The Council on Environmental Quality (CEQ) recently issued interim guidance titled National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions and Climate Change (CEQ-2022-0005). The guidance represents the latest action in a series of presidential policies regarding the National Environmental Policy Act’s (NEPA; P.L. 91-190) environmental regulations for agencies targeted towards reducing greenhouse gas (GHG) emissions and mitigating the impacts of climate change.
Although CEQ is seeking public comment on the interim guidance through March 10, 2023, the guidance is effective immediately. This client alert covers the recent history of NEPA, outlines key provisions of the new guidance and discusses the potential impact of the interim guidance.
Background. Since NEPA became law in 1970, various presidential administrations and courts have grappled with how to implement the mandate that leads agencies to consider environmental impacts before moving forward with “major federal actions” that “significantly affect the quality of the human environment” (42 U.S.C. Sec. 4332(2)(C)). The shifts in view regarding the scope of environmental review required under NEPA – and, in particular, the extent to which agencies must consider indirect impacts on the environment, including the effect of climate change and greenhouse gas emissions – have been notable across the Obama-Biden administration, the Trump-Pence administration and now the Biden-Harris administration.1
In 2016, during the Obama-Biden administration, CEQ directed agencies to consider the impact agency projects had on GHG emissions and climate change. When President Trump assumed office, he ordered that the division roll back the 2016 provisions while further streamlining NEPA reviews to facilitate permitting for infrastructure projects. When President Biden took office, he reversed course and halted all Trump-Pence era regulations, signaling a move towards extensive consideration of GHG emissions and climate change in NEPA reporting. In April of 2022, under direction from President Biden, CEQ published National Environmental Policy Act Implementing Regulations Revisions (87 FR 23453), which is the basis for the present guidance.
Content. This guidance is intended to assist federal agencies in implementing the requirements of the new rule to consider the impacts of the GHG emissions, especially carbon dioxide and methane emissions, from proposed federal projects by providing a common approach while recognizing the unique circumstances of each agency. Key provisions are summarized below:
Quantifying GHG Emissions. The guidance states that agencies should quantify “reasonably foreseeable” direct and indirect; upstream and downstream; and gross, net and cumulative GHG emission changes, including increases and reductions, annually and over a project’s lifetime. It details that each NEPA review should quantify emissions for the proposed action and “reasonable” alternatives, including the impacts of not acting at all, and identify the alternative action with the lowest net GHG emissions and the greatest new climate benefits. It also directs agencies to conduct a substitution analysis to understand how projects that may result in a foreseeable change to the energy mix will affect the energy resource. The guidance also calls for agencies to account for the effects of a project’s “connected” actions, or actions related to a proposed action that an agency must consider in the same environmental impact statement.
The guidance invokes the concept of proportionality and the “rule of reason,” advising that less detailed analyses are acceptable for projects, especially renewable energy projects, that result in net reductions of GHG emissions. Notably, the guidance does not establish a threshold for when a project's GHG emissions necessitate a lengthier environmental impact statement. On implementation, the guidance points to tools CEQ has made available for project applicants to provide the information needed for agencies to quantify GHG emissions. It also directs agencies to explain why in “rare instances” they cannot quality GHG emissions.
Social Cost of Emissions and Contextualization. The guidance charges agencies with using the best available estimates of the Social Cost of GHGs (SC-GHG), or the estimated monetary cost of damages associated with a continuous increase in GHG emissions as defined by the Obama-Biden era regulation Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 (86 FR 24669). The SC-GHG assigns a monetary value to the climate change effects of a project’s and its alternative’s GHG emissions. Notably, the guidance weighs in on an issue that has seen past litigation, calling for agencies to provide the SC-GHG statistic even if no other costs or benefits are monetized. To do this, CEQ calls for agencies to rely on up-to-date scientific literature and modeling to provide decision-makers and the public with a digestible understanding of how a project will impact people and their environments, especially at the local level.
Climate Effects. The guidance calls for NEPA reviews to consider how the effects of climate change caused by a project’s GHG emissions will contribute to the “current and future state” of the environment based on the best available climate reports, including the National Climate Assessment (NCA). The guidance further states that agencies should consider the climate change risks during all stages of a project, including planning, siting, project design and research into reasonable alternatives. It also calls for agencies to implement, indicate and explain resilience and adaptation measures associated with projects that could manage climate change risks.
