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Lessons Between the Lines in Fed’s Final Guidance for Evaluating Climate Change Impacts in NEPA Documents

Bryan LeRoyBy Bryan LeRoy and David McGrath, Manatt, Phelps & Phillips

On August 1, 2016, after nearly six years and two drafts, the White House Council on Environmental Quality (CEQ) issued a final version of its guidance for considering greenhouse gas (GHG) emissions and the effects of climate change under the National Environmental Policy Act (NEPA) (Final Guidance).  CEQ previously released its initial draft guidance in February 2010 and a revised draft guidance in December 2014.

Like the previous drafts, the Final Guidance primarily reinforces the fundamental tenets of NEPA as applied to climate change.  It offers little practical advice in attributing climate change effects to a particular federal action, and validates the broad discretion of individual federal agencies to tailor their NEPA reviews as they see fit.  By its own admission, the Final Guidance is not a rule or a regulation, and the recommendations “may not apply to a particular situation.”  Nevertheless, several important lessons become evident in the most recent changes.

The Final Guidance carries forward some common themes and guiding principles by:

  • Recommending that agencies quantify projected direct and indirect GHG emissions, including a consideration of existing data and suitable GHG quantification tools;
  • Urging agencies to use a proposed action’s projected GHG emissions as a proxy for analyzing potential climate change effects when preparing the NEPA analysis;
  • Recommending that when tools, methodologies, or data inputs are not reasonably available to quantify projected GHG emissions, agencies include a qualitative analysis in their NEPA study and describe why quantification is not reasonably available;
  • Advising agencies to use existing information when determining the potential future state of the impacted environment rather than undertaking new research;
  • Encouraging agencies to use the information generated in the NEPA process to consider alternatives that would make the actions and affected communities more resilient to the effects of a changing climate; and,
  • Advising agencies to rely on their expert judgment and experience in deciding which tools and methodologies should be used in analyses.

But some of the real lessons may be revealed by the recent changes in the guidance and the important points they illustrate:

CEQ Abandons Its GHG “Reference Point”

The prior two drafts of the guidance recommended an often-misunderstood “reference point” where an action resulting in GHG emissions of less than 25,000 metric tons would not typically trigger an Environmental Impact Statement (EIS) or warrant a detailed discussion.  The reference point was only intended to serve as a “useful indicator” that would prompt a more specific analysis to consider the context and intensity of the action to determine the significance.

Based on the public comments, the reference point perplexed readers on both the right and the left who either thought it would be used to impose mitigation or as an excuse to avoid analysis altogether.  So CEQ dropped the concept of a reference point in the Final Guidance.  Instead, the Final Guidance reinforces NEPA’s “rule of reason” and the concept of proportionality, which “caution against providing an in-depth analysis of emissions regardless of the insignificance of the quantity of GHG emissions.” 

The Final Guidance clarifies that it does not establish any particular quantity of GHG emissions that would be significant or that warrant greater consideration of the effects on climate change.  On the contrary, it specifically states that “CEQ does not expect that an EIS would be required based solely on the global significance of cumulative impacts of GHG emissions, as it would not be consistent with the rule of reason.”  Unfortunately, this leaves unanswered the question of whether the incremental addition of emissions from the proposed action when added to emissions from other global sources may be significant enough to warrant the preparation of an EIS.

Reverse NEPA

The prior guidance drafts have always cautioned that agencies should not only evaluate (i) the  potential effects of a proposed action on climate change, but also (ii) the effects of climate change on the environmental effects of the proposed action – essentially NEPA in reverse.  Prior drafts focused the reverse analysis primarily on how climate change may alter the effects of the proposed action over the long term, e.g., a project’s water use from a diminishing stream. 

However, the Final Guidance further clarifies that the reverse analysis also means the NEPA document should evaluate how long-term climate change may affect the project itself.  For example, the agency should consider how rising sea levels and high intensity weather events may put people and structures associated with an action at risk.  The Final Guidance encourages agencies to consider opportunities for resilience and adaptation in the initial project design.

