Celebrate Earth Day with Higher Infrastructure Costs

With Earth Day 2022 set for April 22, the Biden Administration has used this week to highlight several federal actions that, it argues, are beneficial for the environment. The most striking of these was the release on Wednesday of the Phase 1 Final Rule under NEPA, the National Environmental Policy Act; which seeks to undo the “streamlining” of the Act that was proposed under Donald Trump.

NEPA is one of those federal policies that most of us in the general public don’t interact with on a daily basis, but it shapes the permitting, construction, and implementation of every federal project that has an environmental impact. The initial NEPA law (sometimes called the ‘Magna Carta’ of environmental legislation), was passed in 1969 and signed in to law in 1970 by President Nixon and it requires Federal agencies to assess the environmental impact of proposed Federal actions. It applies to a huge array of actions; road and bridge construction, transmission lines, energy projects, broadband; and it extends to forest management and grazing on federal lands as well.

Since it was written, critics have said the law of affords “veto power” to too many stakeholders; one NEPA lawsuit can freeze a jobsite or the permitting process until it’s resolved. This frustration found a receptive audience in the Trump administration, and, for the first time since it was passed, in 2020 the Council on Environmental Quality issued an updated Final Rule on NEPA that would have pared back the reporting requirements and tightened the guidelines on which impacts would need to be considered for a successful permit application. This rule was frozen by the Courts until 2023, however, and it was widely expected that Biden’s team would seek to re-write the final rule, similar to what they’ve done with WOTUS.

And that’s what happened. With the Biden CEQ releasing their Final Rule this week, we can now assess how it will impact the rollout of the huge pile of infrastructure funding approved by Congress last year. The response to the new Biden rule has been divided, with environmental groups largely cheering and agriculture, construction, and energy groups opposed; and even those cheering have concerns.

On Friday, April 22 on AOA I spoke with Michael Altman, the Manager of Regulatory Affairs at Associated Builders and Contractors, a trade association representing the national construction industry, and he highlighted the concerns they have about this new rule. Namely, the Biden plan expands the scope and coverage of nearly every aspect of NEPA. For the full text of the new rule from the administration, click here: https://www.whitehouse.gov/ceq/news-updates/2022/04/19/ceq-restores-three-key-community-safeguards-during-federal-environmental-reviews

These changes will vastly increase the amount of time spent preparing for and petitioning for permits, and that time will no doubt have a cost. And those costs will be added to already high materials costs and labor costs that are screaming higher for the construction industry as a whole; and all of these costs will shrink the number of projects that can be taken to completion with the funds provided by the Bi-Partisan Infrastructure Bill signed last year. Here is ABC’s comment on the rule: https://www.abc.org/News-Media/News-Releases/entryid/19377/nepa-rule-will-cause-needless-delays-for-small-businesses-and-increase-costs-for-taxpayers-says-abc

And, adding insult to injury on Earth Day, Washington Post reports that 42% of the projects currently stalled awaiting NEPA review are clean energy projects, and only 15% are related to fossil fuels. So this is a rule that will raise costs for everyone, misallocate resources, and hamstring the very investments this administration says they’re in favor of.

This rule is final. The only way to change the language of the rule issued on Wednesday is through the courts; challenges will no doubt be coming, but for the time being, this is the law of the land. And, it’s worth noting, this is only Phase 1. A Phase 2 final rule will likely be coming later this year, and we’ll be discussing those details on AOA as they emerge.

– Mike Pearson

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