Federal Efficiency/Streamlining: CEQ Issues New NEPA Guidance Documents

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The Council on Environmental Quality (CEQ) released two handbooks under the federal National Environmental Policy Act (NEPA) on March 5, 2013, that provide regulatory guidance to "encourage more efficient environmental reviews." These documents follow criticism from business leaders in California and other states with strong environmental laws that NEPA requirements in many cases merely duplicate state or other federal obligations, adding delay and litigation opportunities, while providing no real benefit.

The first handbook, "NEPA and NHPA, A Handbook for Integrating NEPA and Section 106," was issued by CEQ and the Advisory Council on Historic Preservation. That guidance explains how to coordinate the National Environmental Policy Act and the National Historic Preservation Act (NHPA) processes. (Please see our Environment alert, "Integrating NEPA and NHPA Section 106 Reviews: New Guidance Document Provides Useful Advice, But Leaves Some Questions Unanswered," March 19, 2013, for more information.)

The second handbook, "NEPA and CEQA: Integrating State and Federal Environmental Reviews" (the subject of this alert), is a draft guidance document that provides an overview of NEPA and the California Environmental Quality Act (CEQA). The draft guidance advocates developing a combined review process to streamline environmental review, avoid redundancy and improve efficiency for projects in California. In part, the document can be seen as a response to problems day-lighted by the state's experience in obtaining federal "stimulus" funding, when shovel-ready projects that had already been subjected to strenuous CEQA review became mired in the NEPA process. This draft handbook is available for 45 days of public comment. The comment period closes April 19 at 5 p.m. EST.

The Draft NEPA/CEQA Handbook

The draft handbook, which was issued in conjunction with the California Governor's Office of Planning and Research, advocates that NEPA and CEQA documents can be successfully prepared jointly, despite the differences in the statutes. The draft handbook contains a useful description of the similarities and differences between NEPA and CEQA, and advocates the use of a memorandum of understanding (MOU) to help guide the process. It also contains a short description of the California Energy Commission (CEC) CEQA functional equivalent process. However, while many support the effort to better harmonize NEPA and CEQA requirements, for those looking for a practical guide or a meaningful regulatory report, the draft handbook will not be the solution. It is also questionable if the draft handbook's general assumption that joint environmental compliance documents will reduce delay and complexity in the review process. Indeed, practical considerations and experiences suggest that in many cases preparing two documents (one state and one federal) will create a more efficient review process, until fundamental regulatory streamlining measures are adopted.

The draft handbook essentially makes two recommendations:

1. Recommendation That State and Federal Lead Agencies Coordinate Efforts Under an MOU

The draft handbook recommends that the state and federal lead parties enter into an MOU identifying the overlapping areas of review and area where each agency will cover additional issues, because of the differences between CEQA and NEPA. This is a long-standing recommendation, which can be supported to the extent that a joint document makes sense and will be prepared. Somewhat blunting its usefulness, the draft handbook does not provide a high level of detail regarding what an MOU should include. Therefore, MOUs will need to continue to be developed on a case-by-case basis. Similarly, for certain state-federal agencies that must frequently work together closely, the level of detail in the MOU will not provide much new guidance. For example, the California Energy Commission (CEC), which has its own, intense process that has been certified as the functional equivalent to CEQA, works with a number of federal agencies (e.g., Bureau of Land Management, Department of Energy). The draft handbook cannot be expected to provide much relief, despite the fact that the guidance includes a brief description of the CEC's process.

2. Recommendation That State and Federal Lead Agencies Prepare a Joint NEPA/CEQA Document

At a more fundamental level, the draft handbook presumes that the most efficient and effective approach to federal/state project environmental reviews in California is to prepare a joint NEPA/CEQA document. While there can be efficiencies in preparing a joint document, the advantages and disadvantages to preparing a joint document are project specific, and various strategic considerations not discussed in this draft guidance come into play. For example, in many cases the federal issues raised by a state project are much more limited than those evaluated under the state law. For example, often the Army Corps of Engineers will have only a "small federal handle" in reviewing permits for dredge and fill, and therefore, it will only look at the aspects of the project over which they have jurisdiction. The full project, however, must be evaluated in its entirety under CEQA. In evaluating whether it will add efficiencies to prepare a single document, project proponents must evaluate whether federal participation (and potential downstream litigation) over the entire document will speed or delay the project. It is recommended that in evaluating options, consideration should be given to whether close coordination rather than a combined document makes best sense for the project.

Navigating the Permitting Process

Holland & Knight has extensive experience helping clients navigate the federal and state permitting process, including advising on joint as well as independent CEQA and NEPA documents and keeping the environmental review process on track and on time. If you would like assistance in commenting on this guidance document or assistance in a specific project, please contact the authors of this alert or another member of our West Coast Land Use and Environment Group. 

To ensure compliance with Treasury Regulations (31 CFR Part 10, §10.35), we inform you that any tax advice contained in this correspondence was not intended or written by us to be used, and cannot be used by you or anyone else, for the purpose of avoiding penalties imposed by the Internal Revenue Code.