeline? No, I think that they’re really objecting to is the dangers that they perceive to be caused by fossil fuels.

 

      It is a huge mistake in my view, in thinking about NEPA, to use it as an excuse or a cover for what should be a substantive discussion, namely a discussion of do we want to have fossil fuels, renewable energy, and so forth? I have fairly strong views on these particular positions, and I’m happy to debate them at any time. But I think this is a terrible mistake to use NEPA as a way of trying to strangle the system by shutting down pipelines over small units in order to make sure that you shift away from fossil fuels to renewables, which cannot, in my judgement, [inaudible 00:12:05]. But do this as a substantive debate. Do it here.

 

      It is often said about NEPA in its current configuration that it only is a procedural statute that requires you to take into account the relevant factors before you act, and it’s not a substantive statute. But as we well know, injunctions are an extremely powerful form of relief, and it’s one that I think to be quite welcome in the variety of cases where there’s a deliberate and constant violation of somebody else’s rights. But if it turns out there is not that, then generally, an injunction turns out to be overkill.

 

      So in the current irony, if you look, for example, at the situation with patent infringement, the United States Supreme Court is generally reluctant to give injunctions against deliberate and known infringements, which I tend to think to be a mistake. The correct rule is one that says you start with the injunction and then modify it by delay or by conditions if it turns out to be unduly onerous. But in the environmental area, you give injunctions almost as a matter of course under these circumstances, even when there’s no perceived harm whatsoever, and even when there are all sorts of ways to continue with the project under various kinds of supervision without getting yourself into a terrible kind of environmental mess.

 

      So what you need to do is to have a safety valve and to go back to what was, I think, the correct common law rule, which is not the eBay formulation of it, but the rule which says that generally speaking, you reserve injunctions to those cases where there are reparable harms. And if there’s no harm looming, you don’t give an injunction. What you do is you order people to continue to watch and to monitor the situation in order to make sure that the project will continue on a sensible path.                

 

      If many things are severable from it -- so for example, if you’re trying to figure out how you mitigate environmental losses by taking various parts of a wetland to use it for a pipeline, you can figure out what that entire amount is going to be down the road. You do not have to stop the project from going forward in order to answer that collateral question. If you’re worried about what kind of safety procedures to put into place, the sensible thing is that the company should commit itself to the best available technologies under some metric, agree to that, and then five years down the road, figure out what that particular technology is going to be. And so I think the fundamental structure here is faulty.

 

      The second mistake I think that happens under these circumstances is one that deals with the way in which courts tend to review NEPA. When NEPA was put into place, it was before the EPA, Environmental Protection Act, was passed. And essentially, people thought the statute was one which said anybody who’s running a government project should take into account multiple points of view before the government decision maker makes its final decision. But in the case that happened shortly thereafter, Skelly Wright said, “No, no, no. That’s not what the situation turns out to be. What we really have to do under these cases it to allow anybody who disagrees with the administrative decision to challenge this thing when you start to get into court.”

 

      And when you start to get into court under that situation, the game completely changes because now the folks who were most opposed to the project are the only ones who will show up in court. And so what you’ll do is you’ll get a judge like, for example, Judge Skelly Wright who welcomes these kinds of charges, even though what you’re doing is you’re not getting anything close to the median sentence.

 

      And when these reviews do come up, what you tend to see is an extremely asymmetrical response to these cases. When an agency decides that it’s going to slow down a project, often for quite frivolous reasons, it turns out that most courts are willing to say, “Fine, do it.” But the moment an agency decides to improve a particular project, then what the courts will say is, “No, no. Now the appropriate stand is for arbitrary and capricious review is to give a hard look.”

 

      And what they do is they start looking at virtually every line and every decision that’s going to be made with respect to a complex project. And it’s just child’s play if somebody has to make 10, 20, or 1,000 decisions to find one of them which is not going to quite be up to standard when the particular project is being made. What you can then do is you can send it back. There are cases in which, essentially, under the so-called live signal rule, that you’re able, under these cases to say, “Oh, we’re not going to vacate the thing. We’ll allow you to do it.”

 

      But I think as was stated in the CEQ that was put out by the White House Council on Environmental Quality in January, what you want is not to have a presumption that any defect stops things and then try to get into an exception. You want to reverse the way in which the position of situation is such that it goes that, essentially, you never give an injunction unless you can show something that comes very, very close to the environmental half standard.

 

      So if we start to do all of this stuff, what we then have to worry about is how it is that this system is going to start to play out over a variety of contexts. And let me give you two particular cases where I think things can become extremely mischievous and done so for technical reasons that really don’t make any sense.

 

      So right now before the Supreme Court, there’s a case called Cowpasture up for review, and the issue there is to whether or not you want to run a pipeline, the Atlantic Coast Pipeline, 600 feet underneath an Appalachian trail, the park service, which has jurisdiction over the trail, is entitled to demand that it control the NEPA proposition over the one-tenth of a mile beneath that particular trail. This 600 mile pipeline probably crossed through the trail, and so the question is do you have one environmental study for the full 600 miles, or do you have 29 or 20 environmental studies to cover 2 miles of this trail and have one environmental study for the rest?

 

      This is sheer delay. I think the Supreme Court justices, when they heard about this case, were somewhat incredulous that you could have that fragmentation. That gives you an extent to which NEPA can be really moved so far from its original situation. Basically, we want new projects to get through if they’re safer than the ones that they replace. And pipelines are safer than trains and busses and old pipelines.

 

      And the other situation is with respect to global warming. And here, it’s, I think, wrong in two ways. Again, to look at the pipelines, they don’t emit much of anything. If you’re telling them that what you have to do is to take into account global emissions from downstream use, that’s a complete perversion of the problem. What you really want to do under these circumstances is exactly the opposite. Review the global warming on a global perspective. Think about this in terms of tax credits of one form or another, transferable permit rights, border transactions of one kind. But you don’t want to do this through the NEPA process.

