National Energy Policies and the Environment: Can the National Environmental Policy Act Provide a Harmonizing Framework?

Energy policy in the United States is inextricably linked with questions of environmental protection. Thus, for example, the Obama administration will soon be called upon to decide whether to approve the Keystone XL pipeline, how much (and what kind) of regulation to impose on hydraulic fracturing for natural gas extraction, whether to regulate carbon emissions from existing coal-burning power plants, what proportion of federally owned lands should be devoted to mineral extraction, and whether to allow the expansion of oil and gas drilling in northern Alaska. Each of those pending decisions will not only affect the mix of sources available to meet the nation’s energy needs, but will also have immense consequences for the nation’s environment and, indeed, for the future of our planet.

This link between energy policy and environmental protection is nothing new. It has been evident at least since the beginning of the modern environmental era in the United States. Many of the precedent-setting judicial decisions throughout this era emerged from cases involving a potential clash between energy needs and environmental consequences. These have included disputes over the environmental impacts of coal leasing in the northern plains, offshore oil and gas leasing, geothermal development, hydroelectric power production that is potentially damaging to fish and other aquatic life, the issuance of patents to extract hardrock minerals, and the back end of the nuclear fuel cycle.

Despite this longstanding and apparent overlap of energy and environmental policy, it is perhaps unfortunate that energy law and environmental law in the United States are both based upon a disparate and complicated set of federal and state statutes, regulations, and policies. They exist in separate spheres, with occasional exceptions such as the amendments to the Federal Power Act that require the Federal Energy Regulatory Commission to take the impacts of hydroelectric power production on anadromous fish and other aquatic life into account when making licensing decisions on hydropower facilities. Notwithstanding this tendency toward fragmentation at the national level, one visionary statute may provide a valuable framework for harmonizing the nation’s important environmental concerns with its energy needs: the National Environmental Policy Act of 1969 (NEPA).

NEPA contains several components. Some of those are long-recognized and frequently implemented. Others have been virtually ignored since the statute’s enactment more than 43 years ago. The best known and most often referred-to provision of the Act is its “EIS requirement.” Sub-section 102(2)(C) requires federal agencies to prepare a detailed environmental impact statement (EIS) regarding proposals for major federal actions significantly affecting the quality of the human environment. This requirement has been satisfied numerous times by federal agencies with respect to agency-proposed energy projects and agency approvals of privately sponsored energy projects. Regrettably, however, its potential efficacy has been limited by unduly narrow interpretations by federal judges and inappropriate implementation by some federal agencies.

In a series of decisions—beginning with the 1980 case of Stryckers Bay Neighborhood Council v. Karlen—the U.S. Supreme Court has ruled that NEPA’s EIS requirement is purely a “procedural” provision. When they prepare environmental impact statements, federal agencies must fully “consider” the environmental consequences of their actions. However, in the Supreme Court’s view, NEPA’s EIS provision does not require those agencies to reach any particular decisions with regard to major projects—including energy-related projects—that the agencies propose. In other words, even if an EIS makes it crystal clear that an agency’s energy extraction, development, or distribution proposal will have devastating adverse environmental consequences, and even if the EIS also identifies alternatives that would achieve the agency’s energy policy goals with a less damaging environmental footprint, nothing in NEPA precludes the agency that prepared the EIS from proceeding with its original proposal. NEPA requires agencies to think about the environment and disclose the results of that process, but not to act in environmentally protective ways.

In addition, federal agencies have sometimes used reckless “shortcuts” to avoid giving risky projects the careful environmental reviews that current law still clearly mandates. A useful illustration of this phenomenon is the irresponsible manner in which the U.S. Department of Interior’s Minerals Management Service (now the Bureau of Ocean Energy Management, Regulation and Enforcement) misapplied the EIS requirement in the leasing of federally owned offshore lands during the years leading up to the Deepwater Horizon oil and gas blowout of 2010. As we (and Professor Sandra Zellmer) have explained in greater detail, MMS abused the EIS process when it provided a “categorical exclusion” from EIS preparation with respect to BP’s development and production plan for the Deepwater Horizon drilling rig. This administrative sleight-of-hand allowed BP’s deep ocean oil and gas drilling to proceed—with famously disastrous results—without meaningful consideration of the environmental dangers posed by this drilling operation. Similarly, MMS misused the EIS “tiering process”—a mechanism designed only to avoid analytical duplication—to camouflage its substitution of a vague and flawed overview of oil and gas drilling in the Gulf of Mexico for a thorough, detailed analysis of specific oil and gas drilling projects like BP’s Macondo well.

Similarly, agencies often prepare less thorough environmental assessments instead of environmental impact statements.  They sometimes justify doing so by contending that mechanisms to mitigate adverse environmental impacts that they have incorporated into their proposals will reduce the level of impacts below the significance threshold that requires preparation of an EIS. Yet, many courts have declared that these mitigation measures are not enforceable, notwithstanding agency reliance on them to avoid EIS preparation.

Notwithstanding these myopic judicial decisions and administrative evasions, however, NEPA’s EIS requirement remains a useful tool for injecting environmental factors into agency decisions concerning important energy issues. Although it may not mandate particular results, this portion of NEPA does often press federal agencies to “look before they leap” when considering energy policies and initiatives. Moreover, when properly implemented, it serves to bring to the attention of other federal agencies, state and local governments, and concerned members of the public, the possible hazards of specific federal proposals and policies in the energy arena. This knowledge can then be used to put pressure on the agencies or on executive or legislative oversight bodies to alter or abandon environmentally damaging proposals.

The potential benefits of NEPA are not limited to the statute’s EIS provision, however. Another provision of the statute may also promote the integration of environmental and non-environmental concerns with respect to federal energy policies. As discussed more fully here, section 102(1) of NEPA provides that, to the fullest extent possible, “the policies, regulations and public laws of the United States shall be interpreted and administered in accordance with the policies set forth in this statute.”  In fact, NEPA’s policies are broad, and unmistakably protective of environmental values. The statute’s express purpose is to “encourage a national policy which will encourage productive and enjoyable harmony between man and his environment” and to “promote efforts which will prevent or eliminate damage to the environment and biosphere and stimulate the health and welfare of man.” NEPA also declares it to be the “continuing policy” of the federal government to “create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic and other requirements of present and future generations of Americans.”

This largely overlooked directive of Congress—which is wholly separate from and independent of the EIS requirement—appears to provide fertile ground for the development and administration of environmentally sensitive federal energy approaches. It provides a firm legal basis for federal executive branch officials to interpret energy-related statutes and regulations—and to fashion new policies and regulations—that will encourage environmentally benign sources of energy. Moreover, sub- section 102(1) of NEPA may well provide environmental advocates with a basis for obtaining helpful judicial relief from energy-related proposals and policies that threaten to do environmental damage.

In sum, the National Environmental Policy Act has the potential to provide legal support for government officials and concerned citizens who favor energy policies that will benefit the human environment and the Earth’s climate. If it is reasonably implemented by courts and agencies, NEPA may prove to be an even more critical instrument for shaping a truly balanced and sustainable approach to the nation’s energy future than it has been so far.