The guidance will significantly affect infrastructure projects located on federal land and federal permitting of major energy projects.

On December 18, the White House’s Council on Environmental Quality (CEQ) issued draft guidance regarding how federal agencies should evaluate greenhouse gas (GHG) emissions and climate change impacts when conducting environmental reviews under the National Environmental Policy Act (NEPA). The guidance updates an earlier draft issued in 2010 and responds to recommendations submitted to the White House in November by the State, Local, and Tribal Leaders Task Force on Climate Preparedness and Resilience.

NEPA reviews apply to major federal actions and, thus, are critical in a wide variety of contexts, including agency licensing proceedings for, inter alia, power plants, pipelines, or liquefied natural gas export facilities; resource management decisions and approvals for projects on federal lands or under federal jurisdiction (such as transmission projects, energy exploration, wind and solar production, and agricultural activities); and in connection with specific projects undertaken by the federal government or with federal funds (e.g., dam and highway projects). CEQ guidance, although not “binding,” guides agencies’ NEPA reviews and is relied on by courts.

The draft guidance states that “it is now well established that rising global atmospheric GHG emission concentrations are significantly affecting the Earth’s climate,” and therefore “to remain consistent with NEPA,” agencies should consider the extent to which a proposed action impacts climate change. The question of whether, and if so how, agencies are to evaluate the GHG emissions associated with a particular agency action has proved troublesome and spurred significant litigation by groups that seek to block particular projects. The guidance is intended to “facilitate compliance” and to “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.” The updated draft includes discussion on land management activities not addressed in the earlier draft, and CEQ is providing another opportunity for public comment.

Key Aspects of the Draft Guidance

The draft guidance provides that agencies should consider the extent to which proposed agency actions and alternatives contribute to climate change through GHG emissions and that agencies should take into account the ways in which a changing climate over the life of the proposed project may alter the overall environmental implications of such actions. Significantly, the draft guidance covers the below topics.

Identifying and Considering Impacts

• Agencies should avoid boilerplate statements, without assessment, that the emissions from a particular action are only a small fraction of total global or national GHG emissions and, therefore, no further analysis is warranted. Such statements are not sufficient treatment of a project’s climate change impacts, nor can they support an agency’s refusal to consider the climate change impacts of a particular action.

• A recommendation that, given the difficulty of attributing specific climate change impacts to individual projects (because one cannot trace particular GHG emissions to particular impacts), agencies rely on projected GHG emissions, plus, when appropriate, any associated changes in carbon sequestration and storage as a proxy for the potential climate change impacts. CEQ notes that agencies should be guided by the principle that the extent of the analysis should be commensurate with the quantity of projected GHG emissions, and that it can be helpful to provide a frame of reference when discussing GHG emissions, such as applicable agency emissions targets.

• Emissions from activities that have a “reasonably close causal relationship to the Federal action,” such as upstream activities (that may occur as a predicate of the action under review) and downstream activities (that may occur as a consequence of the action under review) should be included in the NEPA analysis.

• While noting that consideration of cumulative effects is not expected to be sufficient grounds to require an Environmental Impact Statement (EIS), agencies must consider whether the reasonably foreseeable incremental addition of emissions from the proposed action, when added to the emissions of other relevant actions, is significant when determining whether GHG emissions are a basis for requiring an EIS. Agencies can consider reasonable temporal and spatial parameters in identifying the reasonable foreseeable effects but should take into account both the short- and long-term effects and benefits based on the life of a project and duration of the emissions’ generation.

• For land management decisions, an agency’s evaluation should reflect the unique considerations associated with biogenic sources of emissions. This may require comparison of net GHG emissions and carbon stock changes that would occur with or without the proposed management decision. Such analysis may be more appropriately considered as part of the review that supports larger policy or programmatic decisions.

Analyzing Emissions

• While confirming that NEPA does not require an agency to conduct original research, the draft provides that an agency present the environmental impacts of the proposed action with sufficient information to ensure the scientific integrity of its analysis. Such analysis could be quantitative or qualitative and informed by the tools and information available.

• Noting that GHG estimation tools have become widely available and are already in broad use in the public and private sectors, agencies are encouraged to provide quantitative estimates of GHG emissions and sequestration. In light of the rule of reason and to focus on “significant” actions, specific emissions quantification for an action will generally not be required if it is expected to generate annual emissions below 25,000 tons CO2e.

• Recognition that a cost-benefit analysis may be used in some cases and direction that, if a cost-benefit analysis is included in an environmental review, the federal social cost of carbon assessment should be used.

Alternatives and Mitigation

• Where there are likely to be significant GHG differences among various alternatives (including the alternative of “no action”), those differences should be discussed and disclosed to the public.

• Environmental analyses should consider mitigation of GHG emissions, which may include enhanced energy efficiency, lower GHG-emitting technology (such as renewable energy), carbon capture, carbon sequestration, sustainable land management practices, and capturing or beneficially using fugitive GHG emissions (e.g., methane). For Findings of No Significant Impact, a monitoring program should also be considered.

Considering Effects of Climate Change on Affected Environment

• The current and expected future state of the environment, including consideration of climate change impacts, represents “the reasonably foreseeable affected environment” that provides the basis for comparison of the proposed action and alternatives. Impacts on vulnerable communities may also be considered, and the guidance recommends engaging environmental justice experts in the review process.

• Consideration should be given to whether a project itself will be vulnerable to climate-change related impacts, potentially resulting in additional GHG emissions. For example, infrastructure projects located in coastal areas may be vulnerable to sea-level rise or increased storm surges and would be more likely to require rebuilding or duplication.

Implications

The draft guidance endorses the position that GHG emissions and climate change are environmental impacts that require study under NEPA. While referencing the rule of reason standard and the action agency’s discretion in, for example, determining significance, agencies (and project proponents) may find it difficult to argue that climate change impacts are too speculative, uncertain, or difficult to quantify given the observations on the many tools available to estimate GHG impacts and carbon sequestration.

Incorporating the recommendations in the guidance will expand the scope and complexity of the NEPA analyses for many projects, such as new infrastructure for increased production of oil and gas or transporting renewable energy from new areas of production. Preparing the GHG analysis suggested in the guidance will likely add to the time required to get the necessary federal permissions and to project costs. Moreover, the guidance may support a detailed review of technical design issues that have previously been relatively uncommon. For example, the discussion on mitigation could invite agencies that may have little or no expertise in the construction and operational constraints of a particular facility to involve themselves in such aspects when assessing the facility’s energy efficiency.

The draft guidance is open for comment for 60 days. Changes may still occur before it becomes final, and there is no expected timeline for issuing the final guidance. Nonetheless, those with projects under way that are subject to NEPA review or those that are contemplating such projects should consider how to approach the analysis of climate change impacts, including appropriate tools to use, alternatives, and potential mitigation, particularly for projects expected to have substantial GHG emissions. Failure to include a quantitative or qualitative analysis may open the project to litigation risk under the guidance, unless accompanied by a carefully reasoned statement of why such analysis is not warranted.