On January 10, the White House Council on Environmental Quality (CEQ) proposed revisions to its regulations for implementing the National Environmental Policy Act (NEPA), signed into law in 1970. CEQ has not comprehensively updated these regulations for forty years.
Since its enactment, the NEPA environmental review and permitting process has become increasingly complex and time-consuming and extends far beyond what Congress originally intended. Importantly, NEPA is a procedural statute that requires Federal agencies to assess the environmental impacts of proposed major Federal actions. The purpose of NEPA is essential to sound governments. The chosen means is a “procedural” statute that requires Federal agencies to prepare a detailed statement on environmental impacts from a proposed Federal action, alternatives to the proposed action, unavoidable adverse effects, and any irreversible and irretrievable commitments of resources that would be involved.
The average length of an environmental impact statement is over 600 pages and the average time to complete a NEPA review of major projects is four and a half years. NEPA analyses are frequently challenged in the courts, which delays and increases the costs for transportation, water, pipelines and other infrastructure that benefit States, Tribes, and local communities. CEQ’s proposal would modernize and clarify the regulations to facilitate timely NEPA reviews by Federal agencies in connection with proposals for agency action.
This teleforum is co-hosted by the Federalist Society and ConservAmerica and will offer background on CEQ’s proposal and discuss caselaw that has resulted in calls for NEPA reform and modernization. Comments on CEQ’s proposal are due March 10.
Please click here for a Summary of Key Issues and Select Cases.
Prof. Richard Esptein, The Laurence A. Tisch Professor of Law, New York University, and Senior Fellow at Hoover Institute
Mario Loyola, Senior Fellow, Competitive Enterprise Institute and former Associate Director for Regulatory Reform, White House Council on Environmental Quality
Moderator: Brent Fewell, General Counsel, ConservAmerica
Please dial 888-752-3232 to access the call.
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 Monday, February 24, 2020, during a live teleforum conference call held exclusively for Federalist Society members.
Wesley Hodges: Welcome to The Federalist Society’s teleforum conference call. This afternoon’s topic is titled “Modernizing the National Environmental Policy Act,” also known as NEPA. My name is Wesley Hodges, and I’m the Associate Director of Practice Groups at The Federalist Society.
As always, please note that all expressions of opinion are those of the experts on today’s call.
Today we are fortunate to have a wonderful panel for this topic. And moderating it today is Brent Fewell, who is the General Counsel at ConservAmerica. Thank you very much for sharing with us today. Brent, the floor is yours.
Brent Fewell: Thank you, Wes, and good afternoon to all who were able to join us today. We have a great discussion in store for you on a reform proposal that like many other oversight proposals has attracted widespread interest by both proponents and opponents. And toward that end, I would also like to mention that The Federalist Society and ConservAmerica will be hosting an in-person forum in the near future that will offer those competing perspectives. So stay tuned for that announcement.
My name is Brent Fewell, and I’m with ConservAmerica. For those unfamiliar with us, we are a non-partisan, non-profit 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 co-hosting today’s call with The Federalist Society. And I’m pleased to be introducing our speakers, Mario Loyola and Professor Richard Epstein.
But before turning it over to our speakers, I want to offer brief introductory comments on NEPA, including my own experience with the NEPA process. As an environmental practitioner, my professional career got it’s start preparing NEPA documentation and permitting of 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 the adverse impacts on local communities. I also found myself being asked 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 values of NEPA, I’ve also witnessed its abuse at the hands of some to stop projects vital to America’s economy. ConservAmerica’s aligned with many who have called for NEPA reform, first, because we believe it is important to have a rational, well-functioning environmental review process that helps the agencies to focus their attention 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 Cuyahoga River last caught fire, 11 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 often destructive forces of federal action and even inaction.
In 1969, in a Senate report, the author of NEPA, Senator Henry Scoop Jackson, wrote, “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 action 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 the 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 SuperJet airport on the Everglades National Park; the proliferation of pesticides and other chemicals; the indiscriminate citing of steam-fired powerplants and other units of heavy industry; the pollution of the nation’s rivers, bays, lakes, and estuaries; the loss of publicly owned seashores, open spaces, and other irreplaceable natural assets to industry, commercial users, and developers; rising levels of air pollution, and federally sponsored or aided construction activities such as highways, airports, and other public works projects, which proceed without reference to the desires and aspirations of local people.”
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. 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. And 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 environmental harm that the law was intended to correct.
For example, an airport runway expansion in Taos, New Mexico, which pilots said would increase accessibility and safety, was delayed for more than 20 years due to problems with the NEPA review process. Here in suburban Maryland, even just a few miles from the nation’s capital, the 16-mile Purple Line public transit project was bogged down for 14 years by NEPA reviews and associated litigation before finally being approved. So the paralysis by analysis and endless litigation does nothing to enhance environmental protection. And instead, it causes significant delays that add cost and sometimes block projects entirely, including those that seek to expand renewable energy and public transit. Another example would be the Cape Wind Energy Project off Nantucket Sound, which would have reduced carbon emissions by 1.6 million metric tons per year. But it was delayed for 16 years and ultimately canceled, not because of environmental concerns but because of local nimbyism.
And it is with this backdrop that I now would like to introduce our speakers, both regulars of The Federalist Society. Mario Loyola currently serves a senior fellow at the Competitive Enterprise Institute. And prior to CEI, he served as the Associate Director for Regulatory Reform at the White House Council on Environmental Quality.
And Professor Epstein serves at the Laurence A. Tisch Professor of Law at New York University and is a senior fellow with the Hoover Institute. Both have agreed to take 20 minutes each to offer their perspective on CEQ’s proposal, followed by a Q&A. And Mario has agreed to go first to offer more details on NEPA and the major provisions of the proposal. So thank you to both of you for being here today and I look forward to a great discussion. Mario?