 

      And so what happens is NEPA becomes a substantive statute, and the substantive statute is one which embraces a large number of things which I think are unfound. I’m quite happy to debate those questions on the merits and to let the political process determine, at least as a first approximation, they ought to know. But I think what’s happened underneath, though, with this relentless expansion — and I’ll juts end on this note — is made it have more and more process and more and more complicated ways when the actual environmental risks that we have are a small fraction of what they were 50 years ago.

 

Brent Fewell:  Thank you, Professor. Professor Glicksman?

 

Prof. Robert Glicksman:  Okay. Thank you, Brent. I will start my remarks by admitting that I couldn’t hear everything that Professor Epstein said. He was coming in and out of focus. But before I launch into my own remarks, let me just make a couple of responses to what I did hear him say, part of which I agree with and part of which I don’t.

 

      I am in strong agreement that it would make sense to shift some of NEPA’s work from the front end to the back end of the decision making process. I would urge CEQ in finalizing its current proposal to take that advice to heart. So for example, it would make a whole lot of sense to me to supplement current NEPA procedures with post-project monitoring requirements and make sure that the anticipated effects of the proposal as it’s being implemented actually conform to what the predictions were in the NEPA analysis. Agencies have already begun moving toward an enhanced back-end analytical process through techniques like adapted management. And the courts in cases that I’m familiar with, at least, involving the Forest Service and the BLM have been quite accommodating to agency uses of adapted management to alter the timing and mechanisms of their NEPA analysis.

 

      The part that I don’t agree with is Professor Epstein’s point about the undesirability of injunctions. Injunctive relief under NEPA is really an important tool for preventing a dispute from being mooted before a court gets to the merits of deciding whether or not a NEPA violation has occurred. And in particular, I’m talking here about preliminary injunctions.

 

      And one of the ideas the courts have advanced in support of issuing injunctive relief in NEPA cases, especially preliminary injunctive relief, is to provide a mechanism for preventing project momentum from overwhelming the ability of the agency or the willingness of the agency to factor the information it acquires during the NEPA process into its decision making process. So I am not troubled by the availability of injunctive relief, and Supreme Court cases that require a showing of irreparable harm across the board, I think, can provide a mechanism for confining injunctive relief to its proper role.

 

      In terms of my own remarks, let me start by indicating that in a forthcoming essay that’s going to be published in the Environmental Law Reporter next month, Professor Alex Camacho of UC Irvine School of Law and I are going to be discussing the objectionable or problematic aspects of CEQ’s proposal. And our basic thesis is that the proposal in many ways conflicts with NEPA’s goals, sensible planning, and with the ideals of democratic governance. The proposal, again, in many ways would frustrate NEPA’s goals of fostering agency deliberation on environmental issues, the so-called stop and think function of NEPA. And it would frustrate NEPA’s effort to encourage transparency and public participation in the decision making processes, what some people refer to as the sunshine function.

 

      A former CEQ general counsel provided a valuable assessment of NEPA. She said one of NEPA’s strengths has been opening up decision making to the public. In a host of ways, CEQ’s January proposal would undercut that strength by narrowing the scope of NEPA’s application, diminishing the value of NEPA analyses that do occur, and purporting to limit the availability and scope of judicial review.

 

      Let me provide a little context, though, before I address those three main points. Studies by independent government researchers like the Government Accountability Office and the Congressional Research Service have repeatedly found that the burden of NEPA compliance is overstated. Almost 95 percent of federal actions with potentially significant impacts are covered by categorical exclusions. Almost another 5 percent are covered by environmental assessments, which leaves less than 1 percent of all NEPA reviews that take the form of preparation of environmental impact statements.

 

      In recent years, the number of impact statements prepared government wide has been under 200. So we’re not talking about an enormous number of documents here. Much has often been made about the length of time needed to comply with NEPA and the delays in proceeding with important projects that it creates. But a 2017 CRS report repudiates a commonly cited source of evidence on the purported delays attributable to NEPA, especially of infrastructure projects.

 

      Another former CEQ chair highlighted a flaw in much of the critical commentary of the statute claiming that delays in project implementation are inaccurately attributed to the NEPA process when other factors may be as or more significant reasons for delay. These include difficulties incurring project funding, inadequate agency resources due to congressional underfunding, shifts in policy or direction due to changes in presidential administration, changes in project scope, local opposition, analyses demanded by state and local officials, the need to secure non-federal permits, inadequately trained agency staff, and inexperienced senior level agency officials. In other words, attributing project delays entirely or even primarily to NEPA’s unjustified burdens is overly simplistic.

 

      So what are the three main objections I have to the proposal? The first falls under the heading of inappropriate narrowing of the scope of NEPA’s application. CEQ’s proposal would expand the use of categorical exclusions, even if extraordinary circumstances exist, by allowing agencies to ignore cumulative effects in determining the applicability of those exclusions. Existing restraints on these exclusions if extraordinary circumstances exist is meant to provide a safeguard against the misuse of categorical exclusions and expanding the use would minimize that safeguard. Expanded use of exclusions is also problematic because many federal agencies which establish their own exclusions by regulation require little or no public involvement in determining the applicability of other categorical exclusions.

 

      Related point: The proposal would considerably expand the application of what is now the very narrowly defined functional equivalence exception to NEPA’s applicability. That too is problematic because CEQ’s standards for establishing functional privilege don’t require that either procedures used to evaluate impacts or the scope of the evaluation be equivalent or even closely analogous to those that apply under NEPA.

 

      For example, a finding of functional equivalence might be justified even if the substitute procedure does not require evaluation of reasonably available alternatives as Section 1022.E of NEPA currently mandates. Courts have been very reluctant to find functional equivalents just because an agency has a role implementing environmental statute. CEQ’s proposal would make the functional equivalency exemption potentially available to any agency, not just one, with primarily environmental responsibilities.

 

      All right, so when NEPA would occur under the proposal, its value would be diminished. The proposal would eliminate the obligation to describe cumulative or indirect effects. CEQ says that it’s doing that to avoid confusion, but the proposal itself is unclear in what exactly it means. Are cumulative effects, for example, now completely irrelevant, or are effects that might have been previously covered as cumulative effects still potentially relevant if they meet the proposal’s timing and locational proximity requirements, even if we don’t call them cumulative effects anymore?

