R Street Institute Comments for the Council on Environmental Quality proposed rulemaking, National Environmental Policy Act Implementing Regulations Revisions Phase 2, Docket No. CEQ-2023-0003

Sept. 29, 2023
Council on Environmental Quality
730 Jackson Place NW
Washington, D.C. 20503

Re: Comments for the Council on Environmental Quality proposed rulemaking, National Environmental Policy Act Implementing Regulations Revisions Phase 2, Docket No. CEQ-2023-0003

Dear Chair Mallory,

We at the R Street Institute (R Street) are pleased to see that the Council on Environmental Quality (CEQ) is implementing new guidelines on the National Environmental Policy Act (NEPA) pursuant to the new requirements from the Fiscal Responsibility Act (FRA). In general, we feel that revisions aimed at improving transparency, enhancing clarity and reducing page count burdens will help alleviate the challenges associated with permitting. That said, in this comment, we focus specifically on CEQ’s updated guidance for the consideration of climate change impacts as part of NEPA, noting that the proposed implementation is likely to be at odds with objectives of reduced page counts for NEPA documents; is perhaps too vague to furnish project sponsors with actionable information; and is redundant with NEPA’s primary objective of facilitating compliance with environmental statutes, in which climate-related pollutants are already regulated under other processes. Consequently, we believe this provision could worsen climate change outcomes by making it harder to construct new, mostly greenhouse gas (GHG) emission-reducing projects.

I. Background

Past research from R Street has noted that, prior to 2017, both the median and average timelines to prepare environmental impact statements (EISs) for major infrastructure projects rose steadily, from a median of 2.3 years in 2010 to a peak median of 4.7 years by 2016.[1] From 2017 to 2019 (the last year for which CEQ published complete data), the median fell to 3.5 years.[2] For context, one of the FRA’s stated goals is to restore typical timelines to a period of two years.[3]

Our research determined that the increasing EIS page count, likely influenced by litigation risks, played a significant role in these delays. Past research we cited noted that agencies that took longer to prepare EISs were more likely to succeed in legal challenges to the adequacy of their documents, while agencies that completed EISs more quickly were more likely to lose such challenges.[4] This is consistent with the Congressional Research Service’s observation that litigation risk is a major cause of protracted permitting timelines.[5]

Additionally, our research found that most of the litigation that challenged NEPA decisions came from public interest groups, which accounted for 59 percent of litigants.[6] The least likely plaintiffs were property owners (3 percent) and Native American tribes (3 percent).[7]

Our 2021 paper noted that clean energy and environmental conservation projects were more likely to require lengthy environmental review than fossil fuel projects.[8] Subsequent research reinforced this, finding that, among Bureau of Land Management (BLM) projects requiring an EIS, only 0.3 percent were fossil fuel projects, while 12 percent were renewable projects.[9] Updates to this research found that this trend has only been reinforced. As of July 2023, 90 percent of planned or in-progress energy-related projects on the federal permitting dashboard were for clean energy, compared to 3 percent for fossil fuel.[10] Similarly, 36 percent of active Department of Energy (DOE) projects requiring an EIS were clean energy-related (compared to 18 percent for fossil fuel), while 66 percent of active BLM projects requiring an EIS were clean energy-related (compared to 18 percent for fossil fuel).[11]

In summary, data analysis indicates that EIS preparation timelines are protracted compared to historical norms—a trend likely driven by litigation risks stemming from the need for EIS documents to cover a wide range of potential topics. In the energy industry, these delays are likely to harm clean energy projects disproportionately since they comprise most of the projects requiring an EIS.

II. Appropriateness of Consideration of Climate Impacts as Part of NEPA

CEQ suggests that the inclusion of updated and expanded consideration of climate change effects from projects coincides with NEPA’s intent to guide agencies toward potential project alternatives, ensuring that the best outcomes are selected. We at R Street note that infrastructure projects requiring NEPA review are likely to be subject to the physical effects of climate change and agree that it is appropriate to consider how future climate change may affect infrastructure development (e.g., flood risk, storm surge, wildfires).