Mario Loyola: Thank you, Brent. Thanks to FedSoc for hosting the call and thanks to everyone that’s participating. I look forward to your questions. As Brent mentioned, the National Environmental Policy Act is a law passed by Congress in 1970 that requires federal agencies to study the impacts of major federal action that could significantly improve the environment. In the years since the law was enacted, it’s had a lot of great benefits. It’s made agencies much more cognizant of the potential impacts of their proposed actions. It’s made them often choose alternatives that were not only better for their policy purposes but much better for the environment, and overall has led, I think it’s fair to say, to a cleaner environment.
It’s also unfortunately had some unintended consequences. It’s caused need infrastructure projects, including ecological restoration projects and projects necessary for improving the environment, to get slowed down and red taped, to be sort of burdened by unnecessary regulations and, perhaps worst of all, to be sort of beset by this often unpredictable regulatory process whereby private companies that are proposing to build infrastructure, or state and local governments that are proposing to build infrastructure, have to be prepared to loose hundreds of millions of billions of dollars just because there’s no way to predict when a particular decision is going to be made. And oftentimes, it seems like the bureaucracy’s in no particular hurry to make it and doesn’t particularly care that the private sector or state or local government, or even the federal government itself, is facing these enormous losses, which can be characterized as social losses, losses in which everyone loses.
There’s been a growing consensus—and it really started during the Obama administration when it was seeking expedited procedures for its renewable projects—that a lot of the burdens of NEPA were not necessary to advancing its environmental mission and that NEPA could be improved without detracting from its environmental mission and perhaps could be improved while improving its environmental mission. And so the Obama administration undertook several reforms, working with Congress, FAST 41, MAP-21 for transportation projects, that sort of laid some of the groundwork or introduced some of the basic ideas for the work that the Trump administration did when it came into office. Starting in 2017, the Trump administration had, people will remember, a prominent focus on infrastructure development as part of its way of boosting manufacturing and reviving the American manufacturing sector and, frankly, addressing those regions of the country that were badly in need of renewed and new infrastructure.
And so in August of 2017, the administration signed -- the President signed Executive Order 13807, which adopted a policy called “One Federal Decision.” That policy adopted a series of expedited procedures for major infrastructure projects and tried -- the basic intent of the Executive Order, of the policy of “One Federal Decision,” was to make the system for federal authorizations, permits, and environmental reviews for these major infrastructures projects more synchronized, more timely, more rational, and more cooperative within the interagency process. One of the things that the Executive Order did was it instructed the White House Council on Environmental Quality to review its regulation of NEPA, which it had originally promulgated in 1978 and had only been amended once since then in a minor respect.
And that’s what the administration -- that’s what the White House Council on Environmental Quality spent a very long time sort of studying, did a notice -- advanced notice of proposed rulemaking in which it asked a series of questions, solicited public comments. We got thousands of comments. And then CEQ moved to, on the basis of those comments, to study potential revisions, eventually working with interagency partners, with other agencies, to refine those proposals, which it finally published on January 10th of this year in the noticed of proposed rulemaking. That’s at 85 Federal Register 1684.
I’ll skip over some of the citations here. I’ll note that there is a summary of key issues and important cases that’s linked on the landing page for this teleforum call and will be linked to the podcast when the podcast is posted. I don’t think, looking at it, that it’s meant to be at all comprehensive in terms of the cases that it’s listed. But I think it suggests some important cases for illuminating the major issues that are listed in it. So I’ll go through some of these key issues in the time that I have left and just illuminate issues that might be of interest.
And the value, I think, here -- I think Professor Epstein is going to give a more 30,000-foot view of ultimate problems of NEPA. My perspective is almost the opposite. It is to try to give a sense of how important and impactful sometimes very subtle changes in regulatory language can be in the real world and in actual practice and litigation.
So first of all, let me just address a question that I know has come up, which is the legal status of the proposed rulemaking. CEQ, of course, does not have an expressed rulemaking authority under the National Environmental Policy Act. But the Supreme Court has recognized that CEQ was created by NEPA with the authority to interpret NEPA. On that basis, CEQ has done its regulatory work at the instigation of a series of executive orders, principally three executive orders, one of them adopted by Nixon and another one adopted by President Carter, and finally the executive order under Trump. All three of those are the foundation for this rulemaking. And under sort of long standing Supreme Court and federal court precedence, I think it’s to be expected that the CEQ rulemaking will be given substantial deference in the courts.
Now, with respect to the “One Federal Decision” policy, I’ll just quickly skip over a couple of examples of the expedited procedures that have been adopted. Some of these, of course, are from FAST 41 or other ideas. Others of them are for the “One Federal Decision” policy that was actually laid out for major infrastructure projects in Executive Order 13807. The CEQ proposal would essential codify and build on these and generalize them out for all NEPA reviews.
Some examples are that federal agencies would be required to agree on a joint project schedule so that they not only agree to accomplish their milestones at the time necessary in order to achieve the two year time limit or one year time limit, as the case may be, but also so that they’re each aware of what the other one is doing and so that they each are able to allocate resources in advance. And they don’t find out that, you know, in the month of March of 2021 when their biological opinion was due or whatever that they’ve got a backlog. And they can’t do it because they don’t have the resources. So basically it’s to permit this kind of advanced planning that the CEQ is proposing the joint project schedule.
