Greenhouse gas (GHG) emissions are now recognized as an environmental impact under the National Environmental Policy Act (NEPA), and state analogs such as the California Environmental Quality Act (CEQA) the Washington State Environmental Policy Act (SEPA) and the Minnesota Environmental Policy Act (MEPA). Federal and state agencies and working groups have been developing guidance to help lead agencies and project proponents address these impacts during environmental review. This update examines recent administrative developments under NEPA, CEQA SEPA, and MEPA. In each case, emerging guidance leaves open the question of what level of GHG emissions constitutes a "significant" impact requiring review in an Environmental Impact Statement (EIS). This approach provides considerable flexibility to lead agencies, but it will also leave the final determination of this central issue to the courts. Project proponents will need to evaluate their actions on a case-by-case basis and proactively develop a strategy to coordinate with the lead agency.  

A. NEPA

On February 18, Nancy Sutley, Chair of the White House Council on Environmental Quality (CEQ), issued a memorandum (Draft Guidance) for heads of federal departments and agencies providing guidance on the consideration of the effects of climate change and GHG emissions under NEPA. The Draft Guidance is not effective until it is issued in final form. CEQ has requested public comment on all aspects of the Draft Guidance.

The Draft Guidance proposes to require federal agencies to consider the effects of climate change and GHG emissions when conducting NEPA analyses. While it has become the practice of many agencies to assess the effects of climate change when performing a NEPA analysis, the Draft Guidance more specifically recommends that an agency that proposes to take an action that directly emits GHGs in excess of 25,000 tons annually to consider the effects of those emissions on the environment in a qualitative and quantitative manner. The Draft Guidance makes clear that 25,000 tons do not constitute a significant impact requiring an EIS. Rather, the Draft Guidance states that "a quantitative and qualitative assessment" of emissions "may be meaningful to decision makers and the public" when a project exceeds that level. Such an assessment could occur in either an Environmental Assessment or an EIS.

In addition the Draft Guidance appears to suggest that the effects of climate change on the project be examined in the cumulative effects section of the NEPA document. Page 6 of the Draft Guidance indicates, for example, that "climate change can affect the integrity of a development or structure by exposing it to a greater risk of floods, storm surges or higher temperatures. Climate change can increase the vulnerability of a resource, ecosystem, or human community, causing a proposed action to result in consequences that are more damaging than prior experience might indicate." The Draft Guidance also suggests that the focus of this analysis should be on the aspects of the environment that are affected by the proposed action and the significance of climate change for those aspects of the affected environment. Importantly, it is careful to point out that agencies must employ "the rule of reason" to ensure that their discussions pertain to the issues that deserve study and deemphasize issues that are less useful to the decision regarding the proposal, its alternatives, and mitigation options. The Draft Guidance acknowledges that agencies may limit the scope of cumulative impact analyses on the basis of practical considerations, which in the case of climate change includes scientific uncertainty regarding anticipated environmental effects in a specific project area.

The Draft Guidance specifically suggests that climate change effects should be considered for projects that are designed for long-term utility and located in areas that are considered vulnerable to specific effects of climate change (such as increasing sea level or ecological change) within a project's timeframe. Finally, it emphasizes the value of adaptive management and the value of monitoring to ensure that environmental goals of a decision are realized.

The Draft Guidance also includes a short list of potentially satisfactory mitigation options, including energy efficiency and carbon sequestration.

In sum, the Draft Guidance provides ideas for considering GHGs in each stage of the NEPA process. However, it leaves open to question a fundamental issue in NEPA analyses—the level of emissions that would trigger an EIS. Thus, litigation will remain the principal mechanism for answering this question.

B. CEQA

With respect to California, in 2007 the California legislature directed the state Office of Planning and Research (OPR) to develop regulations for the analysis and mitigation of GHGs under CEQA. This process was completed on December 30, 2009 as revisions to the CEQA Guidelines (title 14, section 15000, et seq. of the California Code of Regulations).

Instead of establishing a clear statewide standard, however, OPR left it to the individual agencies to set their own levels of significance. The regulations allow the agencies to perform either a quantitative or a qualitative analysis to determine if the impact from the GHG emissions from a particular project is significant. This significance "threshold" is the key under CEQA not only to determine whether the project itself has a significant impact, which defines the extent of compliance required, but also to set the bar for other analysis including those involving mitigation and project alternatives.

A quantitative analysis involves a standard based upon a specific numeric threshold, which many industries find difficult to identify given the nature of GHGs. In contrast, a qualitative analysis determines significance based on a project's compliance with performance standards or its consistency with GHG reduction plans or regulations (Climate Action Plan (CAPS)).

