Dan McGroarty reports at Forbes:
The U.S. Environmental Protection Agency is mulling a bold regulatory move that could redefine risk for American business. For the first time ever, it is poised to veto not a project, but the idea of a project based on a hypothetical construct that the agency itself has created.
The project that may never be is the Pebble Mine, a multi-metal mineral deposit in southwest Alaska on state land set aside for mining that could yield more than 80 billion pounds of copper, a world record. EPA has jumped ahead of our national permitting process with its own $2.4 million environmental assessment, setting itself up as judge, jury and executioner on the matter before the development company has submitted an actual mining plan.
This is quite an innovative use of the public budget. To be sure, EPA has authority under the Clean Water Act to stop or revoke permits for all manner of projects, from agriculture to manufacturing, energy, transportation and resource extraction, anything that touches on water. But does it have the authority to stop a project that doesn’t exist? It’s never tried to – until now.
A study by The Brattle Group found that $220 billion worth of domestic investment projects run on Clean Water Act permits. All in all, a significant chunk of America’s economic development activity. If EPA expands its power to cover hypotheticals – the mere idea of projects – you can bet there will be a chill on investment projects not just in Alaska, but throughout the Lower 48.
With millions in the balance, companies make careful calculations about the risks and benefits of pursuing development projects. Thanks to the National Environmental Policy Act of 1969, environmental impact is a fundamental concern that must be addressed in the permitting process. If a project presents the possibility of a negative environmental impact, the development company must devise a way to mitigate or offset that harm, for example by relocating wildlife.
On very rare occasions, EPA has vetoed projects at some point during or after this process – never before. Such a move would fundamentally change the way companies assess the risks of even conducting preliminary research on a potential project. Important ideas that can create jobs, drive innovation, and produce value for the economy may never make it off of the drawing board, as EPA’s Sword of Damocles dangles precariously overhead.