However, we do not believe that NEPA is the appropriate policy mechanism for the consideration of climate change effects resulting from projects. This is because climate change is an indirect environmental effect to which infrastructure projects may or may not contribute. While climate change is caused primarily by global anthropogenic GHG emissions, the atmospheric concentration of these gases depends heavily upon myriad global social and economic conditions that interact with one another.[12] Though it is possible to estimate the direct emission profile of an infrastructure project, it is much more difficult to estimate the net climate effect a project has because it requires an understanding of how economic conditions may or may not change in the future and invites speculation on the part of agencies that may be outside the scope of their expertise.

Essentially, we expect that the CEQ’s proposed modifications to the Code of Federal Regulations title 40, parts 1500.2 and 1502.14 will increase the complexity of NEPA documentation without offering a benefit that outweighs the resulting compliance costs and delayed capital stock entry to market.

Additionally, we expect these changes to have a detrimental effect on overall global GHG emissions since the projects most likely to be impacted negatively by these requirements are generally considered climate-improving. Below, we outline why the CEQ’s explicit requirement for the consideration of climate change in project alternatives is not appropriate for its proposed changes to NEPA.

A. It is unclear to what extent this additional requirement could extend permitting timelines.

One notable challenge to NEPA document preparation timeline adherence is inadequate agency staffing.[13] Accurately estimating the climate impact of a proposed project requires rigorous analysis as well as data from a variety of sources, including the project sponsor. The expertise required to provide this information will be significant, and it is unclear how limited the pool of potential staff will be to agencies with such expertise.

Additionally, the promulgation of this requirement will not only create new staff requirements for CEQ and federal agencies, but it will also create burdens for states and project sponsors that will need to provide relevant information that may be beyond the scope of their existing expertise.

While well-intentioned, the promulgation of this additional requirement will certainly increase the complexity of permitting documents and is likely to extend permitting timelines. As noted above, the climate-relevant projects that are most likely to be impacted by these decisions are clean energy projects and supporting infrastructure. This means policies that complicate or delay permitting are likely to worsen overall climate outcomes by making it harder to build clean energy in the United States.

B. Additional information about climate change effects is unlikely to change projects beyond what is already considered under existing air quality regulations.

NEPA’s primary function is to ensure the compliance of infrastructure projects with all relevant environmental statutes. Secondarily, as noted by CEQ in its proposed rulemaking, NEPA creates an opportunity for agencies to examine their actions rigorously to identify reasonable alternatives. Importantly, for projects in which climate change is most likely to have an impact on the consideration of alternatives (such as emission-intensive energy-related projects), optimal methods for reducing emissions are already likely to be considered as part of existing environmental regulation.

Emitting sources are regulated by the U.S. Environmental Protection Agency under the policies of New Source Review (NSR), the National Ambient Air Quality Standards (NAAQS) and other regulations.[14] Because NSR, NAAQS and other regulations already require facilities to utilize the best available equipment for reducing emissions, it is unclear how the addition of climate considerations in alternatives under new NEPA guidance could offer any new, useful information to project sponsors who are already required to consider air pollution. Presumably the CEQ’s new guidance would have the most potential benefit for projects that do not fall under such requirements; however, these would be projects for which emissions are secondary or even tertiary considerations and thus have only a de minimis potential climate effect.

The CEQ’s proposed rule notes specifically that the consideration of alternatives must be more than a “check-the-box” exercise.[15] While we agree that projects should consider all environmental aspects in the identification of alternatives, a specific requirement for the consideration of climate change effects does create a “check-the-box” exercise. The problem with this approach is that engaging in such activity is not costless—it requires the solicitation of information from project sponsors in addition to the interpretation of that information by staff at permitting agencies, and the delayed implementation of newer infrastructure could result in economic costs as well.

At minimum, CEQ should be able to demonstrate through data analysis how they anticipate these new requirements in the consideration of alternatives could produce economic or environmental benefits not otherwise captured under existing statute and offer an estimated compliance cost. The currently provided regulatory impact analysis notes that better identification of climate impacts—both to projects and effects from projects—can avoid damages, but it offers no cost estimate.[16] If it is true that there are capturable environmental benefits from these new requirements to environmental assessments and EISs, then presumably CEQ should be able to demonstrate how modifications to prior EISs could have yielded monetizable public health benefits that were not captured in the absence of the requirement. The lack of such evidence indicates that CEQ has not cleared this bar and that its assumptions of capturable benefits are speculative rather than demonstrable.

