By Timur Abimanyu, SH.

MH

The Washington Post

Obama administration gives billions in stimulus money

without environmental safeguards
In the name of job creation and clean energy, the Obama administration has doled out about
$2 billion in stimulus money to some of the nation's biggest polluters while granting them
exemptions from a basic form of environmental oversight, a Center for Public Integrity
investigation has found.

The administration has awarded more than 179,000 "categorical exclusions" to stimulus
projects funded by federal agencies, freeing the projects from review under the National
Environmental Policy Act, or NEPA. Officials said they did not consider companies' pollution
records in deciding whether to grant the waivers. They said that creating jobs quickly was an
important part of the stimulus plan, and that past environmental violations should not
disqualify a company from pursuing federal contracts for unrelated projects.

The projects include:

- An electrical-grid upgrade project in Kansas led by Westar Energy, the state's largest coal-
burning utility, which settled a major air pollution case by paying half a billion dollars in
penalties and remediation costs. The Energy Department granted the NEPA waiver to
Westar's project, funded by a $19 million stimulus grant that was approved on the same day
the settlement became official. Westar considers its "smart grid" project to be "our
basic,standard, above-ground upgrade," said Brad Loveless, the company's environmental
director. "From everybody's perspective, there really wasn't the potential for smart grid to
have environmental problems."
- A wind farm project in Texas, as well as an electrical-grid upgrade project in five additional
states, undertaken by Duke Energy. The department granted the NEPA waiver to both Duke
projects, funded by a combined $226 million in stimulus grants, even as the energy
corporation continues its decade-long defense against two of the largest air pollution cases
involving coal utilities in the nation's history. "We're basically adding communication
infrastructure on top of what is already there so it is not disturbing the environment," Duke's
Paige Layne said.
- A project to create clean-burning biofuel from seaweed led by chemical giant DuPont, which
received $8.9 million in stimulus funds in February. That amount nearly equals the
environmental fine DuPont paid in 2005 for hiding the dangers of its toxic chemical known
as C8 from federal regulators for two decades. In a statement, DuPont stressed that it "has
not applied for an environmental exclusion" for its project, but rather is "following the
 necessary process set forth by the Department of Energy." It concludes, "Each project that
we work on includes, by our own policy, a comprehensive and individualized product
stewardship program."

In all, about three dozen of the country's biggest polluters with past environmental problems
won NEPA exemptions for the stimulus grants totaling $2 billion from the Energy
Department - about 6 percent of the department's total money awarded so far.

Passed by Congress in 1969, NEPA provides one of the few proactive protections in an
environmental enforcement system that typically relies on penalties after the fact. The law
requires companies to study possible threats to the landscape, wildlife or human health before
proceeding with a major federally funded project. Industry groups and their allies on Capitol
Hill have long complained that the process can delay projects by months and even years,
costing millions of dollars.

Career employees who granted NEPA exemptions said that their screening process does not
consider a company's environmental record as they lack the ability to easily access such
information. Even so, they said that the NEPA process focuses on specific projects, and that a
company's environmental record isn't pertinent to its stimulus work on unrelated projects.

Environmentalists and people who have suffered from the companies' past pollution disagree
and say the exemptions should not have been granted.
"It's outrageous to give these companies these big breaks when they haven't earned a bit of
trust from the communities around them," said Joe Kiger, a Parkersburg, W.Va.,
schoolteacher who lived in a neighborhood affected by drinking-water pollution traced to
DuPont. "I'm all for the stimulus, and I'm all for job creation, but not at the expense of the
environment and human health."

Administration officials say the exemptions were essential to accelerate more than $30 billion
in stimulus-funded clean-energy projects through the Energy Department, which already have
created 35,000 jobs. In the long run, they add, the exempted activities will boost energy
efficiency and curb pollution.

"What we are doing is providing federal funding to increase energy efficiency and increase
the use of clean energy," said Scott Blake Harris, the Energy Department's general counsel. "I
think that sends a good message to the entire American public, whether or not there are
companies that have decided to do environmentally good things after doing environmentally
bad things."

