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Big Retail Project Stalled Because Environmental Impact Report Failed to Adequately Consider Greenhouse Gases
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August 24, 2009
(This article is reprinted with permission from the August 13, 2009, editions of the Los Angeles Daily Journal and the San Francisco Daily Journal.)
By Jeffrey M. Judd
Howrey LLP
Wal-Mart’s plans to build a “Supercenter” near Joshua Tree National Forest were put on hold when – for the first time ever – a California Superior Court ruled that the environmental impact report inadequately assessed the effect of project-generated greenhouse gases. The Wal-Mart ruling on May 14 demonstrates how pervasive global climate issues have become and provides a timely lesson on the analysis of project-generated greenhouse gases under the California Environmental Quality Act (CEQA).
Since 1970, California agencies responsible for approving projects must complete a full environmental impact report whenever the project may cause a significant adverse environmental impact. CEQA requires that any significant adverse environmental impacts be reduced to a level of no significance by project modification or mitigation. When mitigation or modification is not feasible, the lead reviewing agency still may approve the project by explaining how the project’s benefits outweigh its adverse impacts in a “statement of overriding considerations.” At every stage of the environmental review process, the lead agency has discretion to make environmental policy judgments. A reviewing court cannot substitute its judgment for the agency’s; the report must demonstrate, however, that the agency’s analysis and conclusions are well-reasoned and based on available scientific information and other available evidence.
Wal-Mart project opponents criticized the draft environmental impact report on multiple grounds, including failure to identify and adequately analyze and mitigate impacts from project-generated greenhouse gases. The lead agency arranged for written responses to these critiques to be published in a “final” environmental impact report. The final report was adopted and the project approved on the basis of a statement of overriding considerations.
The final report estimated project-generated greenhouse gases of 7,500 metric tons annually, but rather than undertake a quantitative analysis, it approached the significance question qualitatively. Project-generated greenhouse gas emissions were deemed not significant because the project purportedly “complied” with the governor’s statewide strategies for reducing greenhouse gas emissions. Environmental organizations challenged this analysis, and the court found the final report inadequate for a variety of reasons, including failure to adhere closely to draft guidelines – currently the subject of a pending rulemaking – for analyzing greenhouse gases under CEQA. It set aside project approvals, ordered that the lead agency first make the required finding that the environmentally superior alternative was infeasible before the project proceeded and ordered that the environmental impact report be revised. Coalition for Environmental Integrity in Yucca Valley; Center for Biological Diversity v. Town of Yucca Valley, Nos. CIVBS 810232, 800607 (San Bernardino Super. April 28, 2009).
Although the Wal-Mart ruling was unprecedented, in many respects it was inevitable. The analysis of greenhouse gas emissions under CEQA has in recent years been addressed repeatedly by the California Legislature, the governor, the attorney general, environmental activists and land use professionals. For some time, the question whether greenhouse gas emissions should be analyzed under CEQA was subsumed within the broader debate about whether reliable scientific data had established a causal link between greenhouse gas emissions and global climate change. That debate became irrelevant in 2007, however, when the California Legislature enacted Senate Bill 97. SB 97, codified as Public Resources Code §21083.05, mandated that the Governor’s Office of Planning and Research prepare guidelines that specifically address the analysis under CEQA of project-related greenhouse gas emissions.
The Office of Planning and Research released an initial draft of the greenhouse gas guidelines for public review in January 2009. After months of public comment, the office submitted slightly revised guidelines to the California Natural Resources Agency. The agency commenced the rulemaking process on July 3. The guidelines are expected to be in effect by the January 1, 2010, statutory deadline.
The guidelines take the approach that greenhouse gas analysis does not require a wholesale change to CEQA, and the majority of changes simply make express throughout the CEQA Guidelines at 14 California Code of Regulations §§15000 to 15387 the mandate to analyze greenhouse emissions in environmental impact reports. The guidelines do include two entirely new sections. One discusses how a lead agency should go about determining whether greenhouse gas emissions cause significant impacts, and the other addresses “tiering and streamlining” the greenhouse gas impacts analysis.