 

      In any event, the obvious design of the proposal is to circumscribe the scope of effects that merit consideration. Now, it may be a good idea to take a closer look, as Professor Epstein suggests, at the manner in which NEPA analysis should apply to projects that generate greenhouse gas emissions, but I would argue that the appropriate way to do that is not simply to eliminate the obligation to consider cumulative effects, but to tailor the obligation to consider cumulative effects in the specific context in which climate issues are likely to arise.

 

      Another way in which the utility of the analysis would be diminished is that the proposal would narrow the range of alternatives the agencies would need to consider. It would eliminate an agency responsibility to consider reasonable alternatives outside the scope of its statutory authority. But what bothers me more is that the agencies are seeking comments on whether to establish a presumptive maximum number of required alternatives.

 

      Critics of environmental regulation often complain about its one-size-fits-all approach. Well, here you have it, even though agency proposals differ enormously in terms of their nature and complexity. Some have expressed concern that specifying a number of maximum alternatives would induce agencies to pose one or two straw man alternatives in addition to the favored action and the no action alternative, and then be done with it.

 

      Finally in this category, one of the most astounding provisions in the proposal is the one that would provide that, quote, “agencies are not required to undertake new scientific and technical research to inform their analyses,” unquote. Well, that proposal simply flies in the face of decades of judicial precedent. The Ninth Circuit, for example, stated flatly early on that NEPA requires each agency to undertake research needed to adequately expose environmental harms. In another case, that court explained the preparation of an impact statement is mandated where uncertainty may be resolved by further collection of data. The purpose of an EIS is to obviate the need for speculation.

 

      The proposal imposes a series of direct constraints on public dissipation. For example, it would expand the ability of agencies to contract out their NEPA responsibilities to private project proponents, such as those seeking federal licenses or permits. It would delete the current conflict of interest provisions prohibiting consults with natural interests in the acting of a project to prepare NEPA documents for their own project. It would also eliminate the duty for contractors to even disclose the existence of any conflicts of interest. These changes would undercut NEPA’s efforts to ensure the environmental analyses would be unbiased.

 

      Further, private project proponents, for obvious reasons, may not be inclined to provide adequate time for potentially potent comments or to pay much attention to them when they are provided. Delegating NEPA’s function to self-interested private entities creates a risk that the public values reflected in NEPA will be undermined. So I think one could argue the proposal is an indication to capture.

 

      The other aspect of the proposal that I have a problem with is its prohibition on additional agency NEPA procedures. The proposal purports to prohibit other federal agencies from adopting their own supplemental NEPA procedures unless otherwise required by law. Well, that’s problematic to begin with because NEPA itself requires all agencies to comply with this statute to the fullest extent possible. If an agency thinks it’s capable of going beyond CEQ’s requirements and it would be useful to do so, NEPA arguably requires that it do that.

 

      Second, even if NEPA doesn’t require agencies to do the best they can, and even if CEQ doesn’t demand that they do so, NEPA certainly does invest in CEQ the authority to prohibit agencies from exercising their own discretionary authority under organic statutes to supplement CEQ’s procedures. And third, even if the statute does give CEQ that authority, why would it want to exercise it? It’s never done so before, and some agencies have gone beyond what NEPA has interpreted -- CEQ has interpreted as requiring with CEQ’s approval.

 

      Finally, as to the purported impacts of the proposal on judicial review, the proposal includes several provisions that appear to affect the availability and scope of judicial review. Professor Epstein referred to one of these in terms of eliminating the presumption that NEPA violations merit injunctive relief. Let me just mention a few of the provisions that would remove judicial checks on executive power and reduce the capacity of the public to seek judicial assistance in requiring agency adherence to the rule of law.

 

      The proposal states that the CEQ regulations don’t create a cause of action for purposes of the APA. I suppose that’s true in that whether there’s a cause of action is governed by Section 702 of the APA. But final agency action that violates a federal statute of regulation is reviewable under the APA as long as it qualifies as final agency action.

 

      The proposal requires the lead agency in the NEPA process to certify on the administrative record that it considered public comments. That certification would then create a conclusive presumption that the agency has actually done that, which is supposed to be binding on the courts. But the courts have independent authority to assess whether agencies have appropriately considered public comments and other relevant information and factors, and CEQ doesn’t have the authority to constrain that judicial power.

 

      Finally, the proposal provides that the regulations don’t create a presumption that a NEPA violation is a basis for either injunctive relief or a finding of irreparable harm. It specifies which violations courts should treat as harmless error. But again, CEQ has no authority to dictate any of these matters to the courts, and efforts to do so intrude on judicial authority under the APA and Article III.

 

      These provisions are especially curious in the light of this administration’s inclination to support the claim that Chevron and Auer deference improperly intrude on the authority of the federal courts. The CEQ proposal is doing the same thing in different ways. And I’ll stop there.

 

Brent Fewell: Well, thank you, Professor. Mario, the floor is yours, including responding to any comments that you’d wish to make to Professor Glicksman’s remarks.

 

Mario Loyola:  Thank you. I look forward to engaging a little bit later in the call on points that Professor Glicksman raised. I’ll just make a general set of comments.

 

      I remember when the CEQ proposal first came out. The New York Times was up with a story about it with the headline, “Administration Proposes Sweeping Rollback of Environmental Law,” or something like that. And I did something I rarely do, which is I got on Twitter and tweeted directly at the writer of the story and said, “Your headline is absolutely misleading the public on what this is. This is not a sweeping rollback. It’s a set of marginal changes that you can at best describe as streamlining. And whether you like it or not, there’s nothing sweeping about it, and there’s not much you could even describe as a rollback.”

