Deep Dive Episode 229 – Overcoming the Challenges to Clean Infrastructure

On November 15, 2022, President Biden signed the Infrastructure Investment and Jobs Act. On May 11, 2022, the White House released the Permitting Action Plan, to “accelerate and deliver infrastructure projects on time, on task, and on budget.”

The infrastructure bill represents a major public investment in infrastructure development. And yet significant obstacles to infrastructure development remain. Does the infrastructure bill help overcome some of those obstacles? How does the Permitting Action Plan address those obstacles? How can the federal government work with states, localities, tribes and territories to overcome these challenges?

In this webinar, energy policy experts discussed these questions and more.

Transcript

Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.

[Music and Narration]

 

Introduction:  Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker.

 

Ryan Lacey:  On July 19, 2022, The Federalist Society’s Regulatory Transparency Project hosted a virtual event titled, “Overcoming the Challenges to Clean Infrastructure.” The following is the audio from that event.

 

Steven Schaefer:  Hello, and welcome to this Regulatory Transparency Project webinar. My name is Steven Schaefer, and I am the Director of the Regulatory Transparency Project at The Federalist Society. Today we are excited to host a panel discussion entitled, “Overcoming the Challenges to Clean Infrastructure.” Joining us today is a stellar panel of energy policy experts who bring a range of views to this discussion. We are pleased today to have with us Ted Boling, Alex Herrgott, and our moderator, Mario Loyola. As always, The Federalist Society takes no position on any particular legal or public policy issues. All expressions of opinion are those of the speakers. Mario, the floor is yours.

 

Mario Loyola:  Thank you, Steven. Welcome, everyone. Thank you for coming on today for today’s event. I’m Mario Loyola. I’m a member of The Federalist Society’s Regulatory Transparency Project. I currently teach environmental law at Florida International University in Miami, and I’m a Fellow at the Competitive Enterprise Institute in Washington D.C., and previously, most recently, was associate director for regulatory reform at the White House Council on Environmental Quality, where I had the honor and the pleasure of serving with today’s two other panelists, Ted Boling and Alex Herrgott.

 

Ted was at CEQ, across, I believe, four administrations, being promoted during the Bush administration to General Counsel of CEQ, then serving in that role in the Obama administration, going over to Department of Interior for a number of years to be Deputy Solicitor at the Department of Interior, then back to be the Associate Director for the National Environmental Policy Act at the White House, where he served from the end of the Obama administration through the Trump administration, and is now a partner at Perkins Coie, which I think is how you pronounce that in English. Is that right, Ted?

 

Edward Boling:  Coie.

 

Mario Loyola:  Coie. As long as it’s not a French pronunciation, I think we’re okay. Ted is one of the country’s foremost experts on NEPA, and I personally have learned perhaps more from Ted on this topic of NEPA and environmental reviews and federal permits and the permitting process than from anyone else, which is not to say that it’s Ted’s fault that I take the positions that I do. That is a longer story.

 

Alex is a longtime veteran of the Hill. He was on Senator Inhofe’s staff and Deputy Staff Director of the Environmental and Public Works Committee in the Senate for many years, where he played an integral role in developing FAST Act and a lot of the other permitting reform initiatives that were done during the Obama administration. He was Associate Director for Infrastructure at the Council on Environmental Quality, where he was a major element of the reform effort there and was able to bring up lots of constituencies with a lot of different points of view, and helped the Chairman of CEQ to reconcile those points of view and liaise throughout the government and back with his former colleagues on the Hill, and was just an invaluable conduit to other stakeholders in the entire process that we were undertaking.

 

With that, I would like to just introduce our topic here. And it just occurred to me as I was talking that, basically, we’re running, like, a CEQ staff meeting here for the entire world to see. This is an important topic. The Biden Administration started out in its early days by — fortunately or unfortunately, as the case may be — pulling back Executive Order 13807, which was President Trump’s executive order that gave us our marching orders during the administration, and led to a lot of the rulemaking and the interagency Memorandum of Understanding on environmental reviews and permitting actions.

 

And so that raised the question of where the Biden administration is going to take the effort to reform the process for federal permits and environmental reviews of major infrastructure projects, especially given that the Biden administration’s goals of a clean energy transition, a transition to renewable energy, are extremely ambitious from the point of view of the sheer amount of renewable energy infrastructure that would have to be deployed by 2035, say, and, ultimately, by 2050, to meet the Biden administration’s goals. This is a really staggering amount of energy infrastructure that we’re talking about.

 

And we’ve got a pipeline for permits and environmental reviews that remains very constricted, just because it is the same pipeline that was developed over many decades and that struggled to handle the permit applications of normal times, when we would be talking about maybe two or three solar project applications in the Bureau of Land Management Regional Office in Nevada. That same office with that same number of staff is now overwhelmed with 20 permit applications, and nobody has any clear answers about how those permit applications are going to get worked through, and certainly not in anything like the time that would be required for these permits to be issued, and then, construction to start, and for all of these projects to be online in time to meet anything like a 2035 goal.

 

This effort has a lot of history behind it. The last shoe to drop was on May 11 of this year, when the Biden administration announced its Permit Action Plan to accelerate and deliver infrastructure projects on time, on task, and on budget. There is, as you read through it, a lot of overlap with the Trump administration’s 13807, which sought to reduce delays, reduce costs, and reduce uncertainty for, essentially, the exact same set of permit applications, and which, by the way, I’ll just note as a last point before turning it over to my colleagues that the primary beneficiaries of what the Trump administration did — which we’ll go into in a second — were renewable energy projects.

