Deep Dive 269 – Major Changes to Federal Permitting and the National Environmental Policy Act in the Debt Ceiling Compromise

[Music and Narration]

Introduction:  Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker.

On June 16, 2023, The Federalist Society’s Regulatory Transparency Project hosted a virtual event titled “Major Changes to Federal Permitting and the National Environmental Policy Act in the Debt Ceiling Compromise.” The following is the audio from the event.

Sarah Bengtsson:  Hello, and welcome to this Regulatory Transparency Project Webinar. My name is Sarah Bengtsson, and I am Associate Director of RTP here at The Federalist Society. Today, June 16, 2023, we are pleased to host a discussion on the major changes to federal permitting and the National Environmental Policy Act in the debt ceiling compromise.

After the discussion, our panel will take audience questions, so please submit those into the Q&A function at the bottom of your Zoom window. Please note that, as always, all expressions of opinion on today’s program are those of the speakers.

Our moderator for today’s discussion is Mario Loyola, Senior Fellow at the Competitive Enterprise Institute and Florida International University. Mr. Loyola was formerly a member of the White House Council on Environmental Quality.

In the interest of time, I’ll stop there. But you can read the full and impressive bios for our speakers at regproject.org. Thank you all so much for joining. And now, I will hand it over to you, Mario.

Mario Loyola:  All right. Thank you, Sarah. Thank you all for being with us today. This is a really great opportunity to explore in depth some very important changes in the U.S. federal system for permitting and environmental review of major infrastructure projects and particularly amendments to NEPA, which is the first time—National Environmental Policy Act—the first time in its history that it’s had such significant amendments.

And there’s a lot of people inside and outside the government who are wondering what this all means. And we have a great panel today to try to answer some of those questions for us. So we’ve got Emily Domenech, who is Chief Policy Advisor to the Office of — Senior Policy Advisor in the Office of the Speaker of the House, Kevin McCarthy.

We have Thomas Connolly, who is Chief Counsel to the House of Natural Resources Committee. We have Jason Hill, who’s now Counsel at Hunton Andrews and a former Chief Administrative Judge at the Department of Interior. And finally, myself, Mario Loyola. I’ll be moderating and walking us through some of the issues and posing some of the initial questions for my fellow panelists. 

I have a particular insight and interest in the topic because I was at the White House Council on Environmental Quality from 2017 to 2019. I was one of the principal drafters of the One Federal Decision Memorandum of Understanding and of the NEPA rule revision. So I am very happy and pleasantly surprised to see some of the most important changes that we pushed for have wound up [inaudible 03:56]. 

And so I just want to impress on people that some of these are really, really major changes that are very long overdue and could save not just project proponents and the taxpayer and the government an enormous amount of effort, but really speed the delivery of major infrastructure projects that the American people deserve. 

And that from left to right, there’s an increasing bipartisan consensus that nobody except trial lawyers and environmental advocacy groups that are in the cottage industry of litigating NEPA can really get what they want under the old system and that the system needs to change. And so some of these changes are really going to shake things up and, hopefully, for the better. 

So I am going to depart from the normal order of asking the panelists to take five or ten minutes to give their comments. And instead, I’m going to walk through what I see as some of the major issues and give what I think is just a capsule summary of the issue of the change in the law and then ask Emily, Thomas, and Jason to comment on the particular change. 

And then in the interest of time—because I think we’re going to lose one or two of the panelists before the end of the hour—we’ll try to proceed quickly through each of the issues. And I have maybe seven or eight that I hope to get through by the end of the hour. And then hopefully, we can open it up to questions. 

So I guess I’ll start just by saying that — and I’m going to share my screen for some of these because the first couple of questions I’m going to ask are fairly in the weeds. And so this is really for the lawyer nerds who like reading code. But I’m going to share my screen and try to show you all what I’m talking about so that we can focus in on the legislative text. 

And in the first instance, we are going to talk about the time limits and page limits on the NEPA process that have been brought in. And I’ll just say that this is a very difficult issue for several reasons. What the law does in the Fiscal Responsibility Act is it says that agencies have two years to complete an environmental impact statement and one year to complete an environmental assessment. 

With respect to page limits, it says that agencies have — are given a maximum of I think it is 150 pages for an environmental impact statement and 300 if it’s extraordinary complexity. And so I have questions about each of those, and the most important one has to do with time limits. So I’m going to share my screen briefly and just head over to – then let the text of the legislation. Tell me if anyone has a problem seeing that. 

But basically, what we have here is, in general, except as provided below, with respect to a proposed agency action, a lead agency shall complete the environmental impact statement not later than the date—that is, two years—after the sooner of the date on which such agency determines that NEPA Section 102(2)(c) requires the issuance of an environmental impact statement or the date on which such agency notifies the applicant that the application — the permit application is complete or the date on which such agency issues a notice of intent to prepare the environmental impact statement. But that notice of intent is typically published in the Federal Register. 

So the question that I have about this is — that I think it’s important to ask is the following: This is an idea that was derived from the One Federal Decision policy. And the problem that we had right away, when we did it in the White House, it was two years from the third of these milestones, which is the publication of the notice of intent to prepare an environmental impact statement in the Federal Register. 

As the casual observer will readily appreciate, if the agency gets to decide when to publish the notice of intent in the Federal Register and there’s no right of action to force the agency to publish that notice of intent, then the agency is in complete control of when the clock starts ticking. And we saw before—even I had left the White House Council on Environmental Quality—that agencies quickly gamed this system. 

