My colleague, Michael Sherman, posted yesterday about two issues decided in the California Supreme Court’s decision in Center for Biological Diversity v. California Department of Fish and Wildlife.  Today, I’ll address the part of the decision that involves the evaluation of the Newhall Ranch project’s greenhouse gas emissions.  In short, the Court just made it a lot harder to evaluate greenhouse gas emissions under CEQA for any large land use project.  There is likely a solution for some situations where the emissions primarily involve the consumption of transportation fuel – the AB 32 Cap and Trade Program was recently expanded to cover those fuels.  This potential solution is hinted at by the Court.  I’ll get to that at the bottom of the post.  But first I’ll discuss the decision and why it’s a problem.

For some background, the Newhall Ranch project would consist of over 20,000 residential units in Southern California.  The Environmental Impact Report (EIR) for this project was certified back in 2010.  The resulting litigation has since been making its way through the courts.  The California Department of Fish and Wildlife used an approach to analyze greenhouse gas emissions similar to what other lead agencies have been using recently.  They relied on the AB 32 Scoping Plan to set a threshold of significance.  AB 32 requires statewide greenhouse gas emissions to return to 1990 levels by 2020.  In the Scoping Plan, the California Air Resources Board determined that this would require a 29% reduction in statewide emissions from a business-as-usual approach — an approach with no conservation or regulatory efforts beyond what was in place when the forecast was made.  Lead agencies have used this standard to find that proposed projects that would reduce their greenhouse gas emissions by at least 29% over a project with a business-as-usual approach would, therefore, have a less than significant impact for greenhouse gas emissions.

The Newhall Ranch project was designed so that it would reduce greenhouse gas emissions by 31% over a business-as-usual approach.  Based on this determination, the EIR concluded that the project’s greenhouse gas emissions would result in a less than significant impact.  The Supreme Court found that establishing a significance criterion based on consistency with AB 32’s reduction goals was appropriate.  However, the Court also held that there was no evidence that Newhall Ranch’s project-level reduction of 31 percent in comparison to a business-as-usual approach would be consistent with achieving AB 32’s statewide goal of a 29 percent reduction.  Instead, the Court opined that new development projects would likely have to be more efficient than this average, since current sources of emissions are likely less efficient and will continue to result in emissions.

The greenhouse gas approach used for the Newhall Ranch project has become a common practice for various lead agencies in evaluating new projects.  Accordingly, the Court’s disapproval of this approach will likely hamper lead agencies in their analysis of greenhouse gas emissions.  The Court, perhaps sensitive to the practical impact its decision will have, suggested multiple “potential pathways to compliance.”  One approach would be for a lead agency to determine what levels of reductions for a new project would have to occur to meet the statewide goal.  This would appear to be very difficult for a local lead agency to do because it would involve a comprehensive statewide analysis of projected and existing sources of emissions.

Another approach suggested by the Court would be for the lead agency to assess whether the project would comply with regulatory programs designed to reduce emissions from particular activities, one of the standards set out in the CEQA Guidelines.  This will likely be the best approach for lead agencies going forward where the emissions result from sources subject to the Cap and Trade Program.  For example, fuel producers and importers were subject to AB 32’s Cap and Trade Program beginning at the start of 2015, and accordingly are required to obtain allowances or offsets for the greenhouse gas emissions produced from the consumption of their fuel.  Based on this, lead agencies from Southern California to the San Joaquin Valley have published CEQA documents finding that no significant impacts can result from the consumption of fuel given that these emissions are effectively mitigated at the refiner/importer level.