NEPA’s Footprint: Information Disclosure as a Quasi-Carbon Tax on Agencies

The National Environmental Policy Act’s (NEPA) information-disclosure requirements have the potential to create a quasi-carbon tax on greenhouse gas emissions arising out of major federal actions. By requiring government polluters to expend more resources, both financial and political, on disclosure as project-related emissions increase, NEPA can operate like a carbon tax that forces agencies to internalize negative externalities associated with emissions. Federal agencies routinely undertake actions with enormous potential to affect the earth’s climate. When the predicted impacts of such actions on the environment are significant, NEPA demands that the agency prepare an Environmental Impact Statement (EIS) to disclose and assess those impacts. Outside of the climate change context, NEPA’s onerous disclosure requirements for significant impacts create incentives for agencies to reduce the impacts of their actions on the environment to avoid these burdens. Due to pervasive uncertainty as to what NEPA requires agencies to disclose in the climate change context, however, NEPA’s potential to spur agencies to reduce or mitigate emissions remains unrealized.

Without amending the existing statute or regulations, the White House Council on Environmental Quality can and should structure NEPA’s burdens and reporting boundaries on a sliding scale to mimic key structural features of a Pigouvian carbon emissions tax. The marginal costs of greater emissions should be payable in increased reporting specificity and breadth, with concomitant economic and political costs. This approach will harness NEPA’s substantive effects to combat global climate change.