CHAPTER 1 LAYING THE GROUNDWORK: NEPA'S PURPOSE, LEVELS OF AGENCY REVIEW, AND PROCESS OVERVIEW

• Jurisdiction: United States

National Environmental Policy Act (Nov 2017)
CHAPTER 1
LAYING THE GROUNDWORK: NEPA'S PURPOSE, LEVELS OF AGENCY REVIEW, AND PROCESS OVERVIEW
Ana Gutiérrez
Senior Associate
Dale Ratliff
Associate
Hogan Lovells US LLP
Denver, CO

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ANA GUTIERREZ is a Senior Associate at Hogan Lovells US LLP in Denver, Colorado. In a short period of time, Ana Gutierrez has built an impressive reputation as a preeminent public lands, environmental, and natural resources lawyer. With a background covering a variety of natural resource projects on public lands, involving a myriad of industries from oil and gas development, mining projects, transmission infrastructure, renewable energy infrastructure development, and ski area development, clients rely on Ana for her razor-sharp insight on environmental permitting, compliance, and litigation-related issues. Ana has extensive experience in issues involving the National Environmental Policy Act, Endangered Species Act, Migratory Bird Treaty Act, and Bald and Golden Eagle Protection Act, among other federal environmental statutes. And with local, Rocky Mountain regional, national, and international experience, Ana has positioned herself to effectively manage her clients' needs wherever their business takes them.

DALE RATLIFF is an Associate at Hogan Lovells US LLP in Denver, Colorado. Since joining Hogan Lovells, Dale has gained substantial experience working on a variety of NEPA-related matters from both a permitting and a litigation perspective. Dale's NEPA experience includes federal oil and gas development, onshore and offshore renewable energy development, transmission infrastructure, water supply infrastructure, and ski area development. In addition to his NEPA practice, Dale also has experience working with the Endangered Species Act, the Migratory Bird Treaty Act, the Bald and Gold Eagle Protection Act, the Clean Air Act, and other federal environmental statutes. Dale is a recent graduate of the University of Denver Sturm College of Law where he finished first in his class and focused his scholarship on environmental, natural resource, and water issues.

I. An Introduction: The Origins and Purpose of NEPA.

When President Richard Nixon signed the National Environmental Policy Act ("NEPA" or the "Act") into law on January 1, 1970, he declared that it was time "America pays its debt to the past by reclaiming the purity of its air, its waters, and our living environment."¹ Enacted amidst the flurry of environmental laws being passed in the 1960s and early 1970s, NEPA set forth a congressional declaration of policy that the federal government "use all practicable means and measures . . . to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans."² NEPA effectuates this overarching goal and "infuse[s] [it] into the ongoing programs and actions of the Federal Government," through the establishment of certain "action-forcing' procedures" that come in the form of various levels of NEPA review.³ Chief among these is the requirement that federal agencies prepare an Environmental Impact Statement ("EIS") for all "[f]ederal actions significantly affecting the quality of the human environment."⁴ The requirement to prepare an EIS helps NEPA achieve its statutory goals by implementing a procedural process that requires federal agencies to fully examine the environmental effects and possible alternatives of major federal actions and to fully disclose and inform the public of those effects.⁵ Where an EIS is not required, federal agencies may still be required to prepare an environmental assessment ("EA"), or pursue the federal action through a categorical exclusion. This paper discusses below the levels of NEPA review--EISs, EAs, and categorical exclusions ("CEs")--and the standards for determining when each is appropriate.

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While the "NEPA process is intended to help public officials make decisions that are based on [an] understanding of environmental consequences, and take actions that protect, restore, and enhance the environment,"⁶ the Supreme Court has made clear that NEPA imposes only procedural requirements.⁷ Specifically, courts must ensure that federal agencies have: (1) taken a "hard look" at the reasonably foreseeable environmental consequences of the proposed action (including the direct, indirect, and cumulative impacts) and all reasonable alternatives; and (2) adequately disclosed these impacts to the public.⁸ As long as an agency has taken the requisite hard look, however, "the agency is not constrained by NEPA from deciding that other values outweigh the environmental costs."⁹ Thus, challenges to agency actions brought pursuant to NEPA do not focus on the actual, substantive decision made by the agency, but rather on the agency's compliance with one of the many enumerated procedural standards described in detail below. And the court's review is ultimately governed by the Administrative Procedure Act's ("APA's") deferential arbitrary and capricious standard of review.¹⁰

