Letter to Congress on the Implementation of the $25 Billion Loan Program for Advanced Technology Vehicles Enacted by Section 136 of the Energy Independence and Security Act of 2007 (EISA)

October 22, 2008

TO THE MEMBERS OF THE UNITED STATES CONGRESS:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, applauds both Congress and the U.S. Department of Energy (DOE) for taking steps to implement the $25 billion loan program for advanced technology vehicles enacted by Section 136 of the Energy Independence and Security Act of 2007 (EISA). However, the complicated state of America's regulatory process—in particular, the National Environmental Policy Act (NEPA)—will ensure that the positive steps taken by Congress and DOE will do little to aid the quick rollout of these loans. In separate correspondence, the Chamber has encouraged DOE and consulting agencies to manage the regulatory process for Section 136 as efficiently as possible, because America's auto industry needs these loans to remain competitive. However, the Chamber encourages Congress to consider revisiting Section 136 and waiving NEPA and any other onerous regulatory requirements standing in the way of disbursement of the loans.

Section 136 authorizes DOE to provide up to $25 billion in direct loans to help pay the cost of reequipping, expanding, or establishing a manufacturing facility in the United States to produce qualifying advanced technology vehicles or qualifying components. Qualifying "advanced technology vehicles" are based on meeting certain fuel economy and emissions standards that are more stringent than fleet averages. The program was not funded until last month's continuing resolution, H.R. 2638, the "Consolidated Security, Disaster Assistance, and Continuing Appropriations Act," was signed into law by President Bush. H.R. 2638 includes $7.51 billion in funding for FY2009 for the EISA Section 136 loan program, with $10 million of that given directly to DOE to administer the loans, as well as direct hiring authority to employ personnel and consultants to operate the program. The continuing resolution requires DOE to promulgate an interim final rule for the loan program within 60 days.

At first glance, it appears Congress tried to ensure that the loans are issued as quickly as possible. However, this is not the case. Although Congress did fund Section 136, it did not address mandatory, long-standing regulatory hurdles that would impede the timely delivery of the loans.1 At the top of this list is NEPA, a statute that requires detailed environmental impact assessments to be taken for federal actions that significantly affect the human environment. NEPA typically requires agencies to make diligent efforts to involve other affected agencies as well as the public in environmental assessment processes, and to give the public notice of NEPArelated public meetings and hearings. If an agency finds that significant environmental impact will result, an environmental impact statement (EIS) is required. A typical EIS must discuss an adequate range of proposed alternatives, and the direct, indirect, and cumulative effects or impacts of each. The thoroughness with which an agency must study environmental effects and consider alternatives is greatest if an EIS is required. In all, the NEPA process is a highly complex, multi-step process that can take months or even years.

DOE's current struggle to implement Section 136 is symptomatic of a larger problem: the stranglehold the regulatory process has on timely implementation of our nation's laws. Rather than continually waiving regulations in order to ensure that laws will be carried out efficiently, Congress should consider restructuring the regulatory process so that federal agencies and the American public are not repeatedly overwhelmed, particularly at times of financial emergency.

Because Congress has adjourned, it is unlikely DOE will receive a legislative reprieve. DOE must now play the hand it has been dealt, and the Chamber has urged DOE and all other federal agencies interacting with DOE to carry out the Section 136 loan program to work together to disburse the loans as efficiently as possible. There are several options available to shorten the NEPA compliance process. One option would be to immediately perform an environmental assessment and make a finding of "no significant impact," because the loans are for the purpose of reducing emissions. Another would be to concede that significant environmental impact exists but to make alternative NEPA compliance arrangements with the Council for Environmental Quality (CEQ) because emergency circumstances exist.2 However, legislation is the only sure-fire way to avoid significant delay. Should the 110th Congress reconvene and take up new legislation prior to the end of its term, the Chamber encourages lawmakers to waive NEPA and any other major regulatory requirements standing in the way of implementation of Section 136.

Sincerely,
R. Bruce Josten

Cc: Hon. Samuel W. Bodman, Secretary, U.S. Department of Energy
Hon. James L. Connaughton, Chairman, Council on Environmental Quality
Hon. Stephen L. Johnson, Administrator, U.S. Environmental Protection Agency
Hon. Susan E. Dudley, Administrator, Office of Information and Regulatory Affairs,
Office of Management and Budget

1 These hurdles include expedited hiring authority, assistance with the formation of credit risk models, waiver of the Congressional Review Act, and appropriations covering application fees. All are important, but this letter focuses on NEPA due to its potential to significantly delay disbursement of the loans.

2 This emergency authority is authorized by CEQ's NEPA regulations at 40 C.F.R. § 1506.11, adopted by DOE at 10 C.F.R. § 1021.103. Section 1506.11 states, in pertinent part: "Where emergency circumstances make it necessary to take an action with significant environmental impact without observing the provisions of these regulations, the Federal agency taking the action should consult with [CEQ] about alternative arrangements." Section 129(b) of H.R. 2638 clearly states that funding of the Section 136 loan program is an "emergency requirement" and "necessary to meet emergency needs."