The President's Council on Environmental Quality (CEQ), has issued its long-awaited draft guidance regarding the analysis of climate change impacts in National Environmental Policy Act (NEPA) documents. The Obama administration inherited a February 28, 2008 petition from the Natural Resources Defense Council, Sierra Club and others asking CEQ to issue a rule mandating the inclusion of climate change analysis in environmental review documents. The February 18, 2010 draft responds to that petition and establishes the Administration's position that federal agencies should both consider climate change impacts and take opportunities to reduce greenhouse gases.

While the recent release is a draft, it constitutes a firm statement that climate change impacts should be a part of NEPA documents. CEQ has:

propose[d] to advise Federal agencies that they should consider opportunities to reduce GHG [(greenhouse gas)] emissions caused by federal actions and adapt their actions to climate change impacts throughout the NEPA process and to address these issues in their agency NEPA procedures.

If finalized without change, the CEQ Guidance would advise federal agencies to consider both (1) “the GHG emissions effects of a proposed action” and its alternatives and (2) “the relationship of climate change effects of a proposed action or alternatives.” NEPA applies to federal actions, including actions on private applications for permits or other federal approvals, as well as projects slated to receive federal funding. As a result, applicants for federal permits and contractors involved in federally funded projects have a significant stake in this draft Guidance.

The draft Guidance is open for a 90-day comment period following its publication in the Federal Register. Since the CEQ draft does not go as far as was urged in the February 28, 2008 petition, the public comments will be robust. Given the potential breadth of NEPA and climate change impacts, it is important to participate in the public comment process.

There are several significant limitations in CEQ’s proposal. First, it does not apply to federal and resource management actions (although CEQ is seeking public comment on “the appropriate means of assessing the GHG emissions and sequestration that are affected by such actions”). As a result, decisions by agencies such as the Forest Service and Bureau of Land Management will not fall under the purview of the guidance. Additionally, CEQ has stressed that the suggested analysis is only recommended for large projects. While CEQ does not establish a bright line, it recommends that agencies consider projects that are “reasonably anticipated to cause direct emissions of 25,000 metric tons or more of CO2-equivalent GHG emissions”

annually as likely to require climate change analysis. As discussed in prior Venable GHG Client Alerts, 25,000 tpy is an amount approximately equal to burning about 30 MMBTU/hr or about 2.5 million gallons of fuel per year. For smaller projects, “CEQ encourages federal agencies to consider” whether they should perform a GHG analysis, but does not suggest it. In determining the scope of a project’s direct emissions, an agency should limit itself to “the consequences of actions over which it has control or authority.”

As to the actual analysis of GHG emissions themselves, CEQ has proposed that agencies (1) quantify the direct GHG emissions over the project’s life, (2) discuss measures to reduce GHG emissions and (3) qualitatively discuss the link between GHG emissions and climate change. When discussing the relationship of climate change to the proposed action, the applicable analysis will vary based on the context of the project, including its sensitivity, location, and timeframe. The analysis should include both any possible increased vulnerability of the project to climate-induced effects (such as storms, drought, etc... ) and any possible increase in the vulnerability of the impacted resources (such as wildlife habitat or other natural resources).

In short, CEQ has offered federal agencies somewhat limited guidelines on how to analyze GHG and climate change effects, but does not establish any specific requirements for factors that must be included in that analysis. It would provide agencies with a great deal of flexibility as to when and how to analyze GHG emissions and climate change impacts. The details will emerge after public comments and in the final Guidance.