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FERC, CFTC, and State Energy Law Developments

The Council on Environmental Quality (CEQ) published draft guidance on June 26 to address how agencies implementing environmental reviews under the National Environmental Policy Act (NEPA) should consider greenhouse gas (GHG) emissions. The new guidance would replace the Obama administration’s 2016 guidance, which has been on hold since April 5, 2017, pending “further consideration” pursuant to Executive Order 13783, Promoting Energy Independence and Economic Growth.

If adopted, the guidance could impact every federal agency proceeding that requires a NEPA analysis, including FERC natural gas pipeline certificate proceedings, liquefied natural gas (LNG) facility certificate proceedings, nuclear power plant decommissioning projects, and independent spent fuel storage installation facilities.

The guidance specifies that under the NEPA “rule of reason,” which defers to agency expertise in conducting NEPA analyses, as well as existing CEQ regulations, “[a]gencies preparing NEPA analyses need not give greater consideration to potential effects from GHG emissions than to other potential effects on the human environment.”

The guidance further specifies that agencies need only analyze the impact that their proposed actions would have on GHG emissions “when the amount of those emissions is substantial enough to warrant quantification, and when it is practicable to quantify them using available data and GHG quantification tools.” The guidance directs agencies to decide whether GHG analysis would be “practicable” or “overly speculative.” If analysis is not practicable or is overly speculative, the agency would need to describe how it arrived at such conclusion.

The draft guidance also permits agencies to review emission estimates and relevant literature where such information is available in lieu of a “separate cumulative effects analysis.” Where such information is not available, “the agency should include a qualitative analysis and explain its basis for determining that quantification is not warranted.” Under the draft guidance, agencies conducting NEPA analyses would not need to quantify GHG effects if the information necessary for quantification is not available or is not high quality, or where “the complexity of identifying emissions would make quantification overly speculative.” If this guidance is adopted, agencies also need not conduct any new analyses regarding potential changes to the affected environment, nor utilize social cost of carbon estimates in any cost-benefit analyses.

The comment period for the draft guidance closed on August 26.