[Federal Register Volume 66, Number 53 (Monday, March 19, 2001)]
[Notices]
[Pages 15527-15532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6743]


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DEPARTMENT OF TRANSPORTATION

[STB Ex Parte No. 585]


Surface Transportation Board

AGENCY: Surface Transportation Board

ACTION: Policy statement on use of third-party contracting In 
preparation of environmental documentation.

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SUMMARY: This policy statement discusses the Surface Transportation 
Board's practice of using third-party contractors to aid in preparing 
environmental documentation necessary to comply with the requirements 
of the National Environmental Policy Act of 1969, 42 U.S.C. 4321 et 
seq., and related environmental laws in Board proceedings.

DATES: This policy statement is effective upon publication.

[[Page 15528]]


FOR FURTHER INFORMATION CONTACT: Victoria Rutson, (202) 565-1545 or 
Evelyn Kitay, (202) 565-1563 [TDD/TYY for the hearing impaired: 1-800-
877-8339].

SUPPLEMENTARY INFORMATION: The Surface Transportation Board (Board) 
often uses third-party contractors to assist in preparing Environmental 
Assessments (EAs) \1\ or Environmental Impact Statements (EISs) \2\ to 
fulfill the requirements of the National Environmental Policy Act of 
1969, 42 U.S.C. 4321 et seq. (NEPA), and related environmental laws in 
our rail licensing decisions. The public has, on occasion, raised 
concerns regarding whether an environmental document prepared by the 
Board's environmental staff with the assistance of a contractor paid 
for by a railroad applicant presents an impartial and unbiased 
analysis. Also, applicants have at times objected to their lack of 
control over the costs of an environmental analysis in certain 
proceedings, particularly when the scope of work needed to complete the 
environmental review in complex cases is more far-reaching than 
originally contemplated, due to the discovery of unanticipated 
environmental issues that need to be addressed. Below, we review the 
requirements of NEPA and the environmental regulations concerning 
third-party contracting. In addition, we summarize our third-party 
contracting process, respond to the concerns raised by some regarding 
our current third-party contracting procedures, and explain why we 
believe that our approach, although not without problems, is the most 
appropriate one for this agency.
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    \1\ An EA is a concise public document issued by the agency that 
contains sufficient information for determining whether to prepare a 
full Environmental Impact Statement or to make a finding of no 
significant impact. See Council on Environmental Quality (CEQ), 
Regulations for Implementing the Procedural Provisions of the 
National Environmental Policy Act, at 40 CFR 1508.9; 49 CFR 
1105.4(d).
    \2\ An EIS is the detailed written statement required by the 
National Environmental Policy Act for a major federal action 
significantly affecting the quality of the human environment. See 40 
CFR 1508.11; 49 CFR 1105.4(f).
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Background

