Environmental Leader

One of the many battles that played out during debate of the stimulus bill in February was whether projects funded with stimulus money would be subject to environmental review under the National Environmental Policy Act (NEPA). The fact that Congress answered that question in the affirmative complicates the distribution of stimulus funds.

NEPA requires that every “major federal action significantly affecting the quality of the human environment” undergo lengthy environmental analysis and documentation. The “major federal action” NEPA trigger can take many forms. But “major federal action” includes the provision of federal funding, placing stimulus projects with potentially significant environmental impacts squarely within NEPA’s crosshairs.

The congressional debate over NEPA and the stimulus bill was about both pragmatism and politics. The stimulus bill is designed to pump money into the economy fast, and contains strict deadlines for the use of much of its funding. Environmental review for a major project under NEPA, however, can often take years to complete. It was, and is, unclear whether those two timelines can be reconciled.

Arguing for an exemption or streamlined review for stimulus projects was Senator John Barrasso (R-WY). Although he opposed the stimulus bill, it presented a unique opportunity for putting a dent in what many Republicans and trade associations have long seen as an unnecessarily burdensome and lengthy review process. Armed with a Congressional Budget Office report that put environmental review first on a list of potential obstacles to getting stimulus money into the economy fast, for a while it appeared that Barrasso may win the fight.

But Barrasso lost. Senator Barbara Boxer (D-CA), supported by a number of environmental organizations, inserted language into the bill emphasizing the importance of NEPA review of stimulus projects. In support of retaining NEPA review, Boxer emphasized that there were plenty of “shovel ready” projects in the pipeline that had already cleared environmental review.

Whether Senator Boxer is correct is debatable. First, prior to receiving federal funding in the form of stimulus checks, many projects may not have had federal involvement sufficient to trigger NEPA. Absent federal funding, these projects would have had little incentive to go through the lengthy NEPA process. Second, NEPA review is expensive. Without federal funding for the environmental review itself, cash strapped states and private project proponents would have had difficulty paying for the NEPA process.

Projects receiving stimulus funds in a variety of areas – including energy and transmission projects, developments on federal lands, or major infrastructure projects – will have to go through the NEPA process.

But nowhere is the potential problem more pronounced than in federal stimulus funding for transportation projects. Colorado, for example, is set to receive about $400 million for such projects. But the funds must be committed to a project within four months or the state risks forfeiture of the money. A recent study by the Federal Highway Administration, however, found it took an average of over 3 ½ years to complete the NEPA review necessary for major transportation projects. These two timelines do not easily mesh.

But where there’s a will (and enough money at stake), there is likely a way.  The Colorado Department of Transportation and local planning agencies are currently at work allocating money to projects.

The Denver Regional Council of Governments – responsible for doling out stimulus funds allocated to the greater Denver metropolitan area – moved with remarkable speed and on March 4th selected 13 projects to receive stimulus funding. Many of these projects have already completed NEPA review (including the US-36 120th Avenue connection and the Union Station renovations). Others are currently embroiled in the process (including the I-70 Central Park Boulevard interchange reconstruction).

Regardless of whether other planning agencies are able to find enough projects that have either completed or are near completion of NEPA, however, the need for stimulus projects to undergo environmental review will have several important effects.

First, it may skew funding toward smaller scale activities like repaving, maintenance and repair that likely will not require extensive NEPA analysis because these types of activities may not have a significant environmental impact. Given the crumbling state of our existing infrastructure, this may be a good thing. But these projects do not bring to mind the transcontinental railroad or Eisenhower’s interstate system that have been invoked by President Obama while selling the stimulus package.

Second, it will push funding toward projects that have completed NEPA review, shunning projects that have a long NEPA road ahead.  Again, this may be an acceptable tradeoff if funds flow toward truly beneficial projects. But it creates a risk that the best projects for the long-term will be skipped because they are not far enough along in the NEPA process.

Third, even projects that have completed NEPA review remain subject to litigation risks. Interested parties can, and do, challenge projects on the grounds that the underlying NEPA analysis was inadequate. Although projects often proceed while the lawsuit plays out, plaintiffs are sometimes successful in enjoining a project’s construction at the outset of the proceedings. This type of litigation could stop a stimulus-funded project in its tracks.

The desire to pump money into the economy fast while maintaining adequate environmental review may make each of these tradeoffs and risks acceptable. But NEPA review of stimulus projects assures that the tradeoffs and risks are inevitable.

Steven Imig practices environmental and natural resources law in Faegre & Benson’s Denver office.