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ARB approves first forest carbon offsets under cap-and-trade protocols

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On November 13, 2013, the California Air Resources Board (ARB) announced that it had approved forest carbon offsets under the cap-and-trade program’s Forest Offset Protocol.

The protocol is designed to address the forest sector’s unique capacity to capture and store carbon dioxide. Whether forests function as net source of carbon dioxide emissions or as a net sink depends on their management as well as natural events. Sequestered carbon stays in the trees, plants, and soil for a long time, which slows the accumulation of greenhouse gases in the atmosphere and ocean. Thus, with sustainable management and protection, forests can play a significant role in addressing global climate change.

Under the forestry protocol, ARB provides offset credits for certain “Forest Projects.” These offsets may be used to comply with the cap-and-trade program. A Forest Project is a planned set of activities designed to increase removal of carbon dioxide from the atmosphere (“removal enhancement”) or reduce or prevent emissions of carbon dioxide (“emission reductions”) by increasing or conserving forest carbon stocks. To qualify for carbon offset credits, the projects must reduce greenhouse gas emissions or enhance greenhouse gas removal beyond any reductions or removals required by law or that would occur under business as usual. The forestry protocol provides methods for quantifying the net climate benefits of activities that sequester carbon on forest land.

Forest Projects eligible for offsets include reforestation, improved forest management, and avoided conversion. Offset projects using this protocol can be credited for up to 25 years after the project commences.

Court of appeal reviews housing element update under substantial evidence standard and upholds city’s decision not to prepare an EIR

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In Latinos Unidos de Napa v. City of Napa (Oct. 10, 2013), Case No. A134959, affordable housing advocates sought to set aside the city’s approval of revisions to the housing element of its general plan on the ground that the updates required an environmental impact report. The trial court denied the petition on its merits and the court of appeal affirmed.

The court of appeal explained that the exacting “fair argument” standard set out in Public Resources Code section 21151 applies to new projects, whereas the deferential “substantial evidence” standard set out in section 21166 applies to projects tiered from program EIRs.  The applicable standard turns on whether a project is “new” or whether it is “within the scope” of the analysis in a previously certified EIR.

The court of appeal concluded that the City of Napa’s general plan housing element update was not a new project, but rather, was within the scope of the original program EIR. The court rejected plaintiff’s arguments that the high density residential units approved as part of the project were not adequately addressed in the program EIR.  The court found that the incremental increases in maximum residential densities for parts of the city approved as part of the housing element revisions would not intensify total potential development above what was already analyzed in the program EIR. Many of the projects approved by the city built out at less than the maximum permitted density and the city’s growth rate was slower than anticipated in the program EIR.  As a result, the impacts of increasing density in the housing element revisions remained “within the scope” of —in other words, no greater than those disclosed in—the original program EIR.

Third District publishes opinion in South County Citizens for Smart Growth v. County of Nevada

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On November 13, 2013, the Third District Court of Appeal published its decision in South County Citizens for Smart Growth v. County of Nevada (Case No. C067764). We discussed this opinion previously, when it was issued in October.  The opinion is now citable precedent.

The opinion provides very helpful guidance on when a new “potentially feasible” alternative, proposed after the draft EIR has been circulated for public review, triggers the need for recirculation.  This decision is important because it carefully explains the burden of proof and the elements of proof for a challenge brought under CEQA Guidelines section 15088.5, subdivision (a)(3).  In essence, the petitioner has the burden to demonstrate that no substantial evidence supported the agency’s decision not to recirculate the EIR.  To demonstrate an abuse of discretion, a petitioner must show that no substantial evidence supports any of the following express or implied “negative findings” by a CEQA lead agency: the alternative was not actually feasible; the alternative was not “considerably different from” alternatives already analyzed in the EIR; and the alternative would not “clearly lessen the significant environmental impacts” of the project as approved. (Whether the project proponent has declined to adopt the alternative – another relevant element under subdivision (a)(3) – should be a comparatively more straightforward factual issue.)

 

 

President Obama issues executive order on climate adaptation

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On November 1, 2013, the President issued an executive order intended to make the United States more prepared for the effects of climate change. The order builds on the current “foundation for coordinated action on climate change preparedness and resilience across the Federal Government” established by a 2009 executive order. The current order promotes information-sharing, risk-informed decisionmaking, adaptive learning, and preparedness planning. For example, it directs land and water management agencies to inventory and assess changes to their climate policies and regulations. The order also directs federal agencies to develop and distribute useful tools and information related to climate change preparedness.  It establishes a Council on Climate Preparedness and Resilience with members from thirty different federal agencies and councils. The Council on Environmental Quality and the Office of Management and Budget must develop a portal for climate change issues and decisionmaking on data.gov.