 

      So I think that’s important to note because the CEQ proposals are, in a sense, a set of quite modest, quite marginal improvements. Some of them go to significant issues, but I think the bigger picture here is that the problems of NEPA are not marginal. They are structural, and they are very serious, and they are in the statute. And as Professor Glicksman alluded to, NEPA is not the only source of it. It’s the fact that you have all of these independent agencies with independent statutory authorities on a single project could require 20 different permits, which essentially means that the project proponent is dealing with 20 different basically independent governments in trying to get its projects through.

 

      But they key point is that this entire design suffers from some very serious flaws. And nobody -- I don’t argue with the purpose of NEPA is a laudable one. I don’t argue that the benefits of NEPA are real. They are real. They are important. But policy makers have a duty to the public to make sure that the program design passes some kind of rational test of cost-benefit. And in policy area after policy area, defenders of these various programs often defend them as if there’s nothing wrong with these programs at all.

 

      But we know that that’s not true because nobody’s perfect. And there are some programs -- let’s take an example here, Americans with Disabilities Act. The Americans with Disabilities Act is a wonderful law for a moral society to pass to take care of its most vulnerable population of people. However, if the public were to find out that, for example, take a hypothetical, every dollar of benefit to the disabled comes at a cost of $100,000 or $300,000 or $500,000 of hidden costs imposed upon the public, well, your responsible policy maker has to ask whether a better program design might be in order. And I think that that’s just a basic responsibility that we all have, no matter how much we’re attached to the programs that we advocate for.

 

      The cost of the unjustifiable and hidden costs of the NEPA permitting process are very real, and they’re very serious. They’re very serious when you look -- if you accept the premise, which I think is self-evident, that a company that has to be prepared to lose hundreds of millions of dollars because of unpredictable delays in the permitting and NEPA review process, those losses are social losses because that’s investment capital that instead of going into a project that would create jobs could ultimately just be thrown away on a project that turns into a dead end.

 

      And when you take a step back and think about the risks that -- the premium that’s imposed on capital formation for these projects, you’re in some cases creating really Bolivian levels of sovereign risk for capital formation, and I know for a fact because I’ve spent a lot of time in Texas. Texas is very lucky because of the amount of land, of private land that it has compared to any other state in the United States that it can essentially avoid triggering NEPA as long as the projects don’t leave the boundaries of the state. And there are many, many companies that literally won’t do a project if it triggers NEPA because of the uncertainty. And it’s not because they don’t want to be environmentally responsible because the state of Texas has been very successful in protecting the environment. It’s because the cost overruns are ones that any investors that will invest in these projects are ones that are prepared to lose hundreds of millions of dollars just because of regulatory delays and regulatory uncertainty.

 

      And so the basic problems of NEPA and the underlying statutes that authorize the permits, which is that you have multiple independent -- multiple agencies that are not really coordinating, agency officials that have no incentive to act kindly on the various milestones of these applications, and then courts that have really been quite activist and really paved the way for environmental advocacy groups to use NEPA, not as a way to improve agency decision making, but as a way to halt a lot of projects. This amalgam of risks is, to me, in many cases not necessary in order to achieve the environmental benefits of NEPA.

 

      So I would say that CEQ’s proposal to revise the NEPA regulations is a set of marginal improvements that tries to address some of those issues, but that the underlying problems are a matter of statutory structure and really are going to require Congress to step in and make major improvements to the program. And the NEPA works well in many ways. It’s helped to clean up the environment a lot. Nobody’s going to argue against that. Well, maybe Professor Epstein will. But a lot of people who are trying to reform NEPA recognize the benefits of NEPA. But they start with the premise that nobody’s perfect and no federal program is perfect, and some are less perfect than others. And NEPA is among the ones that could clearly be designed better.

 

      So the CEQ proposal addresses, like I said, some marginal things. It tries to make sure, for example, that NEPA is being applied to federal decisions that really are major federal actions, state projects into which the federal government has insinuated itself with 10 percent of funding or something like that, and then all of a sudden uses that leverage to take over the regulatory approval of the program. But that’s an important, again, marginal change that will only affect a certain number of situations but could help state and local governments adopt environmentally beneficial programs more rapidly.

 

      And another thing -- Professor Glicksman mentioned alternatives. It’s important to understand that — and I’ve said this in a previous FedSoc teleforum — that NEPA requires the agency to study alternatives to its action, project permit situation. Agencies sometimes confuse their alternatives with the project proponent’s alternatives. And so then you wind up with agencies studying what the private investors should be doing with private investment capital and forcing people to study alternatives that the project proponent has absolutely no interest in, would not seek an investment from, and is not going to invest in.

 

      And so I think that one of the key things to clarify, and this goes back to a D.C. Circuit decision from the early ‘90s, is to make sure that agencies are focused on the alternatives to their action. And that’s why it’s important to clarify that the agency statutory authority is what drives in the first instance the range of alternatives that it has to study. And when your applying for a permit, just like when you’re applying for a license, the agency has two basic options, which is to either grant the license or not grant the license.

 

      Now, if the agency prefers the project proponent to do something differently, there’s always an iterative, interactive process over the license application itself where in that collaborative process, the project proponent might want to consider different alternatives. But NEPA does not require the agency to study alternatives that are not its alternatives because for the agency to get into the project proponent’s alternatives violates an important principle of public policy which is that unless you have a statutory authority to do so, we don’t regulate private entities like they were public utilities which means that we stay out of their management decisions.

 

      So this is the kind of change that I think -- the kind of consideration that I think justifies a lot of the marginal changes that CEQ is proposing here. I would say in the long run that there are some sort of -- the sources of the problem are that the agencies have too much discretion over the timing for approval of these projects. And the consequence of this is that agencies -- is that project proponents are not able to plan.

 

      And if you have a basic understanding of how financing happens, of the time value of money, when an investor needs some capital investment and has these very elaborate business models that show a return of investment in quarter X and return on investment in quarter Y, but they have absolutely no earthly idea what year of our Lord they’re going to be able to start operating in, that’s a very serious problem, and it makes capital much more expensive.

 

      And so there’s a lot of projects that don’t serve -- like in countries like Bolivia. The problem with countries like Bolivia is that capital investments don’t occur because the risk to capital is too high. And luckily, we have capital markets in these countries, in this country where securities offerings to the public can be done without the kind of risk that is created by NEPA because otherwise, this would be a [inaudible 00:44:11]. And that’s an important thing to think about.

