On June 12, 2020, the California Court of Appeal in Golden Door Properties, LLC v. County of San Diego, 2020 WL 3119041, handed San Diego County its third loss, by concluding that the County failed to adopt a Climate Action Plan (CAP) in compliance with CEQA.

Background

The California Legislature has created programs to significantly reduce emissions of greenhouse gases (GHG) to help prevent global warming, including a cap-and-trade scheme. The California Environmental Quality Act (CEQA) requires lead agencies to, based upon facts and science, describe, calculate, or estimate the amount of GHG emissions that a proposed project will produce. As defined in the court’s opinion, the County’s CAP “[e]stablishes a baseline inventory of GHG emissions in the unincorporated County and from County operations[, p]rojects future GHG emissions and contains measures to meet state GHG reduction targets.”

The County has been involved in three separate cases over ten years trying to get its CAP in compliance with its General Plan Update (GPU) and CEQA. The County prepared a Supplemental Environmental Impact Report (SEIR) intending to document the environmental impacts of a multi-faceted project, including: (1) the Climate Action Plan; (2) a General Plan Amendment (GPA); (3) a threshold of significance for GHG emissions; and (4) Guidelines for Determining Climate Change. The SEIR contained a mitigation measure, the primary issue of contention in the case, called “M-GHG-1.” That mitigation measure would require certain projects to mitigate GHG emissions “through all feasible onsite design features.” If onsite features are insufficient to achieve sufficient GHG reductions, the project may then mitigate the additional emissions by way of offsite mitigation measures, including the purchase of carbon offset credits. The Climate Action Plan relied on the existence of M-GHG-1 to conclude that projects subject to the measure would necessarily properly mitigate GHG emissions.

Analysis

The Court found that M-GHG-1 violates CEQA because it defers mitigation by not providing objective standards to determine which carbon offset programs qualify as producing a sufficiently “real, permanent, verifiable and enforceable” reductions in GHGs. There are no quantifiable measurements such as compliance with the offset protocols identified in AB 32, the California Global Warming Solutions Act of 2006, and also M-GHG-1 violates CEQA by allowing project applicants to offset GHG impacts through projects outside of California. While San Diego County had targeted carbon offset registries (entities that issue offset credits) that are used by the California Air Resources Board (CARB) in implementing the cap-and-trade program, these registries also issue other credits that are not necessarily compliant with CARB’s standards. CARB will only approve out-of-state credits if the offsets reflected by those credits are genuine, verifiable, and enforceable under law. However, M-GHG-1 does not have any of these requirements. Essentially, a project proponent in San Diego County could purchase second-rate credits that do not result in permanent GHG reductions. Furthermore, the Court stated that, “The CAP is substantively flawed because its projections depend upon the validity of M-GHG-1 to reduce GHG emissions for probable in-process and all future GPAs to zero-above-the-cap, and M-GHG-1 itself is invalid under CEQA.” Since the court found M-GHG-1 violates CEQA, it then held that the CAP’s reliance upon M-GHG-1 was not supported by substantial evidence and the CAP is therefore invalid.

While the Court of Appeal found that the SEIR violated CEQA on numerous other grounds (e.g., a flawed cumulative impacts analysis, the SEIR failed to analyze a smart-growth alternative, and the SEIR and CAP are inconsistent with one another), its holding in regards to M-GHG-1 as described above is notable. The Court heavily relied on actions taken by the CARB and veracity of its carbon offset credit model contained within the cap-and-trade program, a program that has been much scrutinized since its inception. Localities and project proponents in the future will be well-advised to seek using offset credits that are valid under the cap-and-trade program if GHG reductions are a project necessity.

Beveridge & Diamond’s Air and Climate Change practice group helps private and municipal clients navigate all aspects of compliance with Clean Air Act regulations for criteria pollutants, hazardous air pollutants, greenhouse gases, and permitting processes. For more information, please contact the authors. Our NEPA and Historic Preservation Reviews practice group has been involved with NEPA and state analogues (like California’s CEQA) since the earliest implementation of these statutes. We help clients navigate the environmental review and permitting process to help them build their projects.