In December 2022, the United States Court of Appeals for the Fourth Circuit denied an appeal by environmental groups to revive their challenge to the 2020 amendments to the Council on Environmental Quality's ("CEQ") National Environmental Policy Act ("NEPA") regulations (the "2020 Rules"). As discussed in one of our prior articles, this coalition of environmental groups attempted to invalidate NEPA modifications effectuated by the Trump administration in the 2020 Rules. After a federal district court in Virginia dismissed one of their claims for lack of jurisdiction, the Fourth Circuit affirmed on ripeness grounds and explained that the plaintiffs' claims were moot considering the Biden administration's partial retraction of the 2020 Rules last April. The unanimous three-judge panel added that the plaintiffs provided no evidence of past or anticipated future injury that would give the court jurisdiction. The panel concluded, however, by clarifying that their holding was limited to the plaintiffs' injury allegations and that the groups may challenge again if they face actual imminent harm.
As mentioned by the Fourth Circuit, the Biden administration has already released the first phase of its two-phased approach "to reform and modernize the regulations that guide the implementation of [NEPA]." Phase 1 restored the NEPA provisions that the Trump administration curtailed. Although still in development, Phase 2 is set to streamline the environmental review process and address environmental justice and climate change. In the meantime, CEQ published interim guidance on January 9, 2023, to aid federal agencies in "analyzing greenhouse gas ("GHG") and climate change effects of their proposed actions" in accordance with NEPA. Although CEQ is seeking public comment by March 10, 2023, the interim guidance is effective immediately so that federal agencies do not have to wait for the comment period to end.
The interim guidance's key provisions direct federal agencies to quantify GHG emissions, consider the social cost of GHGs ("SC-GHG"), factor the climate change effects of proposed actions, analyze mitigation measures that circumvent or attenuate GHG emissions, and contemplate environmental justice concerns in NEPA reviews. To ensure that federal agencies appraise how their decisions individually contribute to climate change, the guidance states that agencies should quantify "reasonably foreseeable" gross and net, whether direct or indirect, GHG emissions increases and reductions over a project's lifetime. That includes both individually by GHG and as aggregated in terms of total carbon dioxide equivalence. In addition to proposed actions, NEPA reviews should quantify GHG emissions for reasonable and no-action alternatives. The guidance also calls on federal agencies to request or require project applicants to furnish them with the information necessary to quantify GHG emissions.
After quantifying GHG emissions, the guidance instructs agencies to use the best available SC-GHG estimates to monetize the cost of a proposed project's and its alternative's climate change effects, including interrelated physical impacts such as human health effects, sea-level rise, temperature changes, and wildfires. The Biden administration issued interim SC-GHG estimates in 2021, updating technical support last supplied by the Obama administration in 2016. CEQ intends for this metric to serve as a valuable resource in assisting the public and relevant decision-makers in comprehending how proposed actions may impact the climate. To help contextualize the impacts of a proposed action's GHG emissions, the guidance advises federal agencies to explain how the action and alternatives would aid the United States in accomplishing its climate change objectives and commitments. It suggests federal agencies present the SC-GHG "even if no other costs or benefits are monetized," a subject of past litigation. Most recently, the Ninth Circuit rejected environmental groups' argument that NEPA required the U.S. Department of Interior to quantify the environmental harms that may result from a proposed action's GHG emissions.
While the interim guidance does not require federal agencies to green-light only proposed major projects with the lowest climate change costs or greatest net benefits, it prescribes they consider reasonable alternatives and mitigation measures "to reduce GHG emissions to the greatest extent possible." This includes evaluating the economic and technical viability of installing clean energy alternatives compared to non-renewable projects. From a design and siting perspective, CEQ notes that NEPA reviews should use climate reports to factor in how a proposed project will impact the current and future state of the environment. Additionally, CEQ urges agencies to evaluate how the strains of climate change may make an ecosystem or human community more vulnerable and whether the increased vulnerability exacerbates a proposed action's environmental ramifications.
In line with the Biden administration's commitment to make environmental justice a core component of its climate agenda, the interim guidance endorses federal agencies assessing environmental justice concerns when conducting NEPA reviews. CEQ advocates for agencies to ascertain whether the combined impact of climate change and a proposed action results in "disproportionately high and adverse effects" on marginalized communities. The guidance further asks them to examine if a proposed action would amplify acute climate hazards that some marginalized communities may already face.
The CEQ's interim guidance expands upon Obama-era guidance and adopts the most extensive NEPA review criteria to date. Nevertheless, the guidance affords federal agencies much discretion in their reviews and does not establish any GHG emission thresholds. Uncertainty remains as to whether CEQ will implement additional revisions after the public comment period closes or whether there will be further lawsuits filed as new regulations are issued under Phase 2. Project developers, especially fossil fuel-related companies, should: (i) participate in the public comment period; (ii) start monitoring for adjustments to the interim guidance in late March; and (iii) if they have upcoming projects, prepare for the NEPA review process as early as possible.
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