The Council on Environmental Quality ("CEQ") issued final guidance on August 2, 2016, advising federal agencies on how to consider greenhouse gas ("GHG") emissions in reviewing proposed federal actions under the National Environmental Policy Act ("NEPA"). A copy of the Memorandum for Heads of Federal Departments and Agencies is available here. 

The Guidance is applicable to all new proposed agency actions subject to NEPA, including permitting and federal funding of any permitting actions, rulemaking, and land and resource management decisions. It also applies to any ongoing NEPA process as to which the agency decides "the environmental analysis would be incomplete without it and the additional time and resources required would be proportionate to the value of the information included." See, Guidance at 34.

While the Guidance includes boilerplate language confirming the non-binding nature of the recommendations, the final document establishes a clear expectation that federal agency decisions will address climate change, including: (1) the extent a proposed action and its alternatives would contribute to climate change, through GHG emissions, and (2) the ways a changing climate may impact the proposed action and any alternative actions, change the action's environmental effects over the lifetime of those effects, or alter the overall environmental implications of such actions. Id. at 9.     

Focus on Quantification of GHG Emissions

The Guidance creates a preference for quantifying projected GHG emissions using available data and GHG quantification tools and recommends that agencies use these projections as a proxy for assessing potential climate change effects of proposed actions and alternatives. Where appropriate data or tools are not available for quantification, the agencies should complete a qualitative analysis and explain the basis for failing to quantify projected emissions. The Guidance prescribes the use of existing GHG emissions quantification tools and deems "inappropriate" any agency statements that emissions from the proposed project represent only a small fraction of global emissions. Id. at 11.

Promotes GHG Mitigation Alternatives

The CEQ emphasizes consideration of alternatives that mitigate GHG emissions while making clear that agencies are not required to select the alternative with the lowest net level of emissions. Guidance, at 16. Potentially, the Guidance may create opportunities for project proponents to enhance the value of preferred alternatives by including creative mitigation options that would reduce or offset GHG emissions associated with the project where those measures are "reasonable and consistent with the project purpose and need." Id. at 19.

Recommended Consideration of Direct and Indirect Effects May be Overreaching

The CEQ's discussion of analyzing direct and indirect effects of the proposed action includes a footnote that suggests the appropriate effects analysis for a federal coal lease action includes the impacts associated with the reasonably foreseeable combustion of the coal being extracted. In other words, under the Guidance, where the proposed action involves fossil fuel extraction, the effects analysis would include exploration through the end-use of the fossil fuel being extracted. See, Guidance at 16, n.42. This lifecycle͟ approach goes beyond what the NEPA statute requires. The Supreme Court, in Department of Transportation v. Public Citizen, 541 U.S. 752, 773 (2004), explained that an agency's responsibility under NEPA to analyze direct and indirect effects extends only to those effects within the agency's jurisdiction and control. To the extent an agency relies on the Guidance to suggest something more is required, clients should be prepared to press back. For these reasons, the Guidance is likely to lead to controversy and litigation in the future.

Monetizing Costs and Benefits

The Guidance leaves to agency discretion whether to monetize project costs and benefits associated with the impacts of GHG emissions. Despite multiple public comments criticizing the appropriateness of a controversial tool - the Social Cost of Carbon ("SCC") - the Guidance specifically refers to the SCC as one example for conducting a cost-benefit analysis should an agency decide to adopt such an approach.

Conclusion

Notwithstanding boilerplate statements confirming the non-binding nature of the Guidance, CEQ recommends that the federal agencies review and update their NEPA procedures to the extent they are inconsistent with the Guidance. Clients should closely review the Guidance with the understanding that it is well settled that NEPA does not mandate particular results, but simply prescribes the necessary process: "Other statutes may impose environmental obligations on federal agencies but NEPA merely prohibits uninformed - rather than unwise - agency action."  Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350-51 (1989). Accordingly, attempts to use the Guidance as a tool for effecting substantive changes to proposed projects will likely draw legal challenges. 

Clark Hill attorneys are experienced with assisting clients in navigating the NEPA process, including developing creative mitigation strategies to maximize the likelihood of successfully obtaining necessary permits.