    NEPA requires federal agencies ``to the fullest extent possible'' 
to consider the environmental consequences ``in every recommendation or 
report on major federal actions significantly affecting the quality of 
the human environment.'' \3\ The purpose of NEPA is to focus the 
attention of the government and the public on the likely environmental 
consequences of a proposed agency action before it is implemented, in 
order to minimize or avoid potential negative environmental impacts.\4\ 
While NEPA requires that we take a hard look at the environmental 
consequences of our licensing decisions, it does not mandate a 
particular result. Thus, once the adverse environmental effects of a 
proposed action have been adequately identified and evaluated, we may 
conclude that other values outweigh the environmental costs.\5\
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    \3\ 42 U.S.C. 4332(2)(C). CEQ has defined ``major federal 
actions'' to include projects regulated or approved by federal 
agencies. 40 CFR 1508.18.
    \4\ Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 371 
(1989).
    \5\ See Robertson v. Methow Valley Citizens Council, 490 U.S. 
332, 350 (1989); City of Auburn v. United States, 154 F. 3d 1025, 
1031-33 (9th Cir. 1998), cert. denied, 527 U.S. 1022 (1999) (City of 
Auburn).
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    Our Section of Environmental Analysis (SEA) assures that the Board 
meets its responsibilities under NEPA. SEA provides us with an 
independent environmental review of these proposals for which an 
environmental review is triggered by NEPA and our implementing 
regulations at 49 CFR part 1105 (generally rail line constructions, 
abandonments, and mergers). SEA prepares an EA or EIS, as appropriate, 
and provides technical advice and recommendations to the Board on 
environmental matters.
    Third-party contracting is a voluntary arrangement in which the 
applicant pays for a contractor to assist SEA by developing 
environmental analyses necessary for compliance with NEPA and related 
environmental laws, \6\ under SEA's direction, control, and 
supervision. Our environmental rules at 49 CFR 1105.10(d) specifically 
permit the use of third-party contractors, if approved by SEA. The 
third-party contracting process, discussed below in more detail, has 
generally worked well in more than 50 Board (and Interstate Commerce 
Commission) proceedings.\7\
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    \6\ See Implementation of Environmental Laws, 7 I.C.C.2d 807, 
817 (1991) (Environmental Laws). The government-wide regulations 
implementing NEPA, promulgated by CEQ, expressly permit the use of 
third-party contractors in the preparation of an EA or an EIS. 40 
CFR 1506.5(c). CEQ regulations provide that agencies using 
contractors to aid in the preparation of environmental documents 
will be responsible for selecting the contractors, will provide the 
contractors with guidance and supervision in the preparation of the 
document, and will independently evaluate the document before 
approval. Contractors must sign a disclosure statement prior to 
beginning work, indicating that they are disinterested parties to 
the project.
    \7\ Most of the concerns that have been raised regarding the 
third-party contracting process focus on two particularly 
controversial proceedings involving unique and unanticipated 
environmental issues that resulted in higher than expected costs 
associated with the third-party contracting process: STB Finance 
Docket No. 33388, CSX Corp.--Control and Operating Leases/
Agreements--Conrail, Inc. (Draft EIS served Dec. 12, 1997; Final EIS 
served May 22, 1998) (Conrail), and STB Finance Docket No. 33407, 
Dakota, Minnesota & Eastern Railroad Corp. Construction into the 
Powder River Basin (Draft EIS served Sept. 27, 2000) (DM&E).
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The Board's Third-Party Contracting Process

    SEA follows certain steps when preparing environmental documents 
with the aid of third-party contractors. The first step is to inform 
applicants about the third-party contractor option. As stated above, 
third-party contracting is a voluntary arrangement. Applicants can 
choose either (1) to retain a third-party contractor to assist in the 
preparation of the environmental document or (2) to prepare an 
environmental (and historic) report on their own, evaluating the 
potential environmental impacts and any reasonable alternatives to the 
proposed action, and submit the report with, or prior to, the time they 
file their project with the Board.\8\ In the former case, the third-
party contractor assists in the preparation of the environmental 
document, working under the direction, supervision, and control of SEA, 
and the applicant's obligation to submit an environmental and historic 
report is waived.\9\ In the latter case, SEA prepares the environmental 
document using the material provided by the applicant in the 
environmental and historic report as a starting point.
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    \8\ Environmental and historic reports must include the material 
required by our regulations at 49 CFR 1105.7 and 1105.8.
    \9\ See 49 CFR 1105.10(d).
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    Once an applicant decides to use a third-party contractor to assist 
in the preparation of the environmental document, the next step in the 
process is to select a third-party contractor. SEA maintains a list of 
approved third-party contractors, comprised of individuals and firms 
with expertise and experience in environmental review of rail or 
transportation projects.\10\ When an applicant expresses an interest in 
using a third-party contractor, SEA furnishes the applicant a copy of 
the third-party contractor list. The applicant indicates which 
contractor from the list it would prefer to use by formally requesting 
in writing SEA's approval of that contractor.\11\ SEA decides whether 
to

[[Page 15529]]

