CEQ Marks 40th Anniversary of NEPA With New Guidance on Greenhouse Gas Impacts, Mitigation and Categorical Exclusions

Marking the 40th anniversary of the National Environmental Policy Act (NEPA), the White House Council on Environmental Quality (CEQ), has issued three draft guidance documents in a campaign to “reinvigorate” the workings of the Act. The new guidance, issued in draft for public comment, directs how federal agencies are to:

• Consider the effects of climate change and greenhouse gas emissions (GHGs) in agency decision-making;
• Use mitigation to reduce or avoid impacts, and monitoring their effectiveness; and
• Establish and apply categorical exclusions.

The GHG guidance, long anticipated and hotly contested, has garnered most of the attention so far, and for good reason. By requiring the consideration of climate change impacts in agency decision-making, it requires federal agencies to get into the business of using evolving and controversial scientific evidence to assess hundreds of public and private projects, including energy infrastructure, highways and ports, and landfills. Among the states – several of which have “substantive” mini-NEPA statutes – it could require mitigation of those still uncertain impacts. Though less headline grabbing, the other two guidance documents are nearly as potentially far-reaching and will also change the way in which environmental review of federal actions are conducted.

This article focuses on the GHG guidance document. Subsequent articles will discuss the mitigation and categorical exclusion guidance documents. Public comments on the proposed GHG and mitigation guidance documents will be accepted for 90 days after they are printed in the Federal Register, and comments on the categorical exclusion guidance will be accepted for 45 days.

I. Previous Efforts to Compel Evaluation of Climate Change Under NEPA

Efforts to compel the evaluation of climate change impacts in NEPA documents have been ongoing for over a decade. Such efforts have taken on increasing vitality following the Supreme Court’s 2007 Massachusetts v. EPA decision, which held that carbon dioxide and other GHGs are air pollutants subject to regulation under the Clean Air Act.[1] See Supreme Court Greenhouse Gas Decision Extends Beyond the Tailpipe, Marten Law Environmental News (April 4, 2007).

A growing body of case law makes clear that federal agencies must, under certain circumstances, evaluate climate impacts, but the questions of when and how remain unanswered. In 2007, the Ninth Circuit issued its seminal decision in Center for Biological Diversity v. National Highway Traffic Safety Administration (“NHTSA”), holding that “[t]he impact of greenhouse gas emissions on climate change is precisely the kind of cumulative impact analysis that NEPA requires agencies to conduct.”[2] See Ninth Circuit Requires Climate Change Analysis Under NEPA, Marten Law Environmental News (Nov. 28, 2007). The Court also rejected arguments that a cumulative impact assessment was not warranted because climate change is a global phenomenon: “[T]he fact that ‘climate change is largely a global phenomenon that includes actions that are outside of [the agency’s] control … does not release the agency from the duty of assessing the effects of its actions on global warming within the context of other actions that also affect global warming.’”[3] The Eighth Circuit reached a similar conclusion in Mid-States Coalition for Progress v. Surface Transportation Board, holding that GHG emissions were a reasonably foreseeable consequence that must be evaluated in an EIS.[4]

While NHTSA and Mid-States Coalition for Progress indicate that NEPA may compel the evaluation of climate impacts, a number of federal decisions have deferred to minimal or cursory evaluations. For example, in Border Power Plant Working Group v. Dep’t of Energy¸ the U.S. District Court for the Southern District of California upheld a cursory analysis of GHG emissions associated with a proposal to connect the southern California power grid to coal-fired power plants in Mexico.[5] Additionally, at least one district court has ruled that federal agencies need not evaluate how environmental changes attributable to climate change might negate the project’s purpose. And in Hapner v. Tidwell, the U.S. District Court for the District of Montana ruled that NHTSA “did not establish an absolute requirement that every action analyzed under NEPA must include an analysis of climate change, and NEPA does not require the Forest Service to ‘affirmatively present every uncertainty’ in the EA.”[6] These cases have left project proponents uncertain about when and how climate change impacts must be evaluated.

