New Washington Research Council study finds state interpretation of SEPA law has increased regulatory uncertainty

The Washington Research Council today published a special report, The Expanded SEPA has Reduced Regulatory Certainty in Washington. The report provides a concise review of the State Environmental Policy Act (SEPA), focusing on the expanded review process adopted by the Department of Ecology. 

In 2013 and 2014, the state Department of Ecology expanded the scope of review for the purposes of the State Environ- mental Policy Act (SEPA) beyond state borders, in a seemingly arbitrary manner. Three projects in particular were held to this new standard: Gateway Pacific Terminal at Cherry Point in Whatcom County, Millennium Bulk Terminals near Longview, and the Vancouver Energy (Tesoro Savage) crude oil loading facility at the Port of Vancouver. We wrote about the expanded SEPA in a 2014 report, noting, “the expanded parameters increase uncertainty for business and call into question the competitiveness of Washington for future projects.”

The Council’s thorough analysis should be read in its entirety. The prediction from the WRC’s 2014 report has become reality.  

The Council identifies the impact of the expanded SEPA reviews on several major projects and how opponents use the process to derail development. Uncertainty is baked into the strategy.

As Director Bellon has written, “it is not possible to identify a set of ‘industry groups’ or set of specific projects that may trigger a broad or narrow scope of environmental review under SEPA” (Bellon 2013). Thus, “at regulators’ discretion any controversial project may suddenly become subject to global review. In regulatory matters, discretion undercuts certainty” (WRC 2014).

Ecology could apply the expanded review to any future project associated with any commodity. International trade and inter- state commerce will be affected. Businesses will face increased uncertainty, and the timeliness of the SEPA process will be reduced. In the end, Washington’s competitiveness will suffer.

The conclusion is unsparing:

The expanded SEPA and associated political activism have resulted in permitting delays, project cancellations, and even outright bans of projects involving certain commodities. This negatively impacts the communities involved that would have benefited from increased jobs and tax revenues.

…These efforts to prevent legal, environmentally regulated exporting activities from taking place in this state will frequently cause them to be moved to other countries with far less environmental restrictions. The final outcome is worse for the planet and foolishly penalizes working families and the whole economy of Washington state.

We’ve written previously about several of the affected projects, including recent posts on Millennium Bulk Terminal and Gateway Pacific Terminal. The expanded SEPA regulation was also cited in our foundation report

In terms of regulatory content, Washington regulations routinely exceed the minimums required by federal law. For example, the state chose to require a global environmental impact statement, rather than a project-specific analysis, for proposed coal export facilities in 2014. Policies to address climate change and water quality are frequently cited by employers as areas of uncertainty that can affect long-range planning.

…While regulations ultimately reflect Washingtonians’ policy preferences, they should be regularly reviewed to see if, for example, the benefits justify the added costs of compliance.

The WRC report concludes the expanded SEPA review fails the test.