Comment on Revised Draft Guidance for Federal Departments and Agencies Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in NEPA Reviews, 79 Fed. Reg. 77,802
(December 24, 2014)
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Introduction
On December 18, 2014, the Council on Environmental Quality (CEQ) unveiled revised draft guidance on consideration of greenhouse gas emissions and the effects of climate change in NEPA reviews.[1] This new draft guidance is internally inconsistent, fails to require information about climate change itself, is inconsistent with NEPA, is inconsistent with current NEPA regulations, is inconsistent with case law, and uses the arbitrary and capricious social cost of carbon. CEQ should withdraw this guidance.
I. Contrary to the Guidance itself, the Draft Guidance Fails to Consider the Potential Impacts of a Proposed Action on Climate Change
The first requirement in the Draft Guidance states, “Federal agencies, to remain consistent with NEPA, should consider the extent to which a proposed action and its reasonable alternatives contribute to climate change …”[2] Contrary to this directive, however, the Draft Guidance does not do this. Instead of considering how a Federal action would “contribute to climate change,” CEQ directs agencies to “use the projected GHG emissions and also, when appropriate, potential changes in carbon sequestration and storage, as the proxy for assessing a proposed action’s potential climate change impacts.”
Merely describing GHG emissions does not show how an action will “contribute to climate change.” GHG emissions are not synonymous with climate change—they are merely a number that provide policymakers and the public with no real information. As CEQ states later in the Guidance, “An agency must present the environmental impacts of the proposed action in clear terms and with sufficient information to ensure the professional and scientific integrity of the discussion and analysis.”[3] By stressing GHG emissions instead of actual impacts, the guidance is arbitrary and capricious and fails to provide “clear” and “sufficient” information.
Describing climate change impacts requires a discussion of climate change itself. For example, CEQ argues:[4]
Climate change impacts will have important consequences for the resilience of Federal actions, including more frequent heat waves and high-intensity precipitation events, rising sea levels, and more prolonged droughts.
Temperature change, heat waves, high-intensity precipitation events, rising sea levels, and more prolonged droughts are climate change impacts. These are exactly the type of impacts that should be required in a NEPA analysis if the CEQ believes that climate change impacts should be considered.
CEQ’s approach of only describing the number of tons of carbon dioxide emissions, by itself, does not say anything about climate change or climate change impacts.
CEQ admits that it is difficult to describe climate change impacts from federal actions. In response to comments that cite Department of Transportation v. Public Citizen, 541 U.S. 752, 767 (2004), where the U.S. Supreme Court stated that the obligation of an agency to discuss particular effects turns on “a reasonably close causal relationship between the environmental effect and the alleged cause.’” CEQ takes the wrong tack that provides less information than a qualitative explanation. If CEQ believes it is important to examine the GHG emissions, then it is important to make use of that information and provide context of actual impacts on climate.
EPA’s MAGICC climate model is readily available to assess actual quantitative impacts. GHG emissions by themselves provide no real information. If CEQ believes climate change impacts should be reported in NEPA documents, then actual impacts should be disclosed through the use of a climate model that has passed federal data quality tests, such as the MAGICC.
The point of NEPA is to provide policymakers and the public with useful information. Merely providing the tons of GHG emissions does not provide the public with any information in context. The required context is actual climate change impacts. If NEPA analyses should consider climate change impacts, then those impacts should be quantified using the MAGICC model. It is true that the impact of any given project is small, but the failure to disclose actual climate impacts of the specific action would be arbitrary and capricious.
If CEQ believes that the impact of any federal action is small, as CEQ seems to suggest, then CEQ should state as much and not require the consideration of climate change impacts in NEPA analyses.
II. The Draft Guidance impermissibly includes an overly broad assessment of upstream and Downstream impacts
Current NEPA regulations create boundaries for NEPA review by limiting the scope of a NEPA document to only the impacts that are “reasonably foreseeable.” For example, 40 CFR 1508.8 contemplates that NEPA reviews should consider direct effects and indirect effects “which are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable.”
