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Obama Will Use Nixon-Era Law to Fight Climate Change

By Mark Drajem
March 15, 2013 11:50 AM EDT 1022 Comments
Similar analyses could be made for the oil sands that would be transported in TransCanada Corp.’s Keystone XL pipeline, and leases to drill for oil, gas and coal on federal lands, such as those for Arch Coal Inc. and Peabody Energy Corp.
Photographer: Daniel Acker/Bloomberg
Similar analyses could be made for the oil sands that would be transported in TransCanada Corp.’s Keystone XL pipeline, and leases to drill for oil, gas and coal on federal lands, such as those for Arch Coal Inc. and Peabody Energy Corp.

President Barack Obama is preparing to tell all federal agencies for the first time that they should consider the impact on global warming before approving major projects, from pipelines to highways.

The result could be significant delays for natural gas- export facilities, ports for coal sales to Asia, and even new forest roads, industry lobbyists warn.

“It’s got us very freaked out,” said Ross Eisenberg, vice president of the National Association of Manufacturers, a Washington-based group that represents 11,000 companies such as Exxon Mobil Corp. (XOM) and Southern Co. (SO) The standards, which constitute guidance for agencies and not new regulations, are set to be issued in the coming weeks, according to lawyers briefed by administration officials.

In taking the step, Obama would be fulfilling a vow to act alone in the face of a Republican-run House of Representatives unwilling to pass measures limiting greenhouse gases. He’d expand the scope of a Nixon-era law that was first intended to force agencies to assess the effect of projects on air, water and soil pollution.

“If Congress won’t act soon to protect future generations, I will,” Obama said last month during his State of the Union address. He pledged executive actions “to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.”

Illinois Speech

The president is scheduled to deliver a speech on energy today at the Argonne National Laboratory in Lemont, Illinois. He is pressing Congress to create a $2 billion clean-energy research fund with fees paid by oil and gas producers.

While some U.S. agencies already take climate change into account when assessing projects, the new guidelines would apply across-the-board to all federal reviews. Industry lobbyists say they worry that projects could be tied up in lawsuits or administrative delays.

For example, Ambre Energy Ltd. is seeking a permit from the Army Corps of Engineers to build a coal-export facility at the Port of Morrow in Oregon. Under existing rules, officials weighing approval would consider whether ships in the port would foul the water or generate air pollution locally. The Environmental Protection Agency and activist groups say that review should be broadened to account for the greenhouse gases emitted when exported coal is burned in power plants in Asia.

Keystone Pipeline

Similar analyses could be made for the oil sands that would be transported in TransCanada Corp. (TRP)’s Keystone XL pipeline, and leases to drill for oil, gas and coal on federal lands, such as those for Arch Coal Inc. (ACI) and Peabody Energy Corp. (BTU)

If the new White House guidance is structured correctly, it will require just those kinds of lifecycle reviews, said Bill Snape, senior counsel at the Center for Biological Diversity in Washington. The environmental group has sued to press for this approach, and Snape says lawsuits along this line are certain if the administration approves the Keystone pipeline, which would transport oil from Canada’s tar sands to the U.S. Gulf Coast.

“The real danger is the delays,” said Eisenberg of the manufacturers’ group. “I don’t think the answer is ever going to be ‘no,’ but it can confound things.”

Lawyers and lobbyists are now waiting for the White House’s Council on Environmental Quality to issue the long bottled-up standards for how agencies should address climate change under the National Environmental Policy Act, signed into law by President Richard Nixon in 1970.

Environmental Impact

NEPA requires federal agencies to consider and publish the environmental impact of their actions before making decisions. Those reviews don’t mandate a specific course of action. They do provide a chance for citizens and environmentalists to weigh in before regulators decide on an action -- and to challenge those reviews in court if it’s cleared.

“Each agency currently differs in how their NEPA reviews consider the climate change impacts of projects, as well as how climate change impacts such as extreme weather will affect projects,” Taryn Tuss, a Council on Environmental Quality spokeswoman, said in an e-mail. “CEQ is working to incorporate the public input we received on the draft guidance, and will release updated guidance when it is completed.”

