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  • 17
  • February
  • 2017

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Beyond Regulations: What Additional Changes to Climate Change Policy Could Happen Under the Trump Administration?

The few public statements from then-candidate Trump regarding climate policy indicated that he will seek to reverse much of his predecessor’s course on laws and policies pursued in the name of preventing climate change, including the Paris Agreement and the Clean Power Plan. The President has also stated that he wants to cut regulations by 75%, and released an Executive Order limiting the creation of new regulations. But even outside of the realm of formal regulations, there are a number of climate-related policies of the previous administration that could be impacted by President Trump’s policy preferences.

The Obama Administration took a number of actions claimed to reduce climate change that were not formal regulations, but nonetheless affect the way that the federal government operates. An agency typically has greater flexibility to modify policy, guidance, enforcement priorities, and related matters than it does to modify existing formal regulations. The new President is generally free to withdraw or modify Executive Orders, memoranda, and other White House guidance to the Executive Branch, without observing APA-type procedures. As a result, the Trump Administration will have much greater latitude to change these policies. This post highlights a few of the policies that could be impacted.

Paris Agreement:

In December 2015, the United Nations Framework Convention on Climate Change met in Paris, France and agreed to an international climate agreement. Although this agreement does not create any binding obligations for nations to limit their greenhouse gas (“GHG”) emissions, it does include pledges to voluntarily limit or reduce future emissions every five years beginning in 2020. In April 2016, the United States was one of 175 countries to sign the Paris Agreement. The United States’ current pledge is to reduce emissions by 26-28% from 2005 levels by 2025, but there is no punishment under the Agreement for countries that miss their targets.

Under domestic law, the Paris Agreement is an executive agreement, rather than a treaty: Although it was signed by President Obama, he did not send it to the Senate for ratification. As a result, it would be easier for Trump to exit the Agreement, as he pledged to do this past May.

While the Paris Agreement prevents any country from withdrawing for four years after its entry into force — an event that happened on November 4, 2016 — the monitor, report, and verify structure of the Paris Agreement carries no penalties for countries that choose not to comply. As a result, while the U.S. would still technically be a part of the Paris Agreement, the Trump Administration could decline to take steps to implement it. In addition, many of the critical elements for successful implementation of the Paris Agreement were deferred to the 22nd Conference of the Parties, which is currently underway in Marrakech, and it is too soon to tell whether President Trump’s pronouncements that he will withdraw from Paris could prevent meaningful progress on the development of implementation mechanisms.

Moratorium on New Coal Mining Leases on Federal Land:

In January 2016, the Obama Administration’s Department of the Interior announced a moratorium on new coal mining leases on federal land pending a review called a Discretionary Programmatic Environmental Impact Statement (“PEIS”) under the National Environmental Policy Act (“NEPA”). The Order from the Secretary of the Interior notes that “[t]his pause does not constitute a decision on the merits of any application, but is merely a deferral of the decision to allow the PEIS to be considered in making future final decisions” and does not create any rights or benefits for any party. The new Secretary of the Interior will have the ability to issue a new order ending the moratorium and once again allowing mining on these lands.

CEQ’s NEPA Guidance for GHGs:

Under NEPA, federal agencies are required to prepare certain documents evaluating the environmental impacts of major federal actions. Projects can become subject to NEPA if they use or require federal permits, funds, facilities, or land, even if the project proponents are private parties. On August 2, 2016, the Council on Environmental Quality (“CEQ”) released guidance on the assessment of climate change impacts in these NEPA analyses. The guidance did not create any new obligations for federal agencies under NEPA, but it nonetheless has the potential to significantly expand the scope of climate impacts considered under these NEPA documents.

As explained in this previous post, this guidance is potentially problematic for agencies and private project proponents. CEQ stated that the goal of the guidance was to ensure that certain documents that agencies must prepare under NEPA included a useful consideration of climate change by focusing on projects that involve GHG emissions or have a life span that is long enough that they may be affected by the physical impacts of climate change. Although not expressly required, “CEQ recommend[ed] that agencies review their NEPA procedures and propose any updates they deem necessary or appropriate to facilitate their consideration of GHG emissions and climate change.” The new Administration could withdraw or revise this guidance.

Use of the Social Cost of Carbon and Methane:

The Obama Administration has used two metrics — the Social Cost of Carbon (“SCC”) and the Social Cost of Methane — to put a present-dollar value on future climate benefits resulting from each ton of reduction in carbon dioxide or methane emissions. Federal agencies use a uniform SCC value developed by an Interagency Working Group (“IWG”) to assess the impacts of their actions. The IWG most recently revised these figures in 2015, and provides a wide range of potential values for a single ton of emissions, depending on what discount rate is applied. EPA has started using a similar metric to assign a price to each ton of methane. Under the model used by EPA, the value reducing methane emissions for the year 2015 ranged from $580-1,700/ton depending on whether a 5% or 2.5% discount rate is applied.

In its recent climate regulations (including the Clean Power Plan and the Quad Oa regulations for the oil and gas industry), the Obama Administration used these metrics to find a net economic benefit to its rules. For example, EPA estimated that Quad Oa will result in “methane-related monetized climate benefits” of $360 million in 2020 and $690 million in 2025 using the Social Cost of Methane metric at a 3% discount rate.

The new Administration would not even need to revise the current figures or models used by federal agencies in order to significantly impact the application of this tool. If the new Administration simply applied a greater discount rate, or left these metrics out of its calculations altogether, it would significantly lower the “benefit” of the rules. Given that President Trump has issued an Executive Order that establishes a cap on the total cost of all new regulations, limiting the “incremental cost . . . to no greater than zero” in 2017. The Order directs agencies to offset new incremental costs associated with new regulations with the “elimination of existing costs associated with at least two prior regulations” or regulations promulgated in FY 2018 and beyond; the OMB Director will allocate each agency a total amount of annual incremental costs (or required reductions in regulatory costs) that will be allowed as part of the Presidential budget process. The value placed on the reduction of emissions will have meaningful implications on the cost assigned to any future regulation of GHGs. For more information about this Executive Order, please see this e-lert.

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Author

Margaret E. Peloso

Margaret E. Peloso Counsel