HIGHLIGHTS:

  • The White House Council on Environmental Quality (CEQ) published its final guidance on considering greenhouse gas (GHG) and climate change impacts in reviews conducted under the National Environmental Policy Act (NEPA).
  • The final NEPA guidance directs federal agencies to analyze a project's GHG emissions using a quantitative analysis whenever the tools and data are "reasonably available."
  • The guidance leaves a great deal of discretion to individual federal agencies to determine what quantity of GHG emissions should be considered "significant," to what extent a project's "indirect" impacts on climate change should be attributable to the project, and when and to what extent alternatives and mitigation measures should be used to reduce GHG emissions.

After more than six years of review and the issuance of several draft guidance documents, the White House Council on Environmental Quality (CEQ) published on Aug. 5, 2016, its final guidance on considering greenhouse gas (GHG) and climate change impacts in reviews conducted under the National Environmental Policy Act (NEPA). See Holland & Knight's May 2015 alert for an analysis of the prior draft guidance.

Although CEQ notes that the guidance is not legally binding, as a practical matter, the final guidance effectively requires agencies to:

  • analyze a project's GHG emissions, as well as the effects the changing climate may have on a proposed project over the project's lifetime
  • use a quantitative (rather than qualitative) analysis to assess a project's projected GHG emissions whenever the tools and data to do so are "reasonably available"
  • provide a "recognizable frame of reference" by considering whether a project would be consistent with regional, state, tribal or local climate change plans, policies or laws

Beyond these requirements, it will remain up to agencies to determine what quantity of GHG emissions will be considered "significant," to what extent a project's indirect impacts (such as so-called "upstream" or "downstream" GHG emissions) should be attributed to a project, and when and to what extent alternatives and mitigation measures to reduce GHG emissions should be required.

Courts have held that NEPA is a procedural statute, requiring only a "hard look" at environmental impacts. See NRDC v. Morton, 458 F.2d 827, 838 (D.C.Cir., 1972). Despite this, the final guidance's discussion of alternatives and mitigation measures contains language that some federal agencies could cite as justification to use the NEPA process to force the substantive reduction of GHG emissions. It remains to be seen which agencies will see CEQ's guidance as an invitation to go beyond the "hard look" doctrine, and which agencies will instead follow the guidance's frequent admonitions to follow the "rule of reason" and conduct NEPA analyses that are reasonably proportionate to the scale of each project's impacts on global climate change.

The key features of the final guidance are discussed below:

Quantifying GHG Emissions to Analyze a Project's Impact on Climate Change

Citing the global scope of impacts of GHG emissions, the final guidance recommends that agencies use projected GHG emissions associated with a proposed action as a proxy for assessing a project's potential effects on climate change.

The final guidance is clear that a quantitative analysis is preferred over a purely qualitative analysis. Unlike prior drafts, the final guidance removed the 25,000 metric tons of carbon dioxide (CO2) per year threshold under which a proposed project would not have been required to disclose a quantitative analysis. The guidance advises agencies to use appropriate, available tools and methodologies to quantify GHG emissions, but notes that it does not expect agencies, and importantly, project proponents, to fund or conduct original climate change research to support NEPA analyses. If an agency determines that it will only perform a qualitative analysis, it should explain the basis of its determination that quantification tools are not reasonably available.

Following the "rule of reason" and basic principles of proportionality, the final guidance recommends that the depth of analysis should be commensurate with the scale of a project, but provides no guidance on how to judge significance.

No Guidance on Establishing a Level of Significance

The final guidance explicitly declines to establish any specific quantity or threshold of GHG emissions that would factor into an agency's "significance" determination regarding the need to prepare an environmental impact statement (EIS). Determinations of potential "significance" remain subject to individual agency practice, including normal considerations under NEPA of the context (the relationship of the impact to its environment) and intensity (the severity of the impact) of actions. 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. It will remain up to individual agencies to make the critically important determination of when a project's GHG impacts are sufficient to require an EIS.

"Frame of Reference" for GHG Emissions

The final guidance also advises agencies to use a "recognizable frame of reference" when evaluating GHG emissions. Specifically, agencies should reference relevant and approved federal, regional, state, tribal or local plans, policies or laws for GHG emission reductions or climate adaptation to "make clear" whether a proposed project's GHG emissions are consistent with such plans or laws. As an example, CEQ notes that the U.S. Department of the Interior's Bureau of Land Management has appropriately discussed how agency actions in California may or may not facilitate California reaching its emission reduction goals under California's Global Warming Solutions Act of 2006, AB 32 (Stats. 2006, Ch. 488).

