Presidential Directive Mandates Expansive and Likely Unlawful No Net Loss Compensatory Mitigation Requirement for Most Federal Development Permitting

Posted on November 12, 2015 by Jeffrey Lepo


On November 3, 2015, President Obama issued a Presidential Memorandum establishing policies that are a significant departure from existing practice regarding compensatory mitigation for effects to natural resources from most federally approved projects.  The Memorandum, entitled “Mitigating Impacts on Natural Resources from Development and Encouraging Private Investment,” applies to all permits and authorizations issued by the Department of Defense (e.g., the U.S. Army Corps of Engineers), the Department of Agriculture (e.g., the Forest Service), the Department of Interior (e.g., BLM, USFWS, Bureau of Ocean Energy Management, etc.), EPA and National Oceanic and Atmospheric Administration  (e.g., National Marine Fisheries Service (NMFS) ), including actions taken by USFWS and NMFS pursuant to the Endangered Species Act.  Although it cannot be known today how the new policies will ultimately be implemented, the Memorandum is, at least as written, both anti-development and potentially draconian. 


The new Memorandum states that it is establishing certain policies premised upon “a moral obligation to the next generation to leave America’s natural resources in better condition than when we inherited them.”  In furtherance of this moral obligation, the President has established it to be the policy of the identified federal bodies (and all bureaus and agencies within them):


·         To avoid and to minimize harmful effects to land, water, wildlife and other ecological resources (natural resources), and to require compensatory mitigation for, the projects they approve.


·         To establish a net benefit goal or, at a minimum, a no net loss goal for mitigation of the natural resources each agency manages that are important, scarce or sensitive.


·         To give preference to advance compensation mechanisms in establishing compensatory mitigation.  “Advance compensation” is defined to mean a form of compensatory mitigation for which measurable environmental benefits (defined by performance standards) are achieved before a given project’s harmful impacts to natural resources occur.  This policy preference appears to somehow contemplate that compensatory mitigation will be achieved before the project is constructed and operated.


·         To use large-scale plans to identify areas where development is most appropriate, where natural resource values are irreplaceable and development policies should require avoidance, and where high natural resources values result in the best locations for protection and restoration.


The Memorandum also establishes certain deadlines for action, principally by the agencies of the Department of Interior (e.g., one year deadline for BLM to “finalize a mitigation policy that will bring consistency to the . . . application of avoidance, minimization and compensatory actions [f]or development activities and projects impacting public lands and resources.”; one year deadline for USFWS to finalize compensatory mitigation policy applicable to its Endangered Species Act responsibilities).


Some federal laws (e.g., Clean Water Act Section 404 permitting for filling of waters of the United States) already have well-developed compensatory mitigation programs; however, most federal permitting schemes have not been interpreted or implemented to authorize or require compensatory mitigation, let alone at no net loss or net benefit levels.  Accordingly, to the extent that the Memorandum is intended to require net benefit or no net loss compensatory mitigation through many/most federal permitting programs, such a directive would be a significant departure from existing practice, of untested legality, and arguably contrary to existing law.


Moreover, to demonstrate that compensation has occurred at a net benefit or no net loss, unless the adverse effects are offset through generation or preservation of in-kind resources (e.g., a duck for a duck), the “damage” to affected natural resources must first be valued.  Accordingly, if implemented so that compensatory mitigation is broadly required, the policy could lead to an extensive, time consuming and complicated valuation process.  One worst case scenario would be for this policy to result in some form of new natural resources damages assessment, the time and expense for which would be challenging to rationalize in the context of a development proposal where cost and time are relevant (i.e., for every development project).


Unless the Memorandum is rescinded or feebly implemented, or its implementation is held unlawful, it has significant strategic, permitting, legal and financial implications for many, if not most, major development projects.  Of course, it is likely to be difficult or impossible to challenge the new policies established in the Memorandum, except on a project-by-project permit-by-permit basis.  As such, the pressure for project proponents to navigate (rather than litigate) the new policies will be substantial. 

What Direction Is The Wind Blowing?