grant the request and responds to the applicant in writing. SEA's 
approval is subject to the contractor signing a disclosure statement 
that it has no financial interest in the outcome of the applicant's 
proposal.\12\ SEA's process allows the applicant to have some input in 
the selection of the third-party contractor, while enabling SEA to 
retain ultimate responsibility. Our environmental regulations at 49 CFR 
1105.4(j) make it clear that, while the applicant may participate in 
choosing the contractor, ``to avoid any impermissible conflict of 
interest * * * the railroad may not be responsible for the selection or 
control of independent contractors [emphasis supplied].'' \13\
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    \10\ This list was initially derived from responses to a 
solicitation placed by SEA in the Commerce Business Daily. SEA staff 
reviewed the responses received for experience in preparing EAs and 
EISs, and knowledge of and experience in analyzing environmental 
issues, particularly those related to transportation projects. SEA 
has periodically updated the third-party contractor list. Currently, 
there are 48 individuals and firms on the list.
    \11\ Applicants can propose to have a contractor added to the 
list if the contractor furnishes information showing that the 
contractor has the requisite qualifications.
    \12\ This practice prevents conflict of interest problems and 
assures the objectivity of the third-party contractor in the 
environmental review process. See 40 CFR 1506.5(c) (requiring a 
contractor disclosure statement); Sierra Club v. Marsh, 714 F. Supp. 
539, 553 (D. Me. 1989), quoting CEQ guidance for implementing NEPA, 
Forty Most Asked Questions Concerning CEQ's National Environmental 
Policy Act Regulations, 46 FR 18026 (1981) (Forty Questions), 46 FR 
at 18031 (this conflict of interest regulation is intended to 
preserve the ``objectivity and integrity of the NEPA process'').
    \13\ See also 40 CFR 1506.5(c) (``It is the intent of these 
regulations that the contractor be chosen solely by the lead agency 
* * * to avoid any conflict of interest.''); Forty Questions, 
Question 16 (``the agency must select the consulting firm, even 
though the applicant pays for the cost of preparing the EIS * * * 
[T]he applicant may undertake the necessary paperwork for the 
solicitation of a field of candidates under the agency's direction, 
so long as the agency complies with section 1506.5(c)''). There have 
been few challenges to the third-party contracting process. In 
Citizens Against Burlington, Inc. v. Busey, 938 F.2d 190, 202 (D.C. 
Cir. 1991), cert. denied, 502 U.S. 994 (1991), however, the court 
concluded that the agency ``was obliged to pick a contractor itself, 
and not to delegate the responsibility.'' The court rejected an 
agency's claim that its concurrence in the applicant's choice of the 
contractor was sufficient.
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    After the third-party contractor has signed and returned the 
disclosure statement to SEA, SEA prepares a Memorandum of Understanding 
(MOU), which SEA, the applicant, and the third-party contractor must 
all sign. The MOU outlines the conditions and procedures each party 
must follow in preparing the environmental document. Under the MOU, the 
applicant's primary responsibility is to pay for the contractor's 
services; the contractor's primary responsibility is to assist SEA in 
preparing the environmental document as SEA directs; and SEA's primary 
responsibility is to supervise and direct the contractor's work. The 
MOU provides that the applicant will not attempt to improperly 
influence the contractor's work, and that the contractor will cooperate 
fully with SEA. The MOU clarifies that SEA, not the applicant, is in 
control of the preparation of the environmental analysis, even though 
the applicant is paying the contractor's bills. The specific 
responsibilities of SEA, the applicant, and the third-party contractor 
detailed in a typical MOU are set forth below.
    (a) SEA's Responsibilities. While the exact language of an MOU will 
depend on the facts and circumstances of the particular case, each MOU 
explains that SEA is ultimately responsible for the preparation of the 
appropriate environmental document, and that SEA will furnish guidance 
on the environmental analysis, participate in the preparation of the 
environmental document, independently evaluate the environmental 
document and add its expertise through review and revision, if 
necessary.
    (b) The Contractor's Responsibilities. Each MOU makes clear that 
the contractor shall provide: environmental expertise; a good working 
knowledge of NEPA and related environmental laws and regulations; the 
capability to perform appropriate environmental impact analyses; 
representatives to attend meetings; the ability to prepare thorough, 
readable, technically sound, and informative environmental 
documentation, as well as related charts, maps, and diagrams; and 
expertise in data management.
    Every MOU states that the contractor may engage subcontractors to 
perform work on the project, but that all work performed by 
subcontractors will also be under the direction, control, supervision, 
and final approval of SEA. MOUs also typically require the contractor 
to perform work in a ``timely, responsive, satisfactory, and cost-
effective manner * * *''
    (c) The Applicant's Responsibilities. Each MOU states that the 
applicant is responsible for all costs of the third-party contractor, 
including administrative and clerical costs associated with preparation 
and production of environmental documents.
    The final step before beginning preparation of the environmental 
document is the development of a Work Plan that describes the work to 
be performed by the contractor, sets forth a proposed schedule for 
completing the work, names the individual members of the contractor's 
staff who will be primarily responsible for the project, and outlines 
environmental tasks that will need to be performed for the project 
known to date (for example, preparation of a biological assessment 
under the Endangered Species Act, 16 U.S.C 1531 et seq.). The Work Plan 
is prepared by the third-party contractor, in consultation with SEA and 
the applicant. SEA has the authority to amend the scope of work and 
monitors the contractor on a regular basis to ensure that the work is 
progressing efficiently and cost-effectively. SEA also has the 
authority to remove the contractor for cause or approve termination of 
the contract between the applicant and the contractor.\14\ If SEA 
removes the contractor or approves the termination of the contract, SEA 
works to replace the contractor with another qualified contractor as 
soon as practicable.
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    \14\ In most cases, the applicant and contractor enter into a 
separate contract detailing general rates to be charged and others 
costs to be assessed for various services. The agency does not 
participate in this process.
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    Once all of the preliminary matters have been settled, SEA and the 
contractor begin working together to prepare the environmental document 
under SEA's direction and control.\15\ The preparation of every 
environmental document includes extensive contact and cooperation 
between the contractor and SEA. For example, SEA (1) conducts regular 
informational briefings with the contractor (by meetings and 
telephone); (2) determines the format of the environmental document and 
the scope of the environmental analysis; (3) conducts site inspections 
with the applicant, the contractor, and other environmental experts, as 
appropriate; (4) works with the contractor to consult with Federal, 
state, and local agencies, Native American Tribes, members of the 
public, and other interested parties, as appropriate; (5) reviews, 
edits, and revises the environmental document; and (6) coordinates and 
directs the efforts to reach conclusions regarding potential 
environmental impacts and develop recommended environmental mitigation 
measures. The process ensures that SEA retains ultimate control over 
the work product and protects the independent nature of the 
environmental document and the contractor's work.
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    \15\ See 49 CFR 1105.4(j); 49 CFR 1105.10(d); 40 CFR 1506.5(c) 
(CEQ regulations requiring that the agency ``shall furnish guidance 
and participate in the preparation and shall independently evaluate 
the statement prior to its approval and take responsibility for its 
scope and contents'').
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    Additionally, the extensive public participation that is an 
integral part of the environmental review process guarantees that the 
environmental document will reflect multiple points of view and reduces 
the possibility of one-sided or applicant-biased environmental 
analyses.\16\ SEA and the contractor typically conduct public outreach 
at the early stages of the environmental analysis, to promote notice of 
the

