California Air Resources Board, South Coast Air Quality Management District and San Diego County Release Recommendations for Setting Interim Significance Thresholds for Greenhouse Gases Under CEQA

California has a growing body of legislation and case law addressing climate change, accompanied by the ongoing development of new regulatory programs to reduce greenhouse gas (GHG) emissions. In the meantime, lead agencies and project proponents have struggled to quantify, mitigate and make significance determinations for GHG impacts in Environmental Impact Reports (EIRs) under the California Environmental Quality Act (Pub. Res. Code § 21000, et seq.) (CEQA) well in advance of these regulatory programs.

In late October, three agencies – the California Air Resources Board (CARB), the South Coast Air Quality Management District (SCAQMD) and San Diego County – issued draft guidance materials addressing CEQA significance thresholds for GHG. Each agency’s guidance represents a potential analytical framework for addressing climate change in CEQA documents. This represents an important step toward understanding the CEQA direction being considered by agencies with both the expertise and the legal mandate to address GHG emissions.

CARB Recommendations

On October 24, 2008, the California Air Resources Board (CARB) released a recommended approach for setting significance thresholds for GHG. CARB expects to issue final recommendations in early 2009 in conjunction with the Governor’s Office of Planning and Research (OPR) planned release of draft CEQA Guidelines on GHG emissions as required by 2007’s Senate Bill (SB) 97.

CARB’s recommendations address two of the most important threshold issues:

• CARB does not intend to adopt a “zero” emissions standard for industrial, commercial or residential projects. In deciding this, CARB has rejected recommendations from several groups that believe that legislative findings and other portions of enacted GHG laws mandate different conclusions – i.e., that even one new molecule of GHG emissions incrementally and adversely worsens an already stressed atmosphere. Specifically, CARB recognizes that some projects, while producing a minimal increase in GHG emissions, will not produce cumulatively significant GHG impacts. Accordingly, these projects would continue to qualify for categorical exemptions and Negative Declarations under CEQA, and would not require preparation of an EIR. For example, CARB notes that projects qualifying under the statutory infill project exemption may be expected to emit approximately 1,600 metric tons of CO2 equivalent per year (MTCO2e/yr), and would not cause a cumulative significant GHG impact. This statutory infill project exemption covers residential infill projects with up to 100 dwelling units on a site of up to four acres, including no more than 10,000 square feet for any single-level building (Cal. Code Regs., Title 14, § 15195).
• CARB believes that a sector-based analysis is most appropriate because certain project sectors contribute more substantially to GHG emissions. Different levels of reductions will be expected from various sectors going forward, based on compliance with state-wide climate objectives (as noted in the recently released CARB Draft Scoping Plan). As a result of this sector-based model, CARB presents one significance threshold approach for residential and commercial projects and a separate approach for industrial projects.

Commercial and Residential Projects. For non-exempt commercial or residential projects, CARB recommends that GHG-related impacts be found to be insignificant if they fall into one of two classes:

• Projects that comply with an approved GHG emission reduction plan or mitigation program. Under the recently passed SB 375, the State’s 18 metropolitan planning organizations are required to develop regional land use plans that include GHG emission reductions and implementation measures. CARB staff has acknowledged that no current projects are in this class, as these regional plans will not be developed for several years.
• Projects that comply with “performance standards” for energy efficiency, water conservation, waste and transportation, or equivalent mitigation that reduces emissions below a designated quantity of annual GHG emissions. CARB has initially designated performance standards only for energy conservation: a 30 percent reduction from the California Energy Commission’s Tier II Energy Efficiency standards. CARB staff will develop performance standards for other activity areas. CARB also intends to identify a quantitative threshold (currently noted as “x”) for GHG emissions below which GHG emissions will not be deemed significant as long as projects also comply with performance standards.

Projects that do not meet these requirements are presumed to have significant impacts and must prepare an EIR, as well as implement all feasible GHG mitigation measures.

Industrial Projects. For industrial projects that do not qualify under existing CEQA statutory or categorical exemptions, GHG-related impacts may be found to be insignificant if they: (1) meet interim performance standards for construction and transportation-related emissions; and (2) emit no more than 7,000 MTCO2e/yr from non-transportation operational sources. Projects that do not qualify under both criteria are presumed to have significant impacts and must prepare an EIR and implement all feasible mitigation measures.

SCAQMD Recommendations
 
On October 22, 2008, the South Coast Air Quality Management District (SCAQMD) issued its own draft recommendations on GHG CEQA significance thresholds, based on several months of meetings involving multiple stakeholders.
 
The SCAQMD approach is similar in several respects to the CARB recommendations:

• In its rejection of the “zero” threshold, SCAQMD implicitly acknowledges that existing CEQA exemptions should continue to apply.
• SCAQMD then proposes three tiers of compliance that may lead to a determination that impacts are less than significant:
  • Projects with GHG emissions within budgets set out in approved regional plans, to be developed as noted above under the SB 375 process.
  • Projects with GHG emissions that are below designated quantitative thresholds:
    • Industrial projects with an incremental GHG emissions increase that falls below (or is mitigated to be less than) 10,000 MTCO2e/yr; or
    • Commercial and residential projects with an incremental GHG emissions increase that falls below (or is mitigated to be less than) 3,000 MTCO2e/yr, provided that such projects also meet energy efficiency and water conservation performance targets that have yet to be developed.
  • Projects that purchase GHG offsets which, either alone or in combination with one of the three tiers mentioned above, achieve the target significance screening level.