 

And I think that that’s part of the difficulty that the Biden administration has been facing here is that it’s got competing interests among its constituencies, some of them environmental advocacy groups that were very opposed to what the Trump administration did all along, and then, on the other hand, renewable energy constituencies that were at least critical supporters of what the Trump administration did, and have been suggesting to the Biden administration what it should build on, moving forward.

 

So, with that, I’d like to ask, first of all, Ted, to tell us how we got where we are right now, because a lot of these issues were presented early in the Obama administration, when there was a lot of renewable energy infrastructure in those stimulus American Recovery and Reinvestment Act authorizations. And then, after Ted’s had a chance to bring us up to speed, we’ll hand it over to Alex to ask Alex how he sees things now. So thank you all for participating. Thank you, Ted, and Alex. And, with that, Ted, take it away.

 

Edward Boling:  All right. Thank you for that gracious introduction. And I should just say I’m a partner at Perkins Coie, and so my perspective is informed by, really, like, the last 18 months of working with applicants, transmission companies — we’re in the midst of transmission litigation — and transportation agencies, and also renewable energy projects, including some offshore wind work. But then it’s also building on 30 years of experience, because I started litigating NEPA back when I was a trial attorney at the Justice Department in 1990, and I think I’ve been living a fair amount of this story.

 

But I have to start out with what my predecessor as General Counsel at CEQ, Diana Baird, told me when I first started at CEQ, and that is “Every administration has tried to make NEPA work better and work more efficiently, more effectively.” And, really, if you focus on the Carter administration’s rulemaking for NEPA, back in 1977, 1978, it started with an executive order that had a lot of those themes to it. It was designed to bring order to the federal government, to create the efficiencies of a common approach to NEPA, and I think we did a pretty good job of sort of reciting that history in the 2020 final rulemaking.

 

The Federal Register notice, the preamble there, talks about the origins of these efforts and how it really sort of draws a common thread between actually starting with the Carter administration; in the Bush administration, of course, we had our efforts at efficiencies; the Clinton administration; and then, of course, George W. Bush, back in 2002, did Executive Order 13274. That was his Environmental Stewardship and Transportation Infrastructure Project Reviews, very focused on transportation, because that was the primary focus at that point.

 

In the Obama administration you had a broadening of that, with, in 2011, his presidential memorandum on speeding infrastructure development through more efficient, effective permitting and environmental reviews. And that matured into Executive Order 13604. But then, also, the creation of the permitting dashboard, which, again, started off as a Department of Transportation thing, and what we know of as the dashboard today, at permits.performance.gov, which is the means of tracking both transportation projects and also the infrastructure projects that came about under FAST-41. That evolved out of this sort of continuing effort. And the most productive efforts in this area are where an administration doesn’t try to start from a blank sheet of paper, but picks up from what’s worked in the prior administrations.

 

So, in many ways, Executive Order 13807 was building on the initiatives of the Obama administration, but then, also, of course, the very important enactment — Senators Portman and McCaskill got Title 41 into the Fixing America’s Surface Transportation Act. It was so much more than surface transportation. It was standing up the Permitting Council, which Alex Herrgott ultimately became its executive director. And the Permitting Council is really the cornerstone of the Biden administration approach.

 

If you look at their May 11 permitting action plan — which is really, for all intents and purposes, their answer to the executive order-based direction to OMB and CEQ to develop a successor to EO1380 — that permitting action plan really leans in on the Permitting Council authorities, uses the Permitting Council for all it’s worth, and then some, and, particularly, as a convening exercise, using the network of chief environmental review and permitting officers to provide information to project sponsors, to track project development.

 

And then, also, the permitting action plan also directs CEQ to establish clear and consistent standards for assessing climate change impacts from projects, and also in continuing their effort in the modernization of the NEPA regulations. And they’ve got Phase 2: Rulemaking in NEPA currently projected — according to the regulatory agenda — to be coming out next month. It’s got an August date. So that’s sort of my quick tour of the last 50 years, if you like.

 

Mario Loyola:  Ted, before moving over to Alex, can you tell us a little bit about the effort to get through a backlog of, I think it was 200 permit applications, during the Obama administration?

 

Edward Boling:  Well, all right. So when I arrived at the Department of the Interior, Secretary Salazar was engaged in an effort — and this was in the summer of 2010 — an effort to fast-track renewable energy projects on public lands. And, particularly, it focused on solar projects in the Bureau of Land Management Lands in the southwest United States. And they had a backlog of — actually, it was well in excess of 300 applications for uses of the public lands, lots of different technologies. People had different ideas for solar troughs or power towers, and all sorts of — some fairly interesting efforts, but most of them were all just trying to make use the authority to issue rights-of-way on the public lands — huge backlog.

 

And Secretary Salazar established a set of priorities, as well as, also, an organization within the Department of the Interior and coordinated with other agencies to figure out what are the projects that are most likely to move forward, they’re the best from the standpoint of deconfliction., and then to also just schedule them, to be public about that schedule, to move them through an interagency process, and turn what had become a fairly lengthy surnaming process to get anything up to a record decision into a very efficient process. And so I was in the solicitor’s office as we worked our way through. We also had a heck of a lot of litigation. So my job was primarily to make sure that those projects were all ready for litigation, and we had well over 20 cases. And after one TRO before I arrived at the Department of the Interior, we won every case afterwards.

 

Mario Loyola:  Thank you. So, Alex — and I realize now that I unfortunately truncated your extensive bio. Particularly, I want to highlight the fact that after we were colleagues at the White House Council on Environmental Quality, as Ted mentioned, you were Executive Director of the Federal Permitting Improvement Steering Council. And then, after the end of the administration, you formed an important new group called the Permitting Institute that we’ll let you tell us a few words about that as well, and the role that that plays in your vision for improving the process for permits and environmental reviews.

