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iStock_95911999_SMALL copyGuest author Darrin Gambelin, a Downey Brand associate, contributes today’s post.

On August 1, The White House Council on Environmental Quality (CEQ) issued its Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act Reviews (Guidance), which provides federal agencies with a framework for analysis of greenhouse gas emissions and climate change in connection with environmental review under the National Environmental Policy Act (NEPA). This is a significant step in the developing law of climate impact analysis, as state and federal agencies alike continue to struggle to measure, analyze, and mitigate for localized, incremental contributions to this global problem.

The Guidance advises federal agencies to examine both the effects of the proposed project on climate change and the effects of climate change on the project. The guidance does not apply retroactively to projects with a completed NEPA review, but CEQ encourages agencies to adopt these procedures for projects currently under review. As guidance, the policies within are not binding, but in practice agencies generally defer to CEQ; so, applicants can expect federal agencies to apply the new policies to projects moving forward.

In determining the effects of the proposed project on climate change, the Guidance recommends that agencies quantify both direct and “reasonably foreseeable” indirect greenhouse gas (GHG) emissions. For example, when permitting a fossil fuel extraction project, the review must consider not only emissions directly associated with the coal mine or natural gas well, but all emissions associated with transportation and eventual combustion of the fuels. The Guidance states that GHG emissions should be considered for all project alternatives, including no action, as well as any GHG emissions from proposed mitigation approaches. CEQ notes that tools for quantifying GHG emissions are widely available. Many of these tools are compiled in a 2012 report by CEQ titled Guidance for Accounting and Reporting GHG Emissions.

The Guidance goes on to recommend that the amount of estimated GHG emissions be used as a proxy for the proposed project’s impact on climate change. It encourages agencies to use existing studies and government reports, such as a 2014 report by the Department of Energy titled Life Cycle Greenhouse Gas Perspective on Exporting Liquefied Natural Gas, to correlate GHG emissions with quantifiable effects on climate change. As with the Appendix G Guideline under the California Environmental Quality Act (CEQA), agencies may use a qualitative approach to estimate impacts where a project’s GHG emissions are difficult to quantify.

While the impact of any individual project on global climate change is negligible, the Guidance states that agencies must consider the climate effect of every project, even those that result in small increases in GHG emissions. CEQ reasons that nearly all projects will have some effect on climate change when the cumulative effects of GHG emissions are considered.

As under California law, agencies are afforded discretion on the impact thresholds and level of review required. The previous draft version of this Guidance set a threshold of 25,000 tons/year for triggering a detailed, quantitative, review of emissions. The final Guidance instead instructs agencies to use the “rule of reason” inherent in NEPA to determine if project emissions are significant and require detailed review. Thus, the Guidance creates additional uncertainty as to the appropriate thresholds to apply.

The Guidance makes passing reference to the performance of cost benefit analyses and the use of the social cost of carbon in considering the impacts of GHG emissions, but makes it clear that NEPA does not require an in-depth review of the monetization of costs and benefits. Instead, CEQ recommends including a cost benefit analysis as a reference or appendix to the NEPA document.

Where mitigation of climate effects should be considered, the Guidance provides several categories of potential mitigation projects, including energy efficiency, carbon sequestration (forestry), sustainable land management practices, and capturing or beneficially using methane. Conspicuously absent from the list of possible mitigations discussed in the Guidance is any reliance on existing (or future) cap-and-trade programs, local climate action plans, or sustainable communities strategies. In California, the cap-and-trade program, imposed on certain stationary sources and sources of energy, has been considered as alternative mitigation even for non-regulated industries. Similarly, local climate action plans and sustainable communities strategies are becoming more prevalent, and represent California’s approaches to achieving specific state and regional emissions reduction targets.

In addition to examining the effects of the proposed project on climate change, NEPA review must also consider how the impacts of climate change may affect the project. The Guidance advises that this review should include the effects of higher sea levels, more serious storms, and how the project would affect climate change preparedness or resilience. This is a departure from California law, which under the recent California Supreme Court decision in California Building Industry Association v. Bay Area Air Quality Management District, does not mandate that agencies consider the impacts of the surrounding environment on the project (the so-called, CEQA-in-reverse). This difference aside, and given the lack of settled approach to climate analysis under state law, federal agency implementation of the CEQ Guidance may serve as a reference point for state agencies and courts in scrutinizing climate analysis under state law.