By Joshua T. Bledsoe and Christopher W. Garrett

In Friends of Oroville v. City of Oroville, 218 Cal. App. 4th 1352 (2013) (Friends of Oroville), the Court of Appeal of California, Third Appellate District, recently confirmed that analyzing a project’s greenhouse gas (GHG) emissions under the California Environmental Quality Act (CEQA) via a threshold-of-significance derived from California’s GHG emissions reduction goals is appropriate.[1]  However, the Court held that this threshold-of-significance was applied improperly and remanded the case to the trial court to grant the requested writ of mandate.  This case contains lessons for the analysis of GHG emissions under CEQA that project proponents should be sure to keep in mind.

In Friends of Oroville, the proposed project was to replace an existing Wal-Mart store with a superstore (retail plus grocery). The City used a break-from-Business-As-Usual threshold-of-significance derived from California’s Assembly Bill (AB) 32. In its AB 32 Scoping Plan, originally adopted in 2008 (the “2008 AB 32 Scoping Plan”), the Air Resources Board (ARB) forecast the GHG emissions that would occur in 2020 if reduction actions are not taken. The no-action scenario is known as “Business-As-Usual” or BAU. This forecast was necessary to assess the scope of the reductions California must achieve to return to 1990 statewide GHG emissions levels by 2020 (i.e., 427 million metric tons CO2e), as mandated by AB 32. ARB initially defined the BAU scenario as GHG emissions in the absence of any GHG emissions reduction measures discussed in the 2008 AB 32 Scoping Plan. ARB forecast 2020 BAU GHG emissions of 596 million metric tons CO2e. Accordingly, per the 2008 AB 32 Scoping Plan, a reduction of 169 million metric tons CO2e was needed (596 – 427 = 169), or approximately 28.4 percent from BAU.

In Friends of Oroville, the Wal-Mart Environmental Impact Report (EIR) utilized a threshold-of-significance of “about 30 percent from business-as-usual emission levels projected for 2020,” indicating reliance on the 2008 AB 32 Scoping Plan. However, the Friends of Oroville Court acknowledged that other courts have approved of analyses with different calculations of the percent reduction from BAU that is necessary under AB 32. In particular, the Court noted that the Mitigated Negative Declaration (MND) in Citizens for Responsible Equitable Environmental Development v. City of Chula Vista, 197 Cal.App.4th 327 (2011) (Citizens), discussed in more detail below, used a “25 percent figure.” The Friends of Oroville Court’s implicit approval of flexibility for EIRs in calculating the necessary break-from-BAU is noteworthy because both the calculations likely are now outdated.

In 2011, ARB approved a Supplemental FED to the Climate Change Scoping Plan. In conjunction with that approval, ARB updated the projected 2020 BAU GHG emissions inventory based on then-current economic predictions (i.e., as influenced by the nationwide recession), replacing its prior 2020 BAU GHG emissions forecast. The updated 2020 BAU estimate is 507 million metric tons CO2e, which also took credit for certain GHG emission reduction measures already in place (e.g., the Renewables Portfolio Standard). Using this updated estimate, achieving AB 32’s mandate would require a reduction of 80 million metric tons CO2e or approximately 16 percent from BAU.

The Friends of Oroville Court found this threshold was a valid method to judge the significance of the project’s GHG emissions impacts, citing with approval the Citizens case. In Citizens, the court deemed the same threshold-of-significance proper to analyze replacing an old Target store with a newer, larger Target store. Indeed, the Court found Citizens on-point and used the MND discussed in that case as a template for what should have been done by the Wal-Mart EIR.

The Friends of Oroville Court held that the City’s EIR improperly applied the break-from-BAU significance threshold for the following reasons.

