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White House Releases Final Guidance on GHG Emissions For NEPA Reviews

Six years after launching an effort to modify how federal agencies conduct National Environmental Policy Act (NEPA) reviews with regard to climate change, the Obama administration unveiled final guidance it said is designed to quantify the impacts of greenhouse gas (GHG) emissions.

But industry groups said the changes -- part of what analysts and the industry have derided as an "unprecedented" list of regulations in the waning days of the Obama presidency -- were unnecessary and hinted that they could harm applicants seeking FERC approval for projects.

In a 34-page document issued Tuesday by the White House Council on Environmental Quality (CEQ), federal agencies were told to consider the potential effects of a proposed action on climate change by assessing GHG emissions, and to weigh the effects of climate change on a proposed action and its environmental impacts.

CEQ recommended that federal agencies quantify a proposed action's projected direct and indirect GHG emissions, and that they use projected GHG emissions as a proxy for assessing potential climate change effects when preparing a NEPA analysis. CEQ also recommended that whenever agencies do not perform such a quantification, that they include a qualitative analysis in their NEPA documents explaining why it was not reasonably available.

CEQ also called for, among other things, that federal agencies discuss ways to accurately measure direct, indirect and cumulative GHG emissions and climate effects, and to consider reasonable alternatives that could provide short- and long-term benefits to the environment. Federal agencies were also advised to use available information when assessing the potential future state of the affected environment in a NEPA analysis, rather than conduct new research.

"Climate change is a fundamental environmental issue, and its effects fall squarely within NEPA's purview," CEQ said. "Climate change is a particularly complex challenge given its global nature and the inherent interrelationships among its sources, causation, mechanisms of action, and impacts.

"Analyzing a proposed action's GHG emissions and the effects of climate change relevant to a proposed action -- particularly how climate change may change an action's environmental effects -- can provide useful information to decision makers and the public."

The final guidance, which will be published in the Federal Register within days, builds upon draft guidance CEQ issued in December 2014 (see Daily GPIDec. 19, 2014). It was unclear when the new rules would take effect.

Last December, the Federal Energy Regulatory Commission issued a draft update to its Guidance Manual for Environmental Report Preparation (see Daily GPIDec. 29, 2015). The manual is designed to help applicants seeking project approval under the Natural Gas Act (NGA), by guiding them through supplying FERC with useful information so it can complete project reviews in accordance with NEPA.

Weeks later, the Environmental Protection Agency (EPA) said FERC should also require NGA applicants provide more information on a project's indirect impacts, including potential increases in GHG emissions (see Shale DailyJan. 21). But the Natural Gas Supply Association (NGSA) and the Center for Liquefied Natural Gas (CLNG) jointly urged FERC not to expand the environmental reporting requirements, warning that any change in the manual's language could be interpreted as expanding the scope of FERC's project reviews under NEPA (see Daily GPIFeb. 1).

Clearview Energy Partners LLC did not agree, saying “impacts could vary by federal agency. In particular, the guidance may not pose incremental hurdles to natural gas pipeline projects, particularly when they enable gas to supplant coal-fired generation.”

Clearview also said the guidance will be “immediately operational,” implying that an agency’s final action could be subject to litigation risk if it proceeds without addressing GHGs, even if the NEPA review is already in process.

The November presidential election could decide whether the GHG rule prevails, with Republican Donald Trump likely to potentially eliminate it and Democrat Hillary Clinton likely to support it, Clearview said.

In a statement Tuesday, CLNG Executive Director Charlie Riedl said the guidance "not only fails to serve NEPA's goals and purposes, but it also creates yet another arbitrary hurdle for the industry, which is already forced to navigate an unpredictable and inconsistent regulatory approval process.

"The guidance issued today creates greater regulatory uncertainty that will hold the American LNG industry back at a time when it faces fierce competition from LNG projects in other countries that are rapidly coming online."

Michael Tadeo, spokesman for the American Petroleum Institute, told NGI that the organization was currently reviewing the guidance. "[But] it's important to note that the United States is leading the world in the reduction of carbon emissions, which are at near 20-year lows, while leading the world in the production of oil and natural gas," Tadeo said Tuesday.

Analysts and oil and gas experts agree that the waning days of the Obama administration will be challenging ones for the industry, as an "unprecedented" list of proposed regulations that could impact the industry for years to come slowly advance through the rulemaking process.

Last April, the Independent Petroleum Association of America (IPAA) presented attendees of an energy conference with a list of more than 40 regulations proposed by the federal government (see Daily GPI, April 25). CEQ's incorporation of guidance on the impacts of GHG emissions into NEPA was on the IPAA's list.

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