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The adoption of AB 32, the California Global Warming Solutions Act of 2006, and subsequent law SB 375, signed in 2008, recreated the first legislation in the US to reduce greenhouse gas emissions. The moves could have long-lasting effects on urban planning around the state. Elizabeth Watson, a partner focusing on real estate, land use and sustainability at Los Angeles-based law firm Greenburg Glusker, spoke with GlobeSt.com regarding the promise and pitfalls of AB 32 and SB 375 in California, and what it might mean for development elsewhere.

GlobeSt.com: Why is California leading the US in terms of emissions?

Watson: With our economy and our transit-starved fate, our issues with greenhouse gas have caused us to really focus on that before a lot of regions. So we’ve been grappling with that longer.

GlobeSt.com: What are AB 32 and SB 375, and how do they factor into this?

Watson: AB 32 was the pronouncement that California would reduce greenhouse gas emissions to 1990 levels by 2020. That really represents a 29% reduction in emissions below business as usual if it weren’t in place. The California Air Resources Board was directed to devise regulations for mandatory greenhouse gas reporting and verification, and a scoping plan to identify strategies to reduce greenhouse gas. AB 32 was adopted in 2006, and they’ve been working on that in the meantime. You can imagine the enormity of that task.

To figure out how to reduce greenhouse gas emissions, the state had to take a very clear-eyed inventory of the sources. Not surprisingly in California, fossil fuel combustion constitutes over 80% of greenhouse gas emissions.

GlobeSt.com: How does this affect real estate development?

Watson: In the land-use arena, SB 375 is focused on reducing vehicle miles traveled–VMT–and putting an emphasis on transit-oriented development as a means to reduce VMT. That’s relatively new, so we’re still several steps away from knowing what it means. But one of the most interesting aspects is that it involves having the regional municipal planning organizations coordinate residential development and transportation plans over the long range. But there isn’t a mechanism to require the individual local agencies, the municipalities, to change their general plans to necessarily match the regional plan.

Instead of a requirement, there’s an incentive, tying state transportation funding dollars to compliance by the local agency by having their planning documents be consistent with the regional planning documents. But all of this is going to take several years. It’s just at the initial stages, and the initial stage is to have targets set at the state level for the different regions. The different regional planning organizations developing these sustainable community strategies then can achieve the greenhouse gas reduction target established by the state for that region.

GlobeSt.com: Because different areas have different needs?

Watson: Absolutely. That’s one of the difficulties: You can’t come up with a one-size-fits-all prescription. That’s why the state is essentially saying, “We’ll assign the greenhouse gas reduction target, but then it’s up to the regions to decide how they’ll implement that.”

GlobeSt.com: What are developers doing at this stage?

Watson: At this point, there are so many questions that remain unanswered that it’s tough to be really specific. But SB 375 is focused on residential development, so it’s focused on the combination of housing and transportation. That applies only to residential or mixed-use projects that have a substantial residential component. The definition of transit-oriented development, for purposes of SB 375, is a pretty long list of criteria. But if you meet those criteria, there is a streamlining of the environmental review process, the California Environmental Quality Act (CEQA). But today, none of that is in place yet.

GlobeSt.com: What’s the timeline?

Watson: It’s tough to say. They want to have the greenhouse gas emission reduction in place at the state level in a relatively short period of time. It’s up to the regional entities to come up with their plans. I’m assuming that’s going to take some time — I’d say in the two to three-year range, but it’s tough to say. There’s also an expectation that the legislation will be tweaked as we get further into the process of implementation. SB 375 involved a coalition of stakeholders, with environmental groups and the development sector collaborating. What you have is a compromise that takes some big steps, but leaves a lot of detail to be worked out.

GlobeSt.com: Such as?

Watson: We’ve had this debate in California for decades about the role at the regional level, when it comes to planning, vs. at the local government level. Of course, municipalities want to have control over development within their boundaries, but with an issue like reducing greenhouse gas emissions, you want to identify the areas where high-density development makes sense at a regional level to downplay the influence of [local] politics and conflicting interest groups.

A typical slogan is “All planning is local.” Of course, it’s not. Greenhouse gas