  1. It relied on a comparison of the proposed new store’s GHG emissions of about 15,000 metric tonnes of carbon dioxide equivalent per year to statewide emissions. The store’s GHG emissions would represent about 0.003 percent of California’s 2004 GHG emissions. The Court explained that:

    “This relative comparison is meaningless, though, in determining the Project’s environmental impact regarding GHG emissions. It conjures a comparison worse than apples to oranges. Of course, one store’s GHG emissions will pale in comparison to those of the world’s eighth largest economy. The relevant question to be addressed in the EIR is not the relative amount of GHG emitted by the Project when compared with California’s GHG emissions, but whether the Project’s GHG emissions should be considered significant in light of the threshold-of-significance standard of Assembly Bill 32….”

  2. It failed to calculate the existing store’s GHG emissions. The Court noted that this had been done in the Citizens case.
  3. It failed to set forth, either quantitatively or qualitatively, the specific emissions reduction benefits of the EIR’s Mitigation Measures.

The Court further indicated that the EIR’s discussion of GHG emissions associated with vehicle trips to and from the project was insufficient. The Court stated that “Wal-Mart ignore[d] the elephant in the room—- 68 percent of the Project’s GHG emissions come from motor vehicles.” According to the Court, the City of Oroville’s EIR did not provide information on the existing Wal-Mart’s GHG emissions associated with motor vehicles. Furthermore, the Court determined that the EIR was internally inconsistent in its discussion of potential impacts on vehicle trips, with the Traffic Section indicating that “a one-stop shopping destination (i.e., a superstore) may reduce multiple and out-of-town trips for the City’s residents.” However, the Court observed that in its section on GHG emissions, the EIR concludes that the Project will “not result in any significant changes in vehicle miles traveled,” and also suggested in another section that the Wal-Mart store would be “so large a retail destination … [that] there will be round trips of up to 40 miles from neighboring communities.” While the Court found this analysis to be “speculative and contradictory,” it did not elaborate on what would have been required in the EIR to fully address the issue of GHG emissions from motor vehicle trips associated with the planned store.

In reviewing the Court’s opinion, it appears that the EIR in this case did not include in its GHG emission calculations the reductions attributable to California’s efforts to reduce transportation-related GHG emissions (e.g., increased motor vehicle mile-per-gallon standards). These anticipated reductions are included in the AB 32 Scoping Plan as part of California’s efforts to reduce GHG emissions. For other projects, anticipated reductions in motor vehicle GHG emissions from trips associated with projects often are considered as part of the overall calculation of the extent to which projects will reduce their GHG emissions in comparison to the aforementioned break-from-BAU threshold-of-significance. While not specifically addressed by the Court in its opinion, it would appear that including these additional expected reductions in motor vehicle GHG emissions, along with eliminating the contradictions noted by the Court, may have helped to address the “evidentiary sufficiency gap” the Court found in the EIR’s analysis of motor vehicle GHG emissions associated with the project.

There are three primary lesson for project proponents provided by Friends of Oroville in its discussion of EIR analysis of GHG emissions. First and foremost, public agencies and developers should take guidance from the Court’s detailed endorsement of the “break-from-Business-As-Usual (BAU) threshold-of-significance derived from California’s Assembly Bill (AB) 32” as a legally appropriate approach under CEQA. The appropriateness of this threshold, irrespective of its particular application by the public agencies, has been and continues to be a subject of controversy and dispute by project opponents. With both the 2013 Friends of Oroville and the 2011 Citizens cases endorsing this threshold, and no published cases rejecting this standard, it currently seems like a reasonable approach to use for GHG analysis.

Second, public agencies and developers should ensure that their technical consultants include all aspects of the detailed analysis discussed by the Court above, not just ultimate conclusions in their work, and ensure that the consultant’s work is not contradictory across different sections of the EIR. If a break-from-BAU approach is utilized, appropriate resources should be devoted to the quantification of GHG emissions, including a baseline GHG emissions inventory, reductions attributable to Mitigation Measures, and reductions attributable to relevant state mandates. Third, project proponents must have a detailed understanding of California’s ever-evolving efforts to reduce GHG emissions, including transportation emissions, in order to place their projects’ GHG emissions in the appropriate context under CEQA and properly apply a suitable threshold-of-significance.

[1] Aspects of the opinion regarding hydrologic analysis and deferral of Mitigation Measures also have been certified for publication, but are not addressed in our post.