Then you have EISs, EAs to be limited to no more than two years or one year. EISs and EAs are to be limited in page length, except for when the senior agency official approves a longer one. And then the lead agency is supposed to determine per project the purpose and need and alternatives and the project schedule in consultation with the cooperating agencies. One thing I’ll note is that these sort of important concurrence points voided the purpose and need for the federal action; what are the alternatives to the federal action, the things that the various agencies—the lead agency and cooperating agencies—need to agree on are typically important concurrence points of the NEPA process itself.
Now, under the CEQ proposal, there is a provision of what the notice of intent needs to contain. This is the notice of intent to publish an EIS, which gets the entire process rolling, in which there has to be a preliminary purpose-and-needs statement, a preliminary list of alternatives to be considered, a preliminary project schedule. One question that I would have is how this is supposed to work, given that essentially, by implication, they appear to be front loading some of the most important and substantial elements of the NEPA process itself, which one would expect to be elaborated in the course of scoping.
Moving along, another important element -- another important improvement is that in the CEQ regulation that’s initially adopted there was a sort of elaborate and perhaps needlessly cumbersome way for contractors to participate in the preparation of an EIS. The project applicant has to pay for the contractor, but the contractor had to be chosen by the agency. It’s never been clear who the contractor actually works for. The salary’s being paid for by the project proponent, but it really seems to be working for the agency. So there’s an obvious potential for a conflict of interest here.
And the way that the CEQ proposal appears to be addressing it is very simply by going to agency responsibility and saying, “Look. The agency is the one that’s responsible for the environmental documents. So whether it’s the project proponent that prepares it or a contractor for the project proponent, the agency is responsible for guiding the process and for verifying the results and for certifying the results of the process.” That will hopefully make the process in the real world a lot more efficient for the product of EISs.
Finally, there’s several important definitional improvements. I will point to a couple of them. One of the things that arose in the 1970s was somewhat of -- different courts interpreted differently whether the major federal actions significantly affecting the environment, which is the trigger for the environmental impact statement under NEPA -- whether that’s two separate thresholds that needs to be met before the EIS requirement is triggered. In the 1978 regulation, CEQ adopted the position -- adopted what’s called the unitary standard, which says, “Well, if there’s significant impacts on the environment, then ipso facto, it must be a major federal action.”
There were critics of this at the time who pointed out that this essentially violates, among other things, violates a basic canon of statutory construction, which is that courts -- agencies cannot assume that a word in a statute means nothing. Therefore, people took the position and courts took the position in the 1970s that major federal action is a separate threshold from significantly impacting the environment. The CEQ regulation, while maintaining in essence the unitary standard, appears to be breathing new life into the idea of major federal action by saying that the action has to be one in which the federal agency really controls the outcome of the project; that, if it’s just ancillary funding for a project that is essentially a state project in which the ultimate decision and all the outcomes are under the control of the state agency, then it can’t be described as a major federal action for purposes of NEPA. This is in keeping with the most important case of the last 20, 30 years in NEPA practice, which is Department of Transportation v. Public Citizen, in which the Supreme Court held that an agency is not responsible for the outcomes effects over which it has no statutory authority.
Finally, I’ll go over another couple of important issues. And this is an example -- here I’ll address the familiar purpose-and-needs statement and the issue of reasonable alternatives. And here’s an example of where just sort of how delicate the NEPA process is because very subtle changes in regulatory language are going to have a potentially big impact in agency practice. The 1978 regulation adopted a language that said to the agencies, in these environmental impact statements, “shall specify the purpose and need to which the agency is responding.” And that language was somewhat vague and left it unclear whether the agency was supposed to be defining the purpose and need for the project or the purpose and need for the federal action.
When there’s a bridge or a pipeline or something like that, the purpose of the project is obviously quite different than the purpose of the federal action, which is to grant or not grant a license or to grant or not grant -- or to grant a license with conditions. Or under a separate statute, not NEPA, but the Clean Water Act, they might require the examination of different alternatives. But it was clear several cases -- a D.C. Circuit case written by Justice Thomas, Citizens Against Burlington v. Busey back in 1991, made the point that what the statute says is that the agency must study alternatives to the federal action. Therefore, what’s relevant is the purpose and need for the federal action. And in the case of a simple authorize/don’t authorize the project, the purpose and need is simply to comply with the statute’s requirement that the agency act on the permit application.
The reason why this matters is that if you define the purpose and need broadly to be the applicant’s objectives or improvement of the economy or whatever the project objectives are, then the range of alternatives that you have to study that are alternatives to the project are essentially infinite. And that’s been the practice in a lot of environmental impact statements where you’re studying lots of alternatives that are not the agency’s alternatives, that are not alternatives that the project proponent has the least bit of interest in pursuing. But because of a broad interpretation of an ambiguity in the regulation, thousands of pages are wasted, hundreds of pages are wasted on studying alternatives that are not really alternatives to the federal action.
So in this set of reforms, the CEQ regulation is making clear that it’s the purpose and need for the federal action that has to be the initial focus of inquiry for the agency and that the range of alternatives is alternatives that are reasonable alternatives—there’s a new definition of reasonable alternatives—and that have to be bounded by feasibility, given the, where appropriate, the ultimate objectives of the applicant. The other two major changes -- sets of changes in the regulation have to do with the definition of effects and impacts and then, finally, some issues related to litigation.
So in the case of effects and impacts, this has been the source of a lot of litigation over the years in NEPA. The 1978 regulation created distinct categories for direct effects, indirect effects, and what were called cumulative impacts. Direct effects and indirect effects really, at a basic logical level, sort of exhaust all the possible kinds of effects. They’re not direct; they’re indirect. Unless we’re going to get into quantum physics, there’s no third category of effects that are not either direct or indirect.
