Fourth District Court of Appeal Affirms and Reverses Superior Court Decision Invalidating San Diego County CAP

August 3rd, 2020

By: Johannah Kramer

On June 12, 2020, the Fourth District Court of Appeal issued a lengthy opinion addressing the consolidated cases in Golden Door Properties, LLC v. County of San Diego and Sierra Club v. County of San Diego. The Fourth District held that the latest iteration of the County’s Climate Action Plan (CAP), its underlying environmental report and, specifically, a GHG mitigation measure relying on purchasing carbon offset credits, violated CEQA. The Court was careful to state that the holding was not a “blanket prohibition” of the use of carbon offsets, even international offsets, and that better-constructed programs remain a valuable means of mitigating GHG impacts.

The case is the latest in the County’s nearly decade-long battle to produce a sufficient CAP. In 2011, the County adopted a General Plan Update which called for GHG emission reductions and spurred the preparation of the CAP. The CAP contained 26 measures intended to meet the state and County’s GHG-related emissions targets. For projects exceeding the CAP’s anticipated development envelope –requiring a General Plan Amendment – the County required GHG emissions to be reduced to zero and permitted the implementation of measure M-GHG-1. M-GHG-1 first requires a project to mitigate its GHG emissions through all feasible onsite design features, but if onsite design features are insufficient to fully mitigate GHG emissions, the County allowed offsite mitigation, including the purchase of carbon offset credits originating internationally.

Following the County’s approval of the CAP, Plaintiffs, including environmentalist groups and Golden Door Properties, LLC, challenged the adoption, the Significance Guidelines, thresholds of significance for GHG emissions, and the associated SEIR. Petitioners argued that the CAP was inconsistent with the GPU because the GPU requires the reduction of in-County emissions, not carbon offsets “anywhere in the world”. The superior court found that the CAP and its underlying documents failed to satisfy CEQA, and ordered the County to set aside the CAP. The superior court also determined that M-GHG-1 violated CEQA by requiring the purchase of out-of-County offsets without legally sufficient analysis, and unlawfully delegated and deferred feasibility findings. The superior court further determined that the SEIR violated CEQA by inadequately analyzing cumulative GHG impacts, impacts to energy and environmental justice, and smart growth mitigation or alternatives for General Plan Amendment projects. The court also determined that the County violated CEQA by failing to properly respond to comments on the draft SEIR.

On appeal, the Fourth District Court of Appeal addressed whether the CAP was inconsistent with the General Plan, if M-GHG-1 violated CEQA, whether the cumulative impacts were sufficiently addressed, whether the range of alternatives in the SEIR was sufficient under CEQA, and whether the SEIR’s finding of consistency with the Regional Transportation Plan was supported by substantial evidence. For purposes of this case review, the additional holdings regarding the SEIR’s thirty-year shelf life, responses to comment, geographical scope, remedies exhaustion, environmental justice holdings, energy impacts, and special master/advisory opinions have been omitted.

  1. The CAP is not inconsistent with the General Plan.

The County argued that the CAP was consistent with the General Plan because, regardless of M-GHG-1’s validity, M-GHG-1 was not a mitigation measure of the CAP. Rather, it was a mitigation measure in the SEIR and only applied to General Plan Amendments. The Court, applying the highly deferential standard of review adopted in Naraghi Lakes Neighborhood Preservation Assn. v. City of Modesto (2016) 1 Cal.App.5th 9, 19, agreed, and held that while the CAP was not “perfectly in tune with” the General Plan, in light of the highly deferential standard of review, it was not inconsistent with the General Plan.

  1. M-GHG-1 violated CEQA by failing to include enforceable performance standards and by improperly deferring mitigation.

To determine the validity of M-GHG-1, the Court applied a nuanced abuse of discretion standard of review articulated in Sierra Club v. County of Fresno (2018) 6 Cal. 5th 502, 515-516. Under this standard, the Court held that M-GHG-1 violated CEQA because it contained unenforceable performance standards and improperly deferred and delegated mitigation. While properly restricted and verified offsite measures can be a valuable means by which to mitigate GHG emissions, the Court, echoing the superior court, held that “the devil is in the details”.