C. As worded, the proposed requirements for the consideration of climate change would force agencies to engage in speculation that is unlikely to hold true over the full life of permitted projects.

While all decision making requires some assumption about the future, it is important to understand our limitations in knowing what will happen. The proposed rule fundamentally requires agencies to speculate as to which activities they think may have the best climate outcomes, though they must rely on assumptions of future global social and economic factors that they cannot know with certainty.

For example, in February 2022, some politicians called for a restriction on the export of natural gas from the United States.[17] They believed such a policy would reduce domestic natural gas prices. Had such a policy been implemented, the United States would have been unable to supply natural gas to Europe as they curtailed their imports of natural gas from Russia, and the United States would have also forgone the economic benefit of exporting natural gas during a time of high demand and extraordinary prices.[18] The appropriateness of various energy policies is highly contingent upon global conditions that are subject to rapid, difficult-to-predict changes. Notably, government agencies charged with projecting future energy market conditions—like the U.S. Energy Information Administration—are required to focus primarily on current-law projections and to avoid speculation in analysis.[19]

Estimates as to how a project may impact climate invites assumptions about future energy prices, availability, production and demand that may not hold true. For example, an agency could analyze a liquefied natural gas (LNG) export terminal and conclude in an EIS that no-action (as in not constructing the facility) is a preferable climate outcome if they assumed LNG buyers would buy renewable energy instead. But such an assumption would be inconsistent with the available data, which indicates that those buyers would instead purchase from other, likely more-polluting, suppliers—which is why the Bureau of Ocean Energy Management concluded that increases to U.S. offshore fossil fuel production does not, on net, increase global greenhouse gas emissions.[20] Similarly, agencies could make incorrect assumptions about the approval of clean energy facilities. An agency could conclude that an offshore wind facility is the optimal climate choice, but if energy storage costs fall, the planned project could end up competing with solar and storage facilities that require less fossil fuel-intensive transportation to maintain.[21]

Essentially, whatever hierarchy of climate alternatives the agencies offer will simply reflect their assumptions rather than provide actionable information. Such information may be useful in identifying discrete components of projects that could be done in a more environmentally friendly manner—for example, if better project component placement or alternative facility component types could reduce GHG emissions—but the project sponsor would likely have already considered this information as part of the compliance with air quality regulation. Effectively, the wording of the proposed rule assumes that project sponsors do not consider climate-related pollution from their facilities, which is unlikely to be true in all cases and is especially not true for projects that must comply with associated regulations.

Mechanically, it is prudent to assume that project sponsors engage in an activity because they believe that action produces some sort of value, either to them or to the public. While correctly emphasizing environmental tradeoffs of development, the changes CEQ proposes fail in that they encourage agencies to move beyond the estimable avoidable direct effects from projects and speculate about what indirect environmental impacts a project might have based on assumptions that cannot be held with perfect confidence over the life of that project.

III. Conclusion

In summary, the issue with CEQ’s rule as proposed is that it creates an additional requirement in the consideration of project alternatives that increases the difficulty of document preparation without sufficiently demonstrating that the environmental benefit will outweigh the increased costs. R Street believes this is too low a bar to clear for such a broad increase in requirements associated with NEPA compliance and expects that these changes will forgo environmental benefit by delaying the development of new infrastructure that reduces emissions compared to incumbent or alternative development scenarios.

R Street respectfully requests the Council to consider the public input offered herein.

Respectfully submitted,

Philip Rossetti
Senior Fellow
Energy and Environment
[email protected] 

[1] Philip Rossetti, “Addressing NEPA-Related Infrastructure Delays,” R Street Policy Study No. 234, July 2021, p. 5.
https://www.rstreet.org/wp-content/uploads/2021/07/FINAL_RSTREET234.pdf.

[2] Ibid.

[3] “Fiscal Responsibility Act of 2023,” Public Law 118-5, June 3, 2023, section 321, subsection 107.
https://www.congress.gov/118/plaws/publ5/PLAW-118publ5.pdf.