What the CEQ ’78 regulation was trying to get at with the cumulative impacts category was just to point out that the environment is changing, that there are other things that are affecting the environment, and that when you measure the impact of an action against the environment, it can’t be just a static baseline that is not changing. You have to take into account other things that are equally impacting the environment, including things that are impacting the environment at a macro level. And I’ll leave some of those to address in questions.
But the idea of cumulative impacts, to the extent that they should be taken into account in a proper analysis, will result, I think, organically from a proper assessment of the affected environment. The important change, with respect to effects, is that the agency, under the changes -- in the definition of effects, the agency is not obligated to account for effects over which it has no control, effects that would occur regardless of the agency action, and effects that it doesn’t have any statutory authority to prevent. And these are all in keeping, again, with the key Supreme Court case over the last couple of decades on NEPA, which is Department of Transportation v. Public Citizen.
And finally, I’ll close just by noting that courts have been, let’s say, very generous to environmental advocacy groups in sort of letting them off the hook of procedural protections that defendants normally enjoy when a plaintiff is asking for an injunction, such as bonding requirements and similar protections. I think the CEQ proposal starts to address some of those and sort of protects the public interest and efficient and effective agency action and some of the equities involved in the injunction situation by pointing out that trivial violations -- the CEQ proposal doesn’t use the term trivial violation. But it does say that a non-substantive error should be seen as harmless errors under the Administrative Procedure Act.
The CEQ proposal allows agencies to establish bounding requirements to protect agencies against the effects of in injunction which courts -- a requirement that is normal in the typical injunction situation, which courts have loosened for environmental advocacy groups. And a very important change, CEQ proposes that if stakeholders do not make clear their objections to a particular part of the analysis in an environmental impact statement -- if they don’t pose those objections within the comment period to the environmental impact statement, those objections are considered forfeited, and it can’t be raised later in the subsequent litigation. And that will hopefully help turn NEPA into less of a litigation defense exercise and something closer to what it was originally intended as, which is to inform agency decision making and improve the environment.
And with that, thank you very much and I’ll turn it over to Professor Epstein.
Prof. Richard Epstein: Okay. Well, thank you so much. I’m going to sort of start to do this. I’ve been working on a project with ConservAmerica about the critiques on this. And this will, to some extent, talk about these things and the way in which they begin.
First of all, I want to begin with a point of disagreement about the path and the arc of environmental policy. One of the things that is very clear is that we have now gone 50 years. And 1970 to 2020 marks a huge change. The question is, when you start looking at the changes and see what is the undoubted improvement in overall environmental conditions, how much of this do we attribute to regulation, and how much do we attribute to this -- to technological improvement?
It’s very hard for people who don’t remember 1970 to realize that, in virtually all the areas that we’re dealing with today, that the techniques that were available, whether you’re talking about environmental protection or construction or medicine, are relatively primitive to the ones that we have at this particular point. In 1969, there was the Santa Barbara oil spill. It was a shallow dig. It leaked 1,000 gallons per hour for about six weeks or so forth. It managed to create hundreds of square miles of oil slush all along the south part of Los Angeles, from Santa Barbara to Los Angeles.
Those kind of things, if they happen today, would probably produce 1/1000 of the harm that happened then. And it’s extremely important, I think, to understand why this has happened. And by and large, it’s a question of technology.
One of the things that I was reading about when I was preparing for this talk was some work about what are sometimes called in the trade dematerialization. There’s a fellow named Jesse Ausubel at the Rockefeller Institute who specializes in this area. And essentially what happens is every time you introduce a new technology, like drilling or various kinds of medical procedures and so forth, you make a lot of mistakes. You’re very resource intensive, and everything starts to go wrong.
Well, once it turns out that you’ve been in this particular area, what you do is you see an unbelievable progression whereby it turns out that you can get more and more out of a given resource by doing less and less. So if you were to compare, for example, grain yields on an acre of land in 1970 to the present, it’s just enormous tenfold increase that takes place. None of this, I dare say, is attributable to environmental protection laws. It’s attributable to market forces creating technology which allows you to produce stuff.
Now, why is this important for thinking about the way in which NEPA goes? If in fact you are reasonably confident that the incidence of harm is going to be lower, and if you are confident that the ability to correct against those things is going to be greater, it’s going to change the way in which you want to look at a NEPA statute. So in 1970, essentially the dominant thoughts of about everybody was we just have to stop Cuyahoga from blowing up. We have to stop another Santa Barbara. There were all sorts of major catastrophes that people were worried about. And so the initial understandings about the judiciary on NEPA was to figure out how we give it more teeth, rather than how we give it less.
So the first major development that started to take place was a case called Calvert Cliffs, which was decided by J. Skelly Wright in 1971, a little more than a year after the original decision was made. And what our friend Skelly Wright said is “I am welcoming an avalanche of lawsuits in order to stop these projects because I think virtually every one of them is going to have some kind of a negative expected value. And if you really think that things are going to be bad, then the appropriate response that you want to have is to draw out the thing so they take as long as possible to get over the ground.”
Now, what was the strategy that you wanted to use to do this? Essentially what you did is you allowed private rights of action by people who did not like the way in which the permitting process went to challenge what went on. This takes place not only in environmental cases, but, at exactly the same time, the same kind of development started to take place with zoning cases. One is the country; one is the city. But the patterns are the same.
So how does this then change everything? Well, the first thing that happens is you go into a proceeding, and it turns out that there are many people who will be proponents of the particular process in question. One of the persons that’s always in favor of the project is the project developer. And although Mario did not quite mention it, many of these projects are indeed built by government agencies. But even when a project is privately developed and privately funded, it’s the government which bears the burden of going through this thing. Army Corps of Engineers is a common person. And so the third party is essentially an intervener in its own case.