In response to the uneven treatment of climate change under NEPA, the International Center for Technology Assessment (ICTA), Natural Resources Defense Council (NRDC), and Sierra Club filed a petition with CEQ in March 2008 seeking to assure that climate change analyses are included in all federal environmental review documents.[7] The ICTA petition requested that CEQ:

• Amend the definitions of "significantly" and "effects" as well as the provision on environmental consequences to assure NEPA implementing regulations require climate change effects be addressed in environmental assessments and environmental impact statements;
• Issue guidance to assure that climate change effects be addressed at each stage of the NEPA from categorical exclusions to the Record of Decision; and
• Issue a handbook to assist agencies evaluate climate change under NEPA.

On December 29, 2009, Nancy Sutley, Chair of CEQ, sent a letter to two Republican senators stating CEQ’s view that “it is appropriate and necessary to consider the impact of significant Federal actions on greenhouse gas emissions and the potential for climate change to affect Federal activities,” as well as alternatives for managing those effects. Ms. Sutley’s letter, however, also noted CEQ’s position that “NEPA cannot be used to regulate greenhouse gas emissions” and that the Obama Administration remained committed to addressing climate change through comprehensive climate and energy legislation.

II. NEPA Generally

NEPA requires federal agencies to publicly disclose and consider the environmental consequences of their actions and of private actions requiring federal permits or approvals.[8] It is a purely process-oriented statute and is not prescriptive in nature. In other words, NEPA does not mandate specific environmental results and grants federal agencies broad discretion to determine the extent of environmental protection required for proposed actions.

Environmental review under NEPA generally involves four basic steps:

1. Determining whether NEPA applies (i.e., is the proposal a “major federal action”);
2. Evaluating whether the project is categorically-excluded from full NEPA review;
3. Undertaking an environmental assessment (EA) to determine whether the proposed project will have significant environmental impacts; and
4. Preparing an environmental impact statement (EIS) for projects that significantly affect the quality of the human environment.

When determining whether a proposal will “significantly” affect the human environment, agencies must asses the project’s context and intensity.[9]A project’s context includes society, the affected region, the affected interests, and the locality.[10] A project’s intensity refers to the significance of its impacts, including beneficial impacts. Generally, the more sensitive the context (i.e. the impacted resource), the less intense an impact needs to be in order to trigger the need to prepare an EIS. Agencies need not consider remote and speculative impacts.[11] However, agencies must consider the cumulative effect of a proposal on other actions.[12]

To determine the effects of a proposed action on the environment, in an EIS the agency must: (1) set forth the baseline conditions of the affected environment;[13] and (2) address direct, indirect, and cumulative environmental impacts of the proposed action and reasonable alternatives – including any adverse environmental effects which cannot be avoided.[14] Direct effects are those “caused by the action,” which “occur at the same time and place.”[15] Indirect effects “are caused by the action … later in time or farther removed in distance, but … still reasonably foreseeable.”[16] Cumulative effects are impacts caused by “the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions. Cumulative impacts can result from individually minor but collectively significant actions taking place over time.”[17]

III. The GHG Guidance

On February 18, 2010, CEQ issued the draft GHG guidance which responded (at least in part) to the ICTA petition. CEQ’s proposal can be broken down into two main areas: when and how to evaluate GHG emissions, and how to evaluate the effect of climate change on the project. Projected against the backdrop of NEPA’s 40 years of case law, regulations, and interpretations, CEQ’s guidance on the “when” question could be expected to identify two important thresholds: (1) what level of GHG emissions are low enough that climate change issues need not be discussed in NEPA documents; and (2) what level is high enough to be deemed “significant,” warranting detailed discussion in an EIS. As discussed below, the proposed GHG guidance does not directly answer either of these questions. As for how GHGs and climate change should be discussed in NEPA documents, the guidance provides general direction on a few key issues, but leaves substantial discretion to federal agencies, bounded only by the traditional NEPA “rule of reason.” This is perhaps more understandable, given the fact-intensive nature of deciding whether a particular analysis of environmental effects is adequate.

A. Threshold Determinations

The GHG guidance indicates that as part of the initial scoping process, agencies should determine whether a project requiring federal approval will result in “meaningful” GHG emissions, and suggests that emissions greater than 25,000 metric tons may meet this test. Emissions above this level would warrant at least some qualitative or quantitative discussion in NEPA documents.