 

It also occurs to me to take a step back. We jump into this. The learning curve here is pretty tall, which is one of the problems of environmental regulation, generally. And, for those — in case there’s anybody in the audience that doesn’t know, I just want to say a quick word about what we’re talking about here, in general, which is that the National Environmental Policy Act was a very revolutionary law, I would say, turned out to be a very revolutionary law, in terms of good government practice, that was adopted during the Nixon administration and, essentially, requires every federal agency that is contemplating doing something that might have a significant impact on the environment — it requires the responsible official to prepare a detailed statement of those potential impacts on the environment.

 

And that gets triggered whenever the federal government does something itself that’s going to impact the environment, whenever the federal government is appropriating funds for something that’s going to impact the environment, and — crucially, for our purposes today — it gets triggered whenever the federal government gives a permit for something that’s going to get built that requires a federal permit, such as a natural gas pipeline under the Natural Gas Act, or a liquified natural gas export facility, or a utility-scale solar project on federal land in the West, or a linear transmission project or a wind project offshore.

 

And, because renewable energy — I think, disproportionately, compared to oil and gas, it triggers the application of NEPA, sort of all over the place — renewable energy is particularly affected by the delays and costs and uncertainties that have cropped up in the development of NEPA over the years. So, anyway, with that sort of belated introduction to the topic and to Alex, I’ll turn it over to Alex to ask how you see things now.

 

Alex Herrgott:  Sure. Thank you, Mario. And, I think, to add on to how you were taking a step back, I think it’s important to note that, after 15 years in the U.S. Senate and the Environment and Public Works Committee, writing bills and laws that, in many ways, were attempts to address many of these issues, confession is good for the soul. Staffers, in many cases, have never built a project before, or those that were lucky enough to work inside the executive branch can see it from the administrative side. You move over to the administration or where we were at Council of Environmental Quality and over at the Federal Permitting Council, where we were managing close to four — managing is a liberal term here, but $400 million worth of projects in which we were the process cop ensuring accountability and predictability and transparency across all agencies, which is, as Ted mentioned, has been the “what” over the last 30 years. It’s always been the “how” that we’ve struggled with, the specifics.

 

And then, after the end of the administration, creating a non-profit which now is made up of members, about 65 of them now, that are spread across all sectors, from broadband to water to aviation to energy; conventional, renewable storage, then the new clean energy hubs, hydrogen, you name it; along with many of the international investors and private equity and infrastructure debt companies that are looking for reasonable approximations of risk for particular sectors, particular projects, and particular regions, of which we use a GIS-based tool to really be the nerds behind the nerds that work within existing policy and try and help folks work within the constantly evolving permitting landscape.

 

And, when I say that, what I mean is, the folks that are actually making the decisions on a project-level basis — not a policy-level basis like’s happening at CEQ — are in the field. The decision-makers are spread across 13 federal agencies in different offices throughout the country. They’re ultimately — those are the individuals that are making the risk-based decision, at some point, to say yes or no on a particular permit, based and with an evolving cascade of different guidance, new rules that are coming out of Washington D.C., and — due to the opaqueness and the lack of clarity, in many ways, from new policy coming out of D.C. — an evolving outsized role for the courts to interpret what folks meant by dictating what certain gaps in policy mean. Which means that we have a byzantine system that, although, as you mentioned, NEPA, which is — really a good way to describe it is the motherboard, but there’s about 80 other authorizations that might be attributable to a project at the state, federal, and local level.

 

And all of those are supposed to work within NEPA, in many ways, so that they can bring all relevant information to the surface. But what ends up happening — and this is very key, and this is why the permitting institute saw a market failure, and where, when Ted, myself, you, and many others in government, we were not actually able to be advocates for projects, or advocates for new policy. And what we’re working on now is all applications that go into the federal government to apply for a permit or for NEPA are driven by the applicant.

 

Yes, there’s guidance. And there’s a checklist, in many ways. But what we’re seeing now is the broken trust between regulators and developers. And what that is akin to is you holding back information that you give to your accountant, and then criticizing your accountant for the audit risk of the final document, of which you have held back additional information. But that document is created five years earlier. It begins that project journey during the due diligence, capital financing, and debt stage. That takes about two years. Then you hire environmental practitioners, get your team of attorneys, your team of engineers, and you see if a project is economically viable, and you start to do the initial geotechnical design.

 

Well before you actually ever apply to environmental document, you are hundreds — for a large-scale pipeline, you are millions, millions of dollars — and the magnitude grows from there — of capital investment into the project. By the time that application — and that could be 100 pages, 200 pages, 1000 pages, and the associated appendices — it drops on the desk of a 29-year-old biologist that’s now the project lead at the core of engineers in New Orleans for an off-shore LNG facility, and we then create this pejorative characterization of bureaucrats sitting on decisions. But, at the end of the day, our counterparty, speaking from a developer standpoint, in the federal government — and, as you pointed out earlier, Mario, about who’s on the other side — the other side are folks, ultimately, who have never been on the developer side, that have been on the government side, that are now having to process a $3 billion application with the inability to exact accountability and performance from their other cooperating agencies they might be dealing with.

 

And so when a project prevails, it’s the exception, not the rule. And so where the permitting institute works directly with developers to help them explain what their counterparties on the other side are getting — because as soon as that application is dropped off through the adversarial nature of regulators versus developer — developers always trying to get the regulators and regulators always trying to hide behind statutes and a byzantine system of different decision-makers to delay the process — is that if we sharpen up the applications going in, you inoculate and strengthen the administrative record, and you reduce the footholds on the back end for those that oppose the project, whether that be environmental NGOs or those that are just private landowners and others from pushing projects aside.

