The Council on Environmental Quality (CEQ) issued new draft guidance at the end of June intended to further permit streamlining generally and greenhouse gas (GHG) analysis specifically.  The new guidance replaces previous CEQ guidance issued by the Obama Administration on how GHG effects should be estimated for projects during review under the National Environmental Policy Act (NEPA).  Whether and how a federal Agency must consider GHG emissions during NEPA review continues to be a controversial issue for pipeline construction and expansion projects that require federal permits.

NEPA analysis is required for virtually all major projects requiring federal permits or using federal funds.  The current Administration withdrew the prior (2016) CEQ guidance by an Executive Order (E.O.) signed on April 5, 2017 as part of the current Administration’s efforts to help streamline permitting processes for energy projects.  Another E.O. signed in 2017 directed federal agencies to improve coordination during NEPA review and was also intended to streamline permitting. The second 2017 E.O. resulted in the Department of Transportation and ten other federal agencies entering into a Memorandum of Understanding on April 10, 2018 that requires a uniform schedule for review and input by federal agencies during the NEPA process.

Consideration of GHG emissions during NEPA review has become a significant issue for many new pipeline construction projects, gas projects in particular.  The D.C. Circuit has directed pipeline companies and the Federal Energy Regulatory Commission (FERC), which issues permit/certificates to gas projects after NEPA review, to include GHG consideration with as much information as available.  Those judicial decisions have become controversial in regard to whether potential effects need to be considered both downstream and upstream, and for how such information should be gathered and reviewed.  One of the major issues has been whether the courts or FERC should consider an analytical tool referenced in the 2016 CEQ guidance, called the “Social Cost of Carbon” model (SCC).

The new proposed guidance encourages federal agencies to use a “rule of reason” in considering impacts of GHG emissions during NEPA review, noting that “agencies preparing NEPA analyses need not give greater consideration to potential effects from GHG emissions than to other potential effects on the human environment.” The proposed guidance goes on to state that agencies do not need to prepare cumulative effect analysis under NEPA for GHG impacts of projects, “because the potential effects of GHG emissions are inherently a global cumulative effect.”   Finally, although the current Administration supports cost-benefit requirements in most statutes and regulations, the new proposed guidance notes that neither NEPA nor CEQ require cost-benefit review, suggesting that therefore federal agencies “need not weigh” cost benefits using the SCC model “or similar cost metrics.”

CEQ’s proposed new guidance on GHG consideration in NEPA review is available for public comment until July 26, 2019.  It is not likely in the short term that the guidance will have significant impact on permit streamlining, both because the new guidance will undoubtedly be challenged in court, and because CEQ guidance “is not a rule or regulation,” and thus not binding on courts or federal agencies such as FERC.