Even this reasonably foreseeable standard is further limited by case law to not include more than a “but for” causal relationship. Rather, according to the Supreme Court, it requires a “reasonably close causal relationship between a change in the physical environment and the effect at issue. This requirement is like the familiar doctrine of proximate cause from tort law.”[5] Furthermore, the Supreme Court has also explained that “where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant ‘cause’ of the effect. Hence, under NEPA . . . the agency need not consider these effects…”[6]
In sum, the Supreme Court has explained that NEPA analyses should consider the reasonably foreseeable proximate cause of an impact and these analyses should not consider the impacts the agency has no ability to prevent due to limited statutory authority. CEQ’s Draft Guidance, however, appears to contradict the Supreme Court’s explanation of NEPA.
CEQ’s Draft Guidance does not comply with the Supreme Court’s case law on NEPA and requires overly broad consideration of costs and benefits. CEQ’s Draft Guidance states:
When assessing direct and indirect climate change effects, agencies should take account of the proposed action—including “connected” actions—subject to reasonable limits based on feasibility and practicality. In addition, emissions from activities that have a reasonably close causal relationship to the Federal action, such as those that may occur as a predicate for the agency action (often referred to as upstream emissions) and as a consequence of the agency action (often referred to as downstream emissions) should be accounted for in the NEPA analysis. [citations omitted][7]
This sounds like it could comport with case law, but CEQ makes clear, in two important ways, that they are asking for far more than what case law requires. CEQ provides an explanation of a hypothetical open pit mine. CEQ argues:
For example a particular NEPA analysis for a proposed open pit mine could include the reasonably foreseeable effects of various components of the mining process, such as clearing land for the extraction, building access roads, transporting the extracted resource, refining or processing the resource, and using the resource.
This is far, far beyond anything that is required under NEPA case law. The refining, processing, transportation and use of the resource, at very least, is beyond the control of the permitting agency. As the Supreme Court explained in Department of Transportation v. Public Citizen, effects should not be considered in a NEPA analysis “where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant “cause” of the effect. Hence, under NEPA . . .the agency need not consider these effects…”[8]
III. The Social Cost of Carbon is Impermissibly Arbitrary and Capricious for use in NEPA Analyses
The second way that CEQ’s guidance does not comport with the reasonably foreseeable standard is through the use of the Social Cost of Carbon (SCC). Using the SCC makes impacts impermissibly remote and unforeseeable. The Draft Guidance states, “When an agency determines it appropriate to monetize costs and benefits . . . the Federal social cost of carbon . . . offers a harmonized, interagency metric that can provide decision makers and the public with some context for meaningful NEPA review.”[9]
Contrary to CEQ’s assertion, however, the SCC does not provide decision makers and the public with meaningful context. This is because the SCC is an impermissibly arbitrary and capricious metric. First, consider the fact that the SCC purports to include impacts from now until the year 2300. As EPA explains:
The timing of the emission release (or reduction) is key to estimation of the SCC, which is based on a present value calculation. The integrated assessment models first estimate damages occurring after the emission release and into the future, often as far out as the year 2300. The models then discount the value of those damages over the entire time span back to present value to arrive at the SCC. For example, the SCC for the year 2020 represents the present value of climate change damages that occur between the years 2020 and 2300 (assuming 2300 is the final year of the model run); these damages are associated with the release of one ton of carbon dioxide in the year 2020.[10]
By including the Social Cost of Carbon as a way to monetize climate change impacts, CEQ is impermissibly including the downstream impacts for the next 285 years. Impacts over the next 285 years are not “reasonably foreseeable” as required by NEPA case law and regulations.[11] As the Supreme Court has explained, “highly speculative harms” are not reasonably foreseeable.[12]
Not only are impacts 285 years from now not reasonably foreseeable, but today the values calculated by the federal Social Cost of Carbon are “close to useless”, according to MIT economist Robert Pindyck.[13] In a peer reviewed paper, Pindyck explains the arbitrary nature of the damage functions, which underlie the SCC estimates generated by the computer models:
When assessing climate sensitivity, we at least have scientific results to rely on, and can argue coherently about the probability distribution that is most consistent with those results. When it comes to the damage function, however, we know almost nothing, so developers of IAMs [Integrated Assessment Models] can do little more than make up functional forms and corresponding parameter values. And that is pretty much what they have done. [Pindyck p. 11, bold added.][14]
Pindyck then goes on to say:
Most IAMs [Integrated Assessment Models] (including the three that were used by the Interagency Working Group to estimate the SCC) relate the temperature increase T to GDP through a “loss function” L(T), with L(0) = 1 and L’(T ) < 0. For example, the Nordhaus (2008) DICE model uses [an] inverse-quadratic loss function…
Weitzman (2009) suggested the exponential-quadratic loss function…which allows for greater losses when T is large. But remember that neither of these loss functions is based on any economic (or other) theory. Nor are the loss functions that appear in other IAMs. They are just arbitrary functions, made up to describe how GDP goes down when T goes up.
