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Environmental Reviews Under NEPA to Include More Thorough Consideration of Climate Change Risks

Several recent proposals impacting implementation of the National Environmental Policy Act ("NEPA") demonstrate a renewed focus on considering climate change in federal decision-making. In July, the Council on Environmental Quality ("CEQ") proposed revisions to its regulations for implementing the procedural provisions of NEPA. CEQ first promulgated its NEPA regulations in 1978. These regulations remained mostly unchanged until significant revisions were implemented in 2020. One major component of CEQ's recent proposal is restoring certain components from the original 1978 regulations, including identifying and assessing alternatives that avoid or minimize adverse effects. CEQ seeks to add examples of such alternatives, including "alternatives that will reduce climate change-related effects." 

Further, as codified in the Fiscal Responsibility Act of 2023, environmental impact statements must include any reasonably foreseeable climate change-related effects of a proposed action, reasonably foreseeable effects that cannot be avoided, and a reasonable range of alternatives. CEQ's proposal implements these requirements and further requires agencies to address resiliency measures included in the proposed action and alternatives. This is intended to ensure that agencies consider resiliency to risks associated with climate change, such as wildfires, extreme heat and weather events, and natural disasters. 

This proposal follows CEQ's issuance of new interim guidance earlier this year regarding agency consideration of greenhouse gas ("GHG") emissions and other climate change effects. NEPA requires federal agencies to evaluate the potential environmental impact of proposed major actions. However, there has not been a consistent approach in quantifying GHG emissions or assessing reasonably foreseeable climate change impacts. CEQ considers identification and description of reasonably foreseeable climate change effects to be a significant component in identifying the affected environment in a NEPA review. Reasonably foreseeable effects include both direct and indirect effects of the proposed action as well as reasonable alternatives. The guidance clarifies that agency consideration of the potential effects on climate change by a proposed action should include an assessment of GHG emissions and reductions. This includes not only quantifying projected GHG emissions and reductions, but also considering additional context for such emissions, such as the associated social cost ("SC-GHG"). 

Most recently, on September 21, 2023, the White House announced new actions to reduce GHG emissions and combat climate change. Echoing CEQ's recent guidance, the White House is directing agencies to consider SC-GHG when conducting environmental reviews pursuant to NEPA, developing and implementing budgets, and participating in federal procurement processes. SC-GHG takes a number of factors into account, including agriculture, labor, and public health. Consideration of SC-GHG is largely a reflection of the environmental justice goals of the Biden-Harris administration. Executive Order 13990, signed by President Biden in January 2020, directed the revision of methodologies for SC-GHG calculation to adequately account for climate risk, environmental justice, and intergenerational equity. 

The NEPA amendments, corresponding proposed regulations, and the promulgation of new agency guidance demonstrate a focus on the consideration of long-term climate change impacts at the federal level. Not only are current climate risks and GHG emissions calculations encompassed in this, but also the evaluation of contextual factors, including SC-GHG, which in effect adds an additional layer of complexity for agencies in assessing all reasonably foreseeable environmental effects of a proposed action and for companies in presenting proposed projects with appropriate context.

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