New GHG Order Creates Uncertainty for CRE

WALNUT CREEK, CA—Governor Brown's Executive Order B-30-15 declares as state policy a new statewide greenhouse-gas emissions reduction standard that needs clarification, Arthur Coon, a shareholder and co-chair of the land-use practice group at Miller Starr Regalia, tells GlobeSt.com. We spoke with Coon about the new EO and what it means for developers in California.

GlobeSt.com: In a nutshell, what does Governor Brown's Executive Order B-30-15 on CEQA and greenhouse gases do?

Coon: The executive order declares as state policy a new statewide GHG-emissions reduction standard that is stricter than is established by current law. The new standard is 40% below 1990 levels by 2030. The EO finds this will make it possible to reach a previously stated goal of 80% below 1990 levels by 2050. It also finds it is in line with the science on what is needed to limit global warming to below 2 degrees Celsius, a threshold beyond which scientists believe major climate disruptions will occur. Among other things, the EO directs the state Air Resources Board to update the climate-change scoping plan to express the 2020 target in the standardized GHG measurement (metric tons of CO2 equivalent) and orders state agencies with jurisdiction over GHG emissions sources to implement measures to achieve the 2030 and 2050 targets.

GlobeSt.com: How does the order create uncertainty and confusion for California real estate developers?

Coon: The EO complicates CEQA analysis of GHGs by, among other things, potentially creating confusion as to whether the new standard binds local and regional lead agencies as a project-specific threshold of significance for purposes of CEQA analysis (this issue is currently under review by the California Supreme Court in the SANDAG case.) The EO also potentially could conflict with legislation on the topic; for example, SB 32, a currently pending bill, would legislatively establish the 80% below 1990 levels by 2050 standard and direct CARB to state a 2030 standard, presumably based on its technical expertise. If there is a conflict between the EO and the legislation, there is likely to be confusion as to which prevails.

GlobeSt.com: What is being done or should be done to clarify the order for developers?

Coon: One thing that needs clarification is whether there is or will be a consistent statewide standard for 2050 and/or 2030 acknowledged by the governor, legislature, regulatory agencies and courts. Another is how EOs like this one affect CEQA analysis for individual projects. There are a lot of “cooks” in the GHG kitchen at this point in time, and if they don't work smoothly together, the “broth” could be spoiled. AB 32 could legislatively settle the statewide target/s, but it has not yet been enacted, and may not be, or may be in a different form than the governor's stated policy targets. The Supreme Court could clarify the legal nature of EOs and their impacts on CEQA GHG analysis; e.g., does a target stated in an EO become a threshold of significance that all projects must analyze and treat as such? However, that is not likely to happen for some time either. The governor himself might clarify these issues, but that is unlikely to happen for political and other reasons.

What should happen, in my view, is that the governor and legislature should work together on policy, science and law, and the courts (who don't do policy or science well) shouldn't forget who makes the laws (the legislature) and who carries them out (executive branch). The legislature should enact the relevant laws, following the governor's lead if and as it deems that to be appropriate, and CARB should then implement the legislation as directed using its technical expertise to establish sector-specific targets for GHG reductions—much as it has been doing for years now under AB 32 (the Global Warming Solutions Act of 2006) and its progeny.

GlobeSt.com: What should developers do in light of the new order?

Coon: Developers and their environmental consultants should obviously stay current with GHG emissions reductions legal and policy developments that could affect them, whether these be from the governor, legislature, courts and/or agencies. Any uncertainty breeds litigation targets for project-CEQA analysis that threaten project approvals and entitlements. Accordingly, GHG analyses in EIRs, MNDs and NDs should make sure to take the entire regulatory framework—including Governor Brown's recent EO—into account and quantified analysis of the GHG emissions of the project under review and employee a clearly stated threshold of significance (supported by substantial scientific and technical evidence) against which to measure the project's projected emissions. It should also quantify any reductions expected to be achieved by mitigation measures, show by substantial evidence that such measures will be effective and show how the reductions will reduce the emissions below the significance threshold adopted.