Originally published March 10, 2010
On February 17, 2009, President Obama signed into law the
American Recovery and Reinvestment Act (ARRA). The Act is an
extraordinary response to the slowdown plaguing the United States
economy. Among the ARRA's goals are stabilization of the
economy, modernization of the nation's energy and
transportation infrastructure, providing education funding to
increase the skills of the American workforce, and improving access
to affordable healthcare. Funds from the ARRA are provided either
in the form of grants, which require the grantee to share a
percentage of the project costs (usually 50%), or low interest
loans. As part of President Obama's goal of promoting
transparency and accountability in government spending, the
administration required all departments to create a Recovery Act
website and provide weekly updates to the public concerning their
implementation of the Act. A summary of the various
department's actions can be found here.
Although the ARRA's stated goal is to distribute funds to
"shovel ready projects" as quickly as possible in order
to promote job creation, this must be balanced against the need to
assess the potential environmental impact of any project. The ARRA
is subject to the National Environmental Policy Act (NEPA), which
adds a significant layer of bureaucratic hurdles to overcome prior
to project approval. Thus, organizations seeking to obtain funding
through the ARRA must take a proactive approach in managing the
application process. In fact, many entities report that their
requests for funding have been denied for failure to provide
sufficient detail in the application process. This article will
highlight the critical need for organizations to understand how
their proposed funding requests will be impacted by federal
environmental regulations and the importance of preparing an
application that demonstrates compliance with NEPA.
With over $32 billion in funding authorized as of November 6, 2009,
the Department of Energy (DOE) has been among the
most active in announcing opportunities and allocating funds to
eligible projects. Periodically, the DOE will release a Funding
Opportunity Announcement (FOA). The FOA identifies the nature of
the project, the criteria used to determine the recipient(s), and
all relevant deadlines. Each FOA contains different criteria and
provides the scoring system used by the DOE to weight each
particular aspect of a project. Common criteria include
confirmation that the project site has been secured, regulatory
approval obtained, the applicant has secured funding for their
portion of costs and an adequate workforce is in place.
Once an agency makes a decision to award funding for a project, a
determination is made as to whether the project satisfies NEPA.
NEPA is triggered when federal funding is awarded, a project
involves the use of federal land, and/or the issuance of a federal
permit. Once NEPA applies, compliance is established via one of the
following:
- Categorical Exclusion;
- Environmental Assessment; or
- Environmental Impact Statement
Funding will not be distributed until an applicant can
demonstrate that the project satisfies NEPA.
Categorical Exclusions (Cat-Ex) are the simplest manner in which to
satisfy NEPA. Cat-Ex's are defined as "a category of
actions which do not individually or cumulatively have a
significant effect on the human environment ... and ... for which,
therefore, neither an environmental assessment nor an environmental
impact statement is required."1 However, the types
of projects specifically identified as a Cat-Ex are narrow.
Typically, the agency will provide a list of Cat-Ex's in the
FOA, and some agencies have established a list of standard
Categorical Exclusions in their respective provisions of the Code
of Federal Regulations. If a proposed project is listed as a
Cat-Ex, NEPA is satisfied and no further analysis is
necessary.
Environmental Assessments (EA) are another manner in which a
hopeful recipient can illustrate that a project complies with NEPA
to obtain project funding. When the impact of a particular project
is uncertain, applicants may be required to conduct an
environmental assessment. EA "[m]eans a concise public
document for which a Federal agency is responsible that serves to:
(1) Briefly provide sufficient evidence and analysis for
determining whether to prepare an environmental impact statement or
a finding of no significant impact; (2) Aid an agency's
compliance with the Act when no environmental impact statement is
necessary; and (3) Facilitate preparation of a statement when one
is necessary."2 Normally, a period of public notice
and comment is required before a determination of the environmental
impact is made.
Prospective applicants must also be cognizant of additional agency
regulations when submitting an application. When an FOA is unclear
as to what constitutes a Cat-Ex, applicants would be wise to
provide key information in an Environmental Assessment format.
Therefore, the application should include information related to
key considerations such as greenhouse gas emission estimates,
environmental justice factors, cumulative impact analysis, risk of
environmental exposure or terrorist action and public involvement.
Taking these steps proactively allows an agency to convert the
application to an Environmental Assessment if it is deemed
necessary.
If at any point in the process of preparing an EA it is discovered
that the project would result in significant impacts an
Environmental Impact Statement (EIS) must be prepared.3
An EIS is triggered when a project poses a significant impact to
the quality of human environment. Unfortunately, an EIS is the most
costly and complex option for satisfying NEPA. An EIS is a full
disclosure document that details the process through which a
project was developed, includes consideration of a range of
reasonable alternatives, analyzes the potential impacts resulting
from the alternatives, and demonstrates compliance with other
applicable environmental laws and executive orders. The EIS process
is completed in the following ordered steps: Notice of Intent
(NOI), draft EIS, final EIS, and record of decision (ROD). The NOI
involves publication in the Federal Register and is the first step
in a process that involves significant public and governmental
involvement to scope the full implications of a project. The
process will normally take at least a year to complete and involves
substantial cost commitments.
Recent experience has revealed the pitfalls facing those who wish
to become eligible to participate in projects announced under the
ARRA. Organizations seeking to capitalize on the massive funding
available under the ARRA must first carefully evaluate the
resources necessary to complete the application process and develop
processes which ensure their submission will receive proper
consideration by federal agencies. Potential applicants are
encouraged to seek assistance from consultants with a thorough
understanding of environmental law and experience obtaining federal
funds. As always, communication with the agency and key decision
makers will help provide the best opportunity to secure
funding.
Footnotes
1. 40 C.F.R. 1508.4.
2. 40 C.F.R. 1508.9
3. 40 C.F.R. 1502.1 et. seq.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
