On December 18, 2014, the White House Council on Environmental Quality (CEQ) released revised draft guidance on the consideration of greenhouse gas (GHG) emissions and climate change in National Environmental Policy Act (NEPA) review.[1]  The CEQ previously issued this guidance in draft form in February 2010.[2]  Rather than finalize that draft, the CEQ opted to issue significantly revised draft guidance and open a 60-day public comment period, which closes on February 23, 2015.[3]

One of the most notable changes in this revised draft is that the CEQ addresses the question of whether agencies should monetize costs and benefits of a project.  The CEQ notes that the use of cost-benefit analysis depends on whether it is relevant to the choice among alternatives.  However, when agencies choose to include this analysis, the CEQ endorses the Federal social cost of carbon estimates as a “harmonized, interagency metric that can provide decision makers and the public with some context for meaningful NEPA review.”[4]  Following a June 27, 2014 U.S. District Court for the District of Colorado decision invalidating a final Environmental Impact Statement for failure to disclose the costs associated with GHG emissions and ignoring the social cost of carbon estimates,[5] there has been much uncertainty about the use of these estimates in NEPA documents.  The court decision and the 2014 Draft Guidance represent a shift in the use of those estimates, which were developed for significant federal rulemakings.  However, the extent to which agencies will use these estimates in NEPA review remains to be seen.  The revised draft acknowledges the limitations of the social cost of carbon estimates, including the fact that they were developed for rulemaking analysis, the estimates vary over time, and they are associated with different discount rates.[6]

Among other notable changes in the 2014 Draft Guidance, the CEQ definitively stated that agencies’ assessment of direct and indirect climate change effects should account for upstream and downstream emissions.[7]  This position goes further than the 2010 proposal, which stated that evaluation of upstream and downstream effects “must be bounded by limits of feasibility.”[8]  This new language could expand the scope of analysis for some agencies that had previously declined to consider upstream and downstream emissions.  Moreover, unlike the 2010 guidance, which did not apply to Federal land and resource management actions, the 2014 Draft Guidance specifically applies to those actions and includes guidance on biogenic sources of GHG emissions from land management actions.[9]

Other aspects of the revised guidance build upon and clarify concepts included in the 2010 Draft Guidance.  For instance, the 2010 Draft Guidance encouraged agencies to include a quantitative assessment of GHG emissions for projects expected to have direct GHG emissions of 25,000 metric tons or more on an annual basis.[10]  The 2014 guidance continues to recommend 25,000 annual metric tons of GHG emissions as a “reference point” for emissions warranting a quantitative assessment.[11]  Like the 2010 Draft Guidance, the 2014 Draft Guidance encourages agencies to include considerations of GHG emissions and climate change in alternatives analysis, mitigation considerations, and the evaluation of the environmental consequences of a proposed action.

The revised guidance is likely to result in expanded evaluation of GHG emissions and climate change impacts in agency NEPA review and is anticipated to have implications in the near term.  Indeed, while CEQ did not intend the 2010 Draft Guidance to become effective until its issuance in final form,[12] agencies commonly cited it in NEPA documents.  Similarly, while the preamble to the 2014 Draft Guidance states that it will be effective “once finalized,”[13] agencies are expected to refer to it in NEPA documents on an ongoing basis—particularly since the 2014 Draft Guidance expressly encourages agencies to apply it, “to the extent practicable,” in ongoing reviews.[14]  As the guidance is initially applied at the project-level, such environmental reviews may be prolonged.