 

And the importance of all of this is that what we are seeing in Congress to date are — and keep me on the time check, Mario — are the illusions of progress, or what I call the veneers of reform. One federal decision which all three of us had worked on, and it was what we thought, from a policy initiative was a marquee accomplishment in 2017, but all that simply did was says, “We need to reduce the level of decision-makers, put one person in charge, and have regular relative timelines so that there is accountability across multiple agencies.” When you have the IIJA bill that came out, and press releases on both sides were talking about how they’d fixed the permitting issues, all that really happened there was a codification of one federal decision, just for department of transportation projects: an extension of the Federal Permitting Counsel, which right now only has 15 active projects, all of which are seeing substantial delays, many of which are not —

 

Mario Loyola:  That’s last year’s — and you referred to IIJA, last year’s infrastructure bill.

 

Alex Herrgott:  Yeah, last year’s infrastructure bill. My apologies. So when I look at the permitting action plan that Ted referenced, and others, we’re good at the “what,” –transparency, predictability, timelines. It’s the “how,” and the “how” is always the struggle. And what we struggle with is establishing a way in which program managers are not going to get their hand slapped by the whiplash of regulatory and election consequences, and push projects forward. Because the average off-shore wind, pipeline, transmission line — and Ted can get into this to fact-check, but from the due diligence side to the pre-application phase, you’re already three years in; the application phase, anywhere from two to five years. Then you actually have to get the materials. And if you’re an off-shore wind facility, there’s a six-year backlog on turbines at the Shanghai facility. If you’re putting in an off-shore wind facility for a monopile, to actually take that asset to utility scale, and then to actually build the thing, takes about two years. So projects that are conceived today are not going to be in operation for at least a decade, and if that just goes right.

 

And the critical choice of the permitting institute — we call it non-partisan for a reason, because bipartisan is trying to get both sides to agree. Both Republicans and Democrats have gotten this unmistakably wrong in many ways. In many cases, Republicans my overreach, and Democrats may utterly use a precautionary principle where no reform is good reform, and everything, now, is fine. And the hyperbole of the flanks allow for a safe place for adults to come into the room and talk about what’s really happening on the ground.

 

The piece of optimism, and I’ll end it right here, is that for the first time in a long time, the definitions of success of the Renewable Energy Committee and the conventional energy, the transmission, the broadband, and the service transportation sectors are all aligned in many ways, because they’re all suffering from analogous problems. It creates a tremendous opportunity for us to take the less-controversial projects and, potentially, institute new reforms that will have a cascading effect across all sectors and I can get into that in a bit with some specific examples.

 

Mario Loyola:  Great. Thank you Alex. And I’ll just tell everyone, at about 1:45, we’ll be opening it up to questions. In the meantime, if you have a question, please put it in the chat box. I see we’ve already got one very good question, which is the theme of something I want to mention before turning it over to Ted. The question, here, from Erik Lipman has to do with the tension — and I welcome you to read it, it’s a very good one — but it has to do with the tension between the local and the state and federal policy priorities, and citing some of these projects.

 

When I teach NEPA, in connection with clean energy infrastructure and the clean energy transition, in my law school class, I mention that the most sort of straight-forward way to deal with this kind of programmatic effort to deploy a new kind of infrastructure across the country is with a programmatic permit that just is a batch permit for 200 or 300 utility-scale solar projects. But I explain to them that this is not possible under current law, and there’s no administration that could make it possible, because, right now, so many of those projects require cite-specific environmental impact statements, or even cite-specific environmental assessments. And if they don’t do those individual environmental reviews, they will get blown up in court. The permit will get vacated as soon as it has contact with any court.

 

And so that throws the problem back into — that highlights the fact that for all the amount of effort that we had, that the current administration is putting in, the previous administrations have put into permitting reform, the only improvements that the executive branch can make are really at the margins. If you want to have a structural improvement of the entire system, only Congress can do that. And the problem with Congress doing that, and going to Congress and saying, “Hey, can we get an exception for the cite-specific environmental reviews for these 300 solar permit applications?” is that you would be asking the representatives and senators from the western states, for example, to vote their local constituents out of a voice in the process, essentially. That’s the proposition that they’re confronted with. And that is very difficult for them to do. That’s a very difficult vote for them to take — “Sure, we’re giving away our ability to intervene on any of these projects that affect a substantial proportion of the land of in our state.” And that is, like many other aspects of the clean energy transition, politically very difficult, if not impossible.

 

And so I think that that’s why you’ve seen in Congress a certain amount of what I think Alex would describe, and maybe Ted you agree, really, unfortunately, tinkering at the margins, even though there seems to be general agreement in Congress that this is a propitious time for some really sweeping reforms of the entire system, especially given the enormous competitive disadvantage that the United States faces, compared to other countries, where these permits and environmental reviews are done much, much more quickly, much more predictably, and at much lower cost to capital formation. So, with that, Ted, what do you think?

 

Edward Boling:  Well, you gave me a lot to chew on, there. I would just say, first and foremost, in the area of infrastructure projects, to a certain extent they’re just inherently controversial. Very few people actually want to have a power line running through their backyard. There are inherent tradeoffs in every infrastructure project worth doing. Sometimes you can find a win-win, where you’re taking an old, poorly-designed project and you’re relocating it a bit, you’re reducing its impacts, and that sort of thing. But, even then, you’re oftentimes in an environment where you’ve got the cumulative effects of past developments, and your project is only going to do so much. And what this really calls for are, really, the capacity to deal with conflict, the capacity to deal with the tough issues. And that’s where, frankly, the drain on resources in the federal government is a real concern.

