Testimony of Nancy Sutley, Chair of the Council on Environmental Quality Before the U.S. Senate Committee on Environment and Public Works

Before I move to discuss NEPA, I want to express my condolences to the families of the 11 people who lost their lives in the explosion and sinking of the Deepwater Horizon. 

I also want to stress that the Administration is committed to aggressively responding to the environmental crisis in the Gulf, and to protecting the lives and livelihoods of the people in the region.

Last week, the President sent Congress a legislative package proposal that would help individuals manage the claims process and enable the Federal government to speed assistance in the event that the spill gets worse and if the responsible parties are not paying claims to affected individuals quickly and fairly.  The legislation provides states with additional help to provide one-stop services for those affected by the oil spill, including filing claims with BP, and seeking other assistance that may be available, including Small Business Administration Disaster Loans. The Administration’s proposal enables the President to trigger and mobilize, in partnership with states, new forms of assistance – such as Unemployment and Nutrition Aid – if the claims process established by the Oil Pollution Act is not sufficient to meet the needs of affected individuals. It also enables the government to recoup the expenses of providing these services from the responsible parties.

In 1970, President Nixon signed the National Environmental Policy Act into law, which passed Congress with overwhelming bipartisan support.  In passing NEPA, Congress recognized that nearly all Federal activities affect the environment and created an affirmative obligation for Federal agencies to consider the effects of their actions on the quality of the human environment.   As part of NEPA, Congress established the White House Council on Environmental Quality (CEQ) within the Executive Office of the President to work across the Federal government on agency implementation of the environmental impact assessment process. 

Today I will provide you with an overview of the NEPA process and discuss how it relates to agency actions and informs Federal decision-making.  I will discuss CEQ’s oversight role and the Minerals Management Service’s (MMS) application of NEPA to offshore drilling decisions.  I will also discuss how CEQ is moving to update its oversight of agency NEPA processes and practices.

NEPA provides a tool for informed agency decision-making.  Every agency in the Federal Government has an affirmative obligation to comply with NEPA.  The NEPA environmental review process begins when an agency proposes an action.  The agency must determine if the action has the potential to affect the quality of the human environment. Agencies may apply one of three levels of NEPA analysis. They may: prepare an Environmental Impact Statement (EIS); prepare an Environmental Assessment (EA); or apply a Categorical Exclusion (CE).

Under NEPA, when the proposed action has the potential for significant environmental effects, agencies are required to prepare an Environmental Impact Statement.  In those situations where there is uncertainty over whether there will be significant effects, the agency can prepare an Environmental Assessment to determine whether to prepare an EIS or make a Finding of No Significant Impact.  Categorical Exclusions are used for the categories of actions that an agency has found do not typically result in individual or cumulative significant environmental effects or impacts, and are based on agencies’ past experience with similar actions. 

NEPA charges the Council on Environmental Quality (CEQ) with working with Federal agencies on their implementation of the Act. 

In 1978, CEQ issued regulations implementing the procedural provisions of NEPA. Those regulations apply to all Federal agencies and put into place the basic framework for all NEPA analyses.  The regulations required Federal agencies to establish their own NEPA implementing procedures, and to ensure that they have the capacity, in terms of personnel and other resources, to comply with NEPA.  Agencies have more than 30 years experience in implementing NEPA.  CEQ periodically issues guidance and other documents, such as guides and handbooks.  CEQ also convenes meetings with Federal NEPA contacts to provide CEQ’s interpretation of NEPA requirements and focus on how agencies can improve their NEPA analyses and documents.  Through case law, the Federal courts and the Supreme Court have established that the agencies can rely on CEQ’s interpretation of, and guidance on, NEPA.

Agencies establish their NEPA implementing procedures, which tailor the CEQ requirements to a specific agency’s authorities and decision making processes.  CEQ provides assistance when agency-specific procedures are developed.  An agency’s NEPA procedures are not finalized until CEQ reviews proposed procedures and determines that they are in conformity with NEPA and the CEQ regulations.  Any subsequent revisions or changes to the agency procedures are subject to the same CEQ oversight.  Periodically, CEQ also reviews agency’s NEPA implementing regulations and procedures.

On occasion, CEQ engages with Federal agencies on specific NEPA reviews.  This typically occurs when an agency requests assistance, or when stakeholders raise concerns with the NEPA process as it applies to a particular project or interest.  For example, in the recent Corporate Average Fuel Economy (CAFE) rulemaking, CEQ worked with National Highway Traffic Safety Administration and the Environmental Protection Agency to ensure NEPA compliance for the decision making that led to the rule.

More recently, CEQ has been actively engaged in ensuring agency NEPA compliance for projects and activities funded under the American Recovery and Reinvestment Act.  On behalf of the President, CEQ submits quarterly reports on NEPA and the Recovery Act to this Committee and to the House Natural Resources Committee.  Currently, the agencies have completed more than 95 percent of the NEPA reviews required for projects and activities funded under the Recovery Act.