Well, suppose you now take an array of opinions, and what you do is, like many administrative agencies do, is you try to find something which satisfies the median voter, which means that there are a lot of tradeoffs. The project goes forward, but there are a few more restrictions on it than the developer would want and a few less than the opponents would have. And that’s a relatively short and expeditious procedure. And it kind of gets you an outcome sort of in the middle.
The moment you involve yourself in litigation, the entire dynamic starts to change. The people who support a project are not going to litigate it. They’re going to freeride on what the court does and what the developer does. The opponents now have a real reason to organize. And what they will do is they will start to file suit challenging each and every provision of what is going on under the statute. They’re aided, no doubt, by the very broad declaration of purposes that were in the NEPA plan to secure a safe and healthy and happy environment and so on.
And their position is going to be, in all of these cases, is until you’ve analyzed everything that is relevant to the final decision, you’re not allowed to move forward. Their attitude is going to be look before you leap. And under these circumstances, you say, since development is always going to be risky anyhow, it’s okay to slow this thing down and then send it back to an agency for further review because they haven’t done anything.
What happens is this practice then can snowball. Because once you take something and you send it back down on point A, years have passed, and now point B or point C may now somewhat be up in disagreement. So you can say, since you’re going back to look at one thing, now what you have to do is to update this on all sorts of other things. And the recent decision that took place in Montana, I believe, which held up the Keystone XL Pipeline yet went against -- did so largely on those kinds of grounds.
It’s that, well, you haven’t taken into account sufficiently the effects of alternative transportation. You haven’t figured out what’s going to happen with the price of oil in national markets. You’ve got to do all of this stuff. And of course, there’s our trusty standby: you have to figure out how all this thing is going to impact such collective and aggregate a founding as global warming under the older standard of cumulative impacts, which Mario referred to in his particular talk.
So you first go out, do it in the agency, you go to court, you go back, and you do it again. And now there’s grist in the mill for another round of protest. And you can go through this cycle multiple types, at which point the original developer is gone. You’ve got some bankruptcy person taking it over. And the entire process can start, notwithstanding the fact that you’ve sunk many, many dollars into it.
So just to give you a very visual situation on this particular pattern about permits coming out of nowhere, just today the United States Supreme Court heard oral argument in the Cowpasture case. And the issue in that particular case was about pipelines. Now, pipelines are an extraordinarily vulnerable thing when they’re subject to NEPA because they always run through multiple jurisdictions. They run through private lands, and they run through public lands.
And at any particular point with a pipeline, if you can break it somewhere in the middle, then they won’t be able to get the oil and gas from the place where it’s produced, whether it be in the mid-Atlantic states or in Alaska or in the Bakken fields up in North Dakota, to the places where it’s needed in large population centers. So if you’re somebody who’s trying to block a pipeline, you try to figure out that one place in which you can block it, so that even if all the other permits are there, what you’ll do is you’ll shut this down.
If you’re a company, they’re going to tell you, the opponent, “Well, wait until you get all your permits before you build.” But of course, you’ll never get all your permits at one time. And even if you do, many of them say you have to start to use it within six months. So their attitude is, if you wait until you get the last permit, you never start at all. So everybody starts to build.
And this means, in the case of the Cowpasture, you have a very long 600-odd mile pipeline that is under construction. And it’s going ahead, and it obviously has to rip down some tress. And then it’s going to be put under ground.
Today, the technology is so much better, as I’d mentioned, than it was before that if you look at pipelines, which in 1970 or ’80 were 40 or 50 feet below the ground, now they tend to be 5- or 600 feet below because we have horizontal techniques for drilling, used in fracking and other techniques, that were not available 20 or 30 years ago. So these technologies really do make a difference.
What you do now is, given all this situation, you come to a point where this Atlantic Coast Pipeline is now 600 feet under a trail, the Appalachian Trail. The pipeline is ostensibly under the control of the Forest Service, but the trail is under the control of the Park Service.
And you go into the Fourth Circuit. And what the judge says is, “I know this thing is below the trail, but I think that the jurisdiction of the park district goes all the way down. So for this 1/10 of a mile that passes 600 feet below a trail, I’m going to require you to get a separate permit from the park department. You can’t get one unified permit from the forest department, the Forest Service, which will cover everything that’s going on.”
This argument wins in the Fourth Circuit. Now, it turns out that when you’re running a 600-mile pipeline, you’re going to cross 20 paths. And so what you’re doing is you’re going to have the following distribution of authority. There’s going to be 598 miles which will be under the Forest Service, and then there will be about two miles in 20 separate places subject to permits. And the fragmentation that would take place under these circumstances dooms the pipeline.
As I’ve already mentioned to you, it’s not as though this is something just in the thoughts of people. You’ve already built large chunks of it. This is true here. It’s true of Keystone. It’s true, of course, with respect to the Bay Area -- or rather the Dakota Access Pipeline that starts in North Dakota and goes down to Illinois. It’s true of all of them.
So they’re saying, “I can now slow you up another ten years. You’ve got all this sunk cost. The environmental destruction is already there. The pipeline will start to rust out underneath you.” And it goes before the Supreme Court today. And I’m happy to report they were somewhat incredulous about the position that had been taken in the panel below. Chief Justice Roberts says, “So you were saying, in effect, that any time you have trail on the surface, you have an iron wall that prevents anybody from putting a pipeline very deep and below this.
Now, that’s NEPA at its worst when it comes to the question of how it is that you start to segment these things. But it also gets worse when you think of something else. The question you then have to ask is, when you are running on one of these permit-types of systems, exactly what do you want to do? And this is a question of remedial structure.