 

The Permitting Action Plan talks about adequately resourcing agencies and using the environmental review process to improve outcomes. Frankly, just having people who have the technical expertise to keep the small stuff small, to make judgements, to get the resources they need to do the job on a predictable schedule — those are the challenges for the Permitting Council, and for OMB and the Council on Environmental Quality as being the sort of two uber members of the Permitting Council, to help shepherd those projects along.

 

And I think there’s also a lot to be said for just good environmental conflict resolution skills. At its heart, there’s a great affinity, if you will, between NEPA and the Regulatory Transparency Project. It is all about transparency. It’s all about explaining to the public, “Here’s what the government wants to do to you. Here’s what these folks, whoever they are, the project proponents, think is a good idea. What do you think? What are the consequences?” — that sort of thing, and getting to a judgment. Because, ultimately, NEPA is not about processes, in and of itself. It is a decision-making process. It’s about informed decision-making, and making judgments about, “What do we need in the way of information in order to make this decision now, not letting the perfect be the enemy of the good?” and also, frankly, using conflict resolution skills. I’ve seen way too many scoping sessions and information sessions by agencies where they treat it as just sort of like an open-mike night, where they don’t have to do anything except transcribe the comments.

 

And instead of an honest give-and take about, “Here are the tradeoffs, and here are the judgment calls that we’re making,” there is an overarching fear of litigation, I would note, that is wildly out of whack with the litigation record of federal agencies. Federal agencies, when they get to a final agency action, more often than not, they win. We used to do very detailed litigation surveys. And we’ve found, proved, time and time again, year after year, federal agencies, A, were rarely sued, and that’s really the biggest driver, in terms of the suite of agency actions. EIS-level infrastructure projects, they may be more likely targets, because they’re “major federal actions significantly affecting the quality of the human environment.” I’m quoting the statute there.

 

But more often than not, the issues are ones of interagency coordination. It’s other statutes, other authorities in the coordination, and it’s a question of, “How well did you do that?” and getting it to the point of a judicial review. Once agencies are in court, more often than not, they win. And, frankly, they should win, under the standard of review. And what they need to focus on are decisions that are ready for litigation, but use the NEPA process as best they can for conflict resolution, for conflict avoidance, and to minimize impacts.

 

Mario Loyola:  So, can I push back on that a little bit, Ted? And you might have heard this objection before, but I would say that — and tell me if I’m wrong, but I think that the success of federal agencies in litigation is something — yes, they win most of the cases, but it seems to me that this is sort of the same as a wiretap affidavit. And a prosecutor whose wiretap affidavits are found to be deficient 30 percent of the time is going to get fired. And so I think that what you’re looking at is agencies that spend years trying to make sure that they’ve crossed every T and dotted every I, and they still have no earthly idea, to within 60, 70 percent probability, if their permit is going to get vacated.

 

And so the point that I’m making is that isn’t it true that if the law is so indeterminate that an agency that spends years trying to make sure that its permit won’t get vacated still stands a one-in-three chance of getting vacated, then we’ve got a problem of indeterminacy in the law?

 

Edward Boling:  No. First of all, you’re assuming that most projects get litigated. There are over 100,000 decisions that are made at categorical exclusion level every year, probably about 10,000 at an environmental assessment level, with 250 environmental impact statements that get sued on every year. So I went through the numbers, thanks to Lex Machina. In 2011, there were 15 losses of the federal government, 49 wins; 2012, 28 losses, 57 wins. I mean, that sort of ratio kind of goes through. So, to my point, the set of actions that happen shows that your chances of getting sued are actually fairly small.

 

Secondly, your analogy on seeking a subpoena or something is a bit flawed, because prosecutors pick their cases, in that regard. Federal agencies — more often than not, they’re not picking their applicants. They’re taking what the applicant comes to them with. They take the applicant’s purpose, their goals, and they fashion a purpose-and-need statement that might be a step back from that, take in a little bit of a bigger picture of it all. But then they’ve got to look at alternatives and that sort of thing, and ultimately make a decision. But applicant-driven NEPA processes are — done well, they’re well-coordinated with the agency in advance. You’re not just throwing an application into a bunch of agencies that aren’t prepared to deal with it. And you’ve also got agency counterparts that have the capacity, the wherewithal, to process it effectively and efficiently. The burden falls on both sides.

 

But, ultimately, I think federal agencies, still, they generally do a pretty good job. You want to — as an applicant, for all of the capital formation reasons that Alex noted, you want to make sure that you’re not engaging in dodgy, ambitious, narrow interpretations of NEPA or other federal agency statutes, as you’re going through this process. You want to be straight down the fairway. You want to succeed.

 

Mario Loyola:  Point taken. Thank you. So let me ask you both another question, before turning it over. It seems to me that if we can’t get really significant structural reforms of the process that would allow a programmatic permitting of, say, 200 utility-scale solar projects in the West — and just so people understand, these numbers aren’t from out of nowhere. If you’re going to retire 1,000 coal plants, you would need something like 1,000 or 2,000 utility-scale solar plants, not to mention an enormous amount of wind. By the way, these are 1,000 or 2,000 utility-scale, by which I mean 10,000-acre solar projects. That’s a lot of — that’s half the state of Florida covered in solar plants, so that people understand the geography that’s involved.

 

If we’re not going to give these regional offices that are doing the permit applications and environmental reviews the ability to grant permits for dozens of them at a time, then the only alternative, it seems to me, when the regional office that’s used to a volume of permit applications that’s maybe two permit applications at a time is suddenly beset by 20 permit applications, the only, just, arithmetical solution is to increase the size of the staff by a factor of 10.  So I know that, Ted, you’ve said for a long time that the resource constraints are really a major limiting factor here. That’s something that Alex has spent a lot of time talking about on the Hill as well. Why don’t both of you address that, if you can — of how we can overcome the resource constraints — first Alex, and then Ted.