The 25,000 ton threshold is the same one EPA is considering for requiring permits for GHG emissions under the Clean Air Act. See EPA Proposes Regulating Stationary Source Greenhouse Gas Emissions Under Federal Clean Air Act, Marten Law Environmental News (October 7, 2009). It also is the threshold EPA adopted last fall in rules required annual reporting of GHG emissions.[18] While CEQ apparently has concluded that GHG emission levels high enough to warrant regulation by EPA are “meaningful,” the proposed GHG guidance still leaves the question of what constitutes a “significant” GHG emission level to individual federal agencies. This means agencies will continue to make the threshold “significance” determination case-by-case, based on the project’s context and intensity. This approach leaves agencies with notable discretion, private developers seeking federal permits or approvals with little certainty, and project opponents with potential litigation tools.

There also is likely to be some controversy over CEQ’s apparent suggestion that GHG emissions below 25,000 tons need not be discussed, or at least not in detail, in NEPA documents. Some local jurisdictions in California, where environmental reviews under state law have included GHGs for some time, have proposed or adopted much lower thresholds. For example, the Bay Area Air Quality Management District (BAAQMD) issued draft recommendations on GHG significance thresholds in November 2009. For land-use projects (i.e. commercial and residential developments), the BAAQMD proposes that GHG emissions would not be significant if: (1) the project complied with an approved climate action plan; (2) annual aggregate emissions did not exceed 1,100 MtCO2e;[19] or (3) annual emissions per person did not exceed 4.6 MtCO2e. For stationary industrial sources, the BAAQMD proposed a 10,000 MtCO2e threshold. San Diego County has also established interim significance thresholds for GHG emissions. San Diego County’s interim significance thresholds provides that any project emitting more than 900 MtCO2e will require further analysis of climate change impacts (and, under California law, potentially require mitigation).

Thus, CEQ’s proposed guidance remains vague on the key threshold issue that determines whether NEPA documents contain a climate change discussion at all, and if so whether a project’s GHG emissions are significant enough in and of themselves to warrant development of an EIS. If CEQ does not clarify these issues in the final guidance, then these issues will be addressed by individual federal agencies in the first instance, and then no doubt become a focus of NEPA litigation.

 B. Analysis Required Under the New Guidance

The proposed GHG guidance provides some recommendations, but little specific direction, on how to go about discussing GHG emissions in NEPA documents. These portions of the guidance are likely to influence future legal challenges to the adequacy of GHG analyses contained in NEPA documents.

CEQ suggests that NEPA documents for projects with “meaningful” GHG emissions quantify annual and cumulative GHG emissions from the proposed action, as well as the difference in emissions that would occur under reasonable alternatives to the proposed action. The proposed GHG guidance suggests using existing federal protocols for quantifying emissions from the proposed action and the alternatives. It also suggests that agencies may aggregate emissions from related actions, taking a programmatic approach.

CEQ has also proposed that in identifying alternative actions, federal agencies should consider federal, state, and local energy conservation goals, and alternatives for reducing energy demand, or for reducing GHG emissions associated with energy production. As there are as yet no post-combustion control devices to remove GHGs, increasing energy efficiency is one of the few available means for reducing GHG emissions from certain types of projects. However, a push to consider lower energy demand alternatives could have a significant impact on the design of some projects. For example, some may argue that alternatives to transportation infrastructure projects should include mass transit or changes in urban planning.

The GHG guidance also recognizes that there are no existing federal protocols for estimating emissions associated with land use and land management decisions. It also recognizes that determining the reasonably foreseeable impacts of land management decisions on GHG emissions may be difficult. As NEPA does not require analysis based on speculation, CEQ appears to be recognizing that it will be hard to evaluate climate change impacts of many federal land and resource decisions in NEPA documents. CEQ has invited public comment on how – or whether – to address atmospheric GHG releases or sequestration associated with land and resource management actions.

CEQ invokes the “rule of reason” as the criteria for deciding how deeply to delve into GHG emissions analysis. It also suggests this same test be used in deciding: (1) what alternatives for avoiding or reducing GHG emissions deserve detailed study; (2) how far to carry the discussion of potential effects of GHG emissions on climate change; and (3) whether to discuss a project’s potential vulnerability to the environmental effects of climate change.

