The Nickel Report

On June 26, 2019, the Council on Environmental Quality (CEQ) released draft guidance instructing federal agencies on how to consider and document greenhouse gas (GHG) emissions and the effects of climate change when evaluating proposed federal actions, including rulemakings and permitting decisions, under the National Environmental Policy Act (NEPA). The guidance, if finalized, would replace a now-revoked Obama Administration 2016 guidance, which advanced broad positions on how agencies should evaluate GHG emissions and the effects of climate change when undertaking NEPA reviews for proposed federal actions.[1]

The draft guidance states that is not a rule or regulation and is intended to facilitate compliance with NEPA requirements thereby improving the efficiency and consistency of environmental reviews.  A summary of the key provisions follows:

• Consideration of GHG Emissions in NEPA Analysis: Citing to NEPA’s “rule of reason,” the guidance concludes that “impacts of a proposed action should be discussed in proportion to their significance, [with] only a brief discussion of issues that are not significant.”  The “rule of reason permits agencies to use their expertise and experience to decide how and to what degree to analyze particular effects,” and “greater consideration [need not be given] to potential effects from GHG emissions than to other potential effects on the human environment.”
• Projection of a proposed project’s GHG emissions as proxy: A “projection” of a proposed action’s direct and indirect GHG emissions may be used as a “proxy” for assessing potential climate effects. Following the rule of reason, action agencies are to consider direct and indirect effects when a “sufficiently close causal relationship” exists between the proposed action and the effect. The draft guidance notes that a “but for” relationship is insufficient.
• Quantification of proposed action’s GHG emissions. Agencies should attempt to quantify a proposed action’s projected direct and reasonably foreseeable indirect GHG emissions when: (1) the amount of those emissions is substantial enough to warrant quantification, and (2) it is practicable to quantify the emissions using available data and GHG quantification tools. The guidance points to available GHG accounting methods and tools that should be considered.
• GHG inventory information and cumulative effects: Where GHG inventory information is available, an agency may reference local, regional, national, or sector-wide emission estimates to provide context for the relative magnitude of a proposed action’s GHG emission.  This approach, along with a qualitative summary discussion of the effects of GHG emissions will allow the agency to present the environmental impacts of the proposed action clearly and with sufficient information to make a reasoned choice among alternatives.  According to the draft guidance, this discussion will satisfy NEPA’s cumulative effects analysis because the potential effects of GHG emissions are inherently global, and therefore a separate cumulative effects analysis is not required.
• When a quantitative analysis is not practicable, or the agency determines that the tools, methodologies, or data inputs are not reasonably available, the agencies are to include a qualitative analysis in the NEPA document and explain the basis for determining that quantification in not reasonable. Effects need not be quantified where information necessary for quantification is unavailable, of insufficient quality, or the complexity of identifying emissions would make quantification overly speculative. Qualitative analyses may rely on sector-specific descriptions of the GHG emissions for the category of action under review.
• Effect from GHG emissions and alternatives analysis: The draft guidance states that comparing alternatives based on potential effects due to GHG emissions, along with other potential effects and economic and technical considerations, can help differentiate among alternatives.
• Use of Cost-Benefit Analyses and the Social Cost of Carbon: The guidance reiterates that CEQ’s NEPA regulations and the statute do not require an analysis of the monetary costs and benefits of a proposed action.  Accordingly, “an agency does not need to weigh the effects of the various alternatives in NEPA in a monetary cost-benefit analysis using Social Cost of Carbon (SCC) estimates and related documents…or other similar cost metrics.”  If costs and benefits are relevant to the agency’s analysis of alternatives for a proposed action, such as in a rulemaking, the agency should incorporate by reference, in the NEPA document, any cost-benefit analysis to aid in evaluating the environmental impacts. Some effects, such as employment or socio-economic impacts, may be more capable of monetization, and where certain effects are monetized, the agency need not monetize all effects, including potential effects of GHG emissions. This aspect of the guidance appears to address a handful of recent decisions that some advocacy groups have interpreted as holding that where an agency elects to quantify the benefits of a proposed action, it must quantify all costs, including GHG emissions. See, e.g., WildEarth Guardian v. Zinke, CV 17-80-BLG-SPW-TJC at 29 (Feb. 11, 2019); Mont. Envtl. Info. Ctr. v. U.S. Office of Surface Mining (MEIC), 274 F.Supp.3d 1074, 1094-99 (D. Mont. 2017); High Country Conservation Advocates v. U.S. Forest Service, 52 F. Supp.3d 1174, 1189-93 (D. Colo. 2014).

CEQ will accept comments on the draft guidance through July 26, 2019.

[1] The 2016 guidance was revoked by a March 28, 2017, Executive Order seeking to promote energy independence and economic growth. See 82 Fed. Reg. 16,093 (March 31, 2017).

Karma Brown and Lauren Bachtel work in Hunton Andrews Kurth’s environmental practice and focus on natural resource permitting and litigation. Hunton’s environmental practice is routinely recognized for providing top-tier client service and is among the oldest and largest in the world with more than 50 lawyers specializing in environmental law in the United States and internationally. Since 1970, Hunton attorneys have helped clients navigate every major US environmental statute, as well as those of most states and international jurisdictions. For more information, please contact Karma Brown at kbbrown@hunton.com.