 

      The other key problem is that the discretion that agencies have over the clock that is a role that courts have come -- have assumed in micromanaging agency decision making under NEPA. It’s true that in many cases, agency discretion under Chevron has -- the court has deferred too much to the agencies’ legal interpretations of their statutes, but the other side of that coin is that courts have gotten way too deep into the weeds of agency factfinding, which is a key element of the agency process for NEPA purposes.

 

      So I think to close, I would say that at some point, Congress is going to have to look at the program design in this area. And I think that the two key initiatives that would really improve things without detracting in any way from the benefits of NEPA and, in fact, potentially would enhance the environmental benefits of NEPA is to make the NEPA process a series of predictable hurdles over which the project proponent essentially can control the clock so that when a project proponent’s application is filed, the agency has 30 days to publish the notice of intent and to the let the project proponent prepare the environmental studies because there is a potential conflict of interest there.

 

      But the law is full of mechanisms for solving conflicts of interest. Some of them are better than others. And the one that exists in NEPA now where the project proponent has to pay for a contractor, but the contractor really works for the agency because the agency is the one who chooses, this is a very cumbersome and archaic and unnecessarily burdensome way to solve a conflict of interest problem. So I think that letting the project proponent invest the effort that’s necessary in reviewing the environmental consequences, subject to agency review, and then on the other side, letting the public have much more latitude to bring environmental consequences to the agency’s attention would also democratize NEPA and reduce the need for courts to micromanage it.

 

      So I think those two objectives -- I’m working with a Senate office right now on a potential legislative reform to the NEPA process which would help solve those two problems, to give a project proponent more predictable control over the milestones of the NEPA process and to make the overall NEPA process much more democratic and less court managed.

 

Brent Fewell: Thank you, Mario. We appreciate those remarks. Batting cleanup, Tim, the floor is now yours.

 

Tim Male:  Yeah, thank you, Brent. So my name is Timothy Male. I’m the founder of the Environmental Policy Innovation Center. And our mission is to focus on policy solutions that would allow dramatically faster conservation progress. So with a mission like that, I hope it’s not a surprise to anyone that I would support a number of changes that are in this package, for example, the deadlines and page limits. Both of those changes are changes that would be associated with being able to make decisions faster, to Mario’s point, being able to build or implement projects or programs faster.

 

      To address just a couple of points that were made earlier, Professor Glicksman pointed out that the purported magnitude of the NEPA problem is overstated. I agree with that. There are only a very small fraction of federal projects that go through a full EIS. I struggle to think of, among the dozens and dozens of EISs that I’ve read, of a single project that doesn’t have significant effects and that I wouldn’t have wanted to be subject to an EIS.

 

      On the other hand, Mario’s points about the incremental nature of many of these changes is also very valid, and our comments on the package which I won’t go into in depth basically point out that we agree with 60 to 65 percent of the redline changes that CEQ has proposed. Most of those changes, or many of those changes reflect what look to us like reasonable work done by career staff with long experience in NEPA process and federal agency process and are improvements, and I agree that they are modest.

 

      I wouldn’t agree, however, that there aren’t sweeping changes in this package, and I’ll talk about a few of them in our remarks. So the first, really, that I think is a really big deal is that Congress said the purpose of NEPA is to promote efforts which prevent or eliminate damage to the environment. And it said that it was the responsibility of the federal government to use all practicable means to improve federal plans and programs and attain the widest range of beneficial uses of the environment without degradation. They talked about the critical importance of restoring and maintaining environmental quality.

 

      When the proposed regs eliminate the policy and purpose clause that previously existed, dating from the 1978 version of those regs, it eliminates, in my view, any connection between the purpose clauses in the law, Section 101, and what the regulations describe. More specifically, the CEQ regs currently talk about telling federal agencies what they must do to achieve the goals of the act to make sure that federal agencies are acting according to the letter and spirit of the law. It eliminates those statements. It also eliminates to help public agencies or public officials take action that protect, restore, and enhance the environment.

 

      What that’s all replaced with is just a statement that the purpose of NEPA is satisfied if federal agencies have considered information and the public has been informed; not considered and acted upon, not considered and selected the best alternative, the least harmful alternative, just simply considered. It’s very difficult to see how the regulatory package, if finalized, would allow any connection back to that purpose in the statute. That’s a big deal. The analogy that I would use is that it’s like putting a chef in a kitchen and told that they can’t turn off of the burner that the food is cooking on, that if it the food burns, you’re just supposed to tell someone that it’s burning.

 

      It questions the whole purpose of an alternatives analysis in an EIS. What is the purpose -- and the regs go through and in 14 different places add mention of decision making and decision makers in the regs. It’s just not clear what decisions the regulations are directing. If there’s no encouragements or guidance for agencies to choose among the alternatives that are developed, an environmental impact statement -- it’s, of course, common sense.

 

      It’s common sense that if you had two choices and they both were either acceptable to the agency or acceptable to the project proponent, a state agency developing or building a bridge or insulation of a hydropower dam, whatever it might be, it’s only common sense that if there are a couple of alternatives, and those alternatives are both reasonably implementable by the responsible party, that you would choose one that’s less harmful. But I struggle to see where, with the elimination of the purpose clause, there’s any direction for federal agencies to choose that kind of outcome.

 

      The second area that is of deep concern is around mitigation. So mitigation, and particularly compensatory mitigation, is a construct of the last couple of decades of environmental policy. It’s a construct of moderate political business and government leaders who are trying to find a path to reconcile development and economic progress with win-win outcomes for the environment. And the premise behind those policies was correct. We can pursue development and get net wins for the environment.

 

      And a great recent example is the fact that in the recent analysis of billions of birds that have disappeared over 30 or 40 years, that there’s a bright spot, and the bright spot is birds in wetlands. And in wetlands, they documented a 70 million bird increase in avifauna in America’s wetlands. That’s a result of a consistent effort to mitigate impacts on wetlands.