And they did it in a way that actually produced the opposite of the intended result, which was that they started front loading the entire NEPA process before the publication of the NOI just to make sure that they had all their ducks in a row. And we immediately heard from project proponents that the net effect was that everything was taking even longer. 

And so from the time that they filed their initial permit application to the record of decision and publication of the final environmental impact statement, it was taking much longer than two years—or was going to take much longer than two years. I mean, I can only assume that these changes are meant to address that. This is a very difficult issue. 

As long as the agency has any control of when the clock starts ticking, there is a substantial probability that the agency will be able to game the system and escape the time limit. And so I think what I would like to ask Emily is how this is supposed to work, and especially, which — what does this first one actually mean in practice? 

The date on which such agency determines that Section 102(2)(c) requires the issuance of an environmental impact statement with respect to such action raises the question of, “Who at the agency determines that? Who at the agency knows that? Under what set of facts is this condition satisfied?” is basically the issue. 

I ask the question because if I file a preliminary permit application for a solar project on BLM land in Nevada, for example, or a hydro power project in somewhere else, the agency is going to know immediately that if the process proceeds, it’s going to require an environmental impact statement. I guess my simple question is, “What set of facts would satisfy this first condition and start the clock ticking on the two year time limit?” 

Emily Domenech:  Thanks so much for the question. Before I dive in on the technical stuff, I want to take a little bit of a step back to give the framework of where we started with this proposal. 

I think you rightfully note that a good piece of this legislation is based on the work that the Trump administration did, both through their NEPA reg and through the One Federal Decision memo. I think the idea here was to get as much as we possibly could enacted in law so that we had somewhere to build off for the future. 

I think just as in context, the first meeting that I took with the White House on this, they told us that touching NEPA — the statute of NEPA was an absolute nonstarter and was something that was completely unacceptable in the confines of this negotiation and negotiations in the future and that in order to get anything that sped up any timelines whatsoever—whether we did it through the Fast Act or through another mechanism—we would need to put some really big pieces on the table for transmission. 

I think that the real takeaway from this legislation is, while it is not perfect by any means and we certainly didn’t get everything we wanted, we got most of what we wanted here: number one, crossing a red line from the White House, and number two, without having to trade away any major equities that were brought to us by the folks on the left. 

That leaves us open to, number one, come back to NEPA in the future for some of the big items, like judicial review, that we weren’t able to touch on specifically here and also to put on the table some of the other major permitting reform pieces, such as pipelines, mandatory leasing, things like that, that came in the H.R.1 proposal. 

So I will by no means say that everything in this legislation is ironclad and perfect the exact way it is or that it’s not going to allow a left-of-center administration to try to continue to delay. I think those pieces still exist. 

However, we went from having literally nothing in statute on any kind of deadline or timeline to having something that’s here so that project applicants can point to a process that allows them to say, “Hey, look. Number one, you’re supposed to follow a specific timeline.” I think to your point about an agency knowing whether or not they are going to need to do an environmental impact statement or some kind of assessments, sometimes, that’s really clear cut. I think in other cases, there is some deference to the agency on whether or not they have to prepare these documents. 

Some of the language that’s later on in the bill that focuses on the major federal action, for example, gives agencies—perhaps under a friendlier administration—the leeway to say, “You know what? This project doesn’t qualify for something that needs to go through NEPA.” We wanted to be able to preserve some of that flexibility. 

And then the last piece of this is, for the first time ever, we have a right of action for project applicants to say that they are not following the process proposed here in this legislation. So I think you’re right to point out that there are still opportunities for the agency to perhaps delay the publication of a notice of intent. I think that’s certainly something that could happen. But right now there’s no deadline at all. 

So if I had to choose between a deadline that could be delayed and a deadline that — no deadline whatsoever, I’m going to choose this option because I think it gave us more to work on and, frankly, more to give a project applicant to work for, work on when going to a court to say, “Hey, this wasn’t carried out the way it was intended.” 

I’m going to just ask Tom if I missed anything here that’s that specific. But I think that’s kind of my perspective on this section. 

Thomas Connally:  No, I think you nailed it. And I think one of the most important components of this timeline is the right-of-action component. For lack of a better term, it allows NEPA litigation to cut the other direction. For the first time, project applicants and those interested in getting their projects started and completed have a mechanism by which to force agencies to take action. 

Mario Loyola:  Great. All of that is appreciated, and thank you for that. But again, just a narrow question. On what set of facts — at what point in a typical process do you think this first milestone would be reached? 

Emily Domenech:  The determination of when a project — whether or not you would need an environmental impact statement, I think in most cases, for example, the example you raised where you put in a permit for something that almost always goes through that process, you’ll immediately know that you need to — the agency will immediately have a process that identifies you have to go through an environmental impact statement. If you’re building a project on federal land, that’s pretty clear cut. 

I think there are still going to be some cases where that’s less clear cut. And I actually think this provision, frankly, could benefit folks by saying perhaps you do not need to go through the — you do not need an EIS in this case. And so this wouldn’t be a necessary timeline because you’re not doing an EIS at all. 

That was really the intention of the limitations that we put in the major federal action space was. And again, I highly doubt this is going to cut our way that much under a Biden administration, but it’s going to set some precedent for the agency saying, “Look, not everything has to go through this process.” And we have these things we can now point to in statute that allow us some flexibility for carve outs. 