The loss functions in PAGE and FUND, the other two models used by the Interagency Working Group, are more complex but equally arbitrary…[T]here is no pretense that the equations are based on any theory. [Pindyck p. 11, bold added.]
Because the equations that make up the SCC are not “based on theory,” and are wholly arbitrary, the SCC is wholly arbitrary. Using an arbitrary metric to calculate impacts 285 years into the future does not produce information that could be “reasonably foreseeable” as required by NEPA regulation and case law.
Appendix I provides additional information on why the use of the SCC is arbitrary and capricious. This is a comment previously sent to the OMB and explains in detail why the SCC is impermissibly arbitrary and capricious.
Conclusion
CEQ’s revised draft guidance on consideration of greenhouse gas emissions and the effects of climate change in NEPA reviews is fatally flawed. The new draft guidance is internally inconsistent, fails to require information about climate change itself, is inconsistent with NEPA, is inconsistent with current NEPA regulations, is inconsistent with case law, and uses the arbitrary and capricious social cost of carbon. For these reasons, CEQ should withdraw this guidance.
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[1] Council on Environmental Quality, Revised Draft Guidance for Greenhouse Gas Emissions and Climate Change Impacts, 79 Fed. Reg. 77,802, Dec. 18, 2014, http://www.gpo.gov/fdsys/pkg/FR-2014-12-24/pdf/2014-30035.pdf.
[2] Id. at 77,825.
[3] Id. at 77,826.
[4] Id. at 77,816.
[5] Metropolitan Edison Co. v. People Against Nuclear Energy, 460 U.S. 766, 774 (1983).
[6] Dep’t of Transp. v. Public Citizen, 541 U.S. 752, 770 (2004).
[7] CEQ, Revised Draft Guidance at 77,826.
[8] Dep’t of Transp. v. Public Citizen, 541 U.S. 752, 770 (2004).
[9] CEQ, Draft Guidance at 77,827.
[10] Environmental Protection Agency, Fact Sheet: Social Cost of Carbon, Nov. 2013, http://www.epa.gov/climatechange/Downloads/EPAactivities/scc-fact-sheet.pdf.
[11] 40 C.F.R. 1508.7 & 1508.8.
[12] See e.g. Robertson v. Menthow Valley Citiznes Council, 490 U.S. 332, 356 (1989) & City of Shoreacres v. Waterworth, 420 F.3d. 440, 453 (5th Cir. 2005).
[13] Robert Pindyck, (2013) “Climate Change Policy: What Do the Models Tell Us?” Journal of Economic Literature, Vol. 51, No. 3, September 2013, pp. 860-72.
[14] Robert Pindyck, (2013) “Climate Change Policy: What Do the Models Tell Us?” Journal of Economic Literature, Vol. 51, No. 3, September 2013, pp. 860-72.
