Final answer:
The question pertains to the requirement under the National Environmental Policy Act (NEPA) for federal agencies to prepare an Environmental Impact Statement (EIS) when a proposed project may significantly affect the environment. The EPA reviews these EIS documents to ensure compliance with environmental standards, considering both economic and environmental factors.
Step-by-step explanation:
The question refers to the legal requirement under the National Environmental Policy Act (NEPA), which mandates that any federal agency must prepare an Environmental Impact Statement (EIS) when proposing a major project that could significantly affect the environment. This act ensures that the environmental effects are analyzed before the project is allowed to proceed. NEPA is a pivotal piece of environmental legislation that was passed in 1969, and the EIS is a critical tool used to assess the potential environmental impact of proposed federal actions.
An example of the EIS in action includes the assessment of pipeline construction projects, where factors such as the potential for negative effects on aquifers and environmentally sensitive areas must be evaluated. The Environmental Protection Agency (EPA) is tasked with reviewing these impact statements to ensure they meet the required standards. Furthermore, the EIS process allows for public comment and ensures that the economic and environmental trade-offs, including both marginal benefits and marginal external costs, are considered.
However, it's important to note that while NEPA sets a high standard for environmental protection, the application of this law can be subject to political compromise, leading to potential loopholes and exceptions, as stated by the legislators and EPA analysts involved in drafting regulations.