Posted on August 16, 2013 by Gregory H. Smith

Ever since the shock of the oil embargo in 1973 we have been a nation in search of a comprehensive, sound energy policy. It was only a year later, in response to the proposal by Aristotle Onassis to locate an oil refinery on the coast of New Hampshire, that the New Hampshire Legislature adopted the first version of the State’s energy facility siting law.

Today, New Hampshire’s siting law, representing a balance of the need to develop new energy facilities with appropriate protection of the environment, preempts local authority and requires each project to undergo a rigorous comprehensive, consolidated evaluation before a  panel of high-ranking State officials from the several different departments having jurisdiction over all the relevant permits. To obtain all State permits and a Certificate from the siting committee, the applicant must be prepared to present the project in a consolidated process, subject to formal discovery, at an adjudicative hearing before the committee. Interested parties and municipalities may intervene and the Attorney General appoints Public Counsel for the case to represent the broad public interest. To take positions in the broad public interest, Public Counsel is charged with the responsibility to represent the interests of the public as a whole, and not simply the narrower positions adopted by intervening parties. To discharge this responsibility, which derives directly from that of the Attorney General in all other cases, the Public Counsel must take positions that balance the public interest in developing new, diversified energy facilities and the need to take into account environmental regulation.

This highly structured, energy facility permitting process is significant regionally and nationally because its standards tend to drive the design of interstate facilities. Current energy policy and its direction may be discerned from trends reflected in the written decisions of the siting committee over time.  Other states may be developing approaches to these issues.

Beginning in the late 1990s, a steady stream of energy projects have been presented to the committee. Until the mid-2000s, the majority of those projects involved fossil fuel generation, and in particular natural gas generating stations and transmission lines. As public policy, driven by concerns for global warming, has put increasing emphasis on renewable energy sources, there has been a significant increase in proposals to construct wind energy facilities. What is most striking from this perspective is that no energy project was rejected until 2013, although some facilities were subject to hundreds of conditions in their certificate.

This year, a proposed 30 megawatt wind farm in Antrim was rejected on its “aesthetics”, an indisputably highly subjective standard in search of criteria that will avoid arbitrary and capricious adjudications. Three previous wind power projects have all been approved with essentially the same characteristics, but for the first time the committee, at the urging of public counsel, has declined to approve the project rather than setting forth criteria and conditions that would bring essential predictability to this important technological advance in energy production.

The region and the nation will be well served by a steady expansion in the number of renewable energy projects, and this opportunity has the attention of large, even international, experienced and capable developers. Does the rejection of the Antrim project, despite public support, on the basis of the objections of special interests actively supported by public counsel risk a slowing down or abandonment by developers to the detriment of the region’s public interest in a diversified energy portfolio? Is it coincidence that a wind energy project was rejected recently in Maine, also on highly subjective grounds of aesthetics, a case that was referenced in the New Hampshire proceedings? And shouldn’t we ask whether advancing wind turbine technology is something we find in most places attractive, when it represents a great benefit to the environment and the public interest?

These cases bear watching. The New Hampshire case appears to be headed to the State Supreme Court. Will it turn out that these developments represent a turning away from favorable conditions promoting wind energy, so that wind energy development will decline in the years ahead? For environmentally sound economic development in this region and elsewhere we should hope not.

Is Massachusetts Showing the Way Towards a Comprehensive Environmental Law?

Posted on April 25, 2008 by Seth Jaffe

I.          Introduction

In Massachusetts, the Executive Office of Energy and Environmental Affairs (EEA) recently announced two significant new initiatives. In October 2007, Massachusetts became one of the first states in the nation to require assessment of greenhouse gas emissions as part of an environmental policy act review process, issuing its final MEPA Greenhouse Gas Emissions Policy and Protocol (“GHG Policy”). The policy requires proponents of projects subject to the Massachusetts Environmental Policy Act, or MEPA, M.G.L. ch. 30, §§ 61-62I, to assess the greenhouse gas impacts of such developments. The requirement applies not only to direct impacts, such as stack emissions, but also to indirect impacts, such as electricity demand and traffic generation.

