Five Points About the Proposed Revisions to CEQ’s NEPA Regulations

By Jessica Wentz and Michael Burger

On January 9 the Council on Environmental Quality (CEQ) published a proposal to dramatically overhaul the federal regulations governing environmental reviews under the National Environmental Policy Act (NEPA). The proposal represents a significant departure from CEQ’s prior interpretation of NEPA as well as decades of agency practice, case law, and guidance consistent with that interpretation. Rather than promoting transparency, public engagement, and informed decision-making consistent with the policy set forth in NEPA, the proposal aims to curtail environmental analyses, limit disclosures to the public, and expedite federal approvals for major projects, including fossil fuel supply infrastructure.

Although the proposed regulations do not explicitly mention “climate change” there are many provisions that would potentially limit or even eliminate analysis of climate change-related issues for fossil fuel extraction leases and infrastructure, such as natural gas pipelines. Here are five key points about the proposal and its implications for fossil fuel projects and analysis of climate change-related issues:

  1. The proposal would eliminate requirements to evaluate “cumulative” effects, and possibly “indirect effects,” as well.

The existing NEPA regulations require agencies to evaluate three types of effects in environmental reviews: (i) direct effects, which are “caused by the action and occur at the same time and place;” (ii) indirect effects, which are “caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable;” and (iii) cumulative effects, which result from “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.”

The indirect and cumulative effect requirements have played a major role in recent litigation involving federal agency obligations to account for climate change when reviewing the impact of fossil fuel extraction leases and approvals for infrastructure such as pipelines. As we have detailed in recent articles (2017/2019), there are many court decisions requiring agencies to evaluate downstream greenhouse gas (GHG) emissions (e.g., from the combustion of fossil fuels) as indirect or cumulative effects of such approvals, as well as several decisions requiring consideration of upstream emissions (e.g., from fossil fuel production) in the context of transport projects such as coal railways. In some cases, the cumulative effects requirement has also been interpreted as requiring agencies to consider the effects of multiple fossil fuel leasing decisions under their control. These decisions have played an important role in prompting more thorough analysis of the potential effect of such projects on fossil fuel use and the corresponding impact on GHG emissions and global climate change.

CEQ is now proposing to collapse the distinction between indirect and direct effects and to explicitly eliminate the requirement to evaluate cumulative effects (as well as the related requirement to evaluate effects from cumulative actions). CEQ is also soliciting comment on whether it should affirmatively state that consideration of indirect effects is not required under NEPA. CEQ claims this modification is justified because “the terms ‘indirect’ and ‘cumulative’ have been interpreted expansively resulting in excessive documentation about speculative effects and leading to frequent litigation.

CEQ may face an uphill battle justifying such a modification in light of decades of agency practice, case law, and guidance affirming CEQ’s prior interpretation that indirect and cumulative effects properly qualify as “effects” which must be considered under NEPA. In some cases, courts have directly tied the obligation to evaluate indirect and/or cumulative effects to the statutory provisions rather than regulations. For example, in Kleppe v. Sierra Club(1974), the Supreme Court stated that consideration of cumulative effects/actions is necessary to comply with NEPA’s mandate that agencies use “all practicable means” to achieve the policy of environmental protection set forth in NEPA and to comply with NEPA’s procedural requirements.

  1. The proposal would limit analysis to effects which are “reasonably foreseeable” and have a “reasonably close causal relationship” to the proposal.

The proposal would replace the old definition of “effects” – which recognized the distinction between direct, indirect, and cumulative effects – with the following definition:

“Effects or impacts means effects of the proposed action or alternatives that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives. Effects include reasonably foreseeable effects that occur at the same time and place and may include reasonably foreseeable effects that are later in time or farther removed in distance.”

The proposal defines “reasonably foreseeable” as “sufficiently likely to occur such that a person of ordinary prudence would take it into account in reaching a decision,” but it does not define what constitutes a “reasonably close causal relationship.”

The provision limiting analysis to “reasonably foreseeable” effects is generally consistent with past agency practice and case law – courts have long held that NEPA only requires consideration of “reasonably foreseeable effects.” In cases involving fossil fuel extraction and transportation infrastructure, courts have also repeatedly found that indirect and cumulative GHG emissions (e.g., from the end-use of the fuels) are a reasonably foreseeable outcome of the production and transportation of the fuels.

However, the requirement that there be a “reasonably close causal relationship” appears aimed at limiting analysis and disclosure of certain indirect impacts, such as: (i) upstream and downstream emissions from fossil fuel projects, and (ii) any on-the-ground effects of climate change. In addition, the permissive language specifying that the effects which must be analyzed mayinclude effects that are later in time or farther removed in distance signals to agencies that evaluation of indirect effects is optional rather than mandatory. As a result, both provisions could be used to justify the omission of GHG emissions and climate-relate considerations from NEPA reviews for a broad range of projects.

  1. The proposal redefines “significance” and limits consideration of indirect effects in significance determinations.

NEPA requires agencies to take a hard look at “significant” environmental impacts, and only requires preparation of a comprehensive environmental impact statement (EIS) for proposals that may significantly affect the environment. The existing regulations define “significantly” as requiring consideration of both context and intensity. They also provide some guidance on what this means. For example, the regulations outline ten criteria that should be considered in evaluating intensity which include the degree to which the possible effects are highly uncertain or involve unique or unknown risks, the degree to which the effects are likely to be highly controversial, and the degree to which the action may establish a precedent for future actions with significant effects. Even with this regulatory guidance, agencies have a significant amount of discretion in determining whether an impact is “significant” – so much so that it is already very difficult to challenge an agency’s significance determination in court.