The County argued that M-GHG-1 was substantially similar to the offset program authorized under cap-and-trade. Following a detailed comparison of the M-GHG-1 mitigation regime to the stringent requirements of cap-and-trade, the Court rejected the County’s argument. While M-GHG-1 required the purchase of offsets from a CARB-approved or section 38562 subdivision (d)(1) compliant registry, this did not necessarily mean that the GHG emissions reduction protocol administered would be Assem. Bill No. 32 compliant (e.g., it is necessary but not sufficient for the measure to be compliant with CARB and section 38562 subdivision (d)(1)). Under Health and Safety Code section 38562 subdivision (d) (1) and (2) offsets may be issued only if the emission reduction is real, permanent, quantifiable, verifiable, enforceable, and additional.  While M-GHG-1 incorporates section 38562, the Court found the measure lacking because it was not as stringent as CARB offset credits under the cap and trade program.  

M-GHG-1 failed to demonstrate that, like cap-and-trade, the protocol itself was CARB-approved. The Court explained that some offset protocols administered by CARB-approved registries are not Assem. Bill No. 32 compliant, and offset protocols developed by CARB-approved registries (including registries named in M-GHG-1) do not alone meet the offset criteria in Assem. Bill No. 32. Moreover, M-GHG-1 failed to subject its proposed offset protocols to public notice, a comment period, and a public hearing; or require that emission reductions for offset credit originate from sources not already covered by cap-and-trade. Additionally, M-GHG-1 failed to require the protocol itself to be consistent with CARB requirements or ongoing safeguards ensuring that GHG reductions are permanent. 

The Court seemed particularly concerned with the extent and permanence of international offsets and criticized the measure for allowing all offsets to be international. The Court noted that international offsets were much more limited in cap and trade compliance obligations and in the Newhall Ranch Management and Development Plan. Finally, the Court criticized M-GHG-1 for not requiring additionality, in other words, requiring GHG emission reductions to be additional to any GHG reduction otherwise required by law or those that would “otherwise occur”.

The Court held that M-GHG-1 also violated CEQA by affording a single County staff member the unilateral ability to determine that offsets are not feasibly available within the unincorporated county, the County, California, and the United States. M-GHG-1 failed to require a finding that an out-of-state offset site has laws at least as strict as California’s with respect to ensuring the validity of offsets. The Court held that this approach violated CEQA because it amounted to a lack of enforcement authority in another state, let alone in a foreign country.

The Court found that M-GHG-1 violated CEQA by improperly delegating and deferring mitigation to future determinations. Under M-GHG-1, the County staff member must determine whether to approve offset credits based on (1) whether the registry or issuing entity was CARB-approved or “reputable” and issuing offsets consistent with section 38562 subdivision (d)(1) and (2) if offsets are not “available” and/or “financially feasible” in a location geographically closer to the County. The County argued that this approach was similar to mitigation measures requiring plans or purchasing offsets subject to review and approval by an agency approval. The County rejected this argument, noting that similar, valid strategies involve delegation to agency staff based on objective statutory standards ensuring mitigation would be achieved. Here, M-GHG-1 provided only a generalized goal of net zero GHG emissions, and allowed a single staff member to determine whether any particular offset program was acceptable based on undefined and subjective criteria.

  1. The SEIR violated CEQA by failing to analyze reasonably foreseeable future projects, failing to support its conclusion of consistency with the RTP/SCS with substantial evidence and failing to analyze a reasonable range of alternatives.

The Court then addressed the validity of the CAP’s SEIR. Based on a series of errors and inconsistencies, the Court held that the SEIR failed to comply with its role as an informational document.

