United States: High-Speed Rail Grants: The Key Role Of NEPA Compliance

In its interim guidance for high-speed passenger rail grants, the Federal Railroad Administration (FRA) recognized that a "crucial" issue in the application process is the applicant's compliance with the National Environmental Policy Act (NEPA) and related laws.¹ NEPA compliance will play a crucial role because it will determine which applicants are eligible for each of the funding tracks established in the guidance. In addition, a well-defined NEPA strategy can improve an applicant's ability to obtain a large share of the available grant funding.

In this Update, we cover three issues: (1) the impact of NEPA compliance on eligibility for high-speed rail grants under the American Recovery and Reinvestment Act (ARRA); (2) the FRA's NEPA procedures as they relate to high-speed rail projects; and (3) legal and policy issues that will need to be resolved as applicants develop NEPA strategies for high-speed rail projects.

The NEPA Process for High-Speed Rail Projects

NEPA requires federal agencies to conduct an environmental review before approving, funding or directly carrying out a project. There are three levels of NEPA review: the highest level is an environmental impact statement (EIS); the middle level is an environmental assessment (EA) and finding of no significant impact (FONSI); and the lowest level is a categorical exclusion (CE). A CE can take various forms, ranging from a simple checklist to a relatively detailed report.

Before approving a grant for a high-speed rail project, the FRA will be required to comply with NEPA for that project. If other federal agencies, such as the Federal Highway Administration or the U.S. Army Corps of Engineers, also have an approval or funding role, they also will be required to comply with NEPA. In addition to complying with NEPA, these agencies also must comply with other federal environmental review laws, including laws that protect resources such as wetlands, historic properties and parklands.

To implement its responsibilities under NEPA and related laws, the FRA has issued "Procedures for Considering Environmental Impacts." (NEPA Procedures)²]These procedures address many aspects of the environmental review process that are highly relevant to high-speed rail applicants, including the role that the applicant can play in preparing NEPA documents. They also identify numerous decisions in the NEPA process that require review, sometimes in writing, by the FRA's Office of Chief Counsel. Key points from the FRA's NEPA Procedures will be discussed further below.

The Connection between NEPA Compliance and Funding Eligibility

As described in our previous Update, the FRA has defined four "tracks" for applications. Of these four tracks, only Tracks 1 and 2 are eligible for the $8 billion in ARRA funding.³ Tracks 3 and 4 are eligible for approximately $91 million in non-ARRA funding.

In its interim guidance, the FRA has identified NEPA compliance as one of the key criteria for determining eligibility for Tracks 1 and 2:

• Final Design & Construction for Individual Projects. Funding is available under Track 1 for final design and/or construction only for projects that have a completed project-level NEPA document "at the time of application." An application "may be" considered in this category if "substantial progress" on the NEPA review has been made at the time of the application. If the NEPA review is not finished at the time of the application, it must be done by the time the grant is awarded.
• Preliminary Engineering and NEPA for Individual Projects. Funding is available under Track 1 to complete preliminary engineering (PE) and NEPA reviews for individual projects. There are important constraints on the use of this funding.
• This funding can be used only for project-level NEPA studies. It cannot be used to prepare service-level NEPA studies (e.g., a Tier 1 EIS). A service-level NEPA study would be eligible for non-ARRA funding under Track 3.
• An applicant cannot apply for PE/NEPA funding and final design/construction funding in the same application. An applicant that has not completed PE and NEPA studies for a project could compete in this round solely for PE/NEPA funding, and then (after completing the NEPA work) compete in a future solicitation for final design and construction funding. Future rounds will be held only if the FRA does not fully disburse the $8 billion in this round.
• Corridor Service Development Programs. Funding is available under Track 2 to implement a "service development program" for a high-speed rail corridor. To be eligible for a Track 2 grant, the applicant must have completed a "service development plan."⁴ The service development plan itself "must include [a] completed ... corridor-wide 'service' NEPA study, such as a programmatic or Tier I EIS."⁵ In other words, an applicant is eligible for Track 2 only if the applicant has completed a NEPA study – such as a Tier 1 EIS – for the corridor covered by the application.

FRA's Approach to NEPA Compliance

Under both Track 1 and Track 2, an applicant can apply for ARRA funding to complete project-level NEPA studies. To obtain this funding, applicants will need to outline a proposed timeline and approach for completing the NEPA process. Applicants also will need to demonstrate the ability to carry out the NEPA strategy within the proposed schedule.

The FRA's NEPA Procedures provide a useful starting point for developing any application that seeks funding for NEPA reviews. The FRA's approach to NEPA compliance is similar in many respects to the process used by other modal agencies within the U.S. Department of Transportation (USDOT), but there are a number of areas where FRA's procedures are different, or at least are more specific, than the procedures adopted by other agencies within USDOT.

