Improving permitting reform

Suggestions to make the permitting reform bill work better and avoid unintended results

I’ve written a bunch about the Senate’s permitting reform bill.  My basic takeaway is that I want this bill to pass, but that there are some serious flaws in the bill, particularly in the permit certainty provisions, that must be addressed.  And in general, there are areas where greater clarity about the scope of the bill would be helpful – clarity that I think would align with what the drafters likely wanted anyway (so the clarity would reduce the risk of unintended results).

Here are the core changes or clarifications that I think are important to include.  Overall I do not think these changes alter the fundamental balance that the drafters tried to strike here.  These changes are primarily to avoid what I think are likely unintended consequences of the bill language – and not all these changes align with a “pro-environmental regulation” perspective.

NEPA

First, NEPA.  Here the most potentially problematic provision, which I flagged before, is in Section 1106.  This provision might be interpreted to grant CEQ the unilateral power, without any judicial review, to eliminate any and all environmental requirements related to a project going through the NEPA process.  As I wrote before, I do not think that is how the provision would likely be interpreted, nor do I think that is the drafters’ intent.  But I do think it would be important to clarify that this provision (Section 1106(4) of the bill, which adds this dispute resolution provision) does not authorize CEQ to alter or amend any substantive standards under any relevant law, or alter or amend any requirements for public comment or consultation with non-Federal entities. In other words, the provision purely applies to directing traffic within Federal agencies.  It would also be helpful to clarify that CEQ decisions do not alter the underlying standards of judicial review for any final agency decision – if CEQ wants to cut the expert wildlife agencies out of an ESA consultation, CEQ should also be willing to take the penalty that a court is more likely to find any subsequent decision is arbitrary and capricious.

I also flagged provisions that allow federal agencies to rely on state or tribal environmental review provisions, to rely on prior federal environmental review provisions, or to argue that another federal law that guides the agency decision “serves a similar function” as NEPA.  I would clarify that agency determinations to use these alternative mechanisms are judicially reviewable under NEPA, and the underlying environmental review document that is adopted or relied upon will be reviewed just as any other NEPA document would be.

The bill also has a provision (in Section 1106) that states an agency cannot be required to use information produced “after the date of publication of a notice of intent or decision to prepare an environmental document.”  This is intended to provide an (early) cutoff point for when the record for environmental review is “closed” and the agency can proceed with its analysis.  I’ve noted before that there are tradeoffs with this approach.  But my bigger concern here is that this provision might allow agencies to rely on much older environmental review documents (years or even decades old), claim they are just “finishing” those documents, and avoid having to do any updated analysis (since the notice of intent was many years ago).  A simple fix for this problem would be to put a time limit on when the agency’s ability to refuse to consider new information runs out after the notice of intent.  Since the bill already has strict timeframes for completing NEPA analyses, this can be relatively short, perhaps three or four years.  If one was worried about strategic behavior by agencies or litigants, one could toll that period for any timeframe for litigation or unreasonably delay by the agency (perhaps up to a maximum limit).  In addition, the provision means an agency isn’t required to consider any new information submitted during any public comment period (which will necessarily be after the notice of intent timeframe) (thanks to Michael Gerrard for flagging this issue).  That’s a problem – if the information provided in the public comment was not “publicly available” before the notice of intent, the agency can ignore it.  But one of the purposes of public comment is to give more information to the agency for it to use in its analysis.  I would suggest providing an exception for any information made publicly available through the public comment period (which would also serve as an exhaustion requirement).  The provision would still have significant teeth, since plaintiffs could not sandbag agencies by withholding information and then trying to make supplemental NEPA claims later on.

NEPA Judicial Review

For the judicial review provisions for NEPA, I’ve noted they have some significant issues.  Most importantly, the current bill draft appears to require all lawsuits to be filed in the courts of appeal, but also requires those courts of appeal to hear any motions for preliminary injunctions without the benefit of fact-finding or hearings by agencies or district courts.  I’ve discussed how that will likely be difficult to implement.  I can think of a couple of possible solutions.

First, one could allow an agency to avoid vacatur as a remedy only if the agency has a public comment period on the environmental review document (whether draft EIS, EA, or the use of a categorical exemption), allowing the public to argue (and provide supporting evidence) why that document is flawed, how that flaw relates to a violation of another federal law, and would produce irreparable injury.  The agency could then respond in a final environmental review document.  Then the court of appeal would review that record, and based on that record (without deference to the agency) determine whether the standards in the bill have been met for a preliminary injunction.  This seems like a fair trade – an agency that wants to avoid any possibility of vacatur should give the public a chance to explain why the agency’s NEPA review is problematic, and why those problems matter.  If the agency does not believe the risk of litigation is high, or does not care that much about vacatur, it can skip the public comment and try to move the process faster.