First, the Court found that the SEIR violated CEQA because its discussion of cumulative impacts ignored foreseeable impacts from probable future projects. At the time of suit, the County was in the process of reviewing 21 General Plan Amendments, which, if approved, would add nearly 14,000 dwelling units in the unincorporated County and produce thousands of metric tons of CO2 during construction alone. The SEIR did not analyze these cumulative impacts, other than by stating that in-process General Plan Amendments would mitigate emissions exceeding the CAP envelope through compliance with M-GHG-1. The Court held that the SEIR should have considered whether these General Plan Amendments would create cumulatively considerable environmental impacts associated with adding 14,000 dwellings and related infrastructure in projects utilizing M-GHG-1. The absence of this analysis rendered the SEIR an inadequate informational document. The Court rejected the argument that the inclusion of in-progress General Plan Amendments would be too uncertain and speculative to include in the analysis. The Court found that the Amendments were well beyond the initial planning stages, and the County, as the lead agency, had ample access to information on their scope, location, types of projects proposed, and specific amounts of GHG emissions that would be mitigated with offset credits originating outside of the County.

Next, the Court held that the SEIR’s finding of consistency with the RTP and Senate Bill No. 375 was not supported by substantial evidence. The consistency findings drew conclusions about GHG impacts from General Plan Amendments, including statements that projected GHG emissions would be consistent based on the General Plan (which SANDAG incorporated into its RTP to create VMT projections). The Court held that, by definition, land uses allowed under the General Plan do not include proposed General Plan Amendments – so if VMT projections were based on the General Plan, then necessarily those projections exclude VMT from in-process General Plan Amendments. The County similarly erred by contending that CAP GHG reduction measures would reduce VMT, as contemplated in the RTP, because the CAP’s GHG emission forecasts were based on currently allowed land uses and assumed that in-process and future Amendments would mitigate GHG emissions to zero above CAP projections under M-GHG-1.

Finally, the Court held that the SEIR improperly assessed alternatives because it ignored a smart-growth alternative acknowledging the severity of GHG emissions associated with traffic. The SEIR analyzed four project alternatives, including a no-project alternative, an alternative in which the County would pursue direct investment reduction measures to a greater degree without a renewable energy target, a 100% renewable energy alternative, and an alternative increasing solid waste diversion rates from 75% to 80% by 2030. Although the CAP recognized that on-road transportation is the largest source of GHG emissions in the County, no alternative addressed VMT or transportation-related GHG emissions. In light of the County’s consistently clear mandate to reduce VMT to help achieve target GHG emission reductions, the Court compared the County’s alternatives discussion to the CAP alternatives discussed in Cleveland National Forest Foundation v. San Diego Assn. of Governments (2017) 17 Cal. App. 5th 413 (Cleveland).  In Cleveland, the “heart” of the RTP was to lower transportation-generated GHG emissions. the Court found that the County repeatedly articulated the same intent. Thus, the Court found it reasonable to expect at least one SEIR alternative to focus on significantly reducing VMT, and, as in Cleveland National Forest Foundation, held that the SEIR’s failure to do so was prejudicial and precluded informed public participation and decision making.

In addition to the SEIR’s CEQA violations, the Court found the document inconsistent with the CAP. The CAP stated that its 2014 inventory of GHG emissions excluded emissions from General Plan Amendments adopted but not constructed as of 2014. However, the SEIR stated that the same inventory included GPAs adopted between August 2011 and March 28, 2017. Because the SEIR failed to explain project impacts in a consistent manner reasonably calculated to inform the public, it was insufficient as a CEQA document.

  1. Conclusion

While finding that offset programs properly structured could be valuable GHG mitigation tools, the Court found that M-GHG-1 failed to meet the strict obligations of CARB approved protocols for carbon offsets. Moreover, the SEIR failed as a legally adequate informational document because it failed to analyze cumulative impacts, its conclusion of consistency with the RTP was not supported by substantial evidence and the range of alternatives did not meet CEQA requirements. The Court affirmed the lower court judgment directing the County to set aside and vacate its approval of the CAP and SEIR and remanded the matter to the superior court for further proceedings.

Key Point

Mitigation measures relying on the purchase of carbon offset credits must be accompanied by objective criteria to ensure that real, permanent, quantifiable, verifiable, enforceable, and additional GHG reductions are achieved – especially when carbon offset credits are permitted to originate internationally.