So let me give you a private comparison so as to see what happens. If you want to build a large building, even in a regulatory environment, what you always have to do is you have to get yourself an initial permit. But everybody understands that an initial permit cannot solve every problems it’s going to take up. And so what happens is there are periodic inspections that are made by the government to see that you haven’t gone out of whack. And there are all sorts of periodic meetings by the private parties, the architects, the contractors, the subcontractor, the owner, to make sure that when disputes arise as to what should be done, given unforeseen circumstances, they have an effective way in which to deal with this. And it’s an amazingly effective process in terms of the way in which you present the defect, figure out what it’s cost is, figure out who’s responsible, and the allocate the cost as you go on.
NEPA has a very different kind of structure. If you look at the way in which people talk about it, they say what you have to do is to resolve the whole thing at the front end before you do anything at the back end. So it’s not a question of just figuring out what the root is or what the basic structure is. It’s getting every one of these details inline before anything else happens.
So if you look at the Bayou Bridge pipeline, for example, one of the questions that you had to face when the case was before Judge Shelly Dick in Louisiana is what kind of compensatory lands are you going to put into place to replace the wetlands that are lost when you put this 500,000 barrel-a-day pipeline in the middle of a bayou, which is a sensitive location. Now, this is a question you can solve at any time. And if you’re confident that the engineering structure is basically safe, what you want to do is to start the pipeline, tell the people, yes, you better build this. We’re going to respect that you have in insure it. You have carry liability. Given the techniques that I’ve talked about, the footprint that you need to build one of these pipelines gets narrower and narrower from what it was 20 years ago. You’re laying it deep underneath the ground. You’ve got all sorts of inspection systems.
So the transitory loses are modest, way down from what they were. And the permanent loses are even lower. The inspections against leaks and other things are very, very powerful with 5G technology. Literally, you can keep an eye on this thing at 10-foot intervals. They have all sorts of automatic devices to shut these things down.
And she’s saying, “I’m not going to let you build this thing unless you tell me where you’re going to get the acreage in order to compensate.” This is exactly the wrong way in which to do any responsible business. You start the pipeline. And then what you tell the other fellow is “You have to agree to an arbitration in which you’re going to have to purchase at a certain price certain numbers of acreage. And we’ll put it there. We’ll run the two things separately from one another. And we’re going to fine you, by the way, if you don’t deal with the cooperative nature on the arbitration.”
But under NEPA, it turns out that everybody says, “No, no, no, no, no. You have to decide everything at the front end, relatively little stuff at the back end.” Of course, you always have to do backend adjustments, even if you think you’re going to get everything done at the front end. But this is designed to, and has the enormous effect of, slowing things up.
Now, when we started to talk about this, what I said is the reason you’re willing to slow it up if you’re a NEPA advocate is you think that the risk of an environmental harm is so great that what you really want to do is to make sure that it’s not going to be replicated. But if you actually look at the world in which we have, one of the things that you discover is that half of the facilities that you’re going to put into place, as Mario mentioned, are going to be facilities that will allow you to take out of service other forms of facilities that are in place, which are in fact older and much more dangerous, other than the ones that you want to put in. So the way in which NEPA works, to put it simply, is this:
I come forward with a big pipeline, one that I want to put underneath the Missouri River, which is going to be 600 feet down. And it’s going to pose virtually no damage whatsoever to the Indian tribes that live within a half a mile of that particular thing. But you can keep me tied up forever if you can make sure that this thing is going to happen.
So what happens is, in the meantime, you’re shipping stuff by truck, which means you’ve got a lot of unloading and unloading. You’re putting things in a mixed environment where the trucks can be hit by cars or by falling bridges or trees or something. Or you send it on trains, which again is a much more difficult thing. And the way in which the safety analysis goes is you’ve got a pipeline that’s going to reduce the damage from 100 to 5. Why didn’t you get it down to 4?
So you ignore the 95 units of gain that the new pipeline will get you by decommissioning the old one. And then what you do is you put enormous pressure on the system in order to make sure that the old systems remain in place, less people go without energy and freeze during the night. And so to take the pipeline situation in New York, where they’ve banned fracking and they’ve banned the pipeline coming in from Pennsylvania. They required so many permits that essentially now they don’t have many new hook ups in Nassau, New York City, and Westchester County. Then what they do is they burn dirty oil, heating oil in order to deal with these kinds of things -- in dealing with this stuff, so that what happens is, when you’re looking at these things, you create yourself an environmental disaster because of the unwillingness of people to have the orderly change in technology.
Now how does this happen? Well, one of the things that you are told in all of these cases is that NEPA is what we call euphemistically only a disclosure statute. Time and time people will say it’s just a procedural matter, that when you’re actually looking at what’s going on, any agency can decide to disregard the recommendations that come into these particular cases and go ahead exactly as they want before. So it sounds like it’s kind of an advisory opinion.
But what you don’t get out of that particular formulation is the single most salient feature associated with the statute, which is so long as the disclosures are incomplete, as they almost always are under current standard, an injunction exists so you can’t do anything on the project at all. Now, injunctive relief is extremely powerful because it shuts you down, even if you have engaged in work somewhere else. But that turns out to be the norm. And then the question is can we make an exception to the way in which this starts to work?
If you look at the existing law, it turns out that there are ambiguous symbols, but to summarize it in the most convenient form, the current position seems to be that there’s a presumption whenever there is a NEPA violation you will vacate the permit that’s given. You grant the injunction, and then they have to start over again. But there are some equitable exceptions of a fuzzy nature which says that, if the inconvenience vastly outweighs the benefits that you get, a judge at his or her discretion may decide under the circumstances to wave the control and to essentially allow the project to continue, subject to conditions.