1. Programmatic Reviews for Interdependent Actions

The FRA's NEPA procedures require a programmatic EIS to be prepared for "a group of FRA actions ... where no single action would be taken except in conjunction with the other related actions."⁶ The guidance notes that "[d]ecisions on related rail facilities, e.g., connecting lines of a railroad or consolidations, should normally be considered a programmatic action." This policy reflects the general NEPA principle that an action considered in a NEPA document must have independent utility.

In its interim guidance, FRA has defined the concept of independent utility for purposes of high-speed rail projects. Under this definition, a high-speed rail project has independent utility "if it will result, upon completion, in the creation of new or substantially improved High-Speed Rail/Intercity Passenger Rail service, and will provide tangible and measurable benefits even if no additional investments in the same High-Speed Rail/Intercity Passenger Rail service are made." Examples of these benefits "would include on-time performance improvements, travel-time reductions, and higher service frequencies resulting in increased ridership."

Thus, if an applicant proposes a series of individual projects in a corridor, the NEPA Procedures could require a programmatic NEPA review for those projects. Individual projects can be addressed separately only if they can be shown to possess independent utility.

2. Circumstances under Which CEs May be Issued

The FRA's NEPA Procedures list specific types of actions for which CEs can be issued to satisfy NEPA. This list includes actions such as "maintenance of existing railroad equipment" and "minor rail line additions that ... do not involve acquisition of a significant amount of right of way, and do not significantly alter the traffic density characteristics of the existing rail lines or rail facilities."

The FRA's NEPA Procedures also define criteria under which other types of actions can be excluded from NEPA review. To qualify for this type of exclusion, actions must meet the following criteria, among others:

• The action "is not judged to be environmentally controversial from the point of view of people living within the environment affected by the action ..."
• The action will not use any Section 4(f)-protected properties.
• The action will not adversely affect any historic properties under Section 106 of the National Historic Preservation Act.
• The action will not involve any "new construction located in a wetlands area."
• The action will not "affect a base floodplain area."⁷

If strictly applied by FRA, these criteria will limit applicants' ability to rely upon CEs as the basis for satisfying NEPA requirements for high-speed rail projects. Projects that provide sufficient improvement in speeds or capacity to qualify for a grant will, in many cases, have some impacts that preclude the use of a CE under these criteria. For such actions, an EA or EIS would be required. On a related note, the FRA's NEPA Procedures state that an EIS is "normally" required for "any change which will result in a significant increase in traffic."⁸

3. Applicants' Role in Preparing NEPA Documents

In the interim guidance for the high-speed rail grants, FRA notes that "While NEPA is a Federal agency responsibility and the ultimate decisions remain with the Federal sponsoring agency, FRA encourages applicants to take a leadership role in NEPA documentation development, consistent with existing law and regulations."⁹

This approach is consistent with FRA's NEPA Procedures, which state that applicants may be asked by FRA to prepare an EA, a proposed draft EIS or a proposed draft FONSI.¹⁰ The procedures also expressly recognize that applicants may use consultants to prepare the NEPA documents, subject to approval of the FRA program office.

4. Approach to Section 4(f) and Section 106

As an agency within the USDOT, the FRA is required to comply with Section 4(f) of the USDOT Act. Section 4(f) places substantive limits on the authority of USDOT agencies to approve projects that use land from certain types of resources, including (1) significant publicly owned parks, recreation areas, or refuges; and (2) significant historic sites, which include any historic sites that are listed in or eligible for the National Register of Historic Places. In addition, like all federal agencies, FRA is required to comply with Section 106 of the National Historic Preservation Act, which requires agencies to consider effects on historic sites in consultation with State Historic Preservation Officer and other consulting parties.

Compliance with Section 4(f) and 106 requires an evaluation of properties over 50 years of age (and in some cases below that threshold) to determine whether they are eligible for the National Register. In the case of railroads, upgrades to existing lines often involve impacts to rail infrastructure (e.g., bridges) or facilities (e.g., stations) that must be assessed to determine eligibility for the National Register. If they are determined to be eligible, further consultation is needed under Section 106 to determine whether they would be adversely affected by the project, and, if so, consultation must include efforts to resolve those adverse effects. Section 4(f) would impose even more stringent requirements.

The FRA's NEPA Procedures address compliance with Section 106 and Section 4(f). However, these procedures were adopted in 1999, and thus pre-date the changes to Section 4(f) that were enacted in 2005 as part of SAFETEA-LU.¹¹ In particular, FRA's procedures do not reflect the new authority to satisfy Section 4(f) requirements by making de minimis impact determinations. The Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) have adopted regulations that establish procedures for making de minimis determinations. The FHWA and FTA regulations also clarify the standards for analyzing and selecting among alternatives when a de minimis determination cannot be made. It is possible that FRA will follow the FHWA and FTA's post-SAFETEA-LU Section 4(f) regulations.

