In a partially published opinion filed August 19, 2013, the Third District Court of Appeal reversed a judgment denying a writ petition challenging a Wal-Mart Supercenter that would replace an existing Wal-Mart store. Friends of Oroville v. City of Oroville (8/19/13) ___ Cal.App.4th ___, No. C070448. In the published portion of its opinion, the Court held the City’s EIR inadequately analyzed the project’s GHG emissions because substantial evidence did not support its finding that such emissions would be less than significant after mitigation.

Following CEQA Guidelines § 15064.4, the EIR adopted as a project-specific threshold-of-significance standard: “[W]hether the [P]roject would significantly hinder or delayCalifornia’s ability to meet the reduction targets of [AB] 32[,]” the Global Warming Solutions Act of 2006. AB 32 calls for a reduction ofCalifornia’s GHG emissions to 1990 levels by 2020, and the EIR stated the State Air Resources Board’s implementing Scoping Plan further quantified this reduction as “cutting approximately 30 percent from business-as-usual emission levels projected for 2020, or about 10 percent from today’s levels [i.e., 2010, when the EIR… was drafted].”

The EIR found the new Wal-MartSupercenterwould generate operational GHG emissions of nearly 15,000 metric tons of carbon dioxide equivalents per year (15,000 MTCO2e/y), which it noted constitutes a miniscule 0.003 percent of California’s 2004 emissions, and nearly 70 percent would be from motor vehicles. However, in determining whether the AB 32 reduction target which it (properly) adopted was met, the EIR failed to quantify either (1) the GHG emissions of the existing Wal-Mart store which was to be replaced, or (2) the emissions reductions which were expected to be achieved by the adopted mitigation measures (most of which related to non-transportation emissions).

The Court held these flaws in the EIR’s analysis resulted in a lack of substantial evidence to support its conclusion that GHG impacts would be mitigated to less-than-significant. It used as a yardstick for proper GHG analysis the decision in Citizens for Responsible Equitable Environmental Development v. City of Chula Vista (2011) 197 Cal.App.4th 327 (“CREED”), which involved a similar factual scenario (i.e., the project was a “newer, larger Target Store to replace an older one”). The Court noted that the CREED case quantified (again, in metric tons per year) the existing store’s GHG emissions as “business and usual,” and quantified the proposed store’s projected GHG emissions – both without and then with the implementation of energy-saving mitigation measures – to demonstrate both a 29% reduction in “business as usual” emissions for 2020 and a reduction of over 10% from current (2010) emissions. (The CREED case’s EIR estimated a 25% reduction from 2020 GHG emissions as the AB 32 standard.)

In contrast, the Court of Appeal held the EIR in Friends of Oroville deviated from CREED’s exemplary GHG analysis model: “(1) by applying a meaningless, relative number to determine insignificant impact; and (2) failing to ascertain the existing Wal-Mart’s GHG emissions, and the impact on GHG emissions from the Project’s mitigation measures.” With respect to the first error, the Court called the comparison “meaningless” and stated: “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… 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 [AB] 32[.]”

With regard to the second error, the Court stated “the City misapplied the [AB] 32 threshold-of-significance standard by [1] failing to calculate the GHG emissions for the existing Wal-Mart and [2] failing to quantitatively or qualitatively ascertain or estimate the effect of the Project’s mitigation measures on GHG emissions….” Such calculations were done in CREED, and could and should have been done in the case before it as well, according to the Court, in order to demonstrate the requisite satisfaction of AB 32’s relevant reduction standard. Nor were the EIR’s insufficiencies in failing to properly quantify GHG emissions cured, as Wal-Mart urged, by the EIR’s traffic analysis regarding possible reduction of vehicle trips, since on this subject the EIR reacted “speculative and contradictory conclusions [that] do not close the evidentiary sufficiency gap involving the City’s finding that the Project’s GHG emissions will have a less than significant environmental impact after mitigation.”

Friends of Oroville provides helpful guidance to lead agencies, developers and consultants crafting GHG analyses for large in-fill expansion and replacement projects, particularly in areas (such as Butte County in this case) where neither the lead agency nor the local air quality management district has adopted a plan or strategy for reducing GHG emissions that would apply to the project at issue, and the AB 32 reduction targets are adopted as the relevant threshold of significance. In particular, the case underscores the key importance of properly quantifying all relevant parts of the equation when performing the GHG calculus under an AB 32 reduction threshold.