CEQ provides informal and formal advice and review of NEPA analyses.  Occasionally, CEQ  receives formal referrals for inquiry based on either an alleged violation of NEPA, the environmentally unsound nature of a proposed action, or a combination of those.  The referral process was established in the Clean Air Act and the CEQ NEPA regulations.  In the forty years since NEPA was enacted, CEQ has handled 27 formal referrals.  In all its interactions with the agencies, CEQ takes into account the extensive body of law developed over the years as courts interpret NEPA in fact-specific cases. 

On February 18, 2010, the Obama Administration moved to update NEPA practice.  CEQ released draft guidance that will assist Federal agencies to meet the goals of NEPA, enhance the quality of public involvement in governmental decisions relating to the environment, increase transparency and ease implementation. The draft guidance clarifies: 1) when and how Federal agencies must consider greenhouse gas emissions and climate change in their proposed actions; 2) the appropriateness of “Findings of No Significant Impact” and when there is a need to monitor environmental mitigation commitments; and 3) the use of Categorical Exclusions. CEQ is also enhancing public tools for reporting on NEPA activities.

I would like to specifically discuss CEQ’s draft guidance as it relates to Categorical Exclusions.  Categorical Exclusions have been used by Federal agencies since the 1970s.  When experience has shown that certain groups of actions are unlikely to have significant environmental effects, agencies can establish CEs.  In recent years, the expansion of the number and range of activities categorically excluded, combined with the extensive use of CEs and the limited opportunity for public involvement in CE application, has underscored the need for additional guidance about the development and use of CEs. Categorical Exclusions are the most frequently employed method of complying with NEPA, underscoring the value for guidance on CE development and use.

The draft guidance clarifies when it is appropriate for agencies to establish CEs, how agencies should apply existing CEs, and that agencies should conduct periodic reviews of CEs to assure their continued appropriate use and usefulness.  It also recommends greater documentation and public involvement in the process.

In the proposed guidance, CEQ made clear that it will increase its review of agencies’ use of CEs.  Many have commented on this proposed guidance, and CEQ is reviewing and considering all public comments as we finalize that guidance. 

NEPA applies to every stage of Federal decision making related to offshore oil and gas exploration and development.

The Mineral Management Service (MMS) is required to apply NEPA to drilling decisions in the outer continental shelf, beginning with the initial planning of outer continental shelf leasing, and ending with a decision on a specific well.

In the case of the Gulf of Mexico leases, MMS prepared several NEPA analyses.  Environmental Impact Statements (EIS), the most intensive level of analysis, were prepared at two decision points.  First, in April 2007, MMS prepared a broad “programmatic” EIS on the Outer Continental Shelf Oil and Gas Leasing Program, which includes the five-year lease plan for 2007-2012.  Also, in April 2007, MMS prepared an EIS for the Gulf of Mexico OCS Oil and Gas Lease Sales in the Western and Central Planning Areas, the “multi-sale” EIS. 

In October 2007, MMS completed another NEPA analysis, an Environmental Assessment (EA), tiered off the multi-sale EIS, for Central Gulf of Mexico Lease Sale 206.  This is the sale in which the lease was issued for the location that includes the Deepwater Horizon well.

In addition, companies wishing to explore and develop oil and gas offshore submit their offshore operations plans for MMS approval.  MMS approved BP’s development operations based on a programmatic EA that MMS prepared in December 2002.

In the decision to approve the Exploration Plan that included the drilling of the Deepwater Horizon well, MMS applied its existing Categorical Exclusion (CE) review process.

Under section 11 of the Outer Continental Shelf Lands Act, 43 U.S.C. section 1340, MMS has 30 days to complete its environmental review and act on the application to permit drilling.  The Administration, in its supplemental budget request sent to Congress on May 12, 2010, seeks to change that timeline to a minimum of 90 days.

The Categorical Exclusion used by MMS for Deepwater Horizon was established more than 20 years ago.  At that time, CEQ reviewed and provided a conformity letter stating CEQ’s determination that establishing the CE was in conformity with NEPA and the CEQ regulations.  CEQ does not review every application of a Categorical Exclusion, every agency project, or the NEPA review for every agency project.

To ensure that NEPA is being properly applied, CEQ and the Department of the Interior announced last week a review of MMS’s NEPA procedures. CEQ has begun reviewing MMS NEPA procedures for OCS oil and gas exploration and development, including the five-year plan, the oil and gas lease sales, and the exploration well permitting process.  This review is to ensure that NEPA is being applied in a rigorous way that meets its intent.  I expect this review to be completed by mid-June.    
 
In closing, NEPA is a useful tool that has served the nation for the past 40 years.  The Deepwater Horizon event reminds us of the need for thorough environmental review of offshore oil and gas drilling projects, and I am committed to working with MMS to ensure it applies NEPA in a manner that meets the goals of the Act.

Thank you for the opportunity to testify today, and I look forward to your questions."

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