Environmental Update

Publication February 8, 2016

A new law enacted in December should streamline should environmental review and permitting of large infrastructure projects. The new law is called the “Fixing America’s Surface Transportation Act” or “FAST Act.”

It requires federal agencies to set performance schedules, creates a new interagency council to accelerate reviews where multiple agencies are involved, and limits the time opponents have to appeal agency decisions, including under the National Environmental Policy Act.

The FAST Act is a transportation statute, but the parts of it that streamline environmental review apply broadly to power plants, transmission lines, roads, rails, aviation, ports and waterways, water resource projects, broadband, pipelines, manufacturing or any other qualifying sector as determined by the new interagency council, the Federal Permitting Improvement Council.

To qualify for streamlined review, the project must require federal action like a federal grant or loan guarantee or use of federal land so that it is subject to the NEPA review process, and it must be expected to cost more than $200 million. The developer should submit a notice to the council and the lead permitting agency summarizing the project and explaining how the project qualifies as a covered project under the Fast Act. 

The council is supposed to come up with an inventory of projects that are currently in the queue awaiting environmental reviews by May and then develop recommended environmental review schedules for project categories by December 2016.

In general, a final decision by an agency within any category must be issued 180 days after a complete application is received with all the information required for review and after the agency has held any required public hearing. 

An online “permitting dashboard” will be maintained so that applicants can more easily track the status of permitting reviews for their projects. 

The FAST Act makes it harder to challenge federal permitting decisions. First, there will now be a two-year statute of limitations on NEPA challenges as opposed to six years. Second, anyone seeking judicial review of an agency decision under NEPA must have submitted comments during the agency’s review period that are detailed enough to put the agency on notice of the issue. Finally, in deciding whether to issue injunctive relief, courts must consider not only the potential effects on public health, safety and the environment, but also the potential for significant negative effects on jobs.

Northern Long-Eared Bat

The US Fish and Wildlife Service issued final rules in January to protect the northern long-eared bat under the Endangered Species Act. The bat is found in 37 states and has been in marked decline due to a fungal disease called white nose syndrome. It was listed as “threatened” last April.

Under federal environmental law, bat species are not afforded legal protection unless covered under the federal Endangered Species Act. That statute makes it unlawful to “take,” meaning harm, harass or kill, any federally-endangered or threatened species. 

“Incidental takes” may be permitted.

Importantly for developers, the final rule broadened the circumstances where “incidental takes” will be allowed beyond those that were originally proposed. The original list focused on forest management. Going forward, unintentional harm occurring during the normal course of work will be exempted, except in limited circumstances. This includes harm caused by land clearing, building of roads and construction of pipelines, wind farms or electric transmission lines. 

The final rules focus on where and when the bats are most vulnerable by imposing narrowly tailored prohibitions on tree cutting in a broad range of locations for two months each year and year round in more limited areas. Specifically, for sites where bats are infected with white nose syndrome, tree removal will be barred year round within a quarter mile of any known bat hibernation sites, called hibernacula. Bats usually hibernate in caves or mines. Tree removal will also be barred within 150 feet of any known maternity roosting trees during the two-month pup-rearing season in June and July throughout the entire area where the disease is found.

The long-eared bat is found from Maine to North Carolina along the east coast, west to Oklahoma and north into the Dakotas, Montana and Wyoming, as well as 13 Canadian provinces. White-nose syndrome effects bats in up to 28 states, with particular devastation in the northeast.

If white-nose syndrome continues to cause the species to decline, then the Fish and Wildlife Service could list the species as “endangered” rather than “threatened.” This would mean that most incidental takes of the bats would be barred unless a permit has been issued.

Eagles

The Obama administration has given up trying to restore the ability of the US Fish and Wildlife Service to issue long-term permits to “take” bald and golden eagles through the courts. Permits as long as 30 years had been available to wind farms to shield such projects from prosecution when they unintentionally kill or otherwise disturb eagles or their habitats. The permits will now revert to five years.  

A US district court held last August that the Fish and Wildlife Service failed to conduct a full environmental review before lengthening the duration of such take permits from five to 30 years.  

Fish and Wildlife argued that a full review is not required in cases of an “administrative, financial, legal, technical or procedural nature” or “whose environmental effects are too broad, speculative or conjectural to lend themselves to meaningful analysis.” The court said these exemptions apply only where there is an insignificant or minor effect on the environment.

