Building and operating a major industrial facility in the U.S. can be fraught with considerable regulatory challenges. Industrial operations—such as those in the food processing, manufacturing, mining, oil and gas extraction, power generation, distribution, transportation, and transloading industries—usually trigger a complex assortment of permits, reports, and regulatory reviews. These range from local land use permits to regional air and water quality permits and other regulatory approvals involving state and federal rules. One important program that covers some facilities was created by the National Environmental Policy Act (NEPA) of 1969.
NEPA was enacted as a "stop and think" regulation to consider the effects of industrial pollution on our air, water, and natural environment. Many states, including California, Montana, New York and Washington, have since established their own NEPA-like regulations to create statewide policy for environmental protection.
For environmental activists, NEPA is viewed as a necessary shield for environmental protection; many critics, however, believe NEPA is used as a sword by opponents to delay or kill off major federal actions, especially new facility construction.
Moving Forward with a Long View
NEPA regulations have endured over 45 years of application and refinements to incentivize lower-impact projects, facilitate public input, and improve agency reviews. While NEPA regulations can be among the most confusing and time-consuming regulations, the key to avoiding delays and frustrations is knowing the intent of the law, how it is applied, and the NEPA guidance of the relevant federal agency.
This article aims to demystify the NEPA process and suggest environmental management strategies for major industrial operators to leverage the NEPA process if triggered.
What is NEPA?
NEPA (42 USC 4321 et. seq.) established national environmental policy to protect, maintain, and enhance the physical and natural environment and the relationship of people with that environment. NEPA creates a roadmap for measuring, assessing, and mitigating the anticipated effects of a major federal action before federal projects, permits, or actions using federal funds are approved. As a procedural rather than a prescriptive legislation, NEPA requires a federal agency to substantively demonstrate a hard look1 at the environmental effects of its action. The presence of an adverse environmental effect alone will not prevent a federal agency from approving a federal permit or action: the purpose of the NEPA process is to assess and disclose environmental effects of major federal actions and to consider whether there are appropriate alternatives to reduce adverse effects as well as consider substantive public comment.
Major federal actions include the following:
- New or revised federal agency rules, regulations, policies, plans, and procedures;
- Federal permits for major projects including power plants, interstate pipelines, highways, mass transit, and major water or wastewater treatment; and
- Public or private sector projects using federal funds or located on federal land.
Most major industrial facilities are privately owned and operated and likely will not require a NEPA review. However, some major industrial activities can trigger federal permits which can then trigger NEPA. Power plants can trigger Federal Energy Regulatory Commission permits which are clearly a major federal action. Major industrial facilities exceeding air emissions and water discharge thresholds can trigger U.S. Environmental Protection Agency permits. An oil and gas or mining project on public lands would trigger a federal action and NEPA review. A project in the waters of the U.S. can involve a U.S. Corps of Engineers permit. Knowing whether a facility could trigger a major federal action, and thus NEPA, could inform the location and operations of a new major industrial investment during pre-application due diligence.
The NEPA Process in a Nutshell
The Council on Environmental Quality, charged with overseeing NEPA implementation, published A Citizen's Guide to the NEPA in 2007, to provide easy to understand guidance and facilitate public involvement. The NEPA Responsible Agency is the lead federal agency responsible for the major federal action. The NEPA process first requires the responsible federal agency to determine if its actions trigger NEPA, then the federal agency determines the compliance path. The environmental impact assessment process can involve three increasingly complex levels of NEPA compliance analysis:
- Categorical Exclusion (CE)
- Environmental Assessment /Finding of No Significant Impact (EA/FONSI)
- Environmental Impact Statement (EIS)
CEs may apply to a federal action when it does not "individually or cumulatively have a significant effect on the human environment."2 CEs would apply to administrative decisions or minor modifications or restoration to a federal facility. CEs may also apply to a permit application if the activity level is below specific thresholds for emissions or other potential environmental impacts. A CE is a basic form with reference to substantive findings (e.g., a previous NEPA document, a memo, field analysis, or permit application for the proposed action) which clearly delineates the activity as within the scope of a CE as defined in the NEPA guidelines of the NEPA Responsible Agency. The public comment opportunities regarding a CE are generally limited to the Notice of Intent (NOI) to approve the CE and proposed action.
