White House Reboots Draft Guidance on Evaluating Climate Change Impacts

The White House Council on Environmental Quality (CEQ) has restarted the process for formal advice on how best to evaluate greenhouse gas emissions and the impacts of climate change under the National Environmental Policy Act (NEPA). More than four years after issuing its first draft guidance on the same subject, CEQ published its Revised Draft Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in NEPA Reviews on December 24, 2014.

Despite a complete rewrite, the Revised Draft Guidance offers no major changes in substantive advice, as CEQ mostly reinforced and clarified many of its previous positions. However, there is much to be learned in the clarification of old points and the introduction of a few new ones.

In responding to copious public comments, CEQ clarified and expanded several of its prior themes, including:

• NEPA already requires a GHG analysis: CEQ reconfirmed that climate change is a “fundamental environmental issue” and that “analyzing the proposed action’s climate impacts and the effects of climate change…should be very similar to considering the impacts of other environmental stressors under NEPA.”
• NEPA requires a reverse analysis of climate change impacts: The Draft Guidance emphasizes that an adequate NEPA analysis requires consideration of both (1) the potential effects of a proposed action on climate change, and (2) the implications of climate change for the environmental effects of the proposed action. This latter perspective is not just about how climate change might affect the proposed action (e.g., sea level rise), but how climate change may alter the effects of the proposed action. For example, where a proposed action requires water from a stream, the analysis should evaluate the proposed action’s impact by anticipating diminishing quantities of available water due to the effects of climate change.
• CEQ recommends a “reference point” to indicate when a deeper analysis is warranted: The Revised Draft Guidance still recommends a “reference point” of 25,000 metric tons CO₂-equivalent emissions on an annual basis. CEQ clarified that the reference point is not intended to be equivalent to a determination of significance, and that significance remains subject to the standards set forth in CEQ regulations, which require consideration of both context and intensity and set out ten factors that should be taken into account when determining significance. Presumably an Environmental Assessment (EA) and Finding of No Significant Impact (FONSI) could still conclude through quantitative and qualitative analysis that the GHG emissions of a proposed action are not significant, despite being greater than 25,000 metric tons per year.

CEQ was encouraged to significantly strengthen the discussion of mitigation measures and reasonable alternatives in the context of climate change. The Revised Draft Guidance suggests that agencies should consider reasonable mitigation measures and alternatives to lower the level of potential GHG emissions, whether or not the emissions from the proposed action are otherwise significant. It then goes further, arguably beyond the requirements of NEPA, to urge agencies to adopt an enforceable mitigation monitoring program.

Similarly, the Revised Draft Guidance advises that because various statutes, executive orders and agency policies commit the Federal Government to the goals of energy conservation, reducing energy use, eliminating or reducing GHG emissions and promoting the deployment of renewable energy technologies, an EIS should consider reasonable alternatives that would reduce or mitigate GHG emissions. Again without regard to whether those emissions rise to the level of a significant impact, the Guidance recommends that the range of alternatives compared in an EIS should address a reduction in climate change impacts if a comparison of these alternatives based on GHG emissions “would be useful to advance a reasoned choice among alternatives.”

Many public comments requested CEQ to clarify when it is necessary and appropriate to consider the indirect effects of GHG emissions. Yet, the Draft Guidance provides very little practical advice beyond restating the regulatory definitions. It does recognize the US Supreme Court’s holding in Dep’t of Transp. v. Public Citizen that there must be “a reasonably close causal relationship between the environmental effect and the alleged cause.” Unfortunately, however, CEQ has expressly rejected “a hard and fast rule requiring or prohibiting consideration of indirect emissions.” Also unfortunate is CEQ’s use of imprecise terms when describing indirect effects. The Guidance states that emissions from other activities should be accounted for in the NEPA analysis if they occur as a “predicate” for the agency action (which it describes as upstream emissions) and as a “consequence” of the agency action (which it describes as downstream emissions), both of which may run counter to the Supreme Court holding depending on the circumstances.

The Revised Draft Guidance is equally unclear about the distinction between direct versus cumulative impacts. On the one hand, the Revised Draft recognizes that climate impacts are not attributable to any single action but exacerbated by a series of smaller decisions, and it expressly acknowledges the difficulties in attributing specific climate impacts to individual projects. On the other hand, it makes clear that climate change impacts must be evaluated on a direct, project-level basis as well as a cumulative basis, without providing any advice on how to accomplish that. It suggests that the estimated level of GHG emissions can serve as a reasonable proxy for assessing potential climate change impacts and provide a relative comparison between alternatives. Yet presumably, the direct emissions analysis must be something more than just a quantitative disclosure of the estimated GHG emissions because the Draft Guidance clearly states that presentation of the proposed action’s GHG emissions as a small fraction of global emissions is “not an appropriate method for characterizing the potential impacts.”

Finally, the Revised Draft Guidance attempts to address the controversial use of the social cost of carbon in NEPA analyses, but again it falls short of providing any constructive advice. Although it clarifies that a monetary cost-benefit analysis is not required and “should not be used when important qualitative considerations are being considered,” it recommends the Social Cost of Carbon protocol as a “harmonized, interagency metric” when an agency determines it appropriate to monetize costs and benefits. That advice merely states the obvious. The difficulty, which is not addressed, is in reconciling the qualitative analysis of potential climate change effects when compared with the decidedly quantitative monetary assessment of a project’s socioeconomic benefits. While the comparison may not line up as a quantitative cost-benefit analysis, last year a US District Court judge found that the federal government overlooked the social cost of carbon precisely because the NEPA document emphasized the socioeconomic benefits of the proposed action.

Bryan LeRoy is a partner in the Los Angeles office of Manatt, Phelps & Phillips, LLP, where his practice focuses on representing private and public entities in government permitting, land use, environmental compliance and other property development matters. Mr. LeRoy regularly advises on the preparation of environmental documents under CEQA and NEPA for large complex projects at the state and federal level. He can be reached at 310.312.4191 or bleroy@manatt.com.

This column is part of a series of articles by law firm Manatt, Phelps & Phillips, LLP’s Energy, Environment & Natural Resources practice. Earlier columns in the fifth edition of this series discussed California’s Legislative Proposal on Climate Change, The Ban on Crude Oil Exports and California Governor’s Energy and Climate Plan.