CEQ acknowledges the uncertainty inherent in any assessment of the environmental impacts resulting from specific GHG emissions, given the current state of climate science. The GHG guidance discusses NEPA requirements for federal agencies to project the changes from the existing environment to the “reasonably foreseeable” future environment under the proposed action and alternative actions, including “the probability or likelihood of this future condition.” While these criteria have been articulated in NEPA case law, the proposed guidance recognizes there is “significant uncertainty” about climate changes effects, and suggests that federal agencies evaluate GHG emissions “against a baseline of reasonably foreseeable future conditions that is drawn as distinctly as the science of climate change effects will support.”

The proposed GHG guidance closes with a discussion of the role of cumulative impacts analysis under NEPA, and a discussion of EPA’s determination, made last December, that GHG emissions endanger public health and welfare. This section of the document provides very little direction as to how federal agencies should evaluate the contribution of GHG emissions associated with the actions under review to cumulative climate effects. It states, for example, that “nearly every aspect of energy choices and use” is likely to add to or reduce the cumulative total of human GHG emissions. This is hardly a ruler for evaluating the contribution of a proposed action to the cumulative effect of human GHG emissions.

IV. Climate Change under State-Level Environmental Review Statutes

CEQ’s guidance is likely to bolster litigation seeking to compel the evaluation of climate change in state-level environmental review documents. Fifteen states and the District of Columbia have passed environmental review statutes modeled on NEPA which broadly apply to state, county, and local projects and developments. But unlike NEPA, many of these state-level environmental review statutes, including the California Environmental Quality Act (CEQA) and Washington’s State Environmental Policy Act (SEPA), include substantive provisions which allow lead agencies to condition or deny project approvals based on unmitigated environmental impacts. Due in part to this substantive authority, state-level environmental review statutes are increasingly being viewed as tools for addressing climate change – particularly with respect to emissions from development projects and land-use planning actions.

California has seen significant climate change litigation under CEQA. These lawsuits have included challenges to municipal- and county-level land use plans by the California Attorney General’s Office. See Settlement Requires California County to Inventory and Mitigate GHGs, Marten Law Environmental News (Sept. 5, 2007). Environmental groups have also, with varying success, challenged a wide range of private development projects on grounds that they inadequately evaluated GHG emissions and climate impacts. In Center for Biological Diversity v. City of Desert Hot Springs, for example, the court ruled that the EIR for a 160 acre mixed-use development “failed to make a meaningful attempt to determine the project’s effect on global warming.”[20] While the court acknowledged the lack of formal regulatory guidance or approved methodology for conducting a greenhouse gas assessment, it ruled that project proponents were nonetheless required to make a “meaningful” attempt to assess greenhouse gas emissions before concluding that such an analysis was too speculative.[21] In Center for Biological Diversity v. Town of Yucca Valley, the court similarly set aside approvals for a large commercial development on grounds that the EIR failed to adequately address climate change impacts. The court found the EIR for the project inadequate because it “simply ignores … scientific and factual analysis regarding attainment of California [greenhouse gas] emission targets in its discussion of the cumulative impacts of the Project.” The court also found that the EIR failed to consider the project’s entire GHG emission output and failed to evaluate “feasible and environmentally superior” alternatives.

However, a number of California cases have declined stop projects based on inadequate consideration of climate impacts. At least two cases have concluded that a project’s contribution to global warming was too speculative to warrant a CEQA evaluation.[22] And at least one case, Westfield LLC v. City of Arcadia, refused to find that a cumulative impact analysis was required because the “climate change impact from any particular general development project necessarily will be insignificant.”[23]

On December 30, 2009, the California Natural Resource Agency adopted final climate change amendments to the CEQA implementing regulations. The new regulations are more detailed than CEQ’s draft GHG guidance, and will provide project proponents with a degree of clarity in four key areas: (1) cumulative impacts; (2) significance thresholds; (3) mitigation; and (4) tiering greenhouse gas analyses.