Development rights are not constitutionally protected property interests where significant discretion is involved

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In Contasti v. City of Solana Beach (Oct. 22, 2013) 2013 U.S. Dist. LEXIS 15760 (Case No. 09CV1371), the United States District Court for the Southern District of California held that landowners had no Fourteenth Amendment property right in the use of their land where a city had broad discretion to decide whether to grant a development permit. The landowners could not reasonably rely on the benefit of development where it was clearly within the city’s power to deny that benefit, and the city had acted within its discretion.

Background. Plaintiffs were the owners of two adjacent lots in the City of Solana Beach. They submitted applications to build one home on each lot. The city approved the first application but denied the second, which proposed a 4,387 square foot house. Plaintiffs sued over the denial, claiming that the city had violated their constitutional substantive due process rights by denying them a protected property interest—their right to develop.

District court decision.  The court rejected the claim, finding no protected property interest under Fourteenth Amendment.  The Supreme Court in Board of Regents of State Colleges v. Roth explained that to have a property interest in a benefit, one must have a legitimate claim of entitlement to that benefit under state law. Where government officials are given a large amount of discretion in conferring that benefit, the court reasoned there can be no reasonable expectation of entitlement.

The plaintiffs in Contasti argued that they were entitled to the requested development permit, and thus had a constitutionally protected property interest. However, the Solana Beach Municipal Code gave significant discretion to the city council to approve or disapprove development projects. The code required the city council to review each development proposal to determine whether it was compatible with existing and potential development in the project area. Given that plaintiffs’ proposed residence for the second lot was 2,700 square feet larger than the average existing residences, and 387 square feet larger than the maximum size of future residences in the area, the city had found that the development plan for plaintiffs’ second lot was not in harmony with the surrounding area as required by the municipal code.

The court held that the city council complied with all requirements of the local municipal code and had rendered a decision based on those criteria. Thus, plaintiffs could not claim a property entitlement in their development permit given the city’s discretionary review.

Court holds that only agency decisionmaking bodies may certify the project’s EIR

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In California Clean Energy Committee v. City of San Jose (2013) ___Cal.App.4th___ (Case No. CV212623), the city of San Jose prepared an environmental impact report for Envision San Jose, a comprehensive update of the city’s general plan. CCEC submitted a comment letter criticizing the project and the draft EIR’s analysis, arguing that the draft should be recirculated. The planning commission certified the EIR without recirculation. CCEC did not appeal the decision. CCEC subsequently submitted a letter to the city’s planning department but did not mention any deficiencies in the final EIR or the certification process. The city council thereafter independently reviewed, analyzed, and certified the final EIR. CCEC sued, the trial court granted the city’s motion for summary judgment, and CCEC appealed.

CCEC argued that the city planning commission’s certification of the final EIR was unlawful because the planning commission had no approval authority over the project.   The Court of Appeal agreed. The CEQA Guidelines prohibit the decisionmaking body of a public agency from delegating review of a final EIR to a nondecisionmaking body. The planning commission was not a decisionmaking body for the project because it could not to approve or disapprove the project. The court rejected the city’s contention that its certification process was bifurcated, since bifurcation would allow a decisionmaking body to be bound by a finding made by a nonelected, nondecisionmaking body. This process would skirt the purpose of CEQA by segregating environmental review of the EIR from project approval.  Because the planning commission did not have the authority to certify the EIR, the court held that CCEC did not need to take an administrative appeal against the commission in order to exhaust its administrative remedies. The court of appeal reversed the judgment of the trial court, effectively sending the matter back to the trial court to consider the merits of CCEC’s petition.

Supreme Court grants review in Orange Citizens

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On October 20, 2013, the California Supreme Court granted review of Orange Citizens for Parks & Recreation v. Superior Court (2013) 217 Cal.App.4th 1005. The opinion has therefore been depublished (Orange Citizens for Parks & Rec. v. Superior Court (Oct. 30, 2013) 2013 Cal. LEXIS 8768) and is no longer citable precedent.   The case involves a dispute over the interpretation of a city’s land use plan, and the degree of deference owed to a city in interpreting conflicting provisions of the city’s general plan.

The petitioner argued in its appeal that the decision below “turns California planning law upside-down” by holding that a land use designation in a city’s recently-adopted general plan can be trumped by a designation set forth in a resolution 40 years earlier.

In accepting review, the Court narrowed the scope of the review to the following issue: Is the proposed development project of low density housing at issue in this case consistent with the city’s general plan?

West Coast Government Leaders Announce Landmark Climate Policy Accord

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On Monday, October 28, 2013, California Governor Jerry Brown signed a landmark climate change agreement. Governor Brown met in San Francisco with the governors of Washington and Oregon and the Premier of British Columbia to announce the partnership. Also in attendance were British Columbia’s Minister of the Environment as well as business, labor, and environmental officials from the four jurisdictions. The deal is based on the contiguous geography and shared infrastructure of the West Coast and linked economies with a combined GDP of $2.8 trillion – collectively, the world’s fifth largest economy. A meeting with the leaders of provinces on the coast of China is scheduled for January 2014, at which point those provinces may join the current group.