[[Page 15530]]

proposal and to obtain input on potential environmental impacts and 
issues associated with the project. Under our environmental rules, an 
opportunity for public review and comment is provided on every EA and 
Draft EIS.\17\ SEA, working with the contractor, then incorporates and 
responds to the comments in preparing a final EIS or post-EA.\18\
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    \16\ See City of Auburn, 154 F.3d at 1032.
    \17\ See 49 CFR 1005.10(a), (b).
    \18\ Id.
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    Other agencies participate in the environmental review process as 
well, which adds further checks and balances to the process and makes 
the environmental documents required by NEPA more comprehensive. One of 
the first tasks SEA directs a third-party contractor to undertake is 
the preparation of consultation letters to appropriate Federal, state 
and local agencies. All agencies are encouraged to participate and 
submit comments during the Board's environmental review process. 
Moreover, SEA may request agencies that have jurisdiction under other 
laws over some aspect of the proposal, or agencies that have ``special 
expertise with respect to any environmental issue,'' to participate as 
``cooperating agencies'' in the Board's environmental review 
process.\19\
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    \19\ Cooperating agencies typically have their own decisions to 
make regarding a particular project and tend to adopt the 
environmental analysis prepared by another agency (known as the lead 
agency) and base their decision upon it. One environmental document 
therefore includes information necessary to fulfill the requirements 
of NEPA and related environmental laws for both the lead and 
cooperating agencies. 40 CFR 1501.5, 1501.6. The Board may also be 
invited to participate as a cooperating agency in an environmental 
analysis for which another Federal agency is the lead.
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    In short, our third-party contracting process provides an effective 
means to prepare an independent, comprehensive environmental analysis 
that meets the requirements of NEPA and related environmental laws. The 
contractors function as an extension of SEA's staff. They work under 
SEA's direction to collect and verify environmental information from 
the railroads, consulting agencies, other interested parties, and the 
general public; conduct unbiased environmental analysis; develop 
appropriate environmental criteria and methodologies for analyzing 
particular environmental issue areas; and prepare environmental 
documentation and mitigation options.

