Both the federal government and a number of states recently have begun to require consideration of greenhouse gas emissions when evaluating the environmental impacts of proposed projects under the federal National Environmental Policy Act ("NEPA") and analogous state laws. These changes will affect many private construction and development projects that need government permits or other authorizations.

Proposed NEPA Guidance

NEPA requires federal agencies to review, among other matters, the environmental impacts of proposed private projects that require permits issued under federal statutes. On February 18, 2010, to coincide with the 40th anniversary of NEPA, the White House Council on Environmental Quality issued four draft guidance memoranda to "modernize and reinvigorate" NEPA, two with significant implications related to climate change. The CEQ is accepting public comments on the draft guidance until May 19, 2010.

Guidance on Evaluating Greenhouse Gas Emissions. If a proposed project is reasonably anticipated to cause annual direct emissions of 25,000 metric tons or more of CO2-equivalent greenhouse gas, the draft guidance provides that federal agencies should consider an assessment of the emissions as part of the review under NEPA. The CEQ characterizes the 25,000 figure as a "presumptive threshold" that triggers a quantitative analysis. In addition, the draft guidance encourages an analysis of greenhouse gas emissions for long-term projects that will have annual emissions of less than 25,000 metric tons. The draft guidance also addresses quantification of projected greenhouse gas emissions, consideration of project alternatives, and mitigation options. The draft guidance would not be applicable to federal land and resource management actions.

Guidance on Mitigation and Monitoring. The draft guidance also provides that mitigation measures that are either in an Environmental Impact Statement and Record of Decision, or in an Environmental Assessment and Finding of No Significant Impact, should be identified as "binding commitments" to the extent consistent with agency authority. Identified mitigation measures should include both consideration of project alternatives and consideration of project design changes. Perhaps most significantly, the draft guidance provides for a monitoring program to assess whether the mitigation measures are implemented and whether the measures actually reduce the environmental impacts of a project. As stated in the draft, "A substantial mitigation failure, in either implementation or effectiveness, should trigger a response from the agency."

State Actions

Many states have adopted statutes similar to NEPA that require an assessment of the potential environmental impacts of proposed state action, including state issuance of licenses, permits, and land use entitlements. As with CEQ, many of these states have revised, or are in the process of revising, their environmental review process to consider the impact of a proposed project on climate change.

Massachusetts. In 2008, Massachusetts amended its Environmental Policy Act to provide that state authorities must consider reasonably foreseeable climate change impacts, including the effects of greenhouse gas emissions, when reviewing requests for administrative approvals. In February 2010, the state's Office of Energy and Environmental Affairs issued proposed revisions to its Greenhouse Gas Emissions Policy and Protocol, including an updated and refined list of suggested mitigation measures.

California. On March 18, 2010, regulatory amendments on consideration of greenhouse gas emissions under the California Environmental Quality Act took effect. The amendments provide that the lead agency should make a good-faith effort to describe or estimate the greenhouse gas emissions that would result from a proposed project and should evaluate the significance of the impacts from such emissions.

New York. On July 15, 2009, the New York State Department of Environmental Conservation issued guidance for reviewing an Environmental Impact Statement under the state's Environmental Quality Review Act when it includes a discussion of greenhouse gas emissions. The guidance addresses quantification of greenhouse gas emissions and consideration of project alternatives.

These are just examples, and not an exhaustive list, of developments at the state level. Companies that intend to seek state permits should evaluate the law and guidance of the issuing state.