I’ll give you a good example of something I’ve heard since the passage of the FRA on this topic. There’s, obviously, post-CHIPS Act. There’s a lot of money out there for the semiconductor industry, and most of those folks were not prepared for the fact that they were going to have to go through the NEPA process. It caught them completely off guard. 

I think anybody who’s on this call probably could have told them they were going to have to go through NEPA taking huge sums of money from the federal government, but they weren’t prepared for it. I will say the folks from Intel came to me last week and said, “We think that we might not qualify based on how you wrote the major federal action provision. 

They’re going to have to debate that with the agencies because the agencies are still going to think that those major projects receiving the semiconductor funding under CHIPS are going to qualify for — as a major federal action. But because that’s not as clear cut, that’s a place where perhaps the agency won’t be able to immediately, right out of the gate, say, “An EIS is necessary.” 

Mario Loyola:  So thank you for that. So that’s a perfect segue to what’s going to be the next issue I wanted to ask you about, which is the new definition of “major federal action.” And just to set the stage a little bit here so people know what we’re talking about, Section 102(2)(c), which is the core section of NEPA—of National Environmental Policy Act—requires — in the original version, required the responsible official at the agency to prepare an environmental impact statement for any major federal action significantly impacting the human environment. 

The question that immediately arose in the 1970s—and a circuit split developed over this question—was whether major federal action was a separate standard that needed to be met independently of significantly impacting the environment in order for the EIS requirement to be triggered under NEPA. And this is a very difficult question if you think about it conceptually. 

It’s kind of one of those things you could see kids sitting around in a dorm room debating all night long. It’s somewhat metaphysical. And there were some circuits—it was a minority—that said, “You know what? If it’s a significant impact on the environment and the federal government’s involved, ipso facto; the action must be major. So we’re just going to say that it’s a major federal action if it’s a federal action that has a significant impact on the environment.” 

The problem with that approach is that it violates, among other things, a basic canon of statutory construction, which is that you’re not supposed to presume that a word in a statute means nothing. And to say that it’s a major federal action if it’s a federal action that significantly impacts the environment basically reads the word “major” right out of the statute. 

And unfortunately, that is the approach that was adopted in what’s called the “unitary standard” as opposed to the “binary standard” was the approach that was adopted in 1978 when CEQ published its so-called regulation of NEPA. I say “so-called” because it’s really just an executive order dressed up to look as a regulation. 

But when CEQ adopted its regulation—so called regulation of NEPA in 1978—it adopted the unitary standard. And so we went through a difficult process of trying to define “major federal action” — and one of the points that we were arguing about internally for many — for several years in the White House. And I think that you’ve gotten a great stab at the problem here by saying that major federal action means an action that the agency carrying out such action determines is subject to substantial federal control and responsibility. 

Now, I’m going to ask you a question about what this means, but I’m going to parse it because in the next couple of issues that we raise, we’re going to be talking about statements of purpose and need. And you’ll see then the distinction that I’m drawing here—why it matters. 

When we talk about major federal action, if you go back to the Sabal Trail case, the Sierra Club v. FERC August of 2017, what was at stake in that case is whether FERC had to account for the downstream carbon emissions as a proxy for climate impacts of this pipeline that was already in operation, given that the pipeline was just feeding a power plant in Florida that was totally subject to the jurisdiction of Florida authorities and not subject to the jurisdiction of FERC at all. 

And FERC’s argument was, “We don’t have any control over what the state utility is going to do with the gas that this pipeline supplies. We don’t know if they’re actually going to use any of this gas. And so we cannot be required to account for these far downstream impacts which are the climate emissions.” 

And the argument basically was, those impacts are not in the control and responsibility of the agency—the impacts, right? Here, what this appears to say is that the major federal action means an action — agency action—which is the permitting decision—that the agency carrying out such action determines is subject to substantial federal control and responsibility. 

And I’ll just point out that on its face, that seems somewhat circular because the agency permitting decision is always, by definition, in the control and responsibility of the agency. And what I hope that a court looking at this provision will read into it is that the action means the action with all of its impacts because otherwise, it would just be a circular definition. 

But let me stop talking. And let me ask you, Emily and Thomas, and Jason, also feel free to weigh in on the definition of “major federal action,” which, if it’s effective, is a very important limitation that will revive — I think will revive an important part of the original intent of NEPA. 

Emily Domenech:  Yeah, so I’ll just speak to the intent here. I think we approach this as trying to get as many potential limiting factors included in a definition of “major federal action” as we possibly could. 

Again, I’ll start with the starting position from the White House was that they didn’t want to include anything—including things that, frankly, were referenced in their own regulations—which is part of what makes this so complicated is that where we ran into a lot of places, there would be something that was in the existing reg under the first Biden administration round of regs. But they didn’t want to codify it because they were hoping to undo it later in the process. 

So this is an example of one of those things where there is a reference to I believe it’s two out of three of these pieces in the existing regulation, but they were not interested in codifying it. And they were really resistant to our efforts to sort of say we want to say this minimal or federal funding piece, the minimal federal involvement when an agency doesn’t necessarily control the outcome of a project. 

And I’ll give you some examples of what we had in mind when we thought of this process and then limits on applying NEPA where they receive loan guarantees and other pieces of small financial assistance. I will note that there were two pieces that were in the original draft of BUILDER that are not included here because we simply were not able to get them in the negotiation. 