Mitigation. The guidance further states that agencies should consider implementing mitigation measures to the furthest extent possible and as early in project development as possible to avoid or reduce GHG emissions associated with a project. It also outlines standards to evaluate the verifiability, durability and enforceability of mitigation measures.
Climate Commitments. Further, the guidance requires agencies to evaluate how a project and its alternatives would affect the United States' progress toward achieving climate goals and commitments at all levels of government, especially those outlined in international agreements. The guidance explicitly discourages reviews that compare a project’s emissions to total domestic or international emissions.
Environmental Justice (EJ). The guidance extends the Biden-Harris administration’s focus on EJ by adding EJ considerations to the NEPA review process. The guidance observes that marginalized communities are more vulnerable to climate-related health effects and other negative climate change effects while facing more barriers to climate relief. The report calls for agencies to use EJ resources, especially those from the new White House Environmental Justice Interagency Council, to minimize negative climate impacts on vulnerable populations that result from projects. It calls for early engagement with marginalized communities in the project planning process and consideration of alternatives.
Impact. The guidance, along with the August 2022 rule, represents the most rigorous NEPA climate reporting requirements to date. In contrast to the Obama-Biden and Trump-Pence era procedure of using GHG emissions as a proxy for climate change effects, the new requirements call for agencies to directly link the analysis of the effects of climate change to cost considerations by monetizing the effects of a project's GHG emissions using the SC-GHG framework. On SC-GHGs, the guidance also goes further than even the Obama-Biden administration mandated by calling for agencies to provide a review of a project’s SC-GHG even if no other costs or benefits are monetized. The guidance also introduces new techniques that boost the transparency and effectiveness of NEPA impacts, including analysis of consistency with climate commitments, explaining the impact of GHG emissions in accessible terms, encouraging mitigation and adaptation techniques and integrating consideration of EJ early in the project lifecycle.
The guidance states that agencies should adopt the guidance immediately for all NEPA reviews going forward and integrate the considerations outlined in the new guidance into ongoing NEPA reviews. It also notes that applicants for projects authorized by the Inflation Reduction Act (IRA; P.L. 117-169) or the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58) will be subject to particular scrutiny and increased data requirements under the new NEPA guidance. CEQ is accepting public comments on the guidance for 60 days, with comments due on or before March 10, 2023. CEQ may use comments to revise the current guidance, otherwise, it will finalize the guidance at the end of the public comment period. States are expected to challenge the guidance and seek to stay its implementation.
Akin Gump is skilled at helping clients craft thoughtful and impactful responses to public comments and has a robust and growing climate change and energy regulation practice. Clients interested in engaging on the new guidance are encouraged to contact the authors of this alert.
Annex 1: A Brief Timeline of Recent Regulatory Actions Related to NEPA
- August 8, 2016: Under the Obama-Biden administration, CEQ issued Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environment Policy Act Reviews (81 FR 51866). This guidance directed agencies to consider the impact agency projects had on GHG emissions and climate change.
- March 28, 2017: President Trump issued an E.O. titled Promoting Energy Independence and Economic Growth (E.O. 13783), which directed CEQ to roll back Obama-Biden-era NEPA guidance.
- April 5, 2017: CEQ complied with the Trump-Pence administration’s request to cease GHG emissions and climate change impact assessments under NEPA (82 FR 16576).
- July 26, 2019: CEQ issued draft guidance, Draft National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions, which narrowed the scope of federal agency reviews under NEPA (84 FR 30097).
- July 15, 2020: CEQ published Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act (85 FR 43304), which significantly streamlined NEPA reviews to facilitate permitting for infrastructure projects. Agencies were given until September 14, 2021, to comply with the update.
- January 20, 2021: President Biden issued an E.O., Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis (E.O. 13990), which directed agencies to review the Trump-Pence administration’s NEPA guidance.
- January 27, 2021: President Biden released an E.O., Tackling the Climate Crisis at Home and Abroad (E.O. 14008), which called for GHG emissions and climate change to once again be considered in federal permitting decisions.
- February 19, 2021: CEQ rescinded its 2019 Trump-Pence era draft guidance (86 FR 10252).
- June 29, 2021: CEQ issued Deadline for Agencies to Propose Updates to Environmental Policy Act Procedures (86 FR 34154), which postponed the date agencies had to comply with the 2020 guidance to September 14, 2023.
- April 20, 2022: CEQ published National Environmental Policy Act Implementing Regulations Revisions (87 FR 23453), which required federal agencies to consider the climate impacts of major infrastructure projects under NEPA.