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September 13, 2016

The White House Final Greenhouse Gas Guidance Directs Federal Agencies to Consider Climate Change and Greenhouse Gas Emissions Under NEPA


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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.

 As a starting point, the referendum itself has no legal effect on the laws of the UK or EU. The UK will remain a member of the EU until there is either an agreement to exit or expiration of a two-year period after a formal notice of exit is issued by the UK government. This notice, when served, triggers a negotiation period of up to two years during which time the current EU laws continue to apply in the UK.  The UK government has not yet issued this notice.

During the transitional period that ensues, the UK government will need to conduct a complex review of what existing environmental legislation derived from the EU should continue to apply, including where the legislation is directly set out in EU text, taking the necessary steps to adopt domestic legislation for its implementation.  Such a review will naturally be guided by the broader thinking on the UK-EU relationship after Brexit is implemented.  If the UK opts to remain in the EEA as a non-EU state, “Norwegian” style, it will be required to formally continue to adopt most EU environmental legislation, including in areas such as environmental permitting, air and water quality, greenhouse gas emissions, waste, electrical and electronic equipment and chemicals registration.  

Under a bilateral agreement model or bespoke arrangement, more freedom would be afforded to the UK to set its own course regarding operational environmental controls within its own borders.  For example, Switzerland is not required to comply with EU environmental legislation by virtue of its EFTA membership only.  In practice, Switzerland has put in place bilateral agreements with the EU to gain access to the EU single market, which in turn have resulted in the country harmonizing much of its environmental legislation with that of the EU.

As with any country outside European institutions altogether, the UK would still be required to meet EU environmental and safety standards regarding products being placed onto the EU market.  For example, the sweeping EU law governing the registration and safety analysis of chemicals, known by its acronym REACH, requires chemical manufacturers in the rest of the world wishing to sell their products into the EU to appoint an “EU Only” Representative that ensures REACH compliance.  In addition, certain environmental laws govern inherently trans-border or regional concerns, such as those dealing with global greenhouse gas emissions reduction and control (Kyoto Protocol) or marine pollution (the OSPAR Convention).  There is no indication that the UK government would push back strongly on its existing commitments under these laws.

Over the last 25 years, the UK has been at the forefront of certain environmental protection legislation, and some prominent UK domestic legislation does not derive from the EU.  Two notable examples are the UK’s contaminated land regime, which established in the UK a “polluter pays” principle for cleanup of soil and groundwater contamination before similar legislation was introduced at EU level, and the Climate Change Act of 2008, which established very ambitious targets to reduce greenhouse gas emissions domestically by 80% from 1990 levels by 2050.  It is not likely that Brexit would trigger major changes in these areas.  

Authors and Contributors

Mehran Massih


Real Estate

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