The three states and Canadian province formally aligned their climate policies to collectively combat climate change and promote clean energy. Oregon and Washington will bring their efforts to reduce greenhouse gas emissions from vehicles and industrial sources closer to those of California and British Columbia. Oregon will set a price for carbon, and Washington will develop a cap-and-trade market. California and British Columbia will continue their current carbon-reducing pursuits, and the four jurisdictions will harmonize their 2050 greenhouse gas reduction targets. The plan also includes integrating regional electricity grids to provide greater access to renewable sources.

The agreement did not create the regional carbon market sought by California. However, the state is planning to open an emissions market with the Quebec province in 2014. In 2007, a group of western states and Canadian provinces came together in the Western Climate Initiative to create a regional market for greenhouse gas emissions. The group dispersed in 2011, as California and Canadian provinces pursued emissions trading, and the other states branched off to non-market-based strategies.

The accord originated from the Pacific Coast Collaborative, a group that, since 2008, has organized climate change and clean energy policies.

U.S. Supreme Court Takes Up the Issue of Greenhouse Gas Emissions Regulation in Coalition for Responsible Regulation v. EPA

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On October 15, 2013, the U.S. Supreme Court granted certiorari in Coalition for Responsible Regulation v. EPA (2012) 684 F.3d 102. It is regarded as the most important federal case involving greenhouse gas emissions after its predecessor, Massachusetts v. EPA (2007) 549 U.S. 497.

Background

The case below involved a number of the U.S. EPA’s Clean Air Act rules regulating greenhouse gas emissions from stationary sources, such as large industrial plants, refineries, and factories. A three-judge panel of the United States Court of Appeals for the D.C. Circuit unanimously upheld the EPA’s rules in June 2012. Specifically, the court upheld the EPA’s endangerment finding for greenhouse gases and the agency’s decision that the endangerment finding made greenhouse gases an “air pollutant” for purposes of the Prevention of Significant Deterioration (PSD) program. The court also held that plaintiffs lacked standing to challenge how the rule is phased in.

Various interest groups and states submitted a total of nine petitions for certiorari, seeking to overturn the D.C. Circuit’s decision. The Supreme Court accepted six of these petitions.

The Court will consider the narrow issue of whether the EPA acted within its authority in determining that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements for stationary sources under the Clean Air Act. This means that the Court will leave some of the lower court’s findings undisturbed, including the endangerment finding and the “tailpipe rule,” which sets emissions standards for automobiles.

Issues

The challenged Clean Air Act provisions are the “timing” and “tailoring” rules, which together exempt small stationary sources from the greenhouse gas regulations that would otherwise apply. As enacted, the Act regulates every “source” of greenhouse gases emitting 100 tons of a single pollutant, including homes, apartment buildings, and small businesses. The EPA determined that regulating every source at that emission level would be both impractical and politically unpopular, so it created the tailoring rule to confine application of the Act to new sources emitting at least 100,000 tons of greenhouse gases per year and modifications of existing sources that increase emissions by 75,000 tons.

The industries and states challenging the tailoring rule argue that the rule is unlawful, since it relieves sources emitting between 100 and 100,000 tons from regulation when the statute clearly says those sources must be regulated. They also argue that the PSD provisions of the Act under which the EPA is regulating the larger emitters do not apply to greenhouse gases. The challengers believe the PSD provisions only apply to those pollutants on the National Ambient Air Quality Standards’ criteria pollutants list, which does not include greenhouse gases.

The criteria pollutant list is selective; it contains only six air pollutants which have a demonstrable effect on human health, such as lead and carbon monoxide. However, after the Court held that greenhouse gases are air pollutants under the Clean Air Act in the 2007 case Massachusetts v. EPA, the EPA found six greenhouse gases that must be regulated due to their threat to public health and welfare. Thus, though greenhouse gases are not technically listed as a criteria air pollutant, they have been found to be dangerous to human health. In fact, the PSD already applies to non-criteria pollutants, albeit more obscure ones like sulfuric acid mist. Plus, the EPA’s interpretation of its own statutes will be accorded significant deference under Chevron, which makes the challengers’ position an uphill battle.

The lower court never reached the substance of the challengers’ arguments because it found that they did not have standing, reasoning that regulating larger businesses while exempting smaller ones did not injure the larger businesses. In fact, the Court found that the tailoring rule could even help states like Texas – one of the states challenging the rule – because it would lessen the state’s burden in administering the Clean Air Act permitting program.

A ruling on the statutory interpretation issues could help to clear some of the ambiguities plaguing the Clean Air Act, which has not been amended since 1990. With the increasing national and international focus on climate change, environmentalists and industry alike would benefit from more guidance on how the Act applies to greenhouse gases. The Court will hear arguments in early 2014 and is anticipated to issue a ruling by July.

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