Letter on Fixing NEPA in the Stimulus Bill

January 29, 2009

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, shares President Obama's goal of economic stimulus legislation that is timely, targeted, and temporary, an important component of which are provisions that would create jobs through new infrastructure projects. However, Congress continues to ignore, at its peril, the many impediments to "shovel-ready" projects posed by America's dysfunctional permitting process. Unless Congress enacts legislation to address these problems, which are detailed below, the projects in the stimulus—even the "green" ones—will struggle to get off the ground.

1. Fix NEPA

As currently construed, the National Environmental Policy Act (NEPA) is not conducive to completing infrastructure projects in a timely manner. Environmental activists routinely use NEPA to obtain injunctions against proposed actions until the controlling federal agency has prepared a satisfactory Environmental Impact Statement (EIS). As a result, the lawsuit and subsequent EIS can stop a project dead in its tracks. Moreover, because NEPA lawsuits are so prevalent, the mere threat of a lawsuit (even where one is never filed) makes the EIS preparation process that much more costly and time-consuming for covered projects. In response to the ongoing threat of litigation, EIS documents have become increasingly costly and lengthy, as have the time frames to complete the NEPA process.

Even California Governor Arnold Schwarzenegger, who strongly supports green energy and hails from what is arguably the most environmentally progressive state in the Union, has requested that NEPA be waived for projects that are part of the stimulus bill. What does it say for NEPA that it is so fundamentally flawed that it must be waived in order to complete a construction project?

There are two ways to fix NEPA as it pertains to the stimulus bill. One way would be to waive NEPA or create a categorical exclusion for projects undertaken pursuant to the stimulus, as suggested by Governor Schwarzenegger. A second way would be to streamline the NEPA process, by setting strict timelines for final action.

2. Prevent Additional Delay to Infrastructure Projects In the Event the Clean Air Act and Endangered Species Act Are Applied to CO2

The United States is now one court case or one agency decision away from having to wade through the costly, burdensome permitting and consultation requirements imposed by the Clean Air Act (CAA) and Endangered Species Act (ESA) if those statutes are applied to greenhouse gases. Trigger of greenhouse gas regulation under either statute would literally stop the infrastructure stimulus dead in its tracks. A description of the problem to infrastructure posed by each, and a proposed solution, is set forth below.

A. Clean Air Act. Once greenhouse gases are deemed "subject to regulation" under the Clean Air Act, two costly and time-consuming permitting programs would immediately be required for millions of businesses, buildings and new infrastructure projects: Prevention of Significant Deterioration (PSD) preconstruction permits, and Title V operating permits. Any new construction or modifications to a building with the potential to emit more than 250 tons per year of greenhouse gases would have to obtain a PSD permit, or else the project may not move forward. These permits cost on average $125,120, require 866 hours of burden from the applicant, and take six to twelve months from application to approval. An even greater number of sources (those emitting over 100 tons per year) would be required to obtain Title V operating permits, which require covered entities to pay a "carbon tax" equivalent to their annual emissions, from a minimum of $2500 for small emitters to $100,000 or more for large emitters. This includes the now-infamous "cow tax." In addition, every Title V permit is subject to a 60-day citizen suit window, meaning that activist groups can challenge every single Title V permit and bring nationwide operations to a screeching halt. Applying Title V to CO2 essentially codifies "Not In My Back Yard" and ensures that no infrastructure projects will be completed, ever.

As noted, greenhouse gases are on the verge of being "subject to regulation" and triggering PSD and Title V. Environmental groups have signaled their intent to argue that the California waiver to regulate motor vehicle emissions crosses this threshold. Although this argument has questionable legal justification, in practical terms it means that the lawsuits have already started. A finding of "endangerment" in response to Massachusetts v. EPA, recently hinted at by EPA officials, could have a similar result (not to mention potential trigger of farreaching stationary source controls, including National Ambient Air Quality Standards and New Source Performance Standards).

Obviously, an easy way to avoid the trigger of PSD or Title V for greenhouse gases is for EPA not to grant the California waiver or find endangerment, or to consider other endangerment options that would not trigger PSD (such as CAA Section 115). However, in light of EPA's perceived predisposal to make these decisions, the only way to protect the infrastructure projects in the stimulus bill from a PSD and Title V permitting nightmare is to enact legislation exempting greenhouse gases from regulation under the CAA. Rep. Blackburn introduced such a bill last year.

B. Endangered Species Act. Environmental groups are working to exploit ESA as a backdoor method to regulate greenhouse gas emissions. By listing the polar bear as a threatened species under the Endangered Species Act (ESA), the groundwork has been laid for activist groups to block infrastructure projects on the grounds that greenhouse gas emissions from those projects would contribute to the melting of the Arctic ice, the habitat of the polar bear. Blockage would occur as a result of lengthy, onerous interagency consultations to determine a project's impact on the polar bear. Although the Department of Interior issued final regulations streamlining the Section 7 interagency consultation process and protecting against the use of the polar bear to regulate nationwide greenhouse gas emissions, these regulations have already been challenged in the courts. Moreover, the Section 7 regulations are the target of a Congressional Review Act challenge. Even if the rules are upheld, the ESA process has also begun for several other species under the ESA that inhabit the Arctic ice, such as Pacific walruses.

It truly boggles the mind as to why the Section 7 interagency consultation rule has come under fire from the environmental community. The regulations at issue clarify that a federal agency may decide on its own whether its construction project is likely to affect a listed species, instead of forcing the U.S. Fish and Wildlife Service to make that determination every time (and delaying the project). Environmental groups therefore seem to be arguing that agencies led by the current President's appointees are not capable of making this decision on their own. It also exposes their true goal: to stop infrastructure and other construction through Section 7 consultation-related delays, by alleging, for instance, that a bridge project in Florida must consult with the Fish and Wildlife Service to determine its impact on the polar bear.

Congress can protect the infrastructure projects in the stimulus bill from being hijacked in the name of the ESA by defeating the Congressional Review Act challenge to the ESA Section 7 rule.

Economic stimulus legislation is an important and necessary effort to create jobs and jump-start America's ailing economy. However, unless the permitting issues raised by this letter are immediately addressed, the infrastructure projects contained in the legislation could be indefinitely delayed. Such delay not only applies to roads, bridges, and runways, but also green projects that create green jobs. For instance, renewable energy and transmission projects, for which the stimulus bill contains tens of billions of dollars of tax credits and loan guarantees, have been delayed, sued, or outright blocked in New Hampshire (Henniker biomass plant), Kansas (Hays wind project), New York (Jones Beach wind project), California (Green Path North and Sunrise Powerlink solar and geothermal transmission projects), and of course the infamous Cape Wind project in Massachusetts. There are many, many others.

Make no mistake: green projects engender the same opposition—from many of the same groups—that conventional infrastructure projects face. The Chamber therefore strongly urges Congress to enact legislation to fix NEPA as it pertains to the stimulus and to prevent the application of CAA and ESA permit programs to greenhouse gases.

Sincerely,

R. Bruce Josten