This paper proceeds in four parts. Part II of this paper provides a threshold discussion regarding what constitutes a "major federal action" triggering the requirement to comply with NEPA, and provides specific examples of the types of NEPA projects environmental practitioners are likely to encounter. Part III then provides a thorough discussion of the levels and scope of NEPA review, including the EIS, EA, and CEs. Part III also discusses the standards for determining when each level of review is appropriate, including defining "significance" and the application of "extraordinary circumstances." Part IV highlights the NEPA process milestones, identifying the primary opportunities for public involvement during the NEPA process. Part IV is intended to provide practitioners with an important reference for effectively engaging in the NEPA process on behalf of their clients. Finally, Part V briefly discusses processes and standards that govern the administrative appeal and review of agency decisions made pursuant to NEPA.

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II. The When: Triggering NEPA.

The NEPA process is triggered when a federal agency develops and/or is presented with a "proposal" for a "federal action."¹¹ Two important questions, follow from this statement. First, what is a "federal action"? And second, what constitutes a "proposal"?

A. NEPA Applies Only to Federal Actions.

NEPA applies to "federal actions" undertaken by "federal agencies."¹² The Council on Environmental Quality's ("CEQ's")¹³ implementing regulations define federal actions as those actions "potentially subject to Federal control and responsibility."¹⁴ This standard brings within its purview not only direct federal actions such as the promulgation of rules, but also private actions subject to federal approval, including permitting decisions, the issuance of leases or rights-of-way, and certain funding decisions.¹⁵

NEPA does not apply, however, when a federal agency has no discretion over an action, and the agency's role is merely "ministerial."¹⁶ Rather, the "federal agency must possess actual power to control the nonfederal activity."¹⁷ The underlying rationale is that when an agency is

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already required to take a particular action, or "has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions,"¹⁸ the "consideration of environmental factors will not--indeed, cannot--affect its decision."¹⁹ To determine whether an agency retains significant control and discretion over an action requires an analysis of the underlying statute pursuant to which the agency is acting, and the nondiscretionary standard has been held to apply to a surprisingly broad class of actions, including certain federal land acquisitions,²⁰ wilderness trail maintenance decisions,²¹ and even airport landing policies.²² Thus, practitioners must keep the exemption in mind when analyzing a proposed action. However, because the decision to promulgate a rule, issue a necessary federal permit for a private project, or to provide financial assistance to a non-federal entity is almost always considered a discretionary action, from a practical perspective, the majority of federal actions environmental and public lands practitioners are likely to encounter will fall within NEPA's purview.²³

1. Private Development Projects and the Small Handle Problem.

Related to the issue of whether the agency has sufficient authority over the action to subject it to NEPA, is the question of "how much federal involvement is needed to 'federalize' an otherwise private project such that NEPA review is required for the entire undertaking . . . ."²⁴ Referred to as the "small handle" problem, the issue is "to what extent does the 'federal handle' component [of a project] subject the state and local components, or project as a whole, to federal NEPA review."²⁵ The small handle problem originates from pre-NEPA decision-making when agencies were reluctant to involve themselves in anything if they did not have direct jurisdiction to control it. And agencies continue to limit their NEPA review where they can convince a court that their NEPA analysis should be limited to that portion of the project subject to direct agency

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jurisdiction and control "only because a substantial part or most of the 'whole' discussion is better handled on another occasion at another time by another entity."²⁶

A common example that raises the "small handle" issue is section 404 permitting under the Clean Water Act ("CWA"). Commonly, the Corps may have jurisdiction over a permit to develop the wetlands portion of the project, but not have jurisdiction over more significant, uplands portions. For example, in Kentuckians for the Commonwealth v. United States Army Corps of Engineers, the Corps issued a section 404...