The proposed rule would give agencies even more discretion in this context by eliminating the existing definition of “significantly” and replacing it with this provision: “In considering whether the effects of the proposed action are significant, agencies shall analyze the potentially affected environment and degree of the effects of the action.” This language is so vague that it does not provide meaningful guidance to agencies let alone a benchmark that courts could use to evaluate the reasonableness of significance determinations.

If enacted, this change would make it easier for agencies to dismiss the significance of impacts arising from fossil fuel extraction and transportation infrastructure. As we discuss in a forthcoming article, there has been a long-standing debate about the threshold at which GHG emissions qualify as a “significant impact.” Remarkably, we are not aware of any federal reviews for fossil fuel extraction or transportation infrastructure in which the reviewing agency has found a significant GHG impact (despite the fact that these projects would generate millions of tons of CO2e individually and hundreds of millions of tons of CO2e in the aggregate). But plaintiffs have recently begun to challenge this practice in court, relying on the existing regulatory criteria for evaluating intensity as grounds for arguing that GHG impacts from extraction projects qualify as significant impacts under NEPA. Courts have only just begun to grapple with such claims, and the proposed regulations, if upheld, could seriously undermine efforts to hold agencies accountable in this context.

In addition, the proposal would specify that even reasonably foreseeable effects “should not be considered significant if they are remote in time, geographically remote, or the result of a lengthy casual chain.” This provision could certainly be used to justify the exclusion of downstream and upstream GHG emissions from significance determinations for fossil fuel projects. It could also be used to justify the wholesale exclusion of GHG emissions and climate change impacts from all federal reviews, since the impacts of climate change (e.g., sea level rise) are geographically and temporally attenuated from the emission of GHGs. Further supporting this interpretation, the proposed regulations state that “in the case of a site-specific action, significance would usually depend on the effects in the locale rather than in the Nation as a whole.”

CEQ cites the Supreme Court’s decision in Department of Transportation v. Public Citizenas support for this new restriction on significance determinations. But this is a misinterpretation of that case, which held that an agency is not required to consider effects in its NEPA analysis when it has “no ability” to prevent or otherwise influence those effects.  Reviewing courts have held thatPublic Citizen is not applicable to federal approvals for fossil fuel production and transportation infrastructure because the reviewing agencies do have the power to act on information about downstream emissions from fossil fuel use when deciding whether to authorize such proposals. See, e.g., Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017).

Again, it will be difficult for CEQ to justify such a dramatic revision of the requirements for significance determination due to the long history of agency practice, case law, and guidance supporting its prior interpretation.

  1. CEQ has signaled that it will move forward with its proposed GHG guidance, and is inviting comments on whether it should codify any aspects of that guidance in the regulations.

As noted above, the proposed regulations do not include any reference to “climate change.” Rather, in the preamble, CEQ clarifies that it intends to address specific issues related to climate change and NEPA implementation through forthcoming guidance on consideration of greenhouse gas emissions(which it intends to revise to be consistent with the new regulations). However, CEQ is also inviting comment on whether it should codify any aspects of the proposed GHG guidance in this rulemaking.

We discussed the draft guidance and its implications in a previous blog post. One conclusion was that that the guidance, if finalized, was unlikely to significantly affect agency practice or judicial interpretations of NEPA obligation because: (i) the guidance does not carry the same legal force as the statute or implementing regulations, (ii) the guidance does not represent a major departure from current agency practice, and (iii) many of the statements contained therein are too vague to contain meaningful instruction.

However, the situation may change with the finalization of these new NEPA regulations and CEQ’s subsequent revisions to the GHG guidance. If the provisions discussed above are upheld by the courts, then this may open the doors to the promulgation of guidance which could significantly curtail agency analysis of GHG emissions.

  1. The proposal would undermine the environmental policy set forth in NEPA.

If the proposal is adopted and upheld in court, it would potentially allow agencies to approve fossil fuel infrastructure and other major projects without adequate consideration or disclosure of GHG emissions and climate change impacts. It would also disrupt agency practices, create considerable uncertainty about NEPA requirements, and make it more difficult for the public to obtain information about and challenge approvals of potentially harmful projects such as coal, oil, and gas extraction leases. It may also enable the Trump administration – if it remains in power – to accelerate its efforts to expand fossil fuel leasing on federal lands and build out fossil fuel supply infrastructure.

This is utterly inconsistent with the environmental policy set forth in NEPA, which states that the federal government will “use all practicable means and measures… to foster and promote the general welfare, to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans.”

Most of the environmental challenges we face today are in fact cumulative and interconnected. Climate change is a prime example. To ignore this reality is not only irrational – it is also detrimental to the public interest and a flagrant violation of NEPA’s policy. Any future changes to the NEPA regulations should be aimed at improving consideration of indirect and cumulative effects rather than curtailing it. The proposed revisions represent a major step in the wrong direction.

CEQ has requested public comments on or before March 10, 2020. Please visit the CEQ website for more information about how to submit comments.

More information on NEPA and climate change:

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