Friday, June 3, 2011

Regional Governance and NEPA: Is an Interstate Commission a Federal Agency?

As I mentioned in an earlier post, New York Attorney General Schneiderman announced on May 31 that he would sue the federal government for failure to conduct "full environmental review" of the Delaware River Basin Commission's proposed regulations for hydraulic fracturing ("fracking" or "fracing") under the National Environmental Policy Act.   It appears that the suit has now been filed.  The proposed regulations challenged in the suit would allow the DRBC to approve certain aspects of proposed well pad construction and water withdrawals for natural gas drilling and fracking in the Delaware River Basin for ten-year periods and wastewater disposal for five-year periods.  Although the DRBC's approval of these activities would not constitute full approval of well drilling and fracking (state agencies still must grant a permit to drill and have other regulatory authority over the wells), the Commission's partial control of natural gas development in the Basin has been and will continue to be important under the new regulations.  The DRBC has proposed to require, for example, that well pads in the Basin be set back certain minimum distances from wetlands, water supply wells, and surface water intakes; that fracturing operators dispose of wastewater at in-basin wastewater facilities that "the Commission has approved . . . to accept non-domestic wastewater" or out-of-basin facilities for which the Commission has approved wastewater export and which have "obtained applicable state permits and approvals"; that water withdrawals for fracking not cause stream flow to dip below low-flow conditions at locations below water withdrawal points; and that permit applicants complete an Invasive Species Control Plan "if determined by the Commission to be necessary," among many other requirements. In other words, the proposed regulations seem to regulate important potential environmental impacts of natural gas development in the Basin.

Some of the interesting questions likely to arise in this case include whether prior and ongoing environmental studies conducted in the area adequately cover the current regulations and whether a regional interstate compact commission like the DRBC--which was approved by Congress and consists of four state governors' representatives and a federal Army Corps representative--must follow NEPA requirements.   The latter question of whether regional agencies are federal in nature or involve sufficient federal involvement to trigger NEPA requirements can perhaps easily be answered with a "yes" (more on that below), but it still provides a useful review of NEPA definitions for students.  And, more interestingly, according to the New York Times, the federal representative to the DRBC--Brig. Gen. Peter A. DeLuca of the Corps--has argued that the DRBC is not a federal agency.  I know of at least one other regional commission that has made this argument in a NEPA case, but the court didn't end up addressing it.  See  National Wildlife Federation v. Appalachian Regional Commission, 677 F.2d 883 (D.C. Cir. 1981).

As you know, "NEPA requires a federal agency to prepare an environmental impact statement (EIS) as part of any “proposals for legislation and other major Federal actions significantly affecting the quality of the human environment.”  Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55, 72 (2004) (quoting 42 U.S.C. 4332 (2)(C)).  As you also know, the Council on Environmental Quality's "regulations implementing NEPA define 'major federal action' to include 'actions with effects that may be major and which are potentially subject to federal control and responsibility.'"  Piedmont Environmental Council v. FERC, 558 F.3d 304, 316 (4th Cir. 2009) (quoting 40 C.F.R. 1508.18).  The Council on Environmental Quality's regulations also provide, "Federal actions tend to fall within one of the following categories: 1. Adoption of official policy, such as rules, regulations, and interpretations adopted pursuant to the Administrative Procedure Act, 5 U.S.C. 551 et seq.," and "4. Approval of specific projects, such as construction or management activities located in a defined geographic area.  Projects include actions approved by permit or other regulatory decision as well as federal and federally assisted activities."  40 C.F.R. 1508.18.   "'Federal agency' means all agencies of the Federal Government.  It does not mean the Congress, the Judiciary, or the President, including the performance of staff functions for the President in his Executive Office."  40 C.F.R. 1508.12.

The DRBC provided a notice of proposed rulemaking for its fracking rules in the Federal Register, which seems to suggest that it is adopting official policy. It also seems that the DRBC, in approving water withdrawals, wastewater disposal, and well pad locations, also will be issuing permits for activities in a defined geographic area (the Delaware River Basin)--albeit a large area.  But is the DRBC a federal agency, and/or is there sufficient federal involvement here?  Very likely yes.  The Commission has a federal representative from the Army Corps of Engineers, and it is partially federally funded.  Further, "unlike most interstate compacts where Congress merely 'consents' to an interstate compact pursuant . . ., the federal government became a formal signatory member [of the Commission's Compact], subject to various express conditions and reservations,"  Delaware Water Emergency Group v. Hansler, 536 F.Supp. 26, 28 n. 4 (D.C. Pa. 1981), and "Article 2 of the [Delaware River Basin] Compact creates the Delaware River Basin Commission as 'an agency and instrumentality of the governments of the respective signatory parties.'"  Hansler, 536 F.Supp. at 30 (emphasis added).  Finally, prior DRBC actions have followed environmental assessments.  See Hansler, 536 F. Supp. at 28.

While the "federal action" question seems to be a slam dunk (to me, if not to the DRBC's federal representative), other interesting NEPA issues might involve the proper scope of review in light of the thousands of permits that could be issued in the basin.  Attorney General Schneiderman has requested review of the cumulative impacts, for example.  Regardless of the issues that end up dominating the case, it will raise interesting and timely NEPA and regional governance examples for the classroom. 

-Hannah Wiseman

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