The White House released its long-awaited infrastructure plan outline last week. Leaving aside the funding proposals, the plan sets forth a number of potential revisions to the environmental permitting process for new infrastructure projects that may deserve a closer look (these are found in Part III of the infrastructure plan outline). Hogan Lovells has issued a detailed review of the broader infrastructure plan here, but we wanted to also briefly touch on a few points that could potentially impact the environmental review and permitting process for next-generation reactors by the U.S. Nuclear Regulatory Commission (NRC).
A number of these proposals as to environmental permitting have been floating around for a number of years, many on both sides of the aisle, and in particular concern the National Environmental Policy Act (NEPA). Even if the President’s proposal itself does not move forward, a number of them may find themselves in any final infrastructure bill or future legislation:
- Section 3(I)(A) – NEPA & Permitting Timelines: The proposal would establish a 21-month timeline for an agency’s NEPA review, and a 24-month permitting process from start to finish. The idea of setting deadlines for agency permitting actions has historically faced significant pushback over the years for a number of reasons—one being that this may encourage agencies to deny permits as a default when the deadline arrives. However, there have been successful cases where statutory timelines have led to efficient agency processing of permits. For example the Committee on Foreign Investment in the United States (CFIUS) reviews complex foreign investment transactions into the United States for national security risks in a one-to-three month timespan. Done properly amidst other reforms to NEPA, a timeline for NEPA reviews can lead to significant permitting efficiencies.
- Section 3(I)(B)(2) – Tailoring Discussion of Alternatives: One interesting proposal is tailoring the “Alternatives” discussion of a NEPA analysis. The “Alternatives” analysis is often termed the “heart” of NEPA, and “rigorously explores and objectively evaluates all reasonable alternatives including the proposed action.” It also drives a lot of the length of NEPA reviews, and is in need of reform. One issue is that agencies end up spending significant time and capital evaluating alternatives to a project that are not practically up for consideration or commercially feasible. The infrastructure plan proposes to exclude from NEPA “Alternatives” analyses those options “outside [the permitting agency’s] authority or outside the capability of the applicant.” A large part of nuclear plant environmental reviews concern alternatives that are simply not going to be pursued. Done right, a review of the scope of “Alternatives” analyses could yield significant benefits.
- Section 3(III)(A) – Performance-Based Pilot Projects: This program would select 10 projects to be evaluated along “environmental performance measures” in lieu of the typical NEPA process. The project applicant would commit to meet environmental parameters set by the lead federal reviewing agency (in this case the NRC) with public and interagency input. The program would “focus on good environmental outcomes rather than a lengthy environmental review process.” Candidates for the pilot program would be chosen “based on project size, national or regional significance, and opportunities for environmental enhancements.”
New nuclear reactor projects would be well-situated to be selected for such pilot programs. Moreover, the NRC has significant experience in pursuing performance-based regulation, as it has been attempting to implement a more performance-based regulatory framework for nuclear safety issues for some time. It could be a strong pilot lead agency to implement this concept for environmental reviews.
- Section 3(IV) – Judicial Review: The infrastructure plan proposes significant changes to the framework for reviewing NEPA determinations. Among them is a proposal to limit injunctions to “exceptional circumstances.” The courts have already cut back on injunctions in NEPA cases since a seminal Supreme Court decision in Winter v NRDC (which also eliminated the notion that an injunction is automatic after a NEPA violation). However, the threat of a NEPA injunctions drives agencies to ‘throw in the kitchen sink’ in their NEPA reviews to prevent such a deleterious outcome, greatly driving up review time and cost. Reducing the threat of injunctions when agencies conduct reasonable reviews will certainly be controversial, but if done right could allow agencies to focus on the key environmental issues and only supplement their review when needed.
Another proposed change to the NEPA judicial review process would be to provide more certainty that data collected the first time around remains valid over time. Agencies would be instructed to develop guidance regarding when new, more current data is required for a NEPA review as time passes, and courts would defer to this guidance. This provision may face legal challenges, but targets another area where agencies are forced to do more than may be legally required in order to avoid a court injunction. The process of data gathering, especially for nuclear projects, is time consuming and costly, and represents an area where greater certainty can markedly reduce permitting costs.
Apart from the environmental permitting modifications, a number of the funding programs could also prove beneficial for next-generation reactors if developed further. This includes, for example, $20 billion set aside for a “Transformative Projects Program” for “bold, innovative, and transformative infrastructure projects” that face unique risks but otherwise could be commercially viable. Such programs could bring much-needed financing to new reactor developers looking to bridge the funding “valley of death” before a first plant is constructed.
For more on the White House infrastructure plan, or on environmental permitting for nuclear reactors, please contact the authors.