 

Alex Herrgott:  Ted, if you would allow, my answer — I’ll just take a different tack, because I don’t want Ted and I to say the same thing. But, oftentimes, when I talk about 20 to 30 percent of project cost is attributable to avoidable overhead, it’s the same thing when we talk to appropriators who are putting new money in the regulatory budgets of the Bureau of Land Management, the Corps of Engineers, the Fish and Wildlife Service, and several others. Now they have the money from last year’s infrastructure bill. The problem now is recruitment. No one’s leaving college and wants to be a biologist at the Forest Service doing botany surveys. And so there’s a real issue to talk about cost recovery agreements and the ability to pull in some of the private sector folks’ ability to do some of the work on a consistent basis, while it also is validated by the regulator. But that’s a different topic.

 

What I want to focus on is if the rules of the road are more simple. As of rules dealing with, like, the waters of the U.S., we’ve reverted back to 1972 Clean Water Act, currently. We have a Migratory Bird Treaty Act rule that is somewhat ambiguous and opaque on whether or not an enforcement action will happen to you in a certain way if there is a take of a bald eagle, or we have a lesser prairie-chicken and a sage grouse rule that was pulled back. And sometimes, when you pull back too far, you leave this opaque gap in which it allows it allows the courts and applicants to interpret it more broadly, which creates a bigger issue.

 

But if you’re the regulator, yes, we can fill out more bodies, and we can put more qualified project manager folks in key national program management roles, and, particularly, in the energy space. But if the rules of the road are consistently changing, they have to work twice as hard to figure out whether or not in six months, when there’s a record decision ready to be signed, if there’s going to be a new rule that’s promulgated that’s going to force them to go back and redo a biological opinion that costs the applicant, at the end of the day, $300,000, just give or take, and allowed to go back and change the methodology of which they count the delta smelt or some sort of species that is something that had to be mitigated for.

 

And when you’re changing the compensatory mitigation rules — and forget about just NEPA writ large, I’m talking about all of the underlying regulations that are boxes that you’ve got to check and the appropriated guidance — you’re giving those regulators an impossible task. And so it’s not just about the institutional capacity and the staffing levels at some of these key agencies. It’s also what we’re forcing them to undertake, in order to get to a decision, not just a “Yes,” but just a decision, and have a defensible administrative record, to Ted’s point.

 

So when DOJ is representing these cases in court — or STB, in their case, because they do their own for some of the larger rail projects — is the lead agency able to rely on all of these other dependency agencies that did their homework, that fed up into the line? Are they consistent with the evolving landscape of the regulatory changes? When you take the veil back, and you look at it, that’s where there is no simple issue there. You’ve got to go surgical into each one of these statutes or in each one of these regs, and figure out what’s working and what’s not, and then talk about it like adults. And, until we do that, Congress is always going to err to the more simplistic solution, which is topical press release solutions.

 

Edward Boling:  I mean, I don’t know that the regulatory environment is switching around so rapidly that it’s just inherently undoable. Frankly, I think that if you’ve got seasoned practitioners, to Alex’s point, they’re just like the adults here who are going to not play political wind-shifting and try to turn on a dime at every political direction, but actually just focus on the statutes, the regulations, which are — it takes a long time to change the regulations, and, frankly, you ought to have a good reason to do it, and just get the job done. Whatever the question that came in from Eric about from Minnesota, the Sahara of wind, is a great one, because he’s layered on, “Well, what about the states, and what about locals, counties, that are opposed to, say, transmission projects.?” I think it’s a great example.

 

And, in fact, I’m in the midst of litigation. We had, in his Midcontinent Independent System Operator Service territory, a great planning exercise, starting back in 2008, when the governors of upper Midwestern states got together and said, “You know, in order to bring wind power from the high plains, across the Mississippi River, and, frankly, move it around the Midwest the way we need to, we needed a bunch of 345 kV lines.” And so, they created a plan, Midcontinent Independent System Operator created a plan that’s been adopted by the states. So you’ve got the Iowa Utility Board, you’ve got the Public Service Commission of Wisconsin, adopting these transmission lines, and, frankly, that’s — the Federal Power Act and FERC has put the authority there.

 

NEPA should be an instrument of that policy, NEPA as an instrument of good environmental policy in explaining, “All right, so, here’s why this transmission line needs to cross the Mississippi river, and why the Fish and Wildlife Service, the Army Corp of Engineers, the Royal Utility service, they shouldn’t attempt to redo power planning.” Nor does NEPA require them to redo power planning and their look at alternatives. They look at alternatives within their bandwidth there, and that’s a formula for actually getting things built.

 

It takes effort, and, frankly, it takes a cooperation between states and the federal government to make that happen, because there still is a fair amount of authority that resides at the states, appropriately, and the Cheney Energy Task Force identified that as a key factor in interstate transmission, and it remains so. Hopefully FERC will undertake a rulemaking that will help bring greater order to transmission planning, on a regional basis.

 

Mario Loyola:  Thank you, Ted. So, I want to open it up to questions. Please put your questions in the chat box. We’ve got a question here from Katie Exum. She asks, “Using an objective versus subjective review under NEPA, could an EIS and permitting application allow for a faster acceptance for a general project, and then apply for an EIS for a cite-specific review for any public comment or public policy concern?”