Second, In January 2008, EEA issued a draft guidance for public comment on “Integrated MEPA/Permitting Review.”  The purpose of the Integrated Review Guidance is to make the MEPA process the true focus of a comprehensive review of project permitting, in order to avoid the more haphazard coordination between MEPA and permitting agencies that has been the rule in the past. 

Both of these developments are important in their own right for anyone practicing environmental law or doing development in Massachusetts. However, they are significant for another reason as well -- in both of these efforts, one can detect a glimmer of an effort by EEA to craft one comprehensive environmental protection statute for Massachusetts.

II.         Background; the Current Balkanized World of Environmental Protection

Any environmental attorney who practices across the full alphabet soup of environmental statutes -- RCRA, CWA, CAA, TSCA, CERCLA, FIFRA (not to mention their state counterparts) -- has experienced the frustration of finding that a cost-effective solution to an environmental problem is precluded by a provision of some other environmental statute. Clients, who don’t see the world as a random amalgamation of statutes, but through the prism of a specific facility or operating unit, experience this problem acutely. Unfortunately, that is not the way legislators see the world; legislators address one problem at a time, as such problems are brought to their attention by constituents or the news media. Love Canal leads to CERCLA. Acid rain leads to SO2 regulation under the Clean Air Act. PCB problems lead to TSCA. Now, concerns over global climate change may lead to regulation of greenhouse gases. Unfortunately, never the twain shall meet; or they meet, but not in a way that anyone could consider logical.

The closest that any statutes come to the promise of a comprehensive environmental statute is the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. §§ 4321-4370(f), and NEPA’s state analogues, such as MEPA. These statutes are intended to require examination of overall project impacts. However, NEPA has significant limitations as a comprehensive environmental statute. First, its jurisdiction is limited to ”major Federal actions significantly affecting the quality of the human environment…”. NEPA, § 102(2)(C), 42 U.S.C. § 4332(2)(c). Second, it applies only to proposed future projects; it cannot be used to assess the impacts of existing facilities. Finally, and most importantly, NEPA has very limited substantive teeth. It is a purely informational statute. While an Environmental Impact Statement (EIS) that reveals significant potential impacts with no attempt by the proponent to mitigate those impacts may lead a permitting agency to deny necessary approvals, the substantive authority over a project remains with the permitting agencies.

Under NEPA, the agency proposing the action subject to NEPA prepares the EIS and then moves forward with the project, based on the conclusions of the EIS. A project opponent dissatisfied with the adequacy of the EIR must go to court, hoping that a federal judge will find the EIS inadequate. However, in Massachusetts, the project proponent must submit the Environmental Impact Report (we have to be different in Massachusetts; we have EIRs, not EISs) to EEA. EEA, after public comment, makes a formal determination whether the EIR complies with MEPA. EEA’s role in assessing the adequacy of the EIR -- including the statements in the EIR concerning how any adverse environmental impacts will be mitigated -- gives it a hook to use in requiring truly comprehensive review of new projects. 

Ultimate permitting decisions in Massachusetts are still made by other agencies given such jurisdiction by the various substantive environmental laws. Historically, participation by permitting agencies in the MEPA process has sometimes been fitful at best. The question environmental practioners are now trying to answer is whether these policies are simply the first steps by EEA to position the MEPA process as the focus of comprehensive environmental protection review in Massachusetts.

III.        The Details of the New Policies

If a project is subject to the GHG Policy, the project’s proponent must quantify the potential annual GHG emissions from the project in the EIR. Specifically, project proponents must assess potential GHG emissions from three different sources:

·                     Direct Emissions from Stationary Sources. Stationary sources include boilers, heaters, ovens, or furnaces (including periodic sources, such as emergency generators). 

·                     Indirect Emissions from Energy Consumption. Indirect emissions result from heating, cooling, electricity, and/or steam used at a project site. 

·                     Indirect Emissions from Transportation. Transportation-related emissions include emissions from employees, vendors, and customers. 

In other words, this policy is not applicable only to power plants, and it does not require assessment only of the direct GHG impacts of a project. Instead, it requires a comprehensive assessment of indirect impacts as well, including GHG emissions from travel to and from the project and indirect energy use associated with the project.

What About Mitigation?

