In Center for Biological Diversity v. Dept. of Fish and Wildlife,the California Supreme Court upheld the “Business as Usual” (BAU) approach for analyzing greenhouse gas (GHG) emissions under the California Environmental Quality Act (CEQA), but then set a precariously high bar for application of BAU. The Court generally endorsed reliance on consistency with the state’s goal of reducing GHG emissions by 29 percent compared to BAU, pursuant to Assembly Bill (AB) 32, as a standard for identifying significant GHG impacts pursuant to CEQA. In this case, however, the record failed to show that the individual project’s 31 percent reduction in GHG emissions was consistent with the statewide goal of 29 percent reduction. The project might need to do still more than achieve a 29 percent or 31 percent GHG reduction from BAU, the Court reasoned, because other projects and existing development may do less. While this consistency showing is logical in theory, in practice it will not be easy to make.

The Court also decided that species which are “fully protected” under state law may not be relocated from project sites as CEQA mitigation and addressed the CEQA implications of an extra 30-day comment period, mandated by the National Environmental Policy Act (NEPA), on a final joint CEQA/NEPA document.

The Newhall Ranch EIR

The proposed Newhall Ranch project is a very large mixed-use development that would construct up to 20,885 residential units housing nearly 58,000 residents, as well as commercial and business uses, schools, golf courses, parks and other community facilities, on 12,000 acres along the Santa Clara River over 20 years. The project incorporates extensive green design features including energy efficient buildings, drought-tolerant landscaping and close proximity of homes to jobs, services and public transit. The California Department of Fish and Wildlife, as CEQA lead agency, and U.S. Army Corps of Engineers, as NEPA lead agency, prepared a joint Environmental Impact Report and Environmental Impact Statement for the project (an EIR/EIS, which the opinion refers to as “the EIR” as the Court considers only state law CEQA issues).

The Center for Biological Diversity challenged the EIR on several grounds, including its analysis of impacts from GHG emissions and its proposed mitigation for the unarmored threespine stickleback, a fish inhabiting the Santa Clara River. The Superior Court agreed with the petitioner on both issues, while the court of appeal reversed and upheld the EIR.

The BAU Approach as a CEQA Significance Threshold is Upheld

The Supreme Court first considered the BAU approach in general terms. Under CEQA, a state or local agency which proposes to adopt or approve a project must evaluate and, where feasible, mitigate, significant environmental impacts of the project. Mitigation is required if an effect of the project exceeds the relevant “significance threshold”, a standard that separates impacts considered significant from those that are not. CEQA gives lead agencies broad discretion to set significance thresholds, so long as the thresholds are supported by substantial evidence. In 2007, Senate Bill (SB) 97 amended CEQA to require analysis and mitigation of impacts of GHG emissions on the global climate, but it did not specify a significance threshold for doing so.

Independently of CEQA, AB 32 required the California Air Resources Board (ARB) to determine the amount of GHG emission reductions necessary to achieve the statutory goal of returning to 1990 statewide GHG emission levels by 2020. In its AB 32 Scoping Plan, ARB concluded that, to reach this goal, GHG emissions throughout the state must be reduced approximately 29 percent below BAU; that is, the level of emissions that would have occurred in the absence of GHG reduction actions such as increased renewable power generation, building energy efficiency and vehicle fuel efficiency.

In recent years, some CEQA lead agencies, air districts and technical experts developed an approach that unifies these separate statutory directives, by relying on consistency with the state’s goal of reducing GHG emissions by 29 percent from BAU as a significance threshold for CEQA purposes. Following this approach, in the Newhall Ranch EIR, the project’s GHG emissions were calculated under two scenarios, with and without GHG reduction assumptions from the Scoping Plan (the scenario without those assumptions representing “business as usual”). Since project GHG emissions at full buildout, with reduction assumptions, were 31 percent below BAU emissions, they remained below the threshold and the impact was less than significant.

The Court found the BAU approach to be within the lead agency’s substantial discretion to set significance thresholds, as well as consistent with the global scale of GHG impacts. No one project’s emissions can alter the earth’s climate; rather, climate change is the cumulative effect of emissions from many sources. Moreover, if the project were not approved, its occupants would live and work somewhere, still contributing GHG to the atmosphere. As the Court noted, CEQA is not a population control measure (a remark likely to be widely cited in future cases and comments). A fixed numeric GHG threshold, as the plaintiff urged and some air districts have adopted, could limit the size of projects and work as a population control. Conversely, if a project incorporates efficiency and conservation measures, reducing its fair share of GHG emissions toward the state’s reduction goal, it is reasonable to conclude that the project’s contribution to the cumulative impact is insignificant and no further mitigation is required. These considerations supported utilizing the 29 percent below BAU goal as the standard of CEQA significance.3