 

      The proposed regs really eliminate any explicit connection to mitigation under NEPA. Of course, there’s still mitigation under the Clean Water Act, the Shore Preservation Act, Endangered Species Act, but I struggle to see where mitigation is left in the process in an environmental impact statement, which the exception of a mitigated finding of no significant impact to achieve an EA.

 

      In theory, agencies could still choose to do mitigation on their own, but CEQ’s regs would propose to even limit that, directing them, and perhaps this is foreshadowed in Mario’s comments, that they could only suggest mitigation measures that are necessary and that are directly connected to its statutory authority. So if the agency doesn’t have the clear statutory authority, even if they have a good idea, they’re not supposed to put it in their comments. It’s another question of whether the responsible agency, the lead agency, considers those mitigation -- adopts those mitigation recommendations into an alternative. But to not even let agencies suggest a mitigation pathway seems very shortsighted.

 

      CEQ should really be strengthening the basis for mitigation under NEPA. To your point, Mario, about capital formation, one of the crucial problems with the NEPA process and mitigation and then alternatives is that the outcome isn’t predictable. Whether it’s greenhouse gas emissions associated with a pipeline or piles of other kinds of impacts, wetland impacts, impacts on bird populations, impacts on soil carbon, CEQ’s job should be to help develop methodologies that provide a consistent approach to calculating impacts, the same kinds of impacts as they occur in multiple projects.

 

      There aren’t, as Professor Glicksman noted, more than 150 to 200 EISs per year. We’ve got 30 plus years of those EISs accumulated. CEQ should be able to identify common kinds of impacts that occur and develop predictable tools to estimate those impacts.

 

      I was going to talk a bit about cumulative effects analysis. I’m going to skip that because Professor Glicksman talked about cumulative effects to some extent and just identify three gaps that I wish that CEQ had taken on with these regulatory changes. And they may all be wishful thinking, but I’ll recommend them anyway.

 

      The first is that in Section 101 of the law, the law calls for programs that enhance the quality of renewable resources and help the country approach maximum attainable recycling of depletable resources. That’s a clear opportunity for CEQ to interpret that language around depletable soil carbon or otherwise connect standards around carbon stocks as a renewable resource, including to create compensatory mitigation standards around sequestered carbon.

 

      The second is that I want to mention our support for page limits in EISs. EISs really shouldn’t have pages. These regulations -- the first regulations were written in 1978, not particularly amended other than modestly since then. In 20 years, EISs as written today should not look like they do. And the rule -- the proposed regulatory changes do very little to embrace the kind of technology that we have today that is technology that actually makes, to the statements that have been described about accessible to the public, technology that actually makes environmental impact analysis accessible to the public. Maps, visualization, 3D visualizations, interactive visualizations, all of those things exist best when not on a page at all. They should be the heart and soul of EISs today, not ancillary appendices or attached web links that are really not fundamentally incorporated into EISs.

 

      The last point I’ll make is that in NEPA, Congress uses the term effect and also uses the term impact. Those for years have been described more or less synonymously, but there must have been a reason that Congress used the term separately, or at least one could interpret it that way. And it would be our hope that in the future, CEQ would spend some time trying to separately define effects and impacts. In particular, the law talks about environmental effects which cannot be avoided, and those should be distinct from environmental effects which can be avoided, and an explanation from CEQ for how agencies should deal with each of those categories in an EIS process. I’ll stop there, and thank you very much.

 

Prof. Richard Epstein:  Look, I have several oppositions on things, and I just want to make a couple of comments, one in terms of the proposal that Professor Glicksman portrays as a democratic participation situation. Now, I don’t take such a rosy view of the way in which the democratic process works because it can easily be abused. If it turns out that you have hearings in which there are a couple of groups that have an intense local interest and everybody else is relatively indifferent, there can be really disproportionate impacts that take place. And there also can be various kinds of mau-mauing and difficulties.

 

      Anyone who looks at the record associated with the DAPL pipeline and the behavior the Standing Rock Sioux have described, if you watch the Standing Rock Sioux describe themselves, it was just one abuse after another. It’s not my judgement on that one, just have to look at the opinion of Judge Boasberg on that particular case. And I do not understand why there’s a democratic process requires that one goes on forever under these circumstances with constant carping and bilious behaviors and so forth. So sure, I want to get some public positions, and I think that those within a very clear timeline, and do it the way in which NEPA originally presented it, have people make their submissions and then have them make some kind of a judgement without all this endless array.

 

      The second point I want to make is on mitigation. I think mitigation as a doctrine is sometimes an extraordinarily dangerous kind of doctrine. It is one thing for you to insist upon somebody that he mitigate the harms that he causes by way of externality, so if you want to build a plant and what you’re going to do is to pollute somebody else, you better put in a settling pond in order to contain that pollution. If you damage somebody else’s property, then it seems to me that you have to fix that as well.

 

      But mitigation in the environmental area really means something very different from that. It means I want to build on my land, which was a wetland, and so under these circumstances, I have to mitigate the damage I have caused and by building a wetland somewhere else. And there are some cases in which the so-called wetland is in no  particular use in the city, and you could hold up projects forever by trying to make these people buy elsewhere.

 

      The correct answer in virtually all of these particular cases is that if somebody wants to create a wetland outside the city, it should not fall upon the particular developer of a particular lot to pay for that. It should fall upon the public at large to condemn whatever lands it needs to do it or plan a nature conservancy on a voluntary basis to start to acquire those projects. And so what NEPA does essentially is it now takes a very coercive version of mitigation which says  if you want to fill in your own land to build a house on it, now you have to mitigate the, quote, “damage.” That’s an unacceptable definition of damage in my view. The environmental statutes are perfectly sound when they use common law definitions of pollution. But if they in fact use these more exotic definitions, then they get everything wrong.