Another option would be to have lawsuits filed in the district court, where standard procedures for preliminary injunctions could be followed.

There are some additional changes that I think would clarify how the remedy process should work under the bill in ways that would reduce confusion and likely court splits on outcomes.  First, the bill could clarify that (a) the alleged violation of federal law other than NEPA must be a claim raised in the plaintiff’s complaint, and the plaintiff has a likelihood of success on the merits of that other claim; (b) that alleged violation has a causal connection or relationship with the NEPA violation the court has found; and (c) that alleged violation relates to the irreparable harm the plaintiff alleges will occur.  This would narrow the kinds of non-NEPA claims that could support a preliminary injunction, but in ways that are consistent with what I think the drafter’s goal was, which was to allow injunctive relief for “serious” NEPA violations.  (Personally, I would still allow a preliminary injunction for sufficiently serious environmental harms related to NEPA, but that would be a substantial substantive change from the current balance struck in the bill, so that is a change unlikely to be made.)

I would note that these changes would probably make getting relief for plaintiffs harder than under the current bill text.  To keep the same balance as before, I would suggest changing “substantial likelihood” to “likelihood.”  In other words, plaintiffs would have fewer arguments available for injunctive relief, but the burden they would face for those arguments would be relaxed.

I would clarify that courts retain their inherent ability to use contempt and injunctive relief with respect to an agency that does not comply with a remand order (whether in terms of timing or in terms of addressing the underlying NEPA violation) including ultimately vacating the agency decision if necessary.  (As I noted before, I think this power remains with courts, but it would be good to make that clear.)  Note that this would provide some assurance that agencies would not treat the remand to address the NEPA violation as a meaningless paperwork exercise.

Finally, I would fix two issues that Justin Pidot raised in his recent blog post.  While I disagree with Justin’s concern that the judicial review limitations would apply to supplemental claims associated with NEPA claims (so I don’t think the statute of limitations or remedy provisions apply to those non-NEPA claims), it would be good for the bill to clarify that this is the case.  And I do agree with Justin that there is a risk a court will interpret the permit certainty provision in Section 1401 to interact with the judicial review provisions of NEPA to make it impossible for an agency on remand to change its mind about issuance of a permit based on a revised NEPA review (and that this in turn may eliminate standing for a range of NEPA claims).  Again, I think this is likely broader than the drafters (or at least some of the drafters!) had in mind.  I would add a provision to the judicial review provision for NEPA that allows agencies on remand to revise or revoke the authorization based on the revised NEPA analysis, notwithstanding Section 1401.  (I think in practical terms this will only matter in a very limited number of cases.  With the shorter timeframes for NEPA reviews in the bill, plus enforcement, the number of authorization decisions that will have extended timeperiods and thus span multiple administrations – the main context in which these kinds of agency changes of course on decisions have occurred – will be much fewer.  The tight timeframes for remand and the ability of applicants to push for final agency decisions also mitigate against risks of delay here.)

Clean Water Act

I have only limited suggestions for changes to Title II, which provides changes to the Clean Water Act.  First, the bill limits the ability of states to impose conditions on federal permits for Section 401 certification to situations where the conditions would be “consistent with the requirements” of the federal license/permit.  That seems to foreclose states from imposing any conditions that would change the terms of the permit (at best perhaps adding additional provisions or requirements where there are no federal requirements).  On the other hand, the bill also states in a savings provision that “[n]othing in this paragraph [thus including the prior language] allows a Federal licensing or permitting agency to refuse to include conditions from a certifying authority in a Federal license or permit if the conditions are necessary to ensure compliance with water quality requirements.”  These two provisions, which are directly adjoining in the bill text, appear to be sharply at odds, and thus provide ample fodder for litigation and inconsistent outcomes.  I would recommend dropping the “consistent with the requirements” language, unless it can be clarified further as to what is intended here, and how it is not inconsistent with the savings clause.

I would also change the limitations on remedy in judicial review to restrict them only to challenges to general permits (whether as a whole, or in individual applications).  Section 404 permits can have significant environmental impacts – and limiting remedies to only “imminent” harms may not address a range of important environmental harms (such as cumulative impacts of wetlands destruction to sensitive species or important habitat).  (Alternatively, dropping the “imminent” requirement but keeping the remaining limitations on remedy would work.)