One was a limitation on the time of the impacts of a project. So we had a ten-year window. Another was just simply triggering NEPA through an interstate impact. I think, truthfully, if we had a little more time, we might have been able to close that, but we just weren’t quite able to get the folks of the White House comfortable with those provisions or, frankly, work the language in a way where they felt like they weren’t going to get completely attacked by the left on some of the bigger long-term impacts of projects. 

But we see this very much as a good first start to your point earlier. I think we want to see — give projects the opportunity to go to, frankly, to lobby the administration or to go through the legal system and say, “We don’t think we qualify as a major federal action. And here’s our argument for why.” In the current statute, you don’t have any real way to do that. 

So a lot of what we did here—while it’s not ironclad and won’t necessarily let us win every single time—it gives a lot of these projects that need a foothold to make an argument in court against, frankly, the regulatory overreach they face every day. We’re trying to give them that foothold. 

I think the CHIPS project is a — the CHIPS issue is a perfect example of something where this is not ironclad by any means—exempting them from a NEPA process—but it gives them something to argue that they didn’t have previously. I would say I think that the next piece of this is something that we really do want to pursue in the future is getting back to that. 

The interstate impact, for example, is one that I think is really important. One of the examples we used when we talked about this with the White House was we don’t want to have to do NEPA for an entire project if you’re only crossing federal land in one corner. That’s how the process works now. 

It’s something that we’d like to try to move away from. But we just simply weren’t able to get it in code here because, frankly, we were negotiating without the ability to, frankly, trade much away that the White House wanted. So that puts some limitations on us here. But I agree with you. I think there’s opportunity to interpret this in a way that gives people the ability to say, “Look, I don’t think this project applies for NEPA.” 

Another example that we’ll use in terms of the minimal federal funding piece is we looked at — my boss is from California, and we have a lot of California water projects that either come get funding through disaster assistance or something through that process, or they get a minimal amount of federal match for what is largely a state project. Those were the kinds of things we had in mind when we were looking to exclude folks from qualifying under this major federal action space. Tom, did I miss anything? Anything to add? 

Thomas Connally:  No, you summed it up well. 

Jason A. Hill:  When I looked at this — thank you for that history. I think it’s interesting, Emily. When I looked at this, it looked a lot like 1508.1(q) that was in the regulations. And then I was trying to figure out where it matched up. 

And so certain things — the first one was the sixth one in the regs. The second one was the fifth one. The third one was the seventh one. The fifth one was the fourth one, and six and seven were one and two. But it was all kind of already there in the 2020 regs. 

Another change that I noticed was at the very beginning where it talks about major federal action, means in action, that the agency carrying out such action determines the subject in the regs, it just said “federal control and responsibility.” And what I saw was the addition of substantial into the statute, which seems to signal a little bit more narrowing, perhaps, than was in the regs. 

And so this is really interesting. When I look at the non-discretionary language, I had the question last year when the IRA was passed and still have it as to why they’re doing NEPA on the leasing, the offshore leasing provisions that the IRA required them to do by a date certain. It seems nondiscretionary, but they’re still proceeding with doing NEPA analysis on those offshore lease sales. 

We were having discussions yesterday, and I think the loan provisions are pretty interesting on this. That held up a lot. DOE just kind of released some funding guidance on different grant programs. And so I think that these loan guarantee issues are things that there’s already stuff in the pipeline where they’re doing NEPA, and it’s at least worth the project proponents going back to the agency and saying, “Have you looked at this? Are you sure that we need to do NEPA on this like you’re proceeding?” 

And I was just having that discussion yesterday with one of my colleagues on a project we’re doing for a client. At the end of the day, this is a loan guarantee. Go back and read the regulations; go back and read the new statute. I think there’s some good stuff in here. 

And the key of this is the way it ties to Section 102, which is really the action forcing provision and always has been in this NEPA, which is a relatively short statute, and that provision is pretty short. But if it’s not a federal major — or major federal action, then arguably, you’re not having to do NEPA on it, and this kind of gives you some clear cut exceptions to that that have now been codified. I think there was some worry as to whether any of this would be included in phase two. And now, it’s clear it’s happening.

Emily Domenech:  So I’m so glad you raised the loan guarantee piece because that’s—in the course of our negotiations—something the White House wanted to strike. And we basically got them to give up on it because I kept pointing out that it was in the 2020 reg. 

And I think you’re absolutely right to say that there was an intention to cut some of these provisions in the phase two regulations from this administration. I think it was very clear to us that was something that was on the table for them. And it’s part of why we pushed so hard to codify it, even though it’s not perfect. I think there’s a lot more that could be in here. 

But every single piece that we can get in the statute makes it harder for them to roll something back in a future reg. One thing I’ll note that we had included in the Builder Act that we weren’t able to include here was an exclusion for farm loans — for USDA loans, which it was very interesting to us. 

But we could not reach an agreement on that provision I think largely because the environmental community has so aggressively turned on the agriculture space. And they wanted to be able to say that they still preserve the right to execute NEPA on farm loans. 

But it’s a fair point. I assume the reason they are making some of these loans and loan guarantee projects out of DOE go through the NEPA process is that they had every intention of taking that exclusion out in the phase two reg, and now, they can’t. Even if those are the kinds of things that we get done in this provision is making it harder to take away a freedom in a future reg, then it was worth doing. 

Jason A. Hill:  And you’ve got a farm bill coming up. And now that you’ve got a list, you can add to it. 