 

So I think I can probably answer this, because — at least a preliminary matter, because it raises two issues. Number one, when Katie talks about an objective versus subjective review, I think what she’s talking about is whether there’s a legal standard for information sufficiency or analysis of impacts, under NEPA, versus scoping to illicit public concerns. We don’t — in the NEPA world, we don’t use this distinction of objective versus subjective, because, Katie, the subjective component of it, which is stakeholders and local people coming up and raising concerns, is an important source of how you know what the impacts are going to be. That’s called scoping. And so that’s how we end up knowing sort of what the legally relevant information is that we have to get to.

 

The other part of Katie’s question is that — I would answer it by saying that you are describing the system as we have it today, when we talk about programmatic reviews and tiered review. So, if you have, for example, an offshore leasing program for oil exploration or wind projects, you will have a programmatic review that goes as far as the agency can take the review, given what it knows. We’re going to look at this area, we’re going to look at over here. Here’s the general characteristics of all this.

 

And then, when we actually do the specific lease sales, and we know exactly what part of the outer continental shelf is going to get impacted, then, at that juncture, we’re going to do a cite-specific review. And there is a lot — you know the courts are — there’s a lot of case law that tells agencies what they can do at a preliminary, programmatic review, and what they have to do in a cite-specific review. Unfortunately, one of the solutions would be to do a lot of the clean energy transition through a general programmatic review. But, under existing case law and existing law, that’s just a very, very difficult proposition. Ted, what do you think about that?

 

Edward Boling:  Yeah, I was just going to add in a few examples, there. So we did a programmatic environmental impact statement for solar projects in six western United States. And that was proceeding, in tandem with a whole bunch of activity on cite-specific, and it didn’t hold up cite-specific projects waiting for the programmatic. But the programmatic was designed to get at some cross-cutting issues, because, routinely, you had people claiming, well, you shouldn’t do an industrial-scale solar project out here in the California desert, you should do it on the parking lots in L.A., or why aren’t you using more distributed generation?

 

And so the programmatic looked at those issues, looked at issues of transmission, looked at issues of location — because where are the right places to put solar projects in the California desert and throughout, up through Utah and out to New Mexico? — and identified solar energy zones. And it was a good exercise to answer a bunch of questions, so that on the project-specific, then you could point back to that programmatic and say, “Look, we already evaluated that.”

 

Similarly, right now, the Bureau of Ocean Energy Management is doing that for adapted mitigation and monitoring provisions that would be somewhat standardized, if you will, throughout the New York Bight. So that’s an area where they have a number of lease sales, a couple draft environmental impact statements in process, plus six new lease sales just this year, for $4.3 billion, invested. And so what BEOM is going to try to do over the next couple of years is come up with a program of adaptive management mitigation monitoring provisions that then get applied, or at least evaluated, for application on the different construction operation plans, to help make that more efficient.

 

Alex Herrgott:  Well, Mario — sorry, Ted. Ted, it would be helpful if, in particular, when you talk about the New York Bight — when I talk about the cast of devolving regulations, if the National Marine Fishery Service changes the incidental harassment and the sediment agitation and the acoustics and the seismic and other types of turbidity rules that are affects to that endangered species, and in dealing with some of the developers in their construction operation management plan, and saying that their monopiles that are billions of dollars, and these huge massive things — the orientation of them now need to be this far apart rather than this close together, rendering the project economically unviable, the right hand isn’t telling the left hand, which is BOEM, what it’s doing, while the Department of Commerce is putting out its own rules over here. Meanwhile, much of the cable landing is moving through known concentration of PFAS in the sediment, and so there’s an EPA rule coming out that’s going to require remediation.

 

And this isn’t just specific to Bight, this is just kind of more of an anecdotal academic example. And then, at the same time, DOI hasn’t formalized what its incidental take is on the Migratory Bird Act during particular seasons and particular operations. And so, what I’m saying is that the developers are, yes, with the skill of a practitioner, of course, can navigate and figure out what the right parts of the project are that need to be pushed, or sometimes there’s additional mitigation, but, at the end of the day, the project sponsor, from the beginning to the end — which could be day one, and then, six years from now, before a shovel goes in the ground — may have a different set of rules and a reevaluation of many of their permits.

 

And, even though, under litigation, there may have been many wins or losses, it’s not just the CatEx that’s issued, or the 404 permit under the Corp of Engineers for disturbing waters of the U.S., it’s the associated conditions that allow for the notice to proceed and the authorization to construct that have all these opaque things that are different from project to project. So, as much as we talk about programmatic, I have not seen a single project in my career that is identical to a different project that had a separate set of facts that could easily be taken care of with a simple programmatic CatEx or a more generalized programmatic.

 

Mario Loyola:  And I think this goes to the level of —

 

Alex Herrgott:  Let me respond on that. And this programmatic doesn’t tend to or purport to be all things to all people. It creates an adaptive management, mitigation, and monitoring framework that then you have to look at by your slice of the New York Bight, although, for cite-specific considerations. But I think you’re reciting an impressive laundry list of complexities, of different regulations, different agencies, and, particularly, the conservation of the north Atlantic right whale, a critically endangered species where construction techniques, all of that, is of dire importance to the right whale, and, of course, the agencies that oversee it.

 

And those issues have to be worked through, but, frankly, a programmatic can create a framework, whereby the sum of its parts — the various projects knit together can have greater conservation benefit for the whole than the sum of its parts. There is the need to work through a lot of complexity in regulatory statutes, and the Marine Mammal Protection Act is one of the most complex, and also build off of what’s been done before, like the separation scheme for the vineyard wind project where, yes, it’s one nautical mile separation. They worked that out through painstaking negotiations. We ought to be able to build off of that kind of experience.

 

Edward Boling:  I agree with you. The programmatic approach is in the way of right. I think I was just more of a silver bullet, kind of just bringing it back to the other 50-odd authorizations that would allow for construction that are required, are not as static as a project developer would think, from beginning to end. And it requires constant unpredictability, in order to get it to the end of the game.