Permit Certainty

Finally, the permit certainty provisions in Title IV do require some fundamental revisions – because they otherwise may sweep far broader than the drafters (or at least some of the drafters!) intended.

For Section 401 (permit certainty), I would clarify that an agency’s refusal to renew a permit, or renewal with different conditions, is not covered by the bill.  In addition, as I’ve noted this section risks fundamentally changing the evidentiary for most government enforcement actions that relate to all regulations (not just environmental ones).  I would drop the reference to “full capacity” and also drop the “clear and convincing” standard, at least for government actions to enforce applicable law.  I would make clear that new agency regulations and revised interpretations of statutes that are generally applicable count as “applicable law” for purposes of the provision (preventing the provision from permanently “locking-in” regulatory standards for almost all projects in the United States).  Finally, the drafters should define what they mean by “project” in this section – that term is undefined, which means it could be expansively interpreted to produce unexpected and undesirable results.

For Section 402 (disparate treatment), my main concerns are that this also could “lock-in” the application of laws in certain ways that prevent future administrations from increasing regulatory stringency in a resource-neutral way.  Here, my guess is that the drafters’ concerns relate to unequal application of regulatory standards across different types of energy resources, not to an administration that wishes to increase standards across the board (because it takes a different view on tradeoffs of energy production versus environmental protection, for instance).  Also, the way the provision is written, it creates the risk of a “one-way ratchet” in which the application of regulatory standards can only get laxer, eventually reaching a floor of no enforcement.

To address those issues, I would suggest a few changes that I think the retain the core goals of the drafters.  First, the bill should provide a definition of a “substantial” increase in delays or denials that is the predicate for a claim under this section, and specify that increases below that threshold cannot provide the basis for a claim (a safe harbor for the agency).  This would provide greater predictability for agencies (and applicants) as to how this provision would work.  Perhaps an increase of 25% or 33% might suffice to avoid the kind of drastic changes in policy in this Administration, while leaving leeway for future Administrations to (gradually) change policy on environmental protection.

Second, the bill should also take account that for some categories of projects, there will be a very limited number of proposed projects – meaning that even a small change in the absolute number of denials or delays (say, an increase of one or two) could be a substantial percentage increase in rates of denials or delays.  My recommendation would be to specify in the bill that courts should consider the total number of applications in determining whether there has been a substantial increase.

Third, if the bill is intended as a disparate treatment remedy – i.e., the problem is that one resource is being singled-out compared to others – then the plaintiff to succeed should not have to just show a substantial increase in denials or delays for projects in the plaintiff’s category of projects, but also a substantial differential change in denials or delays compared to other types of projects listed in the bill.  (I don’t know if it is fair to require the plaintiff to show such a difference with respect to all other categories, but perhaps to a majority of the other categories.)

Finally, the bill as it stands requires the court to consider whether there has been disparate treatment solely based on the administrative record for the applicant’s project, any claimed evidence of bias by the government, and the raw data of project approvals, denials, or delays.  But the bill requires to court to only provide a remedy for the plaintiff if there is a substantial increase of “unreasonably delayed” or “improperly denied” projects.  However, the limitation of evidence would preclude the government (or the applicant) from making any arguments about whether those past projects that were delayed or denied were unreasonably delayed or improperly denied.  The result is that courts will likely make a decision on that point on “vibes” about how the court feels about the kind of project and the current administration.  That is not a recipe for consistent judicial decisionmaking.  Instead, the government (and applicant) should be allowed to introduce the administrative record for projects that were supposedly “unreasonably delayed” or “improperly denied,” allowing the court to make a determination on those arguments.  That will make litigation more expensive or time-consuming – but if the government’s behavior is particularly egregious (and that appears to be the kind of outcome the bill provision is aimed at), the applicant should still be able to make a strong case.

Like I’ve written before, I want to support this bill.  I’ve written before about the benefits of greater certainty and predictability for permitting the kinds of projects we need to address climate change and other important societal goals.  With changes like these, I think this bill will still accomplish these goals – in a resource-neutral way (which is important for bipartisanship) – while avoiding dangerous unintended effects.  Otherwise, the risks of bad outcomes (particularly from the permit certainty provisions) may be too high.

NEPA, permit certainty, permitting reform, renewable energy, Trump Administration