Concerns That Have Been Expressed

    At times, members of the public and certain applicants have raised 
concerns about the Board's third-party contracting process. The public 
has questioned whether any environmental document prepared with the 
assistance of a contractor paid by the railroad constitutes an 
impartial analysis, and whether the work of a contractor paid by the 
railroad is influenced by the applicant-railroad. We believe that 
adequate safeguards exist that ensure the neutrality of the third-party 
contracting process. As discussed above, SEA remains fully responsible 
for the contents of the EA or EIS and closely monitors the work of the 
contractor throughout the environmental review process. There is 
extensive public outreach to ensure public awareness of the proposals 
before the agency and participation in the process. Also, SEA issues 
every EA or EIS in draft form for public review and comment and 
consults with appropriate Federal, state and local agencies. A final 
environmental document is then prepared responding to the comments, 
which also are made public.
    Applicants' concerns primarily focus on the cost and lack of 
control over the scope of the environmental review.\20\ Specifically, 
certain applicants have complained that the Board's third-party 
contracting process prohibits them from controlling the scope of work 
that will be required to complete the environmental analysis, while 
requiring them to fully fund the contractor's work.
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    \20\ See the comments of the Norfolk Southern Railway Company 
filed in response to the notice of proposed rulemaking in STB Ex 
Parte No. 582 (Sub-No. 1), Major Rail Consolidation Procedures.
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    Because the potential environmental impacts of a project cannot 
always be predicted at the beginning of the environmental review 
process, particularly in large rail construction cases or major rail 
mergers such as Conrail, it can be difficult to estimate accurately the 
amount of work--and consequently, the amount of money--that will be 
needed to complete the requisite hard look at the environmental 
consequences of our licensing decisions. At times, the potential 
environmental impacts associated with a rail proposal initially may 
appear to be less than what comes to light as the agency and its 
contractor begin looking more closely at the proposal. Frequently, 
consultation with Federal, state, and local agencies, as well as input 
from the public, serves to disclose additional potential environmental 
impacts that must be analyzed and, if possible, avoided or mitigated. 
In fact, one of the objectives of the environmental review process 
under NEPA is to detect and appropriately analyze all potential 
environmental impacts, and as potential impacts come to light during 
the environmental review process, the agency is required to supplement 
or even rewrite an environmental document as necessary.\21\ 
Unanticipated public controversy may develop as the public learns more 
about a proposal, or additional alternatives beyond those that were 
anticipated when the environmental review was initiated, may be found 
that need to be considered. In other words, environmental review is a 
dynamic process that can entail unavoidable delay in completing the 
environmental analysis that NEPA requires and increased environmental 
review costs.
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    \21\ See CEQ 1983 Memorandum, Guidance Regarding NEPA 
Regulations, 48 FR 34263, 34264 (1983).
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    As our regulations state, we encourage the use of third-party 
contractors because they expedite and facilitate the environmental 
analysis.\22\ Without the use of third-party contractors, particularly 
in complex cases such as Conrail and DM&E, the Board would not have the 
in-house resources to perform a legally sufficient environmental 
analysis in a timely manner. The Board does not have, and likely will 
never have, funding available to it to increase its staff sufficiently 
to make the third-party contractor resources unnecessary.
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    \22\ See 49 CFR 1105.10(d); Environmental Laws, 7 I.C.C.2d at 
817.
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    Moreover, the Board lacks the broad range of in-house technical 
experts that third-party contractors can tap. Environmental analyses in 
Board proceedings are becoming increasingly complex, requiring the 
input of a number of experts in highly technical fields, such as 
atmospheric science and meteorology, anthropology and ethnography, 
geographic information system (GIS) analysis, acoustical engineering, 
and environmental justice analysis. Almost all environmental documents 
prepared by SEA require the input of some experts. However, individual 
experts are needed only on a periodic basis, as issues requiring their 
specific area of expertise do not arise in every case before the Board 
requiring environmental review. Thus, it would be impractical and 
prohibitively expensive for a small agency such as the Board to employ 
its own experts in these highly technical areas on a full-time basis.
    Furthermore, while third-party contractors, as private businesses, 
are free to commit their staff resources to as many or as few clients 
as they wish, the Board, as a government agency, cannot refuse to 
conduct environmental analyses and produce environmental documents due 
to limited staff. In order to prepare appropriate environmental