Emily Domenech:  Yeah, absolutely. And I’m glad you said that, too, because we sort of see this as the first step on NEPA, not the last. I’m sure that some folks on the other side of the aisle feel differently about that. 

But I’ll just point to even as recently as this week. We had an FAA reauthorization bill come out of the T&I committee 63-0 votes—so a fully bipartisan bill. And they included one federal decision language specifically for airport projects. This is something that hasn’t been done before. 

And they were able to say, “Look, you’ve just voted for some of this in the FRA. You voted for it in the IJA. We have a precedent of doing these kinds of streamlining actions for other major projects across the highway space and in other NEPA-related projects. Let’s do it for airports and airport projects.” And the dems signed off on it. 

So doing something like this allows us to continue to put in small bites in the future, and we hope to continue to leverage it that way, both in other authorization bills and in the [inaudible 32:30] process. 

Mario Loyola:  Well, thank you all for that, and I definitely applaud. I mean, I think that this definition is a major win. When we were talking about major federal action—and some of us were particularly emphatic about the need to revive major federal action as an independent standard—the approach that seemed the most fruitful was to create baskets of carve outs and be able to say, “Okay, well, let’s leave aside the conceptual problem of defining major federal action. Let’s think about what is not a major federal action.” 

And so this approach of — this list of things that are not major federal actions, I think, is a really significant improvement in NEPA and will provide much needed clarity at the outset of the NEPA process of what is and isn’t a major federal action. So really applaud what you all did there. 

So in the interest of — a half an hour has already flown by. Before we start losing some of our key panelists—I guess we’ve already lost one—I just want to kind of try to race through in shorter fashion some of the remaining highlighted issues that I think are important. 

One of the things that I think is really important is the statement of purpose and need and the fact that, now, the EIS requires — the legislation requires NEPA documents to contain a statement of purpose and need for the agency action, which is the purpose and need that the agency action is responding to. 

And that’s a very subtle surgical change that I think is very important because the problem that we’ve had for decades since the 1978 rule—which was very loosely worded rulemaking in general—is that the agencies weren’t clear if they were supposed to be talking about the purpose and need for the project or the purpose and need for the agency action. 

The purpose and need for the project could be a hydropower project and could serve lots of purposes. But the purpose and need for the agency action is just to respond to the statute that requires the agency to either deny or grant the permit. So that’s a very different purpose and need than the purpose and need for the project. 

And the distinction is crucial because NEPA requires that the agency study not just the impacts of the proposed action but also alternatives — the impacts of alternatives to the proposed action. And we’ll get to another major change which is alternatives in just a second. 

But FERC, for example, studies — spends hundreds and hundreds of pages in every permit application, studying routing alternatives for transmission or pipeline, configuration system alternatives, engineering alternatives, and he doesn’t have to study any of this. If FERC thinks that NEPA requires this, it never has. 

And so all NEPA requires is that FERC present its study of alternatives, which is to either grant or deny the permit application. And so this is a very important change. And it’s why I insist that we — very important just conceptually for all of those who work with NEPA to distinguish very clearly between the purpose and need for the agency action and alternatives to the agency action on the one hand, and the purpose and need for the project, and alternatives to the project, which, in most cases, are not going to be any of the agency’s business. 

And so the agency shouldn’t be spending hundreds of pages studying alternatives that the project developers can readily exclude for business reasons and that the agency can often readily exclude for policy reasons. So there may be — maybe the Clean Water Act requires “least damaging practicable alternative,” and then you have to really compare different alternatives to the routing of the pipeline or whatever. But NEPA does not require the agency to study alternatives to the project. And that’s why this definition of “purpose and need” is so important. 

So I’ll wrap that into the next issue which is what I think is maybe the biggest win of all in this legislation, which is the inclusion of a reasonable foreseeability standard for the impacts that the agency has to study. 

I was one of those arguing for months on end that especially after the Sabal Trail decision in August of 2017, there had to be some limiting principle on what impacts the agency has to study because otherwise, it’s chaos-theory NEPA, and the agency does something, and it causes a tornado in China. And the agency has to study all of these potential unforeseeable impacts. 

So I’ll just open it up for Emily and Jason to talk a little bit about the importance of a limiting principle on the alternatives that the agency has to study and on the impacts that the agency has to study. 

Emily Domenech:  Yeah, I can start there. I mean, I think you’re right. In my opinion, the reasonably foreseeable piece was a huge win for us. We didn’t get everything we wanted here. I think we had hoped to include a reasonably close causal relationship, which is language that’s based on the current case law surrounding the reasonably foreseeable phrase. 

We couldn’t get the White House to agree to that second part, but we felt like inserting that reasonably foreseeable standard in the Code allowed us to continue to argue that there’s a limitation on what kinds of effects agencies can be studying. 

I’ll also note another section that I think is our holistic approach here was how do we place limits? How do we narrow the field of what is looked at in the process? One example where we did that was the scope and timeline of scientific review. 

And when a court or an agency could require additional research, we put some time limits, essentially some guardrails around it so that you couldn’t just require scientific review in perpetuity. We took that same approach when we look at that reasonably foreseeable standard is we want the agency to be looking at things that they can predict in the future. 

We can’t be in a position where we have a federal agency that can say, “Well, there’s a potential for an impact in decades that could potentially maybe be attached back to this project.” They could argue that now, or they could argue that before this was put in statute. 

