September 13, 2016
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On August 1, 2016, the White House Council on Environmental Quality published its final guidance to federal agencies requiring the consideration of greenhouse gas (GHG) emissions and effects on climate change when evaluating potential environmental impacts of federal agency action pursuant to the National Environmental Policy Act (NEPA). NEPA requires US federal agencies to prepare an environmental impact statement setting out the environmental impacts of and alternatives considered to federal agency actions that are deemed to have a significant environmental impact. As federal agency decisions related to permitting significant projects such as energy production or infrastructure development will often implicate NEPA, the Council’s final GHG guidance is relevant to sponsors of these projects and their financial institutions.
The Council had issued two previous versions of the GHG guidance, the first in 2010 and a revised version in 2014. Changes to the final guidance were subject to public review and comment. Although the guidance is not legally binding, it is very likely that federal agencies will incorporate it into their reviews as they have done in the past with respect to other guidance issued by the Council. Moreover, both industry and environmental groups are likely to invoke the final guidance in disputes over a project as evidence to support their position that an agency has or has not complied with NEPA.
The over-arching message of the final guidance has not changed: federal agencies should consider GHG emissions and potential climate change impacts as part of their analysis of project alternatives under NEPA. This analysis should include a quantitative analysis of GHG emissions whenever the tools and data are “reasonably available.” Agencies should use projected GHG emissions, including carbon sequestration implications, as a “proxy” for assessing potential climate change effects. The guidance also recommends that where agencies do not quantify a proposed agency action’s projected GHG emissions, they should include a qualitative analysis and explain the basis for determining that quantification is not reasonably available. The guidance does, however, continue to give agencies a lot of discretion to determine the extent of climate change impacts and their significance.
The Council has eliminated the threshold in the 2014 revised guidance that federal actions resulting in emissions of 25,000 metric tons of CO2-equivalent or more should warrant a quantitative (rather than merely a qualitative) alternatives analysis of GHG emissions. The final guidance no longer establishes any specific threshold in this regard. Although the guidance emphasizes a “rule of reason” and that it is not advocating disproportionate attention to a quantitative review where climate change impacts are clearly minor, the elimination of this threshold may expand the scope of projects in which a quantitative analysis is conducted.
In addition, the guidance clarifies its previous position that agencies should analyze both the direct and indirect GHG emissions that are reasonably foreseeable from a project. For example, the guidance suggests that a proper climate change impact analysis of coal extraction/production would also analyze the impacts from coal combustion as a reasonably foreseeable indirect impact.
The final guidance will not apply to federal actions for which an NEPA review has been concluded or actions for which a final environmental impact statement or environmental assessment has already been issued.