Although the cost to prepare the required analyses will not be trivial, EEA has worked hard with the real estate industry and other stakeholders to try to craft approaches to assessing GHG impacts that will be manageable for project proponents. EEA has also put one other significant carrot before project proponents. If a proponent offers to implement “exceptional measures” to limit GHG emissions, EEA may allow the proponent to opt out of the GHG quantification analysis. However, at this point, it is not clear what would constitute such “exceptional measures.” Would electricity from a renewable source qualify? How about agreeing to design a building to a certain level of LEED certification?

Given EEA’s apparently real flexibility regarding the assessment side of the equation, the rubber will really meet the road for the GHG Policy in how EEA approaches mitigation. The GHG Policy is clear that it is not intended merely as a data gathering device. EEA repeatedly emphasizes that proponents will have to assess potential mitigation measures and must “explain which alternatives were rejected, and the reasons for the rejection.”

The GHG Policy could be seen as merely a tweak -- if a significant one -- to MEPA in order to address the significant threat posed by global climate change. However, the comprehensive nature of the policy, and EEA’s separate statements regarding the links between energy and environment (note the new name of the agency) and the importance of embedding concerns about climate change into all of its decisions suggest that EEA has greater hopes for the GHG Policy than as a mere tweak to MEPA.

The view that EEA is seeking to make MEPA a comprehensive environmental statute was made more concrete by EEA’s issuance of the draft policy on “Integrated MEPA/Permitting Review.” The purpose of the Integrated Review Guidance is indeed to fulfill the promise of MEPA as a comprehensive environmental protection statute. Although the Integrated Review Guidance is only draft, and will be utilized solely as a pilot project initially, the intent is clearly to make the MEPA process the true focus of environmental review for new development in Massachusetts, rather than simply as a tool to be utilized by the various permitting agencies, each operating in their own silos. The policy itself states that its purpose is “to make MEPA an integral part of permitting, rather than a separate process that precedes permitting.” 

IV.        Conclusions

It is too soon to predict the outcome of EEA’s apparent efforts to make MEPA a comprehensive environmental protection statute. First, only time will tell how committed EEA is to the project. Second, EEA remains limited by the jurisdictional authority it has been granted under MEPA. Third, as with NEPA, ultimate permitting decisions are still made by each agency pursuant to the authority granted the agency by the substantive statute requiring a permit. EEA has to date resisted efforts to mandate that agencies under EEA authority issue permits within a certain time period following completion of the review under the Integrated Review Guidance. Those agencies must comply with each statute they implement and good intentions will not justify in court an agency decision to ignore the provisions of one environmental statute in order to achieve a broader environmental benefit.

The real test of EEA’s current efforts will be whether it can find a way to assess cross-media environmental impacts, make a decision regarding whether a project is a net environmental benefit, and have that decision override narrower environmental statutes that would otherwise preclude a win-win outcome. What happens, for example, when the state Clean Water Act appears to require some treatment technology to mitigate an apparently small harm to the environment resulting from a water discharge, at a substantial cost in air emissions or decreased energy efficiency? There are also practical concerns regarding how agency personnel operate. What happens if the state Clean Water Act gives the Department of Environmental Protection sufficient authority to waive the discharge requirement, but the individual DEP employee reviewing the permit, who has worked on NPDES permits for her entire career, sees only the trees and not the forest? Persuading agency employees to pull in the same direction could be as significant an obstacle as negotiating the formal legal hurdles.

Until EEA figures out a way to reach the right environmental result across all media, the promise of a comprehensive environmental protection law will remain illusory. Stay tuned.


Seth Jaffe is recognized by Chambers USA, The Best Lawyers in America and Massachusetts SuperLawyers as a leading practitioner in environmental compliance and related litigation. He works on a wide range of environmental law issues, representing clients in the permitting/licensing of new facilities and offering ongoing guidance on permitting and enforcement related matters under federal and state Clean Air Acts, Clean Water Acts, RCRA, and TSCA. He also advises on wetlands and waterways regulation. Seth’s clients include electric and telecommunications utilities, companies in the printing and chemical industries, and education and health care institutions.

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