While the final guidance indicates that this "frame of reference" will inform the policy discussion, it may also be useful in defining significance or analyzing alternatives and mitigation.

Analyzing a Project's Indirect Impacts on Climate Change

In assessing GHG effects, CEQ instructs agencies to take into account the proposed action, including any "connected" actions, "subject to reasonable limits based on feasibility and practicality." The final guidance provides that activities that have a "reasonably close causal relationship" to the federal action should be included in the NEPA analysis. Although the final guidance dropped the use of the terms "upstream" and "downstream" emissions, which were controversial concepts in the preceding draft, CEQ still maintains that a NEPA analysis should account for actions that may occur as a predicate for a proposed agency action or as a consequence of a proposed agency action. Thus, it is not clear how far the agencies' analyses should extend into the "lifecycle" of emissions.

In the final guidance, CEQ uses an example of a resource extraction project to explain that a NEPA review could include the reasonably foreseeable effects of various phases in the process, such as clearing land for the project, building access roads, extraction, transporting the extracted resource, refining and processing, and notably "using the resource." To clarify the point regarding the "end-use" of resources, the guidance provides an example of federal land leases for the sale of coal for energy production and instructs that the impacts associated with the end-use of the extracted coal include the reasonably foreseeable combustion of the coal.

Beyond these specific examples, CEQ does not provide guidance regarding how close the "causal relationship" must be to include "upstream" or "downstream" impacts in the project review.Again, federal agencies may take disparate approaches to including "downstream" or "upstream" GHG emissions in the calculations of a project's climate change impacts.

Impact of Climate Change During the Life of a Project

In addition to requiring an analysis of a project's GHG emissions, the final guidance directs agencies to consider the extent to which a proposed action and its reasonable alternatives are potentially affected by the changing climate, including how the project's environmental impacts might change over time. CEQ notes that climate change can make a resource, ecosystem, human community or structure more susceptible to many types of impacts and lessen its resilience to other environmental impacts apart from climate change. The final guidance directs agencies to consider these potential vulnerabilities in impact analyses and to evaluate initial project designs, as well as alternatives with greater potential resilience to climate impacts, in making decisions.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 be considered, or where a proposed project would include potentially vulnerable coastal infrastructure, such as on a barrier island, the consequences of sea level rise or more intense storms should be considered.

Alternatives and Mitigation

NEPA is known as a "hard look" statute, under which the lead agency is required only to disclose the impacts and consider a reasonable range of alternatives. The U.S. Supreme Court has held that NEPA does not require an agency to mitigate the impacts of proposed actions and monitoring is not required. See Robertson v. Methow Valley Citizens Council, 490 U.S. 332 (1989). Despite this, CEQ recommends in the final guidance that agencies should consider both alternatives and mitigation that may reduce GHG emissions and climate change effects. CEQ further recommends that agencies should also consider adopting appropriate mitigation monitoring for GHG reductions. The final guidance does not, however, specifically clarify when these recommendations should be implemented (i.e., whether such considerations are only implicated when the GHG impacts of a proposed project are significant).

The Bottom Line

In the prior draft guidance, CEQ predicted that "[t]his guidance should also reduce the risk of litigation driven by uncertainty in the assessment process as it will provide a clearer expectation of what agencies should consider and disclose." See 79 Fed. Reg. 77824 (Dec. 24, 2014). Perhaps tellingly, the final guidance does not make any such claim.

CEQ's final guidance provides some certainty to agencies and project proponents regarding the overall approach to including GHG and climate change impacts in NEPA reviews, the need to provide a quantitative analysis of GHG emissions whenever it is reasonably possible to do so, and the need to use the "rule of reason" to conduct an analysis that is reasonably proportionate to the scale of a project. But the final guidance leaves fundamental questions for individual agencies to answer, including the point at which GHG impacts should be considered "significant," the extent to which "upstream" or "downstream" emissions should be considered part of a project's impacts, and the extent to which alternatives and mitigation measures to reduce GHGs should be included. Since different state and local governments have different climate change policies and laws, CEQ's guidance to include a "frame of reference" in NEPA analyses could lead to different significance findings in different states. Finally, encouraging federal agencies to require technology-forcing mitigation and monitoring, even when impacts may not be significant, could increase the regulatory burden and raise nexus and litigation potential.