This approach to stimulus projects has left the Obama administration at odds with some of its
supporters in the green movement. Environmental advocates said the goals of creating a clean
energy economy and more jobs do not outweigh the risks of funding repeat violators of anti-
pollution laws and forgoing supervision.

"Why bring somebody who was a known bad actor and give them government money and a
categorical exclusion for their project?" asked David Pettit, a senior attorney at the Natural
Resources Defense Council.

Ethanol producer Didion Milling received $5.6 million in stimulus money for an energy-
efficiency project just weeks after a federal court ruled that the company had repeatedly
violated the federal Clean Water Act, according to documents obtained by the Wisconsin
Center for Investigative Journalism, which collaborated with the Center for Public Integrity.
Didion landed the NEPA exemption in March for expanding its plant in ways that "conserve
energy," the documents say.

Dale Drachenberg, the company's vice president of operations, said the project will enable the
company to use 25 percent less power for every gallon of ethanol it produces. "Since the day
we started construction on our ethanol-production facility," he said, "we've made innovation
and conservation top priorities."

Didion is installing new equipment at its ethanol plant, "things that are easy to do and should
not have a negative impact," said Mark Lusk, the NEPA compliance officer who granted the
exemption at the Energy Department. He did not see any red flags in Didion's case, he said,
and did not look into any past compliance problems.

The department has carved out regulatory exceptions for entire programs of stimulus money.
One NEPA officer cleared all stimulus-funded projects to upgrade electrical grids. The Smart
Grid Investment Grant Program involves many of the nation's biggest polluting utilities,
including Westar and Duke. Companies say their projects simply are installing new
equipment such as smart meters and high-speed sensors on existing distribution systems.

"As a government, I feel we always have to give somebody a break," said Fred Pozzuto,
another NEPA officer at the Energy Department. "We have to always be forgiving and look at
this on a project-by-project basis."

The idea of granting NEPA exemptions for stimulus recipients was first raised in Congress
when the law was being crafted in early 2009. Sen. John Barrasso (R-Wyo.) offered an
amendment exempting projects whose NEPA reviews would take longer than 270 days. Two
dozen industry groups sent senators a letter backing the proposal while environmental
advocates mounted a robust protest.

"Special interests will assert we cannot afford the NEPA process in a time of national
urgency," 31 environmental groups argued in a Jan. 13, 2009, letter to House Speaker Nancy
Pelosi (D-Calif.), Senate Majority Leader Harry M. Reid (D-Nev.) and Sen. Barbara Boxer
(D-Calif.). "The truth is we cannot afford that kind of leap-before-you-look rashness."

The green groups prevailed. Lawmakers declined to insert a broad exemption into the
stimulus legislation. Instead, senators passed an amendment, negotiated by Boxer and
Barrasso, mandating "expeditious" NEPA reviews. To give a categorical exclusion, officials
must conclude that a project won't "individually or cumulatively have a significant effect on
the human environment."

At a meeting of the nation's governors in February, Energy Secretary Steven Chu said his
department would issue categorical exclusions for some of the stimulus activities aimed at
advancing clean energy. The goal, he said, was to "get the money out and spent as quickly as
possible."

"It's about putting our citizens back to work," Chu said.

In filings with Congress, the administration has reported handing out exclusions to 96 percent
of stimulus projects funded by $293 billion so far. The Energy Department, for its part, has
granted NEPA exemptions to 99 percent of all stimulus projects it has funded so far - 8,012
actions costing $33 billion.

The White House Council on Environmental Quality, which oversees compliance with NEPA,
told the Center for Public Integrity it did not keep historical records on the percentage of
federal projects that get NEPA exemptions and could not say how the NEPA exclusions for
stimulus projects compared with past years.
Kate Golden of the Wisconsin Center for Investigative Journalism contributed to this report.
By Kristen Lombardiand John Solomon, Center for Public Integrity, Sunday, November 28, 2010.

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