‘Major Shakeup’

The new standards will be “a major shakeup in how agencies conduct NEPA” reviews, said Brendan Cummings, senior counsel for the Center for Biological Diversity in San Francisco.

The White House is looking at requiring consideration of both the increase in greenhouse gases and a project’s vulnerability to flooding, drought or other extreme weather that might result from global warming, according to an initial proposal it issued in 2010. Those full reports would be required for projects with 25,000 metric tons of carbon dioxide equivalent emissions or more per year, the equivalent of burning about 100 rail cars of coal.

The initial draft exempted federal land and resource decisions from the guidance, although CEQ said it was assessing how to handle those cases. Federal lands could be included in the final standards.

The White House guidance itself won’t force any projects to be stopped outright. Instead, it’s likely to prompt lawsuits against federal projects on these grounds, and increase the probability that courts will step in and order extensive reviews as part of the “adequate analysis” required in the law, said George Mannina, an attorney at Nossaman LLP in Washington.

Next Administration

“The question is: Where does this analysis take us?” he said. “Adequate analysis may be much broader than the agency and applicant might consider.”

While the Obama administration’s guidance could be easily rescinded by the next administration, the court rulings that stem from these cases will live on as precedents, Mannina said.

Lobbying groups such as the U.S. Chamber of Commerce, American Petroleum Institute and the National Mining Association weighed in with the White House against including climate in NEPA, a law initially aimed at chemical leaks or air pollution.

“Not only will this result in additional delay of the NEPA process, but will result in speculative and inaccurate modeling that will have direct impacts on approval of specific projects,” the National Mining Association in Washington wrote in comments to the White House in 2010.

Leases Challenged

The group represents Arch Coal (ACI) and Peabody, both based in St. Louis. Leases that the Department of Interior issued for those companies to mine for coal in Wyoming are facing lawsuits from environmental groups, arguing that the agency didn’t adequately tally up the effect on global warming from burning that coal.

Given Obama’s pledge to address global warming, “this is a massive contradiction,” said Jeremy Nichols, director of climate at WildEarth Guardians in Denver, which filed lawsuits against the leases.

Arch Coal referred questions to the mining group.

Beth Sutton, a Peabody spokeswoman, said in an e-mail, “We believe the current regulatory approach to surface mine permits is appropriate and protects the environment.”

Since CEQ first announced its proposal, more than three dozen federal approvals were challenged on climate grounds, including a highway project in North Carolina, a methane-venting plan for a coal mine in Colorado, and a research facility in California, according to a chart compiled by the Center for Climate Change Law at Columbia University.

Next Target

The next target is TransCanada (TRP)’s application to build the 1,661-mile (2,673-kilometer) Keystone pipeline. The Sierra Club and 350.org drew 35,000 people to Washington last month to urge Obama to reject the pipeline. Meanwhile, the NEPA review by the State Department included an initial analysis of carbon released when the tar sands are refined into gasoline and used in vehicles.

It stopped short, however, of saying the project would result in an increase in greenhouse gas emissions. With or without the pipeline, the oil sands will be mined and used as fuel, the report said. That finding is likely to be disputed in court if the Obama administration clears the project.

“Keystone is ground zero,” said Snape, of the Center for Biological Diversity. “Clearly this will come into play, and it will be litigated.”

Any actions by the administration now on global warming would pick up on a mixed record over the past four years.

Cap-and-Trade

While Obama failed to get Congress to pass cap-and-trade legislation, the EPA reversed course from the previous administration and ruled that carbon-dioxide emissions endanger public health, opening the way for the agency to regulate it.

Using that finding, the agency raised mileage standards for automobiles and proposed rules for new power plants that would essentially outlaw the construction of new coal-fired power plants that don’t have expensive carbon-capture technology.

Environmentalists such as the Natural Resources Defense Council say the most important action next will be the EPA’s rules for existing power plants, the single biggest source of carbon-dioxide emissions. The NEPA standards are separate from those rules, and will affect how the federal government itself is furthering global warming.

“Agencies do a pretty poor job of looking at climate change impacts,” Rebecca Judd, a legislative counsel at the environmental legal group Earthjustice in Washington. “A thorough guidance would help alleviate that.”

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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