5. FRA Chief Counsel's Office Reviews

The FRA's NEPA Procedures require consultation with FRA's Office of Chief Counsel at multiple points in the NEPA process, and at some points specifically require a written legal sufficiency determination. The procedures require:

• Consultation with chief counsel's office before determining that a project qualifies for a categorical exclusion (for a specific type of action listed in the NEPA Procedures).
• Legal sufficiency review by chief counsel's office before determining that an action is excluded from NEPA review based on the general criteria listed in the NEPA Procedures.
• Legal sufficiency review by chief counsel's office before approving a FONSI.
• Consultation with chief counsel's office when determining whether or not a proposed action would "use" Section 4(f) properties.
• Legal sufficiency review by chief counsel's office for any determination to authorize the use of Section 4(f) resources.
• Consultation with chief counsel's office during the scoping process for any EIS.
• Legal sufficiency review by chief counsel's office prior to publication of every draft EIS, final EIS and Record of Decision.
• Consultation with chief counsel's office before determining whether new information or changed circumstances require supplementation of an EA or EIS.

6. Limits on Applicant's Actions Prior to Completion of NEPA Process

The FRA's NEPA Procedures restrict actions taken by applicants during the NEPA process. The procedures state that, "The Program Office shall inform an applicant that the applicant may not take any major action, in expectation of approval of the application, prior to completion of the environmental documentation process by the FRA, as required by these Procedures."¹² The broad wording of this policy could be construed to apply to any actions taken by an applicant, regardless of funding source. Other USDOT modal agencies, such as FHWA, allow project sponsors to take actions with their own funds, on an "at-risk" basis, prior to NEPA completion.

Issues for Applicants to Consider

Applications for high-speed rail grants must be submitted to the FRA by August 24, 2009 for Track 1 and by October 2, 2009 for Track 2. As they develop their proposals, applicants will confront a number of unresolved NEPA-related issues. These include:

NEPA-Related Eligibility Issues

• Can Track 1 funding be used for a single project-level EIS that involves multiple improvements to a single existing corridor?
• Can a non-NEPA planning study be used as the basis for establishing eligibility for Track 2 grants, instead of preparing a Tier 1 EIS?
• Can ARRA funding be used to prepare re-evaluations and/or supplements to program-level EISs that were previously prepared or approved by FRA?

NEPA Compliance Issues

• What documentation will an applicant need to submit in order to demonstrate that individual projects in a corridor possess independent utility, so that they can be studied and approved as separate projects?
• Will FRA provide flexibility in the application of its criteria for CEs? For example, are there any circumstances under which a CE could be used to approve a project that involves the use of Section 4(f) resources or involves adverse effects to historic properties?
• What level of involvement will FRA expect to have during the NEPA process, and will that differ depending on the type of project being undertaken? For example, does FRA anticipate regular involvement throughout the development of an EIS?
• Will all of the normally required consultations and legal sufficiency reviews by the FRA chief counsel's office be required during the NEPA process? Are there steps an applicant can take to support or expedite those reviews?
• What constraints, if any, apply to actions take by applicants on an "at risk" basis (with their own funds) prior to completion of the NEPA process?
• Must alternative locations (including "greenfield" locations) be considered as alternatives when an applicant proposes an upgrade to an existing freight-rail line?
• How does the potential for greatly increased high-speed rail funding affect FRA's assessment of the reasonableness of alternatives? For example, is it necessary to re-evaluate alternatives that previously were rejected as too costly?

Role for Legal Counsel

Legal counsel can assist applicants in the application process for high-speed rail grants and in carrying out the required NEPA studies. For more information on our experience, see our Project Development and Federal Grants & Loans practice descriptions.

Footnotes

1 Federal Railroad Administration, "High-Speed Intercity Passenger Rail Program: Interim Guidance", 74 Fed. Reg. 29900 (June 23, 2009), at 29903.

2 FRA, "Procedures for Considering Environmental Impacts," 64 Fed. Reg. 28545 (May 26, 1999).

3 FRA, Interim Guidance, 74 Fed. Reg. at 29907.

4 FRA, Interim Guidance, 74 Fed. Reg. at 29922. ("The completion of a SDP is a prerequisite for eligibility for applications for Track 2-Programs.")

5 FRA, Interim Guidance, 74 Fed. Reg. at 29904.

6 FRA, NEPA Procedures, 64 Fed. Reg. at 28548.

7 FRA, NEPA Procedures, 64 Fed. Reg. at 28548.

8 FRA, NEPA Procedures, 64 Fed. Reg. at 28553.

9 FRA, Interim Guidance, 74 Fed. Reg. at 29903.

10 FRA, NEPA Procedures, 64 Fed. Reg. at 28549.

11 Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, Public Law. No. 109-59 (Aug. 10, 2005).

12 64 Fed. Reg. at 28549.

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