[[Page 15531]]

documents without the assistance of third-party contractors, the Board 
would need more resources to hire additional staff with the necessary 
expertise to undertake highly technical environmental analyses. But 
again, even if additional staff could be hired, the increased number 
would doubtless not be sufficient to replace third-party contractor 
resources, particularly in complex cases. Third-party contractors with 
access to staff with varied expertise enable SEA to prepare 
environmental documents and conduct analyses more efficiently, 
effectively, and in a more timely manner than if SEA were working 
alone.
    Certain applicants have expressed concern about the significant 
costs that they can incur with the third-party contractor process.\23\ 
However, SEA oversight and review over the environmental review process 
minimize delay and unnecessary costs as much as possible. As discussed 
above, for each case in which a third-party contractor is used, a Work 
Plan is developed that sets forth a proposed schedule for completing 
the work and outlines the necessary environmental tasks. SEA then 
monitors the contractors on a regular basis to ensure that the work is 
progressing as efficiently and cost effectively as possible. Moreover, 
when other agencies act as cooperating agencies, as in DM&E, 
duplication is minimized because those agencies are not performing 
their own analyses independent of the Board's process, which 
facilitates efficient environmental review and lowers the applicant's 
ultimate costs. In certain cases, as already noted, significant issues 
do surface during the environmental review process that were not 
anticipated at the beginning of the process, which must be evaluated 
and do increase the costs of the environmental review process using 
third-party contractors. While these costs cannot be avoided without 
calling into question the legal sufficiency of the environmental 
review, SEA oversight again serves to minimize unnecessary costs as 
much as possible.
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    \23\ See Conrail.
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    We have examined the processes used by other agencies to see if we 
could improve our process and allow applicants to better control costs 
without compromising the need to ensure the independent nature of the 
contractor's environmental analysis. We conclude that our current 
process, although not without problems, offers the best available 
alternative for preparing the environmental documentation needed to 
fulfill the Board's NEPA obligations.
    Some agencies have policies similar or identical to ours. For 
example, the Federal Energy Regulatory Commission's (FERC) procedure 
for third-party contracting is essentially the same as our process.\24\ 
After applicants decide to use third-party contractors, they select 
which contractor they would prefer to use from FERC's list of approved 
contractors.\25\ FERC makes the final decision as to whom to hire as 
the contractor, and then the selected contractor executes a disclosure 
statement indicating that it has no conflict of interest. The parties 
then prepare and sign a Memorandum of Agreement, which describes each 
party's duties. Like the Board, the applicant in proceedings before 
FERC is responsible for paying the contractor for the preparation of 
the environmental document and executes a separate contract with the 
contractor detailing general rates and costs. FERC supervises the 
contractor's work and retains ultimate responsibility for the finished 
product.
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    \24\ Information obtained from FERC's internet website: 
www.ferc.fed.us.
    \25\ FERC indicates that it uses third-party contracting only in 
the preparation of EISs.
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    The third-party contracting process used by the U.S. Environmental 
Protection Agency (EPA) in the preparation of EISs, outlined at 40 CFR 
6.604(g)(3), is also similar to our process in several respects.\26\ 
EPA requires the applicant to pay for the contractor's services, while 
retaining control and supervisory authority over the environmental 
analysis. Additionally, EPA allows applicants to provide some input as 
to their choice of contractor, but retains ultimate responsibility for 
the final selection of the third-party contractor. EPA and the 
applicant enter into a MOU that governs the third-party contracting 
arrangement, and the contractor must sign a disclosure statement prior 
to beginning work. In the MOU, EPA and the applicant also agree upon a 
general time frame for the completion of various parts of the EIS, and 
set forth the scope of the EIS in as much detail as possible.\27\ If 
EPA determines that additional analysis beyond the scope of the 
original MOU is needed, the MOU may be amended to cover the additional 
work at the applicant's expense, or EPA may elect to complete the 
analysis itself.\28\ Unlike the Board, EPA has a separate process for 
contracting directly with consultants to prepare EISs and has funding 
to pay for the services of these consultants.\29\
    Other agencies either have separate funding for contractors, or 
they may require applicants to place funds for paying contractors into 
separate accounts that are subject to oversight by agency officials. 
For example, the Federal Aviation Administration (FAA) has separate 
funds to pay contractors who prepare environmental documents for 
airport development projects; applicants must pay for hiring 
contractors to prepare environmental documents in other matters.\30\ 
Although separate funds or accounts might reduce some of applicants' 
concerns regarding the costs incurred in the use of third-party 
contractors in Board proceedings, the process to create and regulate 
separate third-party contractor funds or accounts would be burdensome 
and complex for the parties as well as for a small agency like the 
Board, and would more than likely require the Board to hire a cadre of 
escrow account managers. Therefore, this idea is not a practical one 
for the Board.
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    \26\ EPA, as a matter of practice, does not use third-party 
contractors in the preparation of EAs.
    \27\ Information obtained from a sample ``Memorandum of 
Understanding Between the United States Environmental Protection 
Agency and ________ for Third Party Environmental Impact Statement 
Preparation'' that EPA provides to interested parties and from 
informal telephone conversations with EPA staff.
    \28\ Id. See 40 CFR 6.604(g)(1), (2).
    \29\ Information obtained from informal telephone conversations 
with EPA staff.
    \30\ Information obtained from an FAA notice for revising its 
procedures for implementing NEPA, 64 FR 55526, 55594-95 (1999). See 
also 7 CFR 1789 (discussing the Rural Utilities Services (RUS) 
practice of using escrow accounts to fund consultants who assist in 
the preparation of technical documents for applications before the 
agency). RUS allows the use of consultants to ``provide financial, 
legal, engineering, environmental or other technical advice and 
services in connection with the review of an Application'' (7 CFR 
1789.152(a)). Thus, the preparation of environmental analyses 
appears to be just one of several instances in which RUS uses third-
party contracting.
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Summary