One of the really very good features about the Trump proposals is they decide to incorporate that feature in the situation. The usual standard about giving an injunction under an equity regime is something which calls about there is irreparable harm, meaning it’s something, when it’s broke, you can’t fix it. And if you decide that every time there’s a potential flood that may take place down the road, miles or years from the current situation and that gives you an injunction, you’re not talking about irreparable harm.
And so what the statute says -- what the regulations are going to say is the standard of irreparable harm is separate from the standard of statutory violation. And unless you show some kind of an immediacy of the harm in question, you don’t get the injunctive relief, switching the presumption and making it stronger in the opposite direction. I think that’s an absolutely essential feature in all of these cases to stop what would otherwise be the holdout problem. So looking at this situation, what you do is you overweigh the remedies, underestimate the benefits of new technology, and then you do it.
Now, the last point I’m going to talk about is another point in the statute or in the regulations that is somewhat obscure, which is this so called question about cumulative effects and global warming, how it is that we start to deal with that. Under the earlier regulations, it was very muddy as to what was going on, but there were a number of cases in D.C. and elsewhere which seemed to say that, if in fact you want to get a pipeline or some other facility through—particularly pipeline—you have to assess the impact that they’re going to have on global warming. And in order to do that, you just can’t concern yourself with leakage that comes from the pipe and so forth. What you have to do is to concern yourself with the downstream uses that your customers are going to make once the natural gas or the crude oil goes through the pipeline.
This is, of course, a recipe for perpetual delay. And institutionally, it’s wrong in so many ways it’s hard to count them. The first one is, if you’ve got a downstream facility which has serious emissions risk, it should be regulated independently under state or federal law. And if these things are immediate, then shutting it down immediately or capping it is perfectly appropriate. You don’t want to do it through the pipeline because if you do it through the pipeline there are 20, 50, 1,000 different uses. And you have to figure out how to take each of them into account when going down below is a much more efficient way.
The second thing is, if we’re talking about global warming in a pipeline, it’s almost silly to say, “Well, you know, a little more stuff here, you can get a little bit more carbon dioxide in the air, as opposed to somewhere else.” The amounts you’re talking about relative to total emissions in the United States are absolutely trivial. And so the important thing to understand is global warming is a global phenomenon. It doesn’t matter where the carbon dioxide comes from: here, China, downstream, or wherever it is. You know the results are negligible in this particular case.
Just take it off the table for NEPA and say that, when it comes to comprehensive regulation, that’s where you look at it. So the unit is not trying to figure out regulation of an individual site. The unit is trying to figure out whether or not we have a cap and trade tax with respect to carbon dioxide emissions, whether we have cross-border taxes on products that are made with carbon intensive materials elsewhere that are brought into the United States, do we have a universal carbon tax and so forth. NEPA can’t do this.
So what’s really happening with this stuff is that you’re taking trivial effects, known to be trivial, using them as yet another source of delay for information that is of no value, even when you acquire it, and looking at the wrong particular way in which to deal with this. Now, there a lot of disputes as to what we think about global warming. But pipelines are extremely vulnerable, as I mentioned, to the multiple savage points or cut points that you can make in them.
And what’s happened to NEPA, it is no longer a full information statute. It is a covert effort on the part of very strong environmentalist to try to wean us from fossil fuels. That’s a topic on which I have very strong feelings, but the most strong feeling I have is institutionally, if that particular course of action is going to be taken, it should not be by a set of disclosure applications.
Wesley Hodges: Well, very good. Thank you all for your comments. Here is our first caller of the day.
John Myer: This is John Myer. My question is is there any structural regulatory consideration of the specific benefits of projects, such as when a project like a pipeline substitutes for trucks, trains, and some which are more dangerous? And the second part is is there any specific structural situation in the regulations that accounts for the other issue which you discussed, which is when inaction is much more damaging environmentally than the proposed action, even if that action does some environmental damage?
Prof. Richard Epstein: The answer to that question is I’ve looked at many of these cases. There’s not a single one of them which actually says what is the current technology being used to ship oil and gas and how dangerous is this? The only thing you’re allowed to do is to look at the pipeline and figure out its deficit. So what you do is you have a comprehensive cost-benefit analysis, which is completely skewed because it ignores all of those things.
And the other thing, of course, that it does is it’s just incredible repetitive. So in virtually every one of these pipeline cases, the Atlantic Coast Pipeline or the DAPL Pipeline and so forth, there’s always some genius after the thing is laid down that says, “You know, you really should have routed it in some other way.” Everybody continues to consider location decisions at the beginning.
But what happens is, once it turns out you go some victory, asking them to start over again is very attractive. To give you an idea of how horrendous this can get, when the DAPL Pipeline was put forward, Judge Boasberg in a series of opinions said, “Yes, you could go ahead and you can build this, under the permits that you get from the Army Corps”. In December of 2016, after the Obama administration loses, the head of the secretary of the Army -- assistant secretary of the Army for Civil Works and so forth announces, “You know, I don’t really like what’s going on. I’m going to pull the permit, and I’m going to demand that there be a full environmental impact statement,” after this pipeline was 90-plus percent completed.
And she said, “That could take a couple of years. But no big deal. I don’t want to have the tribes essentially taking over this kind of operation.” And the Trump administrative reversed it. So it's not only that you have the judicial system. When the pipelines get big enough, when they’re protested, some of which are violent as in the case of DAPL, it turns out it becomes a political circus because the disclosure commitments and so forth are always reversible by political parties who oversee technical people running the program.