Requirements that project proponents evaluate climate impacts in environmental review statutes are not limited to California. Massachusetts; King County, Washington; and the City of Seattle, Washington, have adopted affirmative requirements compelling climate change evaluations under state-level environmental review statutes. See Massachusetts Becomes First State to Require Developers to Quantify and Mitigate Greenhouse Gas Emissions, Marten Law Environmental News (May 9, 2007); King County (WA) First in the Nation To Require Climate Change Impacts To Be Considered During Environmental Review of New Projects, Marten Law Environmental News (Aug. 1, 2007). While these provisions currently require project proponents to simply inventory the direct and indirect greenhouse gas emissions attributable to their projects, the King County Executive has proposed an ordinance that would require projects to reduce greenhouse gas emissions by 15 percent in order to drop below the significance threshold.

V. Implications of the GHG Guidance for Environmental Reviews

The final GHG guidance is likely to provide clear direction on only a limited number of points: that the NEPA analysis for any project directly or indirectly resulting in significant (or “meaningful”) GHG emissions must include some discussion of those emissions, the GHG emissions that would result from alternative actions, and the relative significance of the proposed action’s emissions in relation to some measure of cumulative human GHG emissions. Beyond this, the GHG guidance appears likely to leave substantial discretion to the federal agencies. The central principle of the guidance appears to be that agencies should apply the “rule of reason” in deciding how detailed their discussion of GHGs and climate change should be, and in deciding how wide a net to cast in evaluating alternatives with lesser potential climate impact. The GHG guidance also notes that agencies may, in their discretion, adopt more specific standards in their agency-specific NEPA rules.

The proposed GHG guidance does provide some direction on how GHG emissions should be quantified. For example, it identifies specific protocols for preparing quantitative GHG analyses for large stationary sources (i.e. generation facilities and industrial stacks), federal facilities, and terrestrial carbon sequestration. The guidance, however, does not provide any specific protocols or assessment tools for other project types. Notable omissions include quantification protocols for transportation infrastructure projects such as highways, rail corridors, and ports. Agencies and project proponents will be required (as they are now) to identify appropriate quantification methodologies for such projects on a case-by-case basis using inter-agency consultation and available expertise. The guidance specifically notes that there is currently no federal protocol for assessing GHG emissions and reductions associated with land management techniques, and identifies that as an appropriate subject for public comment.

In the absence of more firm guidance from CEQ, two areas of GHG analysis are likely to draw particular attention from federal agencies, and ultimately from the courts – the analysis of alternatives to the proposed action, and the analysis of cumulative effects. These two areas are likely to be at the core of any administrative or judicial scrutiny given to the adequacy of GHG and climate change analyses in NEPA documents.

The most direct suggestion the proposed GHG guidance provides concerning alternatives analysis is that agencies should consider energy conservation and alternatives for reducing energy demand, which effectively is a surrogate for GHG emission reductions. Beyond this, CEQ falls back on the suggestion that agencies “apply the rule of reason” to assure that the analysis focuses on “issues that deserve study and deemphasizes issues that are less useful.” As is often the case in NEPA, this means that an explanation of why a particular alternative is selected for detailed consideration, and why other alternatives were discarded after little or no analysis, can be as important as the substantive analysis provided. A court is likely to look to this explanation in deciding whether the agency arbitrarily discarded an alternative that might have produced lower GHG emissions.

The guidance does little to resolve uncertainty surrounding cumulative impact analyses. While some projects have individually insignificant impacts, NEPA nonetheless requires agencies to consider the project’s impacts if they are cumulatively significant – i.e. the environmental impacts of the action are significant when added to other past, present, and reasonably foreseeable future actions. The guidance acknowledges that agencies may limit the scope of cumulative impact analyses based on practical considerations which in the case of climate change include scientific uncertainty regarding anticipated environmental effects in a specific project area. CEQ also recognizes the difficulty of determining when individually insignificant projects become cumulatively significant in light of the global nature of GHG emissions. CEQ’s acknowledgement of such ambiguity may help agencies and project applicants fend off challenges to cumulative impact analyses that acknowledge such uncertainty.

VI. Conclusion

CEQ’s draft GHG guidance can be improved, and there is likely to be substantial public comment during the next 90 days. In the end, however, federal agencies will likely have broad discretion in shaping their NEPA analysis of GHG emissions and other climate impacts. A well drafted agency NEPA analysis that explains the choices made in the GHG analysis is still the best way to protect the agency’s decision, and the proposed project, from a successful challenge.

For more information on NEPA, and on climate change laws generally, please contact Svend A. Brandt-Erichsen or Dustin T. Till.