On April 22, 2021, U.S. President Joe Biden celebrated Earth Day with a pledge to cut emissions by 50 to 52% from 2005 levels. The pledge is only a small portion of Biden’s broader plan to decarbonize the U.S. economy entirely by 2050. While environmentalists praise the efforts of Biden’s administration, there are concerns about how these shifts in environmentalism will affect America’s economy and specifically one of the largest sectors of the economy, real estate development.
In 2020 alone, $4.3 trillion, or 21%, of the U.S. GDP was made up of commercial, residential, institutional, and infrastructure development and operations. The development industry supports over 28 million American jobs and adds inventory to attract new businesses and jobs across the country, according to the 2021 Annual Report from the NAIOP Research Foundation.
It prompts questions surrounding the intersections of environmental regulations and developments. How can companies balance keeping up the demand across residential and commercial developments while also adhering to the grower regulations surrounding land use and the building process? Industry leaders answer these questions by first understanding the current regulations under the National Environmental Policy Act (NEPA).
The role of NEPA
According to the United States Environmental Protection Agency, NEPA was signed into law in 1970 under President Richard Nixon and set up as a foundation for environmental protections that were reasonable, balanced, and transparent.
The NEPA’s most basic functions include a review process under government agencies to ensure any construction projects do not cause any significant environmental and public health impacts. The act intends to keep government agencies and potential projects as transparent as possible and allow local communities to voice an opinion about the greater effects a development could have on the local environment.
NEPA applies to all federal agencies and any major projects they intend to execute, including power plants, bridges, and roads. The process is kicked off with a proposal, especially if the construction project requires federal resources. Then, the proposal falls under three different types of analysis:
- Categorical Exclusions – the lowest level of analysis and concludes the group of actions does not individually or cumulatively cause an effect on the quality of the surrounding environment. A simple example would be reconstructing a hiking trail. These exclusions are based on previous experiences with specific actions and found no significant impacts on public health.
- Environmental Assessment (EA)- If there is any uncertainty about environmental effects, agencies have to prepare a concise evaluation called an Environmental Assessment. The EA includes crucial details about the project and helps identify any ways to reduce environmental or societal impacts. It only determines if there are “significant” impacts – not what those impacts are. If the agency determines that the EA will not have significant impacts, the agency will issue a Finding of No Significant Impact (FONSI).
- Environmental Impact Statements (EIS) – It’s the next step if there are significant impacts on the environment or public health from the EA. The EIS is an incredibly detailed report with rigorous expectations for stating the impacts. The EIS includes several aspects that discuss environmental consequences, potential alternatives, agencies, and public opinion from affected community members. If a project goes through the EIS analysis, there is a minimum 30-day “wait period,” where agencies consider whether they will approve the proposal, then the agency issues a Record of Decision stating the decision, any alternatives it considered, and the agency’s plans for mitigation.
Each analysis contains a significant amount of time and effort as developers also have to fit their projects into the expansive guidelines of federal environmental goals. Some agencies may cooperate to help a given project, including the EPA or the Council on Environmental Quality. However, each federal agency has its own exclusions, so it is critical to work with an attorney who understands the NEPA review process and how to prioritize a CATEX analysis.
The imperfections in the NEPA review process
NEPA has been a hotly debated act since its inception. Almost every decade includes a proposition or executive order where restrictions are reduced to help streamline projects and stimulate local economies. Some of the biggest arguments for either repealing or reducing NEPA include government inefficiency, lack of accountability, vague wording with limiting actions, and general oversights on specific communities.
All these negative side effects tend to put developers in the toughest positions because they need to adhere and comply with current NEPA standards to secure federal funding and facilitate a positive perception for the public review phase.
One of the most argued aspects of NEPA reviews is defining a “reasonable alternative.” Throughout the EA and EIS review stages, many projects stall because the statements do not provide sufficient alternatives according to the agency’s standards. It is up to the agency to determine whether an alternative is feasible, economical, and meets environmental expectations. It makes project leaders consider several options and often think “outside the box” to accomplish their goals.
Achieving constructive results under strict regulations
The most proactive way to work with NEPA and successfully continue a project is using the review process to your advantage. In most cases, developers do not want to destroy or even damaged the surrounding environment. They want to add value to Oregon and its communities.
The best way to do that is to hire an attorney who understands federal regulation and also the complexity of environmental law. The right support allows you to understand the potential in a specific project and how to work around any environmental obstacle that hinders development.