An EA provides a concise review of the environmental effects of the proposed action, determines the significance for each environmental issue area, and considers the project's alternatives. The EA is more comprehensive than a CE, yet briefly provides sufficient analysis and evidence to determine whether an EIS is required. An EA includes the following:
- The purpose and need for the proposed action,
- Proposed alternatives,
- The environmental impacts of the proposed action and alternatives, and
- A list of agencies and persons consulted
The EA includes significance evaluations for the proposed action on each environmental category and identifies ways to revise the action to minimize the effects. The EA also involves environmental agencies, applicants, and the public in preparing and reviewing the EA. After the EA process is complete, it concludes with either a FONSI determination or a decision to proceed into preparing an EIS. There are more opportunities for public review and comment with an EA.
CEs and EAs are the most common NEPA documents, with thousands completed each year. By contrast, there are only hundreds of EIS prepared annually.
The EIS is the most detailed level of NEPA review. An EIS is required when a federal agency is proposing a major federal action which will significantly affect the quality of the human environment. The EIS process includes the steps listed below.
- The scoping process
- Draft EIS
- Purpose and Need
- Reasonable alternatives evaluation
- Direct, indirect and cumulative effects of preferred alternative
- Public comment period
- Final EIS (including responses to substantive comments)
- Notice of Availability
- Record of Decision
The EIS involves the most opportunities for public review and comment. Large, complex projects often include multiple federal agencies as well as state, local, and tribal agencies. A cooperating agency has jurisdiction by law or special expertise and will oversee its assessment area (e.g., the U.S. Fish and Wildlife is responsible for the wildlife impact assessments). The EIS may include a statement of environmental impact for air quality, water, land use, land forms, hazardous substances, wastes, subsurface, wildlife, cultural, utilities and transportation, depending on the proposed action and its environmental setting.
Take Advantage of Due Diligence
A true "due diligence" process can save project applicants time and money. The key is asking the right questions early and being willing to adjust project features (and thus reduce potential environmental effects and possibly additional permits) before submitting permit applications.
Most agencies will be willing to participate in "pre-application review" discussions. This offers applicants an opportunity to collect critical information and advance their project evaluation before over-investing in a preliminary project design. All of this due diligence can then be incorporated in the scope of the project and applications.
Public and Agency Involvement
The NEPA process includes several opportunities for public comment, especially with the EIS review. A well-designed communication strategy facilitates positive public input for environmental impact assessments. Conversely, when public input is limited and projects are not well described, public involvement can become challenging and create delays. With major projects, it is important that key community leaders are invited into the project development and review process early. The NEPA Responsible Agency and applicants can then incorporate community input, and the overall project success rate is improved. Controversial projects benefit from creative community consultation strategies.
The same principles apply to agency coordination. When multiple agencies are involved in the permitting and approval processes, early inter-agency coordination can facilitate a more efficient review process. Often, when agency staff are sought for guidance, they are more likely to provide timely reviews and creative consideration of permit conditions.
Avoiding Technical Snags
Another potential obstacle in launching a complex project is not understanding all the potential technical issues. Through a transparent project evaluation/due diligence process, which may include screening-level technical reviews before locking in project details, many issues can be resolved early in the process.
Potential technical snags could include the following:
- Failing to identify all applicable permits and approvals;
- Inadvertently exceeding major permitting thresholds;
- Locking in the purpose and need description before screening out of a complex technical study; and
- Not having a good communications strategy.
In conclusion, by better understanding the intent of the NEPA law and how it is applied, an industrial applicant can successfully navigate the NEPA review, more efficiently move through its permitting process, and more quickly break ground. Implementing the strategies listed below is key to avoiding or overcoming regulatory obstacles.
- Engage in an early due diligence process to effectively position the project application and positively focus initial "pre-application" agency conversations.
- Initiate pre-application screening studies to refine project site plans, equipment, and operations levels and make changes to avoid or minimize environmental impacts before formal application submittal.
- Apply a proactive approach when engaging with agency reviews and public input.
- Understand the technical requirements for each application to avoid procedural snags and schedule delays.
1 Kleppe v. Sierra Club, 427 U.S. 390, 410 n. 21, (1976)
2 Council on Environmental Quality NEPA Regulations, 40 CFR 1508.4