To date, agencies that have issued regulations or guidance seem to use a combination of these two methods. The Bay Area Air Quality Management District (BAAQMD) has set quantitative standards that are based upon the difference between projected emissions and emissions that would be regulated under A.B. 32 (the California Global Warming Solutions Act). The BAAQMD also will allow CAPS under strict criteria. In turn the San Joaquin Valley Air Pollution Control District (SJVAPCD) will allow compliance with Best Performance Standards (BPS) to reduce GHG emissions rather than emissions quantification and mitigation for individual projects. If the BPS cannot be met or there is none for that industry, a source may be able to escape significance by quantifying its emissions and reducing the GHG by 29%, which is the estimated reduction required under A.B. 32. The SJVAPCD is currently working with the public to set the BPS for specific industries. Finally, the South Coast Air Quality Control District is looking at a tiered approach, with current quantitative levels based upon a 90% capture rate for stationary sources. This approach would require the quantification of GHGs for a project as well as all mitigation measures included in the project or added during the CEQA process. The tiered approach may also allow the use of CAPS or other measures to determine significance levels.

At this juncture there is no clear path for projects with respect to GHGs and the CEQA process. Project proponents will need to comply with whatever process the relevant lead or responsible agency has developed to deal with GHGs and make sure that whatever analysis is incorporated into their CEQA documents is defensible under the new CEQA Guidelines, local regulation or guidance, and any case law that develops.

C. Washington SEPA

In 2008, the Washington Climate Action Team convened a SEPA Implementation Working Group (IWG) in an effort to prescribe SEPA guidelines for evaluation of projects with GHG impacts. This effort did not yield concrete results. The IWG concluded:

There are many issues that the SEPA IWG did not fully address or resolve because of the constraints of time, the complexity of the issues, and the many aspects of SEPA that are affected by considerations of climate change. For example, the SEPA IWG did not fully develop an approach for conducting SEPA threshold determinations and what the standard (or standards) of significance for projects and non-projects should be. The IWG did, however, focus this and other discussions on key sets of questions and options that provide direction for future work. Regarding GHG mitigation, the IWG reported: There are a wide range of climate change strategies that are already being considered by other jurisdictions as possible mitigation for greenhouse gas emissions. Although a promising number of strategies exist, we currently have little information about the effectiveness of the individual strategies. We also have little information about the costs versus the cost savings of various strategies. These information gaps lead the IWG to recommend that Ecology publish the entire list of mitigation options without recommending specific options at this time. Ecology, along with the advisory committee, should assess effectiveness and address the cost-efficiency of various options with an eye toward developing more specific guidance at a later date.

The Washington Department of Ecology is expected to issue a draft guidance later this spring; however, according to individuals working on the guidance it will not establish numeric levels of emissions that constitute a significant impact.

D. MEPA

In September 2009, the Minnesota Pollution Control Agency (MPCA) provided guidance on how to address GHGs in the state's environmental review process under MEPA. MPCA uses a different framework from the CEQ for determining when a proposal requires meaningful consideration of climate change in environmental review. Rather than identifying a reference point (i.e., 25,000 metric tons per year), the MPCA requests quantitative analysis of GHGs from all proposers of projects that are also required to obtain air emissions permits. These proposers should develop carbon footprints that include reports of all GHG emissions from within the boundary of the proposed facility, and emissions from the generation of any purchased electricity.

Further, if the proposed project involves fuel combustion, the analysis should include a description of other fuel choices that were evaluated in the development of the project and their effect on GHG emissions. Also, if the proposed project is not the lowest GHG-emitting option, a description of why the project was still selected should be included.

Like the CEQ's Draft Guidance, MPCA's guidance makes recommendations on methodology for these calculations. But MPCA suggests using the protocol designed by the Climate Registry, a non-profit collaboration that sets GHG reporting standards, rather than using the various federally developed technical documents recommended by CEQ. Unlike the Draft Guidance, Minnesota's guidance does not recommend consideration of the effects of climate change on project proposals.

It appears that any project challenged on the basis of whether a sufficient GHG analysis was performed will be evaluated on a case-by-case basis. For example, in 2009 the Minnesota Court of Appeals decided a challenge to the scope of environmental review performed by the Department of Natural Resources (DNR) in issuing a permit for a proposed mining and steel mill. The steel company argued that MEPA did not extend to climate change issues. The DNR argued that its analysis, including a carbon footprint study (similar to the one in the MPCA guidance), was sufficient given the current state of climate science. The court held that MEPA does extend to GHG emissions and that the DNR review was sufficient under MEPA.