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CEQA Update: Appellate Court Issues Broad Decision on Greenhouse Gas Analysis

In a lengthy and wide ranging decision, the Court of Appeal in Golden Door Properties, LLC v. County of San Diego upheld multiple challenges under the California Environmental Quality Act (“CEQA”) to the County of San Diego’s Climate Action Plan (“CAP”), on the grounds that: (1) a greenhouse gas (“GHG”) mitigation measure adopted under the CAP was insufficient; (2) the Supplemental Environmental Impact Report (“SEIR”) inadequately analyzed cumulative impacts; (3) the SEIR’s finding of consistency between the CAP and a Regional Transportation Plan adopted under SB 375 was not supported by substantial evidence; and (4) the SEIR violated CEQA by failing to analyze a smart-growth alternative. The main issue underlying the decision was the Court’s determination that the County’s reliance on carbon “offsets” to mitigate GHG impacts violated CEQA because the offset requirements did not meet the standards required by the State’s cap-and-trade program.

GHG Mitigation Measure Did Not Meet State Cap-and-Trade Requirements
The County adopted the CAP as a part of its General Plan update. In doing so, the County implemented policies that would result in development under the General Plan achieving a less than significant impact from GHGs. The Court agreed with this determination. The County, however, also had a large number of development projects under consideration that would require General Plan amendments, and which, if approved, would cause development under the General Plan to exceed the GHG significance thresholds under the CAP (the “GPA” projects). To address these GPA projects, the County imposed mitigation measure M-GHG-1, requiring GPAs to reduce GHG emissions to a “net zero” value above the GHG emissions for the existing General Plan density, first through on-site mitigation measures and then through the purchase of carbon offsets.

The Court identified multiple problems with M-GHG-1 largely based on the mitigation measure’s failure to meet State standards under the State’s cap and trade program. The cap and trade program requires certain regulated entities to reduce their greenhouse gas emissions below mandated levels. Entities that are successful in reducing their greenhouse gas emissions more than required can sell the extra emissions reductions as carbon credits to entities that find it more economically efficient to purchase such credits than to implement greenhouse gas reduction measures. The Court held that M-GHG-1 violated CEQA because the measure did not require that the carbon offsets meet the State’s offset protocols. These offset protocols, established in California Code of Regulations, title 17, sections 95972 and 95802, and Health and Safety Code section 38562, require that the GHG reductions be “real, permanent, quantifiable, verifiable, enforceable, and additional to any GHG emission reduction otherwise required by law or regulation, and any other GHG emission reduction that otherwise would occur.”

The Court found that M-GHG-1’s requirement that carbon offsets be purchased from offset registries “approved” by the California Air Resources Board (“CARB”) was insufficient because, as CARB has indicated, “CARB-approved” does not mean that CARB has found the protocols used by the registries are compliant with the State’s cap-and-trade protocols. In particular, the Court found that M-GHG-1 did not meet the State requirement that the offsets be “additional.” The Court also found that M-GHG-1 was not “verifiable” or “enforceable” because it allowed for 100 percent of the offsets to come from projects outside of California, where the County has no enforcement authority.

M-GHG-1 was Improperly Deferred Mitigation
Next, the Court found that M-GHG-1 improperly deferred the specifics of mitigation and lacked feasible, enforceable performance standards. A lead agency may properly defer the specific details of mitigations “when it is impracticable or infeasible” to include those details during CEQA review, but only if the agency “(1) commits itself to the mitigation, (2) adopts specific performance standards the mitigation will achieve, and (3) identifies the type(s) of potential action(s) that can feasibly achieve that performance standard and that will be considered, analyzed, and potentially incorporated in the mitigation measure.” The Court found that M-GHG-1 was deficient because it included “only a generalized goal of … net zero GHG emissions” and because it allowed a County staff member “to determine whether any particular offset program is acceptable based on unidentified and subjective criteria.” Thus, the Court found M-GHG-1 lacked necessary performance standards to ensure that mitigation would actually be achieved.

There are a number of takeaways from this part of the opinion. Perhaps most critically, according to the Court, in order to pass muster as a mitigation measure under CEQA, GHG offsets must meet State standards for cap-and-trade carbon credits and be “real, additional, quantifiable, permanent, verifiable, and enforceable.” Next, agencies must use extreme caution in allowing offsets to be purchased outside of California and must ensure that any such out-of-state offsets meet the State requirements. Third, agencies must use caution when deferring the specifics of mitigation measures and ensure that they include specific performance standards based on objective criteria. Finally, agencies will be responsible for ensuring the offsets actually meet the above requirements and must establish in mitigation measures the criteria by which offsets will be evaluated.

SEIR Failed to Account for GPA Projects in Its Cumulative Impact Analysis
The Court found additional deficiencies with the CEQA analysis addressing other core CEQA principles – cumulative impacts analysis. The Court found that the SEIR’s cumulative impact analysis violated CEQA because it failed to take into account the GHG emissions from the reasonably foreseeable GPA projects as well and rejected the County’s contention that it did not need to evaluate these potential project-specific impacts in the programmatic document. The Court emphasized that the type of document was not important to the level of detail that the EIR must include; rather, the critical factor was how reasonable and practical it was for the County to include the information in the EIR. Because the GPA projects were already before the County and information about the proposals were known, the Court concluded the County should have included GHG emissions from the GPA projects in the cumulative impacts analysis.

CAP was Inconsistent with the Regional Transportation Plan and Sustainable Communities Strategy
Next, the Court found that the SEIR did not adequately analyze the consistency of the General Plan update with the adopted Sustainable Communities Strategy, adopted by the regional metropolitan planning organization (San Diego Association of Governments) under SB 375. Through this ruling, the Court confirmed that regional plans adopted under SB 375 are among the “regional plans” with which lead agencies must analyze a project’s consistency under its GHG consistency with plans analysis. In doing so, the Court also highlighted the importance of reducing vehicle miles traveled (“VMT”) a key element of SCS in meeting GHG reduction targets. The fact that the SEIR was released before VMT was a mandated part of CEQA review did not save the analysis because the VMT reduction was a core component of the SCS and required as part of the analysis of the consistency with the SCS.

Court Required the County to Consider an Alternative that would Reduce VMT
The Court invalidated the EIR’s alternatives analysis for failure to examine an alternative that would reduce VMT or transportation-related GHG emissions. Despite examining four alternatives, the no-project alternative and three alternatives that would reduce impacts from the General Plan update, the Court still found that this did not constitute a “reasonable range” of alternatives. It was unreasonable, the Court held, to not examine an alternative that would reduce VMT or transportation-related GHG emissions in light of the “consistently clear mandate” from the State law and California Air Resources Board regulation to “reduce VMT to help achieve target GHG emission reductions.” In addition, because the SEIR found that GHG impacts resulting from transportation were significant and unavoidable, the SEIR was required to address an alternative that would result in VMT reductions. (For more information about SB 743 and VMT, please click here for a recorded Meyers Nave webinar.)

This is an important ruling on CEQA with significant implications. Based on the Court’s ruling, lead agencies and project proponents should exercise additional caution in the areas of GHG offsets as CEQA mitigation, determining the consistency of proposed projects with applicable SCSs, and in the selection and analysis of alternatives to address significant and unavoidable impacts.