Environmental groups and Indian tribes sued the Fish and Wildlife Service to block the longer permits.

The agency is now going through the full environmental review rather than continue to argue the point in court. The market is still sorting out whether it will settle for five-year permits in the interim, given that a five-year permit is all that is on offer and the market made do with them before 2013, or whether certain projects may be delayed until the window reopens for longer permits. 

Even while Fish and Wildlife was offering permits for up to 30 years, the permits still required operational reviews every five years by the agency. However, the reviews were not the same as having to apply for a new permit. Fish and Wildlife also reserved the right with the longer permits to modify or revoke a permit if issues arise, and ongoing monitoring for mitigation effectiveness was still required. 

Clean Power Plan Litigation

Opponents of the Clean Power Plan failed in late January to persuade a US appeals court to freeze implementation of the plan while the court considers whether the Obama administration had authority to impose the plan.  

Twenty-nine US states had asked the court to “stay” implementation of the plan while the merits of the plan are being argued in court. The states have now appealed the decision on the stay to the US Supreme Court. 

The Clean Power Plan requires a 32% reduction in carbon dioxide emissions from most existing coal- and gas-fired power plants by 2030. Each state has been assigned individual carbon reductions. Each must submit an implementation plan by September 6 this year. The federal government will impose a federal plan in states that fail to submit their own plans or that submit plans that fall short of what the Clean Power Plan requires. States must start to show carbon emissions reductions by 2022. States may ask for up to another two years to submit their own plans before the federal government will step in. 

The US appeals court that turned down the stay said only that the opponents of the plan had “not satisfied the stringent requirements for a stay pending court review.” The opponents had alleged immediate and irreparable harm resulting from the need to close coal-fired power plants and overhaul the power sector and from the extraordinary burdens placed on state governments to devise compliance plans by the September 6 deadline.  

Instead of a stay, the US appeals court set an aggressive schedule for briefing and oral argument on the merits. Final briefs are due by April 22 and oral arguments will be held on June 2. The opponents of the plan have asked that a final decision be issued before states are required to turn in their implementation plans on September 6. 

Wind and Solar Incentives

Renewable energy groups are urging the US Environmental Protection Agency to move up the start of a window period for wind and solar projects to qualify for allowances and emissions rate credits under a “clean energy incentive program” that is part of the Clean Power Plan. 

The clean energy incentive program –- called CEIP –- offers carbon dioxide allowances and emissions rate credits to new wind and solar projects based on their electricity output during 2020 and 2021. 

New wind and solar projects that commence construction or operation after a state submits its final implementation plan to EPA would be entitled to receive them. The allowances and emissions rate credits will have value and can be sold in an emissions trading market. 

Many states are expected to file only initial plans in September 2016 and to request a two-year extension for filing a final plan. Renewable energy groups worry that this will deny the benefit to projects that get underway before September 2018. 

They want all projects that commence construction or operation after September 6, 2016 to qualify rather than limiting allowances and credits to projects that commence after a state submits its final implementation plan. 

Having a fixed eligibility date for all projects would make any stimulus to wind and solar from the CEIP incentives coincide more closely to the stimulus the newly-extended renewable energy tax credits are providing. The idea is to give a final push through tax and CEIP incentives until the Clean Power Plan starts having an effect. 

Both the wind and solar trade associations expressed concern that the way the CEIP is currently proposed to operate could cause some developers to delay work on projects until late 2018 to qualify.

MACT Rule

A US appeals court sent an EPA rule requiring power plants to use “maximum achievable control technology” to reduce air toxics emissions back to the agency for further work rather than throw out the rule and require the agency to start over as opponents had hoped. The court rendered its decision in December.

EPA will basically be required to perform only a cost analysis of the rule as part of its statutorily-required finding that the rule is “appropriate and necessary.”

The US Supreme Court told the agency in a case called Michigan v. EPA in June 2015 that it should take compliance costs into account at the outset of any rulemaking under the section of the Clean Air Act on which the MACT rule is based.  

The agency has already issued a proposed cost analysis for public comment and indicated that it anticipates issuing a final finding by April 15, 2016. The opponents of the MACT rule say the proposed finding is procedurally flawed and unlawful and are probably headed back to the appeals court. They face an uphill battle in any such appeal.

— contributed by Andrew Skroback in Washington, DC


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