Court of Appeal Reinstates Regional Air Quality Thresholds for Greenhouse Gas Emissions

On August 13, 2013, the First District Court of Appeal reinstated controversial air quality guidelines adopted by the Bay Area Air Quality Management District (the District), including numeric greenhouse gas (GHG) thresholds of significance.

The court in California Building Industry Association v. Bay Area Air Quality Management District, ___ Cal.App.4th ___, (Court of Appeal Case No. A136212) (click here to read the full decision) found that the District’s adoption of thresholds of significance for its California Environmental Quality Act (CEQA) Guidelines was not a “project” subject to CEQA.  It determined that the state’s CEQA Guidelines contained an alternative process for public review and adoption of thresholds of significance that the District followed, making a review under CEQA “absurd.”  Second, it rejected as speculative and not reasonably foreseeable, CBIA’s contention that the adoption of the District’s thresholds was a project that indirectly affects the physical environment by making infill development more difficult and encouraging suburban development with higher GHG emissions.

The court reversed a 2012 ruling by an Alameda County Superior Court judge invalidating the District’s thresholds of significance (Thresholds).  As a result, the Thresholds, originally adopted in 2010, may be used in analyzing environmental impacts of Bay Area development projects, including their requirement that projects assess potential health impacts on new residents from existing pollution sources such as nearby freeways.

BACKGROUND

In June 2010, the District adopted air quality thresholds for analyses by lead agencies under CEQA.  It marked the first time that a California air district set numeric thresholds of significance for evaluating environmental effects of GHG emissions from proposed projects.  Projects with emissions exceeding the Thresholds would result in a finding of a significant impact necessitating preparation of an environmental impact report (EIR) and adoption of mitigation measures.

The Thresholds also introduced a new requirement for projects proposed within 1,000 feet of existing pollution sources, including most freeways, major roads and transportation corridors.  Such projects were required to perform a community risk assessment to determine potential health impacts on new project residents from existing, background pollution.  Traditionally, CEQA examines a project’s impacts on the surrounding environment rather than the environment’s impact on a project and its residents.

On November 29, 2010, the California Building Industry Association (CBIA) sued, arguing that the Thresholds conflicted with the state's climate change goals, such as those found in SB 375, of reducing sprawl and encouraging infill and transit-oriented development.  CBIA alleged that the District failed to analyze the potential environmental impacts of the rules in violation of CEQA.

On March 5, 2012, Alameda County Superior Court Judge Frank Roesch found adoption of the Thresholds was a project under CEQA and ordered the District to withdraw the Thresholds until it studied their potential environmental impacts, including their potential effect on future development in the region.  Judge Roesch found that there was a fair argument that implementation of the Thresholds “may cause a reasonably foreseeable indirect change in the environment” and might discourage urban infill development while encouraging suburban development.  He also granted CBIA its attorneys’ fees.

For more information on the adoption of the thresholds and the lower court suit, see “Air Quality District’s CEQA Thresholds Invalidated” (5/10/12) >read, “BAAQMD District GHG Thresholds of Significance Will Have Wide Impact” (9/17/09) >read and “BAAQMD Update on CEQA Thresholds” (1/8/10) >read.

COURT OF APPEAL RULING

In addition to addressing whether adoption of the Thresholds was a project under CEQA, the Court of Appeal also considered CBIA’s other contentions that certain aspects of the Thresholds were arbitrary since they required analysis of the environment’s impact on a project, and that the Thresholds themselves were not supported by substantial evidence.

First, the Court determined that the District’s adoption of the Thresholds was not a project subject to CEQA for two reasons.  The Court found that under CEQA Guidelines section 15064.7, a public agency may adopt thresholds of significance through a public review process and supported by substantial evidence, but that an EIR or other CEQA review is not required because it would be duplicative of the required process.  In addition, the Court rejected as speculative CBIA’s claim that the Thresholds would make infill development more difficult and result in more housing to be built in suburban and rural areas.  The Court found such a scenario “possible” but not “reasonably foreseeable.”

Second, the Court rejected CBIA’s arguments that the Thresholds themselves were legally invalid.  CBIA argued that the Thresholds’ Risks and Hazards section requiring an analysis where a project will expose people to existing pollution was contrary to several cases stating that CEQA does not require analysis of the existing environment’s impacts on a project.  While the Court of Appeal did not directly disagree with those cases, it found that this aspect of the Thresholds facially valid since they would not conflict with CEQA’s provisions or case law in the majority of cases in which they would be applied.

Finally, the Court upheld the Thresholds’ limits on single source and cumulative toxic air contaminants based on increase in cancer risk.  CBIA objected that the single-source significance limit (increased cancer risk by 10 in a million assuming a 70-year exposure) was arbitrary and unsupported in light of the cumulative limit for contaminants from all sources (increased risk by 100 in a million).  The Court found CBIA had not carried its burden to show the District’s determinations were not supported by substantial evidence.  The Court also reversed the attorneys’ fee award.

TAKEAWAYS

The Court of Appeal’s decision upheld the validity of the District’s Thresholds.  While the Thresholds are not legally binding on other Bay Area agencies, they are widely used by cities and counties in evaluating projects for CEQA purposes.  Despite the superior court ruling in 2012, many agencies continued to voluntarily use the Thresholds in conducting CEQA analyses.  The Court of Appeal ruling will make such a choice more defensible.

The Thresholds help provide certainty regarding when a finding of significance will be triggered for GHG emissions.  However, a lingering concern is that stricter emission standards for GHGs and health risks will make it difficult to develop infill projects near existing pollution sources such as freeways and transit.

During the Thresholds’ approval, several cities, as well as development, transit and affordable housing advocates, criticized the Thresholds as being overly conservative and making infill “smart growth” development less feasible due to additional costs and the burden of preparing EIRs and health risk assessments.  Opponents asserted that the numeric standards were so low and restrictive that even transit villages planned adjacent to BART lines would be unable to avoid a significant impact finding for GHG emissions.

Under the Thresholds, GHG emissions of a project are presumed insignificant if the GHG emissions remain below quantitative thresholds or if the project complies with a “Qualified GHG Reduction Strategy.”  For residential, commercial, industrial, and public land-use projects, emissions greater than 1,100 metric tons of carbon dioxide equivalent (“CO2e”) per year or 4.6 metric tons of CO2e per year per person (residents and employees, known as “service population”) will be considered to have significant effects.

These thresholds correspond roughly to a 56-unit single-family housing project, an 83-room hotel, a general office building of 53,000 square feet, a regional shopping center of 19,000 square feet, or a 1,000 square foot fast-food restaurant.  For stationary-source projects, the threshold level is 10,000 metric tons of CO2e per year.

Local agencies that have adopted qualified GHG reduction strategies, such as a general plan climate change element or climate action plan, can find that a project’s GHG impacts are less than significant if the project is consistent with such a plan.

In upholding the validity of the Thresholds’ 1,000-foot community risk assessment zone, the Court of Appeal appeared to question the reasoning in a line of recent CEQA decisions that rejected the need to evaluate impacts of the surrounding environment on project residents.  (See Ballona Wetlands Land Trust v. City of Los Angeles (2011) 201 Cal.App.4th 455; South Orange County Wastewater Authority v. City of Dana Point (2011) 196 Cal.App.4th 1604.)

The Court concluded that whether the application of the Thresholds would run afoul of the holding of those cases will have to wait until an actual dispute arises in their application to a particular development project.

It is not known whether CBIA will seek review of the Court of Appeal decision by the California Supreme Court.