Projects that cannot demonstrate compliance through one (or a combination, if using offsets) of these methods are presumed to have significant GHG impacts, and trigger the need to prepare an EIR.

San Diego County Interim Guidelines

As part of its ongoing effort to streamline the CEQA process and provide a greater level of certainty to project proponents, on October 23, 2008, San Diego County released interim guidelines for determining the significance of GHG emissions. These guidelines set a threshold level of GHG emissions above which projects must prepare a climate change analysis using a designated format and mitigate GHG emissions based on emission reduction goals found in Assembly Bill (AB) 32, California’s “Global Warming Solutions Act,” which was passed in 2006.

Specifically, all projects that will emit approximately 900 MTCO2e/yr or more of GHG must prepare a climate change analysis. The guidelines also list project types estimated to generate emissions at or below this level, for which a GHG analysis would not be required. The list of small projects includes 50 single-family homes, 70 units of apartments or condominiums, 35,000 square feet of commercial office space, 11,000 square feet of retail space, or 6,300 square feet of supermarket space. The 900 MTCO2e/yr threshold also applies to industrial and mixed-use projects, but whether any proposed project reaches the threshold will be evaluated by the County on a case-by-case basis.

All projects that exceed the 900 MTCO2e/yr threshold must perform a GHG emissions inventory as part of a CEQA analysis. The inventory must quantify GHG emissions from energy consumption, water usage, construction activities, vehicular traffic, and any other “unique” operational emissions a project may have. Through adoption of design features and mitigation measures, projects must demonstrate that emissions will not exceed AB 32 goals by showing a 33 percent reduction from “business as usual” operational and construction emissions plus a 10 percent reduction in vehicle miles traveled. Projects that cannot meet these reduction targets will have a significant GHG impact for CEQA purposes.

Conclusion and Recommendations
 
The major difference between the San Diego approach and the CARB approach is that San Diego allows projects to meet performance targets for GHG emission reductions and mitigate GHG impacts to a less than significant level for CEQA purposes, rather than attempting to identify a single target number “x” as the sole basis for concluding that a project has significant cumulative GHG emissions and further unspecified GHG mitigation obligations. Although the San Diego and SCAQMD approaches both contemplate percent reductions below business as usual emissions as a route to compliance, San Diego has identified these targets, while SCAQMD leaves the target question open in its current draft.

As a result, the San Diego approach is unique in providing immediate practical direction for GHG CEQA compliance, while the CARB/SCAQMD interim guidance documents leave major questions unanswered – e.g., when a project GHG emission level is “significant” for CEQA purposes, or the level of reduction below business as usual required in order to avoid a finding of significance.

All three guidance documents are intended to provide project proponents, lead agencies, and other stakeholders with clear information about CEQA mitigation measures and performance criteria for meeting California’s AB 32 mandate for reducing GHG emissions. AB 32 will also result in development of sector-specific regulatory mandates for GHG reductions, as well as a “cap and trade” program for creating and using GHG mitigation credits. Before the AB 32 regulations take effect over the next several years, however, CEQA provides an alternative legal framework for assessing and reducing GHG emissions.
Specifically, these guidance documents may also potentially serve as a mitigation plan or program for addressing cumulative GHG emissions pursuant to Section 15064(h) of the CEQA Guidelines. They may do so by providing a basis for which “a lead agency may determine that a project’s incremental contribution to a cumulative effect is not cumulatively considerable if the project will comply with the requirements in a previously approved plan or mitigation program which provides specific requirements that will avoid or substantially lessen the cumulative problem (e.g., water quality control plan, air quality plan, integrated waste management plan) within the geographic area in which the project is located.” This is an alternative to the otherwise applicable CEQA requirement of implementing feasible alternatives and/or mitigation measures to mitigate cumulative GHG impacts.
 
Extensive stakeholder comments of all three draft guidance documents are expected. Pending and threatened CEQA litigation on GHG will also result in judicial interpretations that may vary from all of these approaches. It is also likely that further legislation will be introduced in January 2009 to address these CEQA and other GHG issues. In the meantime, lead agencies and project proponents should continue to monitor and participate in these ongoing regulatory agency efforts to identify CEQA significance criteria.
 
From a practical perspective, we continue to suggest that lead agencies and project proponents take the following steps:

• Accurately quantify project GHG emissions and feasibly reduce GHG emissions through project design features and mitigation measures, including (for example) the California Energy Commission’s Tier II Energy Efficiency standards.
• Differentiate between construction and operational phase GHG emissions, and further differentiate for each of these phases emissions from energy consumption, water conservation, waste generation and transportation/transit.

CARB’s preliminary proposal and supporting documents can be downloaded here:
 
http://www.arb.ca.gov/cc/localgov/ceqa/meetings/meetings.htm

Comments on CARB staff’s preliminary proposal can be submitted online at:

http://www.arb.ca.gov/cc/localgov/ceqa/ceqacomm.htm