The most difficult task lead agencies will face, at least initially, is to determine whether project-generated greenhouse gas emissions will cause “significant” adverse impacts. Complicating this analysis is the absence of established regulatory standards, the relatively small amount of greenhouse gas emissions that any single project is likely to generate, the cumulative nature of climate change, and the developing and controversial state of climate science.
The greenhouse gas guidelines discuss many options but provide little concrete direction. For example, either quantitative or qualitative greenhouse gas significance assessments may be found acceptable. Lead agencies should consider the extent to which a project may increase or reduce greenhouse gas emissions as compared with existing conditions, any thresholds of significance the lead agency deems appropriate for the project and the extent to which the project complies with existing statewide, regional or local plans to reduce or mitigate greenhouse gases. A lead agency thus is essentially free to select a project-appropriate method to determine the significance of project-generated greenhouse gases so long as it adequately explains its reasoning, based on substantial evidence. Until generally accepted standards are developed, some courts may require environmental impact reports to examine a wide array of guidance and policy documents and provide a reasoned, evidence-based explanation as to why the lead agency has deemed certain greenhouse gas policy documents to be most relevant to the study project and how the project relates to such policies.
The new provision for tiering and streamlining, §15183.5 of the guidelines, outlines several methods to simplify analysis of the impact of project-generated greenhouse gas emissions. To the extent a programmatic approach to greenhouse gas emissions has been adopted following CEQA review – such as in a general plan, a long-range development plan or a separate plan to reduce greenhouse gas emissions – project-specific review may rely on such plan’s underlying environmental report. Environmental impact report proponents should be aware of general plans, development plans, specific greenhouse gas reduction plans and other programs that have jurisdiction over the project and be prepared to include in the record a discussion of such plans. Greenhouse gas policy documents that have not been reviewed under CEQA may be used in the cumulative impacts analysis, but simply referring to such a plan and asserting that the project complies will not by itself suffice. At a minimum, an environmental impact report must provide a reasoned, evidence-based analysis that explains why the lead agency finds a non-CEQA greenhouse gas-reduction plan to pertain to the project under review.
The Wal-Mart final environmental impact report attempted to base its greenhouse gas impacts analysis on the governor’s greenhouse gas strategies, a high-level strategy document adopted without CEQA review. The Wal-Mart court found the analysis inadequate because it was not supported by substantial evidence. The court could ultimately find a proffer of evidence demonstrating compliance with the governor’s strategies adequately addresses CEQA’s greenhouse gas emissions analysis requirement. During the time the Wal-Mart environmental report is being revised and re-circulated for public comment, however, developments in climate-change policy, science or the law may uncover new issues that project opponents will raise. The rapid evolution of climate-change policy and science thus increases the possibility of serial challenges to environmental impact reports.
While the guidelines make clear that reports must include greenhouse gas emissions analysis, they do little to clarify precisely what will be required for an analysis to be found adequate. Although a growing number of cities and counties are adopting climate-change and greenhouse gas-reduction plans, to date relatively few have been reviewed under CEQA. Until more CEQA-reviewed greenhouse gas-reduction plans are adopted and before specific approaches to greenhouse gas emissions analysis become generally accepted, project opponents will continue to challenge the approval of specific projects by focusing on greenhouse gas emissions analysis. Because being targeted for environmental activism can adversely affect a project’s budget, timing and public perception, project stakeholders should consider early in the development cycle how CEQA greenhouse gas emissions analysis may affect the entitlements process. Addressing greenhouse gas issues early will maximize the opportunities to reduce delay, incorporate design flexibility and avoid unnecessary transaction costs.
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For more information about the issues covered in this report, please contact Jeffrey Judd in our San Francisco office at 415-848-3221 or at juddj@howrey.com or contact your Howrey attorney. For more information about Howrey's Construction Practice Group, click here.
©2009 Howrey LLP
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