[4] John C. Ruple and Kayla Race, “Measuring the NEPA Litigation Burden: A Review of 1,499 Federal Court Cases,” Environmental Law 50:2 (2020), p. 511.
https://dc.law.utah.edu/cgi/viewcontent.cgi?article=1008&context=stegner_pubs.

[5] Linda Luther, “The National Environmental Policy Act: Background and Implementation,” Congressional Research Service, Feb. 29, 2008, p. 29. https://sgp.fas.org/crs/misc/RL33152.pdf.

[6] Philip Rossetti, “Addressing NEPA-Related Infrastructure Delays,” R Street Policy Study No. 234, July 2021, p. 7.
https://www.rstreet.org/wp-content/uploads/2021/07/FINAL_RSTREET234.pdf.

[7] Ibid.

[8] Ibid, p. 5.

[9] Philip Rossetti, “The Environmental Case for Improving NEPA,” R Street Institute, July 7, 2021.
https://www.rstreet.org/commentary/the-environmental-case-for-improving-nepa.

[10] Philip Rossetti, “Current Share of Energy Projects Requiring High-Level Review that Are Clean Energy,” R Street Institute, Aug. 17, 2023. https://www.rstreet.org/commentary/current-share-of-energy-projects-requiring-high-
level-review-that-are-clean-energy.

[11] Ibid.

[12] Andrew K. Jorgenson et al., “Social science perspectives on drivers of and responses to global climate change,” Wiley Interdisciplinary Reviews Climate Change 10:1 (December 2018).
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6360453.

[13] John C. Ruple et al., “Evidence-Based Recommendations for Improving National Environmental Policy Act Implementation,” Columbia Journal of Environmental Law, 47:S (2022), pp. 340-341. https://journals.library.columbia.edu/index.php/cjel/article/view/9479/6000.

[14] “Regulatory and Guidance Information by Topic: Air,” U.S. Environmental Protection Agency, last updated June 6, 2023. https://www.epa.gov/regulatory-information-topic/regulatory-and-guidance-information-topic-air.

[15] Council on Environmental Quality, National Environmental Policy Act Implementing Regulations Revisions Phase 2, Notice of Proposed Rulemaking, Docket No. CEQ-2023-0003, July 31, 2023.
https://www.federalregister.gov/documents/2023/07/31/2023-15405/national-environmental-policy-act-implementing-regulations-revisions-phase-2.

[16] “Regulatory Impact Analysis for the Proposed Rule, Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act,” Council on Environmental Quality, July 2023, pp. 24-42.
https://ceq.doe.gov/docs/laws-regulations/NEPA-Phase2-NPRM-RIA.pdf.

[17] Matt Egan, “Democrats call for Biden officials to limit US natural gas exports because of rising home heating costs,” CNN Business, Feb. 3, 2022. https://www.cnn.com/2022/02/03/energy/natural-gas-export-limit/index.html.

[18] Gavin Maguire, “U.S. LNG exports both a lifeline and a drain for Europe in 2023,” Reuters, Dec. 21, 2022.
https://www.reuters.com/business/energy/us-lng-exports-both-lifeline-drain-europe-2023-maguire-2022-12-20.

[19] Annual Energy Outlook 2023, U.S. Energy Information Administration, March 16, 2023, pp. 1-3.
https://www.eia.gov/outlooks/aeo/pdf/AEO2023_Narrative.pdf.

[20] Bureau of Ocean Energy Management, OCS Oil and Natural Gas: Potential Lifecycle Greenhouse Gas Emissions and Social Cost of Carbon, U.S. Department of the Interior, November 2016, p. 36.
https://www.boem.gov/sites/default/files/oil-and-gas-energy-program/Leasing/Five-Year-Program/2017-2022/OCS-Report-BOEM-2016-065—OCS-Oil-and-Natural-Gas—Potential-Lifecycle-GHG-Emissions-and-Social-Cost-of-Carbon.pdf.

[21] Will Foster, “Vessel Emissions in Offshore Wind,” Duke University Libraries, April 22, 2022.
https://dukespace.lib.duke.edu/dspace/bitstream/handle/10161/24824/Offshore%20Wind%20Vessel%20Emissions%20-%20Final.pdf.