GHG Emissions as a Proxy for Climate Change Impacts

The Final Guidance continues to recommend that the NEPA analysis quantify the projected GHG emissions associated with the proposed action and use those emissions as a “proxy” for assessing the action’s potential effects on climate change.  This approach is intended to recognize the incremental contribution of each single action to global climate change effects while acknowledging that there is no scientific way to attribute climate change results to a particular source of GHG emissions.

Although the Final Guidance does not provide any practical advice on how to evaluate the significance of the emissions as a proxy, the recent revisions provide a clue by suggesting that agencies combine the quantitative measurement of GHG emissions with a “qualitative summary discussion” of the impacts of GHG emissions generally based on authoritative reports to enable a “reasoned choice between no action and other alternatives and appropriate mitigation measures.”  In other words, NEPA documents should acknowledge published reports linking GHG emissions to climate change and the global and regional trends in changing climate as a consequence of the emissions.  Then, presumably, the evaluation would draw some conclusion about the level of projected emissions from the proposed action and whether the action’s contribution is significant. 

It is that latter part of the analysis – the impact conclusion – for which CEQ avoids any advice, apparently surrendering to the discretion of the agency.  Nevertheless, like the draft guidance before it, the Final Guidance clearly and unequivocally warns that conclusions dismissing the significance of the action’s GHG emissions as a small fraction of global emissions is inappropriate.  Reading between the lines, CEQ sees the real value of the GHG analysis in the comparison between alternatives and the consideration of possible mitigation measures, rather than the characterization of the impact as minor, moderate, or major.

Cumulative Effects Analysis

Also new and different is CEQ’s acknowledgment that because the effects of climate change are regional and global in scope, the analysis of a proposed action’s GHG emissions is “essentially a cumulative effects analysis.”  The Final Guidance goes on to declare that the direct and indirect effects analysis for GHG emissions will address the cumulative impacts for climate change, and “a separate cumulative effects analysis for GHG emissions is not needed.”

Presumably, this advice does not apply to the “Reverse NEPA” evaluation of the long-term effects of climate change on the project and the effects of the project.  For example, if there are other reasonably foreseeable users of water that will draw from the same water source, those cumulative activities would need to be discussed together with the effects of climate change that may act to further reduce the source of water.

Social Cost of Carbon

Finally, CEQ has notably backed away from its controversial recommendation that agencies may use the social cost of carbon metric to characterize and quantify the impacts of a proposed action on climate change.  The social cost of carbon is a metric developed by a Federal Interagency Working Group in 2010 to assist agencies in cost-benefit analyses associated with rulemakings.  The 2014 revised draft guidance included a statement that “[m]onetizing costs and benefits is appropriate in some, but not all, cases” and that when an agency determines it is appropriate to monetize costs, “the Federal social cost of carbon…offers a harmonized, interagency metric” that can provide some context for meaningful NEPA review.

In stark contrast, the Final Guidance explicitly states that “NEPA does not require monetizing costs and benefits” and a monetary cost-benefit analysis “should not be [used] when there are important qualitative considerations.”  The only discussion of the federal social cost of carbon metric is relegated to a footnote, which states that if an agency conducts a cost-benefit analysis, the appropriate method is a decision left to the agency’s discretion.  The federal social cost of carbon is provided as one example.

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

David McGrath is an associate with Manatt, Phelps & Phillips. His practice focuses on regulatory and transactional matters involving land use and development, air quality and climate change, energy projects, water quality, hazardous waste, and related government compliance issues. Mr. McGrath can be reached at (310) 312-4147 or dlmcgrath@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 sixth edition of this series discussed Environmental Justice, Regulation of Methane Emissions, EPA’s Chemical Data Reporting Rule, California’s Global Warming Solutions Act, Evaluating Traffic Impacts of Projects, California Water Bond Funding and Export of US Crude Oil.

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