 

Mario Loyola:  So we’ve got just a few minutes left to try to get a couple more questions in. So I see that Carolyn Parlatos [sp] had her hand up. Carolyn, if you can unmute yourself, you can go ahead and ask.

 

Carolyn Parlatos:  I just unmuted, and it was a mistake. I did not intend to have my hand up. Sorry.

 

Mario Loyola:  Oh, okay. Because, at the risk of making an Italian language pun, I was going to give you a moment to speak.

 

Carolyn Parlatos:  All right, yes. That would have been very nice, but I do not have a question ready. Thank you though.

 

Mario Loyola:  Great. So, Eric Kennedy has a question. “Stepping back from the EIS review process and the change of winds of regulatory policy, what of the administration’s green transition campaign surviving the administration and the 117th Congress?” I’ll say that I am not going to crystal ball that one. But I will say that, just as an example of the political difficulty that this whole effort faces, any administration that’s trying to make a significant change in policy has two choices in the approach that it can take. It can swing for the fences, and hope that they win the next election, knowing that if they don’t win the next election, everything they did is fried chicken. Or they can bend over backwards to make sure that they have an inclusive process where they’re going through the coalition-building.

 

Old Senator Phil Gramm used to say, “If you don’t have a constituency, you don’t have a policy. So no matter how good your idea is, you really need to build a coalition for it in a democracy.” I think it’s fair to say, I hope it’s fair to say that in the Trump administration, we really bent over backwards to put in place a set of common-sense reforms that would survive into a new administration, regardless of what party that administration was.

 

And I think that you may find some proof of that when the administration finally does come out with its series of infrastructure reform measures, and you discover that there’s not a lot of difference between what they did and what we did, other than learning from, of course, the shortcomings in what we did, one of which is don’t front-load too much of the NEPA process, and the other of which is don’t assume that the resources are going to be there at the regional office, among the agencies, to process a tsunami of new permit applications, unless you’re able to contribute new resources. So, in a couple of seconds that we have left, on the political survivability of any reform efforts, Ted, and Alex, do you want to give any final thoughts there?

 

Alex Herrgott:  Go ahead, Ted. Go ahead.

 

Edward Boling:  I was going to say Alex is the one who could really speak with knowledge here. I’d just underscore that NEPA was enacted for really good common-sense reasons, to just answer the most reasonable of questions, and keeping it within the rule of reason, “Okay, what are you doing? What are the alternatives? What are the practical ways to reduce the environmental impact? And where does this get us?” I think, in the end, those are valuable. That’s valuable information. It’s essential for an informed democracy. And so I hope that we won’t have any sort of panic and reaching for drastic changes, because I think we’ll have some unintended consequences associated with that.

 

Alex Herrgott:  Yeah, I think that fighting the green energy agenda versus traditional conventional is somewhat of a red herring. At the end of the day, we need a 30 percent increase in production over the next ten years on the grid, just in general, to address reliability and some of the cost increases we’re seeing across the country. And if we took every single offshore wind and renewable generation project in the pipeline now and took it to utility-scale in six years, we would still need about 30 gigawatts of traditional dual-fired natural gas generation. And so actually taking a look at what we need to get —

 

Mario Loyola:  In addition to what we have now?

 

Edward Boling:  In addition, in addition. And so we need them both. And the problems that affect the renewable energy transmission projects are now backed by the very same companies that were entirely reliant on coal as a sole source of revenue. So the players have changed. So fighting the old legacy battles is one thing. People are going to do that on the political side. That’s wonderful. That’s about money. But developers don’t need money. The IIGA infrastructure money, the citing money the federal government has made possible, is about two percent of all spending that is done at all levels, and it’s mostly funded by the private sector. They don’t need dollars. They need certainty and a level playing field. And the reality is, until we get it there, then we’re fighting a battle that has already been fought.

 

Mario Loyola:  Yeah. And thank you both for that. Before turning it over to Steven, I’ll just say the point that I still have images from the Yellow Vest protests in France. People are much more liable to have open ears for a clean energy transition and the cost that that entails when gasoline is two dollars a gallon, than when gasoline is five dollars a gallon. And so there’s a political element here to environmental regulation that actually is universal to all environmental regulations that I think we need to think about carefully. But thank you, Alex, and thank you, Ted. I think it’s been a great panel. We could go on for hours. Actually, we did go on for hours during our time in the White House, on these exact issues. Thank you to those who joined us, far and wide. And, Steven, thank you and the Regulatory Transparency Project for putting this on.

 

Steven Schaefer:  Thanks, Mario. I want to thank, also, Ted and Alex for all of you sharing your time and expertise today and for this insightful discussion. And thank you to our audience for tuning in. For additional Regulatory Transparency Project webinars and podcasts and other content, visit us at RegProject.org. That’s RegProject.org, and on all major social media platforms. Until next time, we are adjourned.

 

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Conclusion:  On behalf of The Federalist Society’s Regulatory Transparency Project, thanks for tuning in to the Fourth Branch podcast. To catch every new episode when it’s released, you can subscribe on Apple Podcasts, Google Play, and Spreaker. For the latest from RTP, please visit our website at www.regproject.org.

 

[Music]

 

This has been a FedSoc audio production.

Edward Boling

Partner

Perkins Coie LLP


Alex Herrgott

President & CEO

The Permitting Institute


Mario Loyola

Senior Fellow

Competitive Enterprise Institute


Energy & Environment

The Federalist Society and Regulatory Transparency Project take no position on particular legal or public policy matters. All expressions of opinion are those of the speaker(s). To join the debate, please email us at [email protected].