NEPA Compliance For Projects Funded Under The American Recovery And Reinvestment Act Of 2009: Is Your Project 'Shovel Ready'?

The American Recovery and Reinvestment Act of 2009

("ARRA"), provides a $787 billion economic stimulus

package with funding for investments in infrastructure, energy,

healthcare, education and science, among other sectors. With

billions of dollars in federal stimulus funds available, the ARRA

presents private firms with opportunities for financing eligible

projects. For example, federal stimulus funds are available for

certain affordable housing projects, as well as transportation

infrastructure, including highway, bridge, road, transit, and rail

improvements that may be associated with a development project.

Stimulus funds are also available for wastewater and drinking-water

projects, as well as environmental clean-up and remediation, and a

wide range of other construction projects.

ARRA-Funded Projects Require NEPA Compliance

The award of any discretionary grant, loan, loan guarantee or

other funding requires the federal agency granting the assistance

to comply with the National Environmental Policy Act

("NEPA"), the federal environmental review statute. NEPA

compliance will be required for projects involving federal funds,

even if the project has already completed environmental review

under an earlier verson of NEPA or an equivalent statewide program.

Depending on the scope of the project, obtaining NEPA compliance

could seriously delay construction of the project and potentially

subject the project to more delay from litigation challenging the

adequacy of environmental review. Because one of the primary goals

of ARRA is to inject federal stimulus funds into the economy as

quickly as possible, Congress considered exempting ARRA projects

from NEPA compliance. The final bill, however, does not contain a

NEPA exemption. Instead, section 1609(b) of ARRA requires that

federal agencies devote "adequate resources" to ensure

that NEPA review of ARRA projects is "completed on an

expeditious basis" using the "shortest existing

applicable process." ARRA requires certain projects,

particularly those involving renewable energy, to commence

construction by September 30, 2011.

Streamlining The NEPA Process

The requirement that environmental review be

"expeditious" and use the "shortest" applicable

process is a direct signal to federal agencies to use a streamlined

environmental review process. Therefore, the ARRA appears to favor

and encourage Categorical Exclusions ("CatEx") of

Projects from NEPA, or initiation of Environmental Assessments

("EAs")...

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