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Department of Energy Exempts Many Small-Scale Energy Projects From NEPA Review

Beveridge & Diamond, P.C., October 12, 2011

On October 3, 2011, the U.S. Department of Energy (“DOE”) announced a final rule under which many small-scale energy projects can avoid detailed environmental review under the National Environmental Policy Act (“NEPA”).  See U.S. Dept. of Energy, NEPA Implementing Procedures, available at http://energy.gov/nepa/downloads/notice-final-rulemaking.  The rule establishes discrete new categorical exclusions for defined projects and revises several existing categorical exclusions in DOE’s NEPA regulations.  DOE anticipates that the changes will better align its categorical exclusions with the agency’s current activities and experience; modernize its regulations to reflect advancing technology, operational practices, and regulatory requirements; and facilitate NEPA compliance by allowing for more efficient environmental reviews.  Due to the limited applicability of the exclusions, however, it is uncertain whether those effects will be particularly far-reaching.  

Background

NEPA requires federal agencies to prepare an environmental impact statement (“EIS”) for all “major Federal actions significantly affecting the quality of the human environment.”  42 U.S.C. § 4332(2)(C).  When an agency determines that a certain type of action does not normally have a significant individual or cumulative effect on the environment, the agency may issue a categorical exclusion, which allows qualifying activities to bypass the EIS requirement.  In that way, agencies may conserve limited resources and focus their attention on actions that are most likely to cause significant environmental effects. 

DOE’s NEPA Rule

DOE’s NEPA rule establishes twenty new categorical exclusions.  The new categorical exclusions include exclusions for stormwater runoff control; small-scale indoor research and development projects using nanoscale materials; experimental wells for injection of small quantities of CO2; small-scale renewable energy research and development and pilot projects; solar photovoltaic systems; solar thermal systems; wind turbines; biomass power plants; and methane gas recovery and utilization systems – among others.  Each new categorical exclusion has defined qualification criteria (e.g., acreage, location, and height limitations) to ensure that the covered actions normally would not have the potential to cause significant effects. 

Before DOE may apply a categorical exclusion to a particular proposed action, the agency must determine that (1) the proposed action meets the requirements of an established exclusion, (2) there are no extraordinary circumstances related to the proposal that may affect the significance of its environmental effects, and (3) the proposal is not “connected” to other actions with potentially significant effects, is not related to other actions with cumulatively significant effects, and has not been improperly segmented to created an appearance of insignificant environmental effects.  Actions that do not satisfy these requirements must undergo traditional NEPA review. 

Implications

While DOE estimates that the changes to its NEPA regulations will result in $100 million in savings over the next decade and will streamline the environmental review process, it is uncertain whether the new categorical exclusions will make a substantive difference to many in the energy industry.  The qualification criteria attached to the exclusions render each narrowly drafted and limited in scope. 

For example, the new categorical exclusion for wind turbines applies to the installation, modification, and removal of “a small number” of commercially available wind turbines.  DOE explains that it considers “a small number” of turbines to be “generally not more than 2,” and that each of those turbines “generally” must have a total height less than 200 feet (measured from ground to maximum vertical blade rotation).  In addition, the turbines must be located on land, “within previously disturbed or developed areas,” more than 10 nautical miles from an airport or aviation navigation aid, and more that 1.5 nautical miles from a federal government weather radar.  Finally, the proposed action must not have the potential to cause significant impacts on bird or bat populations or to people (from effects such as shadow flicker, other visual effects, or noise). 

The above wind turbine restrictions are similar in type and effect to restrictions that apply to almost all of DOE’s categorical exclusions, and consequently most commercial energy projects will not qualify for an exclusion.  As a result, those projects will remain subject to NEPA’s more detailed environmental review requirements.  For those actions that do qualify for a categorical exclusion, however, DOE’s new rule offers the possibility of cost and resources savings.

For more information on these categorical exclusions or their implications for a specific project, please contact Parker Moore at (202) 789-6028, pmoore@bdlaw.com or Stephen Richmond at (781) 416-5710, srichmond@bdlaw.com.

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