By Dan Byers
With President Barack Obama's term ending, the business community is bracing for the predictably unpredictable rush of last-minute rules and regulations as he looks to further cement his legacy.
In a surprise move, the White House recently finalized one such measure: new guidance to federal agencies calling for dramatically expanded consideration of climate change in the federal permitting process.
The guidance applies to National Environmental Policy Act (NEPA) reviews such as Environmental Impact Statements (EIS) that are undertaken on development projects related to energy, infrastructure and a broad range of other sectors. These NEPA reviews serve an important function, and for decades have ensured that economic development is accompanied by sound environmental decision-making.
Unfortunately, the NEPA process has also been used for decades as a tool to block development of all kinds - from oil and gas leasing to roads and bridges. Well-funded environmental lawyers leave few stones unturned, and while their success has been mixed at best, they often win by losing, forcing delays and uncertainty that spook investors or make projects uneconomical.
Now, armed with the finalized NEPA guidance, groups fighting economic development have a new avenue to halt progress: climate change. The White House directive calls on agencies to consider and mitigate for (i.e. pay new fees for) all greenhouse gas emissions related to a proposed project - land clearing, construction, production, transporting, processing and use of project resources.
Among these, the proverbial elephant in the EIS will be "use." With respect to energy projects, this means agencies must account for greenhouse gas emissions far removed from the project or activity under review. Mining coal that will be transported to power plants in Asia? Producing natural gas for export to Europe? Not only are emissions from these activities infinitesimal on a global scale, but the guidance encourages agencies to undertake soup-to-nuts analyses of all project "connected" emissions. It is not inconceivable that future grazing projects will have to quantify and offset methane from … cow emissions.
It is important to note that the guidance is just that - guidance, not a mandate. It is reasonable to expect that most agencies will carry it out, but with inevitable litigation lurking, even federal agencies wary of the changes may not get their way. Consider the following unsuccessful lawsuits from environmental groups against the federal government:
The Sierra Club sued the U.S. Department of Transportation to halt a $1.1 billion segment of Houston's Grand Parkway that would expand highway capacity and alleviate traffic congestion.
The Earth Island Institute sued the U.S. Forest Service to halt prescribed burns to reduce wildfire threats near Lake Tahoe, Calif.
A coalition of citizens sued the Department of Defense to halt construction of a $1.2 billion naval complex in San Diego that will be home to over 7,000 jobs.
The National Resources Defense Council sued the Army Corps of Engineers to halt BNSF's $1.2 billion rail and shipping facility in Kansas that will employ 13,000 people.
In these lawsuits, environmentalists cited inadequate consideration of climate change issues under NEPA, and in each case, the court disagreed and the project was allowed to proceed. However, as a result of the new White House guidance, future lawsuits may stand a much better chance of success, and could ultimately kill projects like these.
The energy industry will undoubtedly be the center of this storm, as stakeholders face growing opposition from "keep it in the ground" extremists looking for another tool in their arsenal. If the Sierra Club's characterization of the NEPA guidance as a "long awaited and essential new tool" is any indication, they may have just found it.
Indeed, it took less than a month for environmental special interests to capitalize on this new loophole. Last month, several anti-energy groups filed a lawsuit challenging nearly 400 existing energy leases on federal lands - citing this new guidance. At this rate, we can expect anti-energy groups to sue and challenge every single project, permit, or license granted by the federal government. The U.S. Chamber of Commerce estimates in a new report that halting production on federal lands could cost America 380,000 jobs and over $11 billion in royalties. This is litigation run amok in its purest form, all in the name of "Keeping It In the Ground."
Byers is vice president of policy at the U.S. Chamber of Commerce's Institute for 21st Century Energy.