Mario Loyola: And I’ll just add to that that one sort of blind spot of NEPA is there is no procedural way for the consequences of a NEPA injunction -- for the environmental impact of a NEPA injunction to come to light in the sense that many environmental advocacy groups demand of the NEPA process itself, in terms of downstream effects and aggregate effects. And so an example of this is that, if the effect of slowing down all of these natural gas pipelines across the country is to slow down the transition from coal to natural gas, well, it turns out that the transition from coal to natural gas is what’s responsible for the United States having the world’s greatest reductions in carbon emissions, 11 percent reduction in carbon emissions over a decade, according to the International Energy Agency, as opposed to 11 percent in Europe and 40 percent increase in China and other places.
So the U.S. leads the world in reductions of carbon emissions because of the transition from coal to natural gas. The natural gas pipelines have to account meticulously for the carbon emissions that are going to be released from somebody way downstream that’s under state regulation, that’s not under federal regulation, the powerplant that’s actually going to be using the natural gas. But there’s no point at which you can take into account the real policy implication of stopping all of these pipelines and slowing down the transition to cleaner burning fuels than therefore slowing down the gains that the U.S. is making in reducing carbon emissions, which is a particularly ironic effect.
I’ll add to something that Professor Epstein said at the end of his main point -- which he said that NEPA has become a tool for environmental advocacy groups to get rid of fossil fuels. I would take it a step further than that. Environmental advocacy groups often use NEPA as a way to slow down even renewable energy projects because there appear to be -- I think that the mainstream environmentalists are people that -- conservationists that we agree with. We want to preserve the environment, protect the environment without unduly burdening society. But then there’s a certain -- I’ve come across them from time to time, and I think that they might be disproportionately represented among the litigants in NEPA cases.
There’s a sort of environmentalist that thinks that all development is bad, all economic development is bad. There’s no such thing as an unreasonable burden on business. The only way to protect the environment, essentially what Bill McKibben says to end capitalism, or whatever these green sort of echo people say. And so that’s the kind of thing that I think we have a mainstream bipartisan consensus against that way of thinking. And it’s a good thing.
Prof. Richard Epstein: Well, let’s hope it’s the mainstream consensus. Mr. McKibben has always taken positions like that, no particular training on anything but always has these very extreme kinds of positions. And they believe that all salvation comes in the form of renewable energy, solar and wind. But they never talk about the environmental difficulties associated with both those technologies or the very limited production situation.
The case against them is very simple. Solar doesn’t work when the sun doesn’t shine, and wind doesn’t work when the wind doesn’t blow. And those are very common occurrences in many places. Nobody wants to ban these technologies, but you don’t want to give them subsidies either in cash or kind because, like all subsidies in all markets, they distort choices and lead to inefficient outcomes.
Wesley Hodges: Very good. Let’s go to our last caller.
Devon Watkins: This is Devon Watkins. I had a question concerning the time and page limit. I can see the argument a little bit from the other side. They’re going to say something along the lines of, you know, “These NEPA reviews take as long as they take,” or, you know, “It needs to be as long as it needs to do to consider all the alternatives,” something along those lines. What is the counterargument for why these time limits and page limits are appropriate?
Mario Loyola: I think the administration’s concern here is very simply the realization, which I think again is a matter of broad consensus, that nobody’s going to read a 3,000-page environmental impact statement. Therefore, NEPA’s purpose, it’s fundamental purpose of informing the decision maker as to the environmental consequences of proposed federal action cannot be served by a 3,000-page environmental impact statement and that, therefore, a lower page limit will sort of focus the attention of agencies in the NEPA process on alternatives and impacts that actually matter, that will actually be important drivers of the decision that the agency ultimately takes.
On the other hand, the NEPA statute and the sufficiency of an EIS is a matter of the administrative record, and it’s subject to a challenge under the Administrative Procedure Act. So it has to meet the minimum requirements of the Administrative Procedure Act. So an EIS that complies with the 150-page limit or the 300-page limit but is missing something important and doesn’t meet the sufficiency standard to survive challenge under the Administrative Procedure Act isn’t not going to make it. So agencies, essentially, have to accomplish both.
The original 1978 regulation had page limits also. But they were like highly hortatory. They basically said, “150 pages, unless the agency thinks that more is needed.” And having a limitation like that is no limitation at all. So one question to look at is whether we really have a strong page limit here.
Prof. Richard Epstein: I just have a couple of comments. One, there’s a saving grace hole in this statute as well. You can go beyond it if a senior administrator requests it. But also I just want to mention, when we did some of this stuff, the short version environmental assessment that was done on the DAPL Pipeline was over 1,000 pages. And I couldn’t conceive of anything more that you would want. It was such an easy case, given all the merits.
But what happens is, if you have this frame of mind in which all the presumptions are set very heavily against a new development, then you have to put that in. The basic argument is it’s a one-two punch. You narrow the class of relevant subject matters; you can shorten the page length. And that’s what the regulations are going to do.
I mean, the one thing that’s so sad is you listen to some of the environmental groups like the National Resources Defense Capital -- Gina McCarthy was the head of the Environmental Protection Agency under Obama. And she says, “We’re just going to fight this.” And there’s not the slightest understanding, as far as I can see, in the environmental groups that there are two kinds of errors, one going too slow and one going too fast. The only thing they care about is going too fast, which means in the end—and I’ll end on this note—we’re all going much too slow.
Brent Fewell: Well, thank you, Professor and Mario, for your time. Very lively and informative discussion today. And Wes, on that note, I think we will adjourn.
Wesley Hodges: Thank you so much, Brent. On behalf of The Federalist Society, I’d like to thank you all for the benefit of your valuable time and expertise today. We welcome all your feedback by email at email@example.com. Thank you all for joining us for the call. We are now adjourned.
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