    We remain open and receptive to suggestions on how to improve our 
third-party contracting process. But for now, the current process 
appears to be the most efficient and effective way for the Board to 
ensure a thorough, adequate, and legally sound environmental review 
under NEPA and related environmental laws. As discussed above, we 
believe sufficient safeguards exist to address the public's chief 
concern--assurance of the objectivity of the environmental review 
process. To date, most of applicants' concerns relate to experience 
with a few extremely controversial rail proposals, such as Conrail, 
involving extensive opposition by communities or other Federal agencies 
and entities and unique environmental issues that

[[Page 15532]]

resulted in unanticipated costs associated with the environmental 
review process. While we understand applicants' concerns in this 
regard, because the NEPA analysis at times involves the discovery of 
unforeseen environmental impacts that require more analysis than 
originally contemplated, we see no way to set monetary limits or to 
accurately forecast total expenditures at the outset of the NEPA 
process, nor any practical way to further monitor costs throughout the 
process beyond SEA oversight. And we see no viable alternative to the 
use of third-party contractors to ensure a legally sufficient 
environmental review that is timely, given the Board's budget.
    NEPA mandates a process rather than a result. In order to respond 
to new developments, SEA, as well as contractors working under SEA's 
supervision and applicants, must remain flexible and responsive. We 
understand that this process may introduce some undesired uncertainty 
and additional cost into the environmental review process, but NEPA has 
certain requirements, including thorough, accurate, and ultimately, 
legally defensible environmental analyses, and the current third-party 
contractor process is needed to meet those requirements in the most 
timely and efficient way possible.
    We do not seek public comment on this policy statement because we 
do not propose a new rule or policy here. Rather, we are explaining the 
Board's existing policy regarding third-party contractors.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

    Decided: March 16, 2001.

    By the Board, Chairman Morgan, Vice Chairman Clyburn, and 
Commissioner Burkes.
Vernon A. Williams,
Secretary.
[FR Doc. 01-6743 Filed 3-16-01; 8:45 am]
BILLING CODE 4915-00-P