 

      The key illustration of the way in which that particular problem took place was in the very unfortunate decision in the Sweet Home case by Justice Stevens in which he sort of announced that very broad definition of harm would allow the government to designate habitat pretty much at will without regard for the consequences to the particular owner in question. He misread the statute, which essentially said if you want a habitat protection, what you do is buy that. You don’t have to buy it on public lands because you already own it. But what’s happening in these cases, you do this.

 

      The second to last problem I wanted to make is about these cumulative effects documents which I think in most cases turns out to be a racket. If you’re looking at one of these particular pipelines, the emissions that come from the operation of a pipeline are trivial and they’re perfectly standardized. There’s no reason whatsoever to make a kind of individualized judgement of what’s happening in these particular cases. What you do is you have a standard, generic plan and you put that into effect instead of having all of these things done on a kind of individuated basis.

 

      And the last point that I’ll make is I think it’s very wrong to say, “Oh, there are only 200 environmental impact statements that really matter in so many years.” You don’t want to do this by numbers. You want to do it by value of the particular properties in question. And the cases that I have worked upon centering upon various pipelines, they’re all million dollar projects, and they get held up for years for basically what I can say are perfectly trivial offenses. These pipelines are known to be safer than their opposition going in, and there is no reason whatsoever to delay them for seven years by a series of irrelevant situations that happen. The DAPL pipeline, the abuses that were done by the Obama administration when it didn’t even accept the Boasberg decision, show that you can really play politics with NEPA and have no really effect of system of judicial abuse review, that becomes an abuse.

 

      So I think that there’s much too much funniness about democratic processes, much too, shall we say, indifference with respect to property rights. And as our friend Mario said, capital formation depends upon having a set of rules. And the reason why we have other reasons why these projects tend to fail is that you scare away capital, you will find out now that the businesses start to withdraw. These are all dependent upon the delay factor. They are not independent of it. That’s enough for the time being.

 

Dean Reuter:  Let’s go to our first caller.

 

Caller 1:  NEPA’s declaration of purpose is quite broad. It’s got a lot of heterogeneous components, I think you could say. So I suppose you could say that it doesn’t really qualify for Chevron Step One, which leads me to the question of where you think it would come in under Chevron Step Two and where CEQ’s prerogatives would come in in light of that.

 

Prof. Richard Epstein:  You’re saying since the statute is ambiguous on its face, you get a lot of deference, which is going to create the usual problem of flip-flops across administrations. That’s what I think. Professor Glicksman, do you agree?

 

Prof. Robert Glicksman:  Yes.

 

Prof. Richard Epstein:  And I’ll just take it one step further. I think continuity in this area is particularly difficult, and the explanation is pretty simple. Capital projects are long term, and if it turns out that you have a fluctuating formula that goes from administration to administration, and you’re trying to put something together over ten years, then you’re going to see that happen. What you want to do is have a statutory framework so that this looks more like a bond market and less like a political bazaar such that when you get approvals in one generation, you’re not going to have them yanked away from you in the next one.

 

      And that, of course, was something that really happened in the Obama administration relative to the early Bush administration. They became just as much more antsy on these things, and a lot of projects that had previously seemed to be go became upended.

 

Prof. Robert Glickman:  Can I make two comments that are related to the points that are being raised here? Everybody, I think, agrees that predictability is a positive value and that government ought to operate in ways that induce those who are subject to its regulatory efforts or other management controls to be able to predict what’s going to happen in the future.

 

      One of the problems I have with the proposal, which I don’t think is accurately characterized as simply a series of marginal improvements, is that it upends decades of NEPA case law. So by eliminating provisions of the 78 regulations entirely or by replacing them with language that bears no resemblance to the existing regulatory language, you’re creating a massive amount of uncertainty because the courts have interpreted the regulations to mean certain things. Agencies -- project proponents have relied upon those interpretations, and now they sort of all go by the board. And I remember reading in one of the trade presses a comment from an attorney for a lot of developers that they should run as quickly as they can from this proposal because it’s going to create, at least for a while, a chaotic situation.

 

      Second point I want to make is about capital protection, and my point would just be that natural resources that are affected by agency projects subject to NEPA are also social capital that are deserving of governmental protection.

 

Prof. Richard Epstein:  On the last point, what you do is -- I’ll give you a typical illustration. You want to slow down a pipeline because there’s 3,100 feet of, shall we say, natural resources and land that’s going to be upended by the pipeline, which is, say, 20 miles long. Sure, it’s social capital one way or another, but you have to do a comparison of the relative sizes. And my view is not about the small cases. My view is about the big cases that get into litigation because that’s where the value is. And when you look at the set of objections that are raised to them, they basically become de minimis objections.

 

      I’m willing to make a thousand different adjustments to replace 3,100 feet worth of grass or something or another, or willing to make any kind of adjustment as to how you put a pipeline underneath a stream and so forth. But if you take a case like the Constitution case in New York, what’s happened is it’s systematic efforts on the part of the agencies to block everything from going on in a place which has acute shortages of energy, shutting down business from taking place. I mean, the dislocations there are pronounced, and frankly, the games you’re talking about are 1/1,000 of the losses that you’re imposing.

 

Mario Loyola:  This is Mario. Can I just jump in also with a comment? As far as Section 101 is also among this question, and going back also to Tim Male’s comments on the purposes of NEPA, it’s important to recognize that the CEQ regulation of NEPA is not built on Section 101 of NEPA, which is the purposes of the statute as has been said already in this call. It’s a purely procedural regulation that implements Section 102 of NEPA, which is simply the requirement for an environmental impact statement and sets forth process for the agency to develop the new environmental impact statement.

 

      Now, true enough that in Public Citizen v. Department of Transportation, the Supreme Court recognized that CEQ was created by NEPA in order to interpret NEPA, and so its interpretations of NEPA will receive substantial deference from the courts. It’s very important to recognize, however, that NEPA does not require -- nothing in the NEPA statute requires an agency to choose any particular alternative on the basis of the environmental impacts that it studies.

