Proposal Requires Federal Agencies to Assess GHG and Climate Change Impacts and Encourages Substantive GHG Reductions Under the National Environmental Policy Act

HIGHLIGHTS:

  • NEPA's Revised Draft Guidance could require a significant level of additional analysis, including analysis of “upstream” and “downstream” impacts as well as a cost-benefit analysis in certain circumstances.
  • The proposed guidance goes well beyond the well-established NEPA non-substantive “hardlook” doctrine by instructing agencies to use the NEPA process to force the substantive reduction of GHG emissions.
  • Although the White House Council on Environmental Quality (CEQ) intends the guidance to “lessen litigation driven by uncertainty,” it is not clear the Revised Draft Guidance will accomplish this goal.

Nearly five years after issuing its initial draft, the White House Council on Environmental Quality (CEQ) continues to revise its draft guidance on conducting greenhouse gas (GHG) impact analyses under the National Environmental Policy Act (NEPA). CEQ published its Revised Draft Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in NEPA Reviews (“Revised Draft Guidance”) in December 2014, and the comment period closed at the end of March 2015. CEQ must now wade through nearly 500 NEPA comment letters before finalizing the guidance. When released as final, the guidance will be effective immediately.

Unlike the previous draft, which concluded with a series of questions, including whether and how to incorporate federal land management decisions, the Revised Draft Guidance does not leave any issues open and resolves the previous question by fully incorporating federal land management decisions in its scope. While CEQ clarifies that the final guidance will not be legally enforceable and does not impose new requirements on federal agencies, it effectively sets a standard for requiring agencies to:

  • assess GHG and climate change impacts
  • look at alternatives that reduce GHGs
  • undertake a cost-benefit analysis where warranted
  • encourage the use of mitigation for GHGs as well as monitoring for implementation and effectiveness, regardless of the significance of the impacts

Essentially, the Revised Draft Guidance appears to push federal agencies to use NEPA to take a more activist stance in reducing GHG emissions, a theme reflected in CEQ's response to comments on the prior draft, with the frequent reminder that

... [b]y statutes, Executive Orders, and agency policies, the Federal Government is committed to the goals of energy conservation, reducing energy use, eliminating or reducing GHG emissions, and promoting the deployment of renewable energy technologies that are clean and more efficient.

Thus, while courts have held that NEPA is a procedural statute, requiring only a “hard look” at environmental impacts (NRDC v. Morton, 458 F.2d 827, 838 (D.C.Cir., 1972)), this CEQ proposed guidance goes well beyond this doctrine by instructing agencies to use the NEPA process to force the substantive reduction of GHG emissions.

Summary of the Key Elements and Recommendations in the Revised Draft Guidance

Use Two Types of GHG Assessment

The Revised Draft Guidance instructs agencies to assess both (1) the impact of the proposed project on climate change, and (2) the impact of climate change on the proposed project. Due to the challenge of attributing specific climate impacts to a single project, CEQ recommends that predicted GHG emissions (or carbon sequestration capacity) be used as a proxy to disclose project impacts on climate change. Conversely, to assess the impact of climate change on the proposed project, CEQ explains that agencies should look at “the ways the changing climate may alter the overall environmental implications of a project.” For example, where a proposed project would withdraw water from a stream, future projections of rainfall and snow pack on water levels in the stream should also be considered, or where a proposed project would include coastal infrastructure, future sea level rise projections should be considered.

Employ a Broad Scope of GHG Review

CEQ instructs in the Revised Draft Guidance that for GHG analyses, federal agencies should follow the general NEPA requirements of considering direct, indirect and cumulative effects. Additionally, CEQ provides that agencies must consider connected actions, including a discussion of emissions from other activities that have a reasonably close causal relationship and are either “upstream” or “downstream” from the proposed action. Using the example of a proposed open pit mine, CEQ explains the NEPA documents could include a discussion of GHG emissions from clearing land, building access roads, transporting the extracted resource, refining or processing the resource and, notably, “using the resource.” Further, CEQ advises that agencies should take into account all phases and elements of an action, including both the short- and long-term effects and benefits of a project based on what the agency determines is the life of a project and the duration of the emissions generation. The level of detail required for each project is left to the individual action agency using the “rule of reason.”

