Biden Administration elevates consideration of GHG emissions and climate change in federal agency approvals by rescinding Trump guidance and reviving Obama guidance.

by Janice M. Schneider, Stacey L. VanBelleghem, and Devin M. O’Connor

On February 19, 2021, the White House Council on Environmental Quality (CEQ) published a Federal Register Notice rescinding the June 2019 “Draft National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions” (2019 Draft GHG Guidance) issued by the Trump Administration. This action, directed by President Biden’s Executive Order 13990, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” (January 20 EO), reinstates Obama Administration policy and requires further review and updating on how greenhouse gas (GHG) emissions and the effects of climate change are considered in environmental review under the National Environmental Policy Act (NEPA).

NEPA requires federal agencies to consider the environmental effects of proposed major federal actions (e.g., issuing permits) before they are taken, including to evaluate alternatives, to assess potential mitigation measures, and to provide an opportunity for public input in the evaluation process. The scope and detail of NEPA review can affect the contours and ultimate outcome of federal decision-making and is frequently litigated by project opponents.

CEQ’s regulations implementing NEPA do not expressly address consideration of GHG emissions or the effects of climate change. Although agency guidance lacks the legal authority and enforceability of federal regulation, CEQ guidance on this topic has been the key framework used by federal agencies when undertaking NEPA review. Proponents of energy, infrastructure, and other projects subject to NEPA review should plan for the implications of the Biden Administration’s policy changes on considering the impacts of GHG emissions and climate change effects when issuing project approvals.

Short-Term Implications

Back in August 2016, CEQ under the Obama Administration issued final guidance for federal agencies to consider GHG emissions and the effects of climate change in NEPA reviews (2016 GHG Guidance). The 2016 GHG Guidance (summarized in this Latham blog post) directed federal agencies to quantify the direct and indirect GHG emissions of a proposed action and weigh climate change impacts in considering alternatives and in analyzing mitigation strategies. This CEQ guidance also recommended that agencies include a qualitative analysis of climate change impacts when quantification tools, methodologies, and/or data inputs are not reasonably available to quantify GHG emissions.

During the Trump Administration, CEQ withdrew the 2016 GHG Guidance in April 2017, and later replaced it with the 2019 Draft GHG Guidance. The 2019 Draft GHG Guidance recommended a narrower approach to considering GHG emissions in NEPA review. The quantification of GHG emissions from a proposed action was limited to when “the amount of those emissions is substantial enough to warrant quantification” and “it is practicable to quantify them using available data and GHG quantification tools.” The 2019 Draft GHG Guidance also recommended that an agency consider whether quantifying GHG emissions would be “practicable” and “overly speculative”, and to explain the basis for such a conclusion. In addition, the 2019 Draft GHG Guidance specified that agencies need not weigh the effects of the various alternatives in a monetary cost-benefit analysis using the Social Cost of Carbon (SCC) estimates or other similar cost metrics. In contrast, the 2016 GHG Guidance left the determination of whether to use a monetary cost-benefit analysis, such as the SCC, up to the agency’s discretion.

In the recently issued Notice, the Biden Administration CEQ rescinded the 2019 Draft GHG Guidance and signaled that CEQ will develop future revisions and updates to the 2016 GHG Guidance. CEQ noted that, in the interim, federal agencies “should consider all available tools and resources in assessing GHG emissions and climate change effects of their proposed actions, including, as appropriate and relevant, the 2016 GHG Guidance.” The Notice’s language affords agencies flexibility to use the 2016 GHG Guidance.

Of course, there have been other significant developments in this area since 2016. Chief among them, in July 2020 CEQ finalized substantial revisions to its NEPA regulations (2020 Regulations), 40 C.F.R. Parts 1500–1508. In the 2020 Regulations, CEQ removed the definition distinguishing between “direct” and “indirect” effects and eliminated the requirement to consider “cumulative” effects. In addition to the existing requirement that effects considered in NEPA analyses must be reasonably foreseeable, effects must also have a “reasonably close causal relationship” to the proposed action or alternatives being analyzed in the NEPA review, consistent with the US Supreme Court’s decision in Public Citizen.[1] Under this standard, a “but for” causal relationship is insufficient. The 2020 Regulations go a bit further, stating that effects “should generally not be considered if they are remote in time, geographically remote, or the product of a lengthy causal chain.”[2] The 2020 Regulations also exclude from analysis effects the agency “has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action.”[3] In response to comments raising concerns that climate change would no longer be considered in NEPA analyses, CEQ then stated that agencies will consider “predictable environmental trends” — including trends determined to be a consequence of climate change — in the baseline analysis of the affected environment, rather than as effects of the proposed action.[4]

Accordingly, the 2020 Regulations did significantly more to reduce the obligation of federal agencies to consider GHG emissions and climate change in their NEPA reviews than the 2019 Draft GHG Guidance. Although the 2020 Regulations remain in effect, their longer-term influence over how agencies conduct NEPA reviews is in doubt, as noted below. In the meantime, in light of the Notice, agencies are empowered to use the 2016 GHG Guidance at their discretion. Therefore, this guidance reflects the most detailed roadmap for addressing the impacts of GHG emissions and effects of climate change in NEPA review, until CEQ takes further action during the Biden Administration.

What’s Coming Next

As directed by the January 20 EO and indicated in the Notice, CEQ is expected to review and update the 2016 GHG Guidance. CEQ’s updated NEPA GHG emissions and climate change guidance very likely will incorporate parallel efforts by the Biden Administration to update the SCC and develop other methodologies, including the Social Cost of Methane, to quantify impacts associated with GHG emissions, as required by the January 20 EO.

In updating the 2016 GHG Guidance, CEQ may need to contend with the additional procedures put in place by the Trump Administration in an eleventh-hour regulation finalized on January 8, 2021 (40 C.F.R. Part 1519), as may be applicable. This regulation was promulgated pursuant to Executive Order 13891, which has also been revoked by the Biden Administration, and made effective on the date of publication. It would require CEQ to take certain procedural steps (e.g., Office of Information and Regulatory Affairs review, public comment) before issuing a “significant guidance document.” Not surprisingly, this regulation is on the White House’s list of actions that it will review, consistent with the January 20 EO.

As part of its ongoing review of prior Administration policies, the White House has also committed to evaluating CEQ’s 2020 Regulations, and CEQ will almost certainly undertake a new rulemaking to reverse and significantly revise those regulations. In addition, the 2020 Regulations have been challenged in five separate cases in federal district courts across the country. As a result, substantial changes in how federal agencies weigh the impacts of GHG emissions and effects of climate change when issuing project approvals and making other major decisions are on the horizon.

Latham and Watkins’ Environment, Land and Resource attorneys are closely monitoring these issues.

[1] Dep’t of Transp. v. Public Citizen, 541 U.S. 752, 767 (2004).

[2] 40 C.F.R. § 1508.1(g)(2) (2020).

[3] Id.

[4] 85 Fed. Reg. 43,304, 43,331 (July 16, 2020).