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Obama administration gives billions in stimulus money without environmental safeguards

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By Kristen Lombardiand John Solomon
Center for Public Integrity
Sunday, November 28, 2010; 9:41 PM

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.

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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.


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