December 4, 2008
For the past few years, concern over the potential impacts of new developments on climate change has prompted the attention of state officials to begin developing methods under the California Environmental Quality Act (CEQA) to reduce greenhouse gas (GHG) emissions. However, the question remains: what type of GHG analysis is required by CEQA? We now have a preliminary answer to that critical question.
California law requires that before July 1, 2009, the Office of Planning and Research (OPR) shall prepare and develop guidelines under CEQA for the mitigation of GHG emissions. To meet its objective, OPR asked the California Air Resources Board (CARB) staff to recommend a method for establishing a GHG threshold of significance by identifying a range of options—both quantitative and qualitative—and on October 24, 2008, CARB released a Preliminary Draft Staff Proposal entitled “Recommended Approaches for Setting Interim Significance Thresholds for Greenhouse Gases under the California Environmental Quality Act.” While CARB staff will make its final recommendations on significance thresholds in early 2009, the October 24th report marks an important first step toward developing thresholds of significance for GHGs under CEQA. With clear significance thresholds, a lead agency can determine whether a project’s impact to climate change, whether direct or indirect, is significant, and if so, an Environmental Impact Report (EIR) would be prepared to disclose the impact and impose feasible mitigation measures to reduce the impact.
The CARB report focuses on three common project types—industrial, commercial and residential—that are collectively responsible for a significant amount of GHG emissions (estimated by CARB at 80%, together with the transportation sector). Moreover, the CARB report suggests that different GHG thresholds of significance may apply to projects in different sectors, and may be of different types (e.g. quantitative, qualitative and performance-based).
With respect to industrial projects, CARB’s objective was to develop a threshold of significance that would result in approximately 90% of the statewide GHG emissions from new industrial projects being subject to EIR evaluation so that feasible mitigation could be imposed. CARB uses a representative small project to estimate its emissions (based upon a standard sized industrial boiler). Using that benchmark, CARB proposes a significance threshold of 7,000 metric tons of CO2 equivalent emissions per year for operational emissions (excluding transportation). Projects with GHG emissions below the threshold are presumed to have a non-significant impact to climate change. In addition, performance standards addressing construction and transportation emissions are proposed for industrial projects. CARB suggests that AB 32 requirements could serve as the performance standards for industrial projects.
For residential and commercial projects, CARB recommends a threshold based first on the implementation of stringent performance standards, or equivalent mitigation measures, addressing energy use, transportation, water use, waste and construction. Specific performance standards are not presented, although CARB recommends reliance on the California Energy Commission’s Tier II Energy Efficiency standards for the energy performance standard, and references existing GHG-reducing programs, such as LEED, GreenPoint Rated and the California Green Building Code, as possible reference sources for the other performance standards. Second, residential and commercial projects will only be presumed to have a non-significant effect on the environment if, after meeting the above performance standards, the project’s total net emissions are below a specified ceiling. Unlike the industrial sector, the quantitative threshold for the residential and commercial sector is left undefined in the report, but will be developed as part of CARB’s final recommendation to the OPR. On the whole, there will be a presumption of less than significant impacts related to climate change if the project (i) is exempt under a statutory or categorical exemption, (ii) complies with a previously approved plan that addresses GHG emissions that, among other things, is consistent with legally established statewide goals, includes specific, enforceable GHG requirements, and has a certified final EIR, or (iii) meets the minimum performance standards and is below the GHG emission ceiling, as discussed above.
Overall, CARB’s recommended method for establishing a GHG threshold of significance will have a substantial effect on the development of industrial, residential and commercial projects once the final guidelines become effective. Projects that might not have traditionally triggered the preparation of an EIR could be so required because of a potential significant environmental impact on climate change, if this becomes the final guideline. Further, projects will be required to implement all feasible GHG mitigation measures to be approved. Although CARB’s October 24th report presents a framework for establishing GHG significance thresholds, the particular details, especially with respect to residential and commercial projects, have yet to be determined.
Gibson, Dunn & Crutcher’s Environmental and Natural Resources Practice Group and Real Estate Practice Group are available to assist in addressing any questions you may have regarding these issues.
Please contact the Gibson Dunn attorney with whom you work, or any of the following:
Patrick Dennis (213-229-7568, firstname.lastname@example.org),
Amy Forbes (213-229-7151, email@example.com), or
Mary Murphy (415-393-8257, firstname.lastname@example.org)
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