 

      And in fact, the CEQ regulation was never -- the ’78 regulation that’s being potentially revised now has never been interpreted that way. The section that Tim Male refers to as having been substantially changed that talks about the purposes of NEPA has not been cited. I believe it hasn’t been cited in a single major district, appellate, or Supreme Court case in the entire history of NEPA, except for the general proposition that’s set forth in Section 101 of NEPA that the purpose of NEPA is a productive harmony with the environment.

 

      I’ll make another point also that I think is very important which is this is something that’s lost also at the regulatory level because it goes to the NEPA statute itself. There is an important limitation -- first of all, in the NEPA regulation as it’s been interpreted, there’s no limiting principle on the extent to which downstream and upstream effects of a particular federal action have to be studied. So you could trade consequences out to the end of the earth until they’re highly speculative, and some courts will require that they be studied. The reason why there should be a limiting principle here, besides reasons of basic public policy, is that when the sort of procedure act prohibits agencies to take into account in their decision making processes factors that Congress did not intend when they established in this case, for example, the authorizing -- the permit authority for that agency.

 

      Now, I will agree that if you have a series -- if an agency, for example, FERC, has a series of projects before it that are natural gas pipeline projects and could have some cumulative impact accumulated, aggregated impact on climate change, well, it’s important for policy makers to be informed of those. And that’s an important potential value of NEPA that’s been lost under the current arrangements which is -- so we have -- maybe this particular project has only a trivial impact, but if you aggregate all of these projects together, somebody should be paying attention to this aggregate effect.

 

      But that’s not a consideration in most cases that the agency can or is even allowed to take into account under the Administrative Procedure Act in making its determination with respect to a particular license application. And so the agencies should not be studying these climate effects of a limited -- of a pipeline whose individual contribution to the impact is negligible. That’s not to say the problem is not an important problem. It’s just that the agency is the wrong institution to be dealing with the problem at the level of the permit application.

 

      So I think that this is an important thing to take into consideration when considering the problem of cumulative effects. And I think one reason why the CEQ prosed regulation dispenses with cumulative effects is the difficulty of explaining to anybody what a cumulative effect is because we have direct effects, we have indirect effects that would seem just on a metaphysical level to exhaust the possible universe of effects. And so I struggled to understand for the time that I was at the White House what is meant by cumulative effects. And the closest that I could get was just the desire to have agencies take into account not just impact on an environmental baseline as it exists as a snapshot in time but also the effects that other things might be having on the environment or other trends in the environment that are potentially natural.

 

      And so I think that a proper study of the affected environment which takes into account that the affected environment is dynamic and that there are other things happening in the environment besides that particular project will still be allowed under this, will still go forward. It’s still required even under the CEQ regulation that is proposed. And so I think at the end of the day that a proper cumulative impacts analysis will be alive and well, provided, as I said earlier that it’s taking place at the right level of bureaucracy, which is to say that global effects of a single project are not ones that an agency should take into account on its permit decision.

 

Tim Male:  I want to go back to the caller comment which was about Step Two Chevron deference. Imagine a world in which CEQ finalizes successfully, as in defensibly, the time limits and the page limits on environmental impact statements and EAs. In a world where those changes are defensible, and you have a process that is predictably long and a document that is predictably short, and you think about capital formation and how capital formation will have changed at that point, and how a number of the problems that have been described by speakers on this panel or in comments and discussion about NEPA have been addressed, and then you think about, okay, so now I have this short and fast environmental impact statement that includes a set of alternatives, if I am a federal agency or project proponent looking at those alternatives, what guidance does CEQ give me on which alternative I should choose? Should I always choose the most harmful one, should I always choose the least harmful one, or should I choose something in between?

 

      And it’s in that space that the changes that CEQ has made fail to provide any guidance to agencies. And you’re right. The details which CEQ has addressed, Mario, in these regulatory changes are focused on the mechanics of EISs. There has to be some tie back to whether it’s Step One or Step Two, some tie back so that Congress’s statement of intent in passing this law in that situation where you’re looking at alternatives, what do you do? And my point is that the CEQ guidance as it would be changed in these regs really gives you no information on what to do.

 

Prof. Richard Epstein:  Nothing in the previous law gives you the kind of information either. The single biggest problem that you have with an environmental system that tries to measure inputs and then figure out what the marginal gains are is that you never quite know how much of a cost is justified by how much of a benefit, which is why it is in these statutes there has to be a substantive change where you constantly look at the outputs rather than the inputs because if you look at the pipeline and you’re trying to figure out whether you want to redesign an entire system when the anticipated losses are going to be 100 barrels, 500 barrels over a 15 year life, that’s a silly way in which to do it. But that’s not a NEPA problem, that’s a substantive problem. And no version of NEPA will get that thing right, the old one or the new one.

 

Mario Loyola:  Yeah. Can I just respond real quick, just very, very quickly to something that Tim just said? There’s nothing in the existing regulation that provides guidance to agencies on which alternative they should choose. I mean, that’s not in NEPA, and NEPA was -- the statute was designed carefully to give agencies policy judgement prerogative, which is a very vital function of the Executive Branch.

 

Prof. Richard Epstein:  And that’s gone. The transformation with NEPA comes with the Calvert Cliffs case. Once you put this into a judicial framework, it ceases to be an administrative decision and becomes a political or a judicial one. And then you have to articulate the standards, and you can’t do it because there’s no way that anybody old or new could come up with a discernable standard, which is why the capital freeze on this thing and all the complications that were for it to happen. You change NEPA and you change the ability to have community opposition. You change the ability to delay projects and so forth, and you completely reverse the world. So this is, I think, more important than the critics would sometimes acknowledge.

 

Brent Fewell:  I have to wrap things up there. Great discussion, great debate.

 

Dean Reuter:  Let me thank you, Brent, and thank our panelists. Apologies again to the audience for the audio problems we had which were a problem with the telephone company. A quick note in terms of a commercial announcement: We’ll be hosting a teleforum conference call in the very near future with the head of ENRD at the Department of Justice, Jeff Clark, who’s going to be speaking to us about supplemental environmental projects. Check our website for upcoming teleforum conference calls, but until the next call, we are adjourned.

 

Operator:  Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at www.fedsoc.org/multimedia.