Additionally, and new in the Revised Draft Guidance, CEQ recommends the use of cost-benefit analyses when it is relevant to the choice among alternatives. CEQ instructs vaguely that where it is “appropriate” to monetize costs and benefits, then agencies should use the federal social cost of carbon protocol. This addition to the guidance appears to respond to a District Court case in Colorado, which found the federal social cost of carbon protocol (developed for rulemakings), valid for a project-specific analysis, where it invalidated a NEPA document for a coal mine, which quantified the benefits of the project and allowed the GHG emissions, but failed to use the protocol to disclose the costs associated with the GHG emissions (High Country Conservation Advocates v. U.S. Forest Service, No. 13-CV-01723-RBJ (D. Colo. June 27, 2014)).

Establish a “Frame of Reference” for GHG Emissions

Another new element of the Revised Draft Guidance is the instruction regarding use of a “frame of reference.” Specifically, CEQ advises that when discussing GHG emissions, it is helpful to incorporate applicable federal, state or local goals for GHG emissions reductions as a “frame of reference” for understanding the impacts. CEQ points to California as an example, noting that NEPA documents in California should examine how the proposed project will help or hurt in reaching the state’s emission reduction goals under Assembly Bill 32 (Global Warming Solutions Act), which requires California to reduce its GHG emissions to 1990 levels by 2020. Under California Gov. Jerry Brown's Executive Order B-30-15 (April 29, 2015), California recently set new targets for reducing GHG emissions: 40 percent below 1990 levels by 2030 and ultimately 80 percent by 2050, and California Senate Bill 32, introduced in the current legislative session, proposes to enact these targets into law. The Revised Draft Guidance is careful not to equate this “frame of reference” with a significance level under NEPA that would require the preparation of an Environmental Impact Statement, but how this “frame of reference” context should be interpreted and applied by an agency, or by a court, in mandating project-level mitigation, is unclear.

Determine a “Reference Point” for GHG Emissions Calculations

The Revised Draft Guidance admonishes federal agencies that a prior common approach of finding that GHG impacts do not need to be calculated and assessed, or are not significant, because the emissions represent only a small fraction of global emissions, is not appropriate. CEQ sets 25,000 metric tons of annual CO2-equivalent emissions as the trigger for requiring quantitative disclosure and a more in-depth analysis. However, CEQ also takes pains to clarify that this “reference point” is not intended to equate to a determination of significance. To determine whether a proposed project has significant impacts (and thus triggers the need for an environmental impact statement), the federal action agency must consider context (the relationship of the impact to its environment) and intensity (the severity of the impact), in light of the 10 factors set forth in existing regulations (40 CFR 1508.27). As a practical matter, it is not clear how agencies will make this determination for GHG emissions, where every incremental addition exacerbates a global problem.

Consider GHG-Reducing Alternatives, Mitigation and Monitoring

Under NEPA, agencies are required to consider a reasonable range of alternatives consistent with the purpose and need of the proposed project (40 CFR 1502.14). Mitigation and monitoring is not required (Robertson v. Methow Valley Citizens Council, 490 U.S. 332, (1989)). Where it would be useful to “advance a reasoned choice among alternatives,” the Revised Draft Guidance recommends that the agency compare the levels of GHG emission caused by each alternative and mitigation. Even though the Supreme Court has held that NEPA does not require an agency to mitigate the impacts of proposed action, in the Revised Draft Guidance, CEQ recommends that agencies should consider mitigation that may reduce GHG emissions and climate change effects – regardless of whether those emissions are significant. CEQ further recommends that agencies should also consider adopting an appropriate mitigation monitoring program.

CEQ's Revised Draft Guidance May Not Reduce Uncertainty

Although CEQ intends the guidance to “lessen litigation driven by uncertainty,” it is not clear the Revised Draft Guidance will accomplish this goal. The recommendation to consider upstream and downstream impacts is particularly vague, and the example of the open pit mine as requiring an analysis of the GHG emissions from the ultimate use of the materials mined suggests an in depth life cycle analysis could be required, but provides no additional guidance on how “causally connected” such impacts must be. Further, the Revised Draft Guidance specifically avoids providing direction on determining when GHG and climate change impacts are significant, and the recommendation to discuss different state “frameworks” could lead to different significant findings in different states. Finally, pushing federal agencies to require technology-forcing mitigation and monitoring – even where impacts may not be significant – could increase the regulatory burden and raise nexus and litigation potential.