California Supreme Court Rejects Greenhouse Gas Analysis for Newhall Ranch Development

By GGU Emeritus Prof. Alan Ramo

The California Supreme Court in a key climate change case probably surprised a few observers in rejecting the California Department of Fish and Wildlife’s (CDFW) greenhouse gas analysis of the giant Newhall Ranch development in Northwest Los Angeles County pursuant to the California Environmental Quality Act (CEQA).[1] After all, lower state courts have been rather deferential to challenges to the implementation of California’s Global Warming Solution Act (known as AB 32).[2] Greenhouse gas analysis is the kind of technical expert analysis that courts hesitate to wade in on.

What is remarkable is that the Court’s large majority (5-2) did not hesitate to dive into the analysis contained in the project’s Environmental Impact Report and found a fundamental flaw in the project level analysis that sought to mimic the state’s approach to greenhouse gas regulation.  Perhaps even more alarming to proponents of greenhouse gas emitting projects, the Court, while accepting the AB 32 implementing Air Resources Board’s (ARB) calculation of a 29% reduction in emissions from business as usual by 2020 as a legitimate CEQA “threshold” for significance, questioned whether that threshold will remain applicable to projects which will emit greenhouse gases beyond 2020.  And lurking in the Court’s willingness to question the validity of the project’s business as usual projection is an appetite to scrutinize the interworkings of such hypothetical baselines where trading programs in the past have been gamed to give the appearance of reductions where none have appeared.[3] Those who are invested in the AB 32 approach to a Cap, as part of the Cap-and Trade program, may actually have to be judicially accountable if the projections are indeed manipulated to avoid real emission reductions.

As this case is brought under CEQA, the Court’s analysis is through a CEQA lens rather than simply a policy analysis.  The legal issue before the Court is whether the EIR properly analyzed whether the greenhouse gases from the proposed development (anticipated to house more than 50,000 people) are significant, and therefore, require mitigation, or, if there are unavoidable impacts after deploying all feasible and reasonable mitigations, a statement of overriding considerations if the project’s benefits are deemed to outweigh its impacts.

The Court states the question as whether this project, together with present and future projects, is cumulatively considerable.  It eventually finds that while the project will add greenhouse gases to the environment, the issue is really whether the added emissions are less than what would happen without the project, because after all, the population that would live in the City will live somewhere, and somewhere else may lead to even more emissions.  Further, the project should be designed to contribute its appropriate share of reductions consistent with the State’s AB32 program, which is a plan to address the cumulative contribution of California to the global climate change problem.  The Court cites extensively to an article authored by the Bay Area Air Quality Management District’s counsel, Sandy Crockett, published by the GGU Environmental Law Journal.[4]

The Court specifically upholds the use of the ARB’s calculation that a 29% reduction from its projected business as usual emissions for 2020 is an acceptable first step to address the cumulative problem, and therefore, that can be applied as a threshold for significance for a project.  However, here is the rub.  While one may simplistically leap to the conclusion, as Fish and Wildlife and the appellate court in this case did, that therefore any project that achieves a reduction greater than 29% from a business as usual scenario is not significant (Newhall projects a 31% reduction from its assumed business as usual calculation), it turns out this determination is more complicated.

First, what is the business as usual scenario for the population that would end up living in Newhall?  That turns out to be a somewhat murky question.  While the minority judges are ready to hold up their hands and say, that is one for the experts, the majority say as with all CEQA findings that this must be explained with reasoned analysis based upon facts.  The Court here finds that Fish and Game failed to do so, and suggests that in fact by making unsupported assumptions about the impacts of the density of the project versus the density of living sites for the business as usual population used by the ARB, the agency may or may not have skewed the result.

Even more important, the Court recognized that the ARB’s business as usual scenario and its 29% reduction is an across the board average.  That is, for example, there may be some projects in the future that can only be expected to reduce their emissions by 15% while others can be reasonably expected to reduce by 45%, for example.  The fact that this project is reducing its emissions by 31% may or may not undermine the business as usual projections.  The Court argues that in taking the ARB’s projected reduction to an individual project requires a project specific analysis of how the project fits into the statewide analysis.

The Court identifies at least three ways the project may correct its analysis.  First, evaluate the assumptions behind the ARB’s business as usual analysis and link those to the individual project.  Second, demonstrate the project is using mitigation measures consistent with requirements under AB 32.  The court notes that these requirements may be limited to specific impacts, however, so it would be better if local or regional agencies developed greenhouse gas plans consistent with AB 32 that would incorporate the project.  Third, to the extent regional agencies have developed numerical thresholds for individual project greenhouse gas emissions (the example used by the Court is the BAAQMD’s thresholds) abide by those numbers.  If the project exceeds those thresholds, then the project may adopt all feasible mitigation measures and, if still significant, issue a statement of overriding considerations.  Considering that Newhall’s project already has a statement of overriding considerations for other impacts, this author wonders whether this would be the simplest and most defensible approach, especially given Newhall’s representation it has designed a green project with the latest and best mitigations.

The larger implications of this decision are quite profound.  A simple analysis based on the ARB 29% reduction calculation will not be sufficient.  Further, as 2016 approaches, this figure may soon be outdated and far greater reductions will be required for such large greenhouse gas emitters.  Finally, and most important perhaps, the Court’s majority has shown it is not afraid to engage in the more technical aspects of greenhouse gas emission regulatory programs and baseline and business as usual calculations.[5] While it can be expected that it will show due deference to agencies such as the ARB, fundamental gaps or gaming in the use of baselines or projections that could undermine environmental protections will not automatically be ignored.

[1] Center for Biological Diversity v. California Dept. of Fish and Wildlife 2015 WL 7708312 (November 30, 2015).

[2] Our Children’s Earth Foundation v. California Air Resources Board, 234 Cal.App.4th 870 (1st Dist., 2015); Association of Irritated Residents v. California Air Resources Bd., 206 Cal.App.4th 1487 (1st Dist. 2012).

[3] For an analogous situation, though not cited by the Court, see Neighbors for Smart Rail v. Exposition Metro Line Construction Authority, 57 Cal. 4th 439 (2013), discussed by GGU’s Professor Paul Kibel in Sea Level Rise, Saltwater Intrusion and Endangered Fisheries – Shifting Baselines for the Bay Delta Conservation Plan, 38-SPG Environs Envtl. L. & Pol’y J. 259, Spring 2015 at 260 et seq.

[4] Crockett, Addressing the Significance of Greenhouse Gas Emissions Under CEQA:  California’s Search for Regulatory Certainty in an Uncertain World (July 2011) 4 Golden Gate U. Envtl. L.J. 203.

[5] See note 3.

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