So the goal is to say, “Okay, you need to tell a judge based on the case law for reasonably foreseeable impacts. Are we meeting that standard?” And we felt like that was a really big step forward. And again, we’re not done here. 

We still have more restrictions I think we could put in the statute. But it also gives a really good foundation for a future administration to build a stronger regulation. 

Jason A. Hill:  That’s very helpful because I think that the reasonably foreseeable language coming into really that core action forcing part of 102, it wasn’t there before, and now, it’s clearly there in the statute. 

The concept of reasonable foreseeability, though, has always been kind of kicking around in effect. I mean, it was in the ‘78 and in last year’s changes under cumulative impacts and things. And then it was in the 2020 regs. The really important part was that kind of reasonably close causal relationship. So it’s interesting to understand kind of how that didn’t get picked up too. 

There is a definition in the 2020 regs for “reasonably foreseeable,” which is sufficiently likely to occur such that a person of ordinary prudence would take it into account. It’s really interesting. 

I think another interesting limitation in that Section 102 is the “except where compliance would be inconsistent with other statutory requirements.” There hadn’t been an exception there before. And I think you’ve got certain statutes where Congress says, “When you get this application, get it done in 90 days.” And the agency has been doing these environmental reviews on it. 

And I think this kind of helps those applicants that say, “But it says 90 days.” Yes, you’re allowed to consider things, and the statute allows that. But doing a two-year NEPA process is inconsistent with this other statutory provision that requires you to approve or disapprove this in 90 days. And so I think that exception is an important limitation as well. 

The alternatives to the proposed agency action—talking about a reasonable range, including the analysis of negative impacts of not implementing—but really that technically and economically feasible — that was not part of the pre-2020 regs. And now that it’s codified in the statute, I think that’s an important piece to show that it really needs to be technically and economically viable. 

And then to Emily’s point about the science and when you’re required to do the studies and stuff, there is some qualifying language in there about whether it’s reasonable or unreasonable for the amount of time and cost. And is it unreasonable if they go do a study that puts them outside that two-year limit? So you kind of have to think about how these things interact. 

I think the argument can be made like, “Yes. You’re saying that you need to do the study in order to evaluate the alternative fully.” But you’re talking about a five-year study, and you’ve got a statute that says you have a two-year statute of limitations. 

Or even talking about an 18-month study, you’ve still got to be able to get it done within that 2-year period or that 1-year period. And I think that kind of provides some boundaries to what’s reasonable in those scientific study provisions.

Mario Loyola:  Great. 

Emily Domenech:  Yeah, and that’s part of why we wanted to include that and part of why the right of action on the two-year — one-year timeline is so important. That gives you the opportunity if the agency isn’t following this statute and they say, “We do want an 18-month study, or we do want a 2-year study.” 

You have the ability to go to a court and say, “There’s no way they can possibly meet their two-year deadline if they require this additional scientific information.” And they need to really justify it. If they really need it for some particular reason, the agency still has the ability to say that, but they need to be able to justify it in a reasonable way. 

I will say I think you’re right to point out that the reasonably closed causal relationship stuff, I think, would have been great to have here. I think that’ll be something that we definitely bring up in permitting round two. And it’s just the question of this is a good start, and how do we take it to the next level as we move forward.

Mario Loyola:  Yeah, so thank you both for that. And I do want to take one question from the audience here. But I will say that I think if — I don’t think that the White House got such a big win there by keeping the reasonably close causal relationship language out because, even without it, the reasonable foreseeability standard right there at the heart of Section 102(2)(c) of NEPA is clearly — the courts are clearly going to look at that and say, “Okay, what does that mean? That’s like proximate causation and torts,” which was exactly the genius — one of the genius aspects of Justice Thomas’s opinion in Public Citizen v. Department of Transportation. 

Emily Domenech:  That’s exactly what we were referencing. And we felt like it was better to rely on that case law rather than put in a definition that we felt like was incomplete. 

Mario Loyola:  Yeah, absolutely. And so I think that now, judges will say, “Oh, well, we don’t have to invent a whole new case law over this. We can borrow from the law of torts as persuasive authority on the difference between cause in fact.” It has to be not just cause in fact but also approximate cause. 

And I think that that’s a very important limitation. If I can suggest before going really quickly to this question from Dawn Reeves (sp), for round two, if I humbly suggest one thing for round two, it’s in that definition of “major federal action,” to make it to add impacts of the action subject to federal control and responsibility because going back through the iterative process internally at the White House, the reason why this language about subject to federal control and responsibility originally cropped up in the drafts was precisely to try to bring in — to try to say, “If the impacts of the action are not within federal control — the environmental impacts of the action are not within federal control or responsibility, then it can’t be a major federal action.” 

And that means that if it’s in the control of some other government or some state government or some local government, it’s not a major federal action. I think you have captured a lot of that, though, with the baskets, such as minimal federal funding, because a highway project that only has five percent federal funding is minimal federal funding. And that could dramatically, in one fell swoop, reduce the burden of NEPA environmental impact studies for the Department of Transportation that is, in any case, delegating them to state agencies, but save everyone a lot of pain and suffering and time. 

So with that, we have a question from the — one question from Dawn Reeves who says, “Can someone please speak to the impact of the law on projects already undergoing NEPA review that may no longer be required”—I guess she meant to say—“or that due to changes in the law, there was no grandfathering. So what is likely to happen?” That’s a great question. 

I think that grandfathering existing NEPA reviews would have been a terrible idea because those grandparents were going to last a long — were going to live a long time anyway, and they would have lived much longer if you put that grandfathering clause in. So I would just turn that over to Emily and Jason and see what you all think. 

Emily Domenech:  Yeah. I mean, I think our perspective — I agree with you on the grandfathering. I think that would have allowed the administration to delay a whole bunch of projects that maybe shouldn’t have even been under the NEPA provision at all. 

I think, truthfully, not that I’m giving advice to projects out here, I think there’s opportunity for them to take advantage of the right-of-action provision to make an argument, that maybe their process should be abridged or perhaps dropped altogether. I think that they will probably — I expect there will be quite a bit of litigation in that space if the administration doesn’t try to be more flexible with some of those projects. 

But I also will note that I haven’t — with the exception of the semiconductor industry, I haven’t heard from any specific industry projects at this point. If you all have, feel free to send them to me. I think we’d be curious to see how this plays out as well. 

Jason A. Hill:  I think that a key point on that is just kind of — I’ve lost my train of thought. 

Emily Domenech:  It happens to the best of us.

Mario Loyola:  On the grandfathering?

Jason A. Hill:  I started thinking about something else with the scheduling issue.

Mario Loyola:  But, Jason, so on the grandfathering? 

Jason A. Hill:  Yeah. On the grandfathering, we’re looking at that with our clients right now. Our view is it’s immediately in effect. And so some of these projects that are in early stage, we’re like, “Hey, make the agency do these threshold questions; figure out whether it’s a major federal action”—things like that. Things where we’re pretty far down the road on it, it’s like, “Let’s just wrap it up as fast as we can.” 

I think the other issue is stuff that was decided before this and it’s now in litigation and what that means for the litigation, right? Like, “Okay, yeah. You’d apply the law that was in effect at the time that the decision was made, but to what consequence if there’s a remand and they’re going to have to analyze it now under the new law?” Is there a harmless error kind of argument to be made there? 

And so I think it kind of breaks into those three different buckets depending on where they are in the process, right? Are we early in the process and can take advantage of this? Are we pretty far along and we just want to get it done, or are we already in litigation? And what does that mean for the litigation and potential remedy here? 

Mario Loyola:  Yeah, great. Super important. And I think that dovetails nicely with Anthony Cavender’s question. “Has the Council on Environmental Quality issued any guidance on this legislation?” I mean, I’ll take that on moderator’s prerogative and as a veteran of CEQ. 

I can say that it is 100 percent impossible for them to have issued guidance on legislation that was so recent. I would be astonished if they issue guidance this year, which they may. But anyway, it won’t be anytime soon. 

Emily Domenech:  I will note, though, that the CEQ is testifying before House Natural Resources, I believe, next week. So there’ll be an opportunity to ask some questions about this on the record. 

Jason A. Hill:  Well, I do think that they have phase two that they were planning to get out. And based on the unified agenda that came out this week, they’re still looking at getting that done in the next month or two with phase two NEPA. 

And I think I saw some acknowledgment earlier this week where they said, “Yeah, this is going to change some of what we were going to put in phase two.” But it still seemed to indicate that they thought they could make those changes and still meet their deadline under the unified agenda. 

Mario Loyola:  But now, the thing is that, at some point, they’re going to have to rewrite — they’re going to have to sort of codify all of this in the “NEPA regs” because now, we’ve — now, this legislation in material respects overrules the existing NEPA reg. 

And this is a good opportunity to put in my plug once again that people should just take a close look at whether this is really a regulation to begin with because, in my opinion, it is not a regulation—the CEQ regulation. It is just an executive order. It is not based on any rulemaking authority. There is no rulemaking authority in NEPA. 

The authority in the preamble says that it’s coming from executive orders dating back to the Nixon and Carter and the Trump and Biden administrations now. And all it is is a memo to agency heads. 

And besides being an important conceptual point for litigation, it has a huge impact like many other aspects of this new legislation for FERC. A lot of the permitting work in the federal government is done by the Federal Energy Regulatory Commission pursuant to the Federal Power Act or the Natural Gas Act or various laws that make FERC the permitting authority, and, in this case, the lead agency under the new law. 

And there is a question whether the CEQ regulation ever had any binding impact on FERC. Now, we know that it doesn’t with respect to these things. Because it’s a statute, it does impact the work of FERC. And I think maybe this is a good idea for another webinar, and we can have one or more of the commissioners on to discuss this from FERC. 

But I think that this could be — this could really change how things are done at FERC. And let me ask Emily and Jason to assess that. And then, Jason, if you want to take on in the remaining minutes how you think this might shake up how things are done in Interior, that would be great as well. 

Emily Domenech:  Yeah. On the FERC point, I’ll just note that we had a lot of conversations with the White House about transmission and whether or not we’d be willing to include things on everything from cost allocation to minimum transfer to a number of other complicated issues in the transmission space. And I kept coming back to the argument that, “Look, dealing with NEPA and streamlining the process in NEPA is going to benefit anyone who builds anything that has to be impacted by the regulatory process.” 

And to your point about FERC going through, frankly, endless reviews to look for every alternative and every potential impact, one of the things that’s impacted the most by that process is transmission. The same is true for pipelines. But they both run into this big problem where they just are such a big project that they just get endlessly reviewed and litigated. 

And so we felt like while we didn’t specifically do carve outs for transmission and spill—in fact, we didn’t do carve outs for anything—we felt like the reforms here would really streamline that process. And I’m very curious to see how FERC interprets it and how we see this play out over the next year—whether there is some real streamlining on the transmission side as well. 

Mario Loyola:  Jason? 

Jason A. Hill:  Yeah, no. I mean, I don’t really have anything to add to what Emily just said. I mean, I completely agree with all of that. 

Mario Loyola:  Well, so then moving along and in the couple of minutes that we have left, I do want to highlight another very important — what I see as a very important change—which I will just admit that I argued very persistently and through a strategy of exhausting my colleagues at CEQ for this change when I was in the White House—which is to allow the project proponent to prepare their own environmental impact statement. 

I thought that the argument that the agency should be selecting a contractor that the project proponent pays for but doesn’t have any privity with the project proponent otherwise was a really cumbersome and onerous way to get around a very simple conflict of interest potential that, in any case, more apparent than real. This is something that’s really going to give project proponents significant control over the clock. 

And I will say, next week, Council on Environmental — sorry, Competitive Enterprise Institute—not to be confused with Council on Environmental Quality—we’re going to be releasing a report that I’ve been working on for many months, that is, a survey of best practices in other major industrial economies in the permitting space. 

And in every other country, the project developers are the ones that have to prepare the environmental impact statement. And not only that, but then once they publish the environmental impact statement and there’s an independent commission that can weigh in on whether it’s sufficient or not—in some cases like the Netherlands—then government officials are given very tight timetables for responding and making their decisions. 

Sometimes, it’s just a matter of weeks; sometimes, just days to act on those environmental impact statements. So this is a huge change that’s potentially going to lead to further changes down the road. But Emily and Jason, why don’t you talk a little bit about — Jason, this has got to be good for you.

Jason A. Hill:  Yeah, I think this is a great change. And we’ve had clients that actually have the in-house skills to do this, and I think this allows for that now, which simply wasn’t allowed before. You had to go through that whole hiring contractors. And I think this puts a lot more control over the timeline with the project proponents. 

I was just speaking on this last week to Essential Minerals Association, and we were talking about how significant of a change this was. I think it’ll be yet to see. I think there’s some requirements that the agencies put out some guidance regulations on how this will operate in practice. But I think it has really great potential. 

Emily Domenech:  We also saw it as really critical to pushing back against this narrative that the reason that NEPA reviews take so long is because we don’t have enough bureaucrats. That is something that’s in the Manchin bill. It’s brought up all the time when you talk about this issue. 

And we said, “Okay. Well, really, if it’s that you don’t have enough people to do the work, we’ll give the industry the right to do the work.” So that’s really what we were going for here, I think. Obviously, it’ll be interesting to see how it plays out when they implement it. But that was the intent. 

Mario Loyola:  Yeah, and subject to agency verification and adoption, right?

Emily Domenech:  Exactly.

Mario Loyola:  So it’s still the agency impact statement at the end of the day. And I will say as well that this is something that actually has survived the rollbacks in the Biden administration of the things that were in the Trump era NEPA rule revision. 

There were many things, actually, from the Trump era rules — many important changes that are still on the books in Biden’s CEQ today and what that represents—and this is a good place to round up and get your final thoughts, Jason and Emily, because we have a hard cut off in two minutes—is that this really represents a bipartisan. 

The reason why this is possible and the reason why it was possible to amend NEPA at all—which is the sacred cow for 50 years hovering over the American economy—is that there’s an increasing bipartisan consensus that amending NEPA and fixing this process is good for everybody. And that’s why so many of the ideas that the Trump administration had came from the Obama administration, and Biden has preserved Trump rules. 

And now, we’re codifying these in these legislations. It’s just a big win all around. So with that, congratulations. Emily, final words from you and Jason. 

Emily Domenech:  Yeah, I’ll just say we had to fight like hell for this. I know there’s plenty of bipartisan interest in addressing NEPA, but it sure didn’t come across from the White House. Big credit to Congressman Garret Graves and to the speaker. He had to directly engage with the president on this multiple times. So we’re really excited to see how it moves forward and, frankly, to build on it in the future. 

Mario Loyola:  Super. Thank you, Emily. Jason? 

Jason A. Hill:  Yeah, I mean, this has been kicking for a long time. Go back to the 1978 preamble. I mean, the fundamental purpose of NEPA is to help improve decision making, not to create useless paperwork and waste time. That was there from the beginning. And this kind of helps us move towards that. It had gotten away from it. 

Mario Loyola:  Well, super. Thank you very much, Emily. Thank you very much, Jason. Thank you very much to The Federalist Society Regulatory Transparency Project for hosting this valuable and insightful webinar. Thank you for having me. And thanks to all of those who joined online. 

And we’re all available to answer further questions, so please be in touch and to be continued. Don’t miss next Thursday’s report release event at Competitive Enterprise Institute, and have a great weekend. 

Emily Domenech:  Oh, thank you, Mario. And again, I just want to thank all of our speakers for sharing your time and expertise with us today. And to our audience, thank you for tuning in. You can find more of our content on our website at regproject.org or follow us on any major social media platform @FedSocRTP to stay up to date. With that, we are adjourned. 

Conclusion:  On behalf of The Federalist Society’s Regulatory Transparency Project, thanks for tuning in to the Fourth Branch podcast. To catch every new episode when it’s released, you can subscribe on Apple Podcasts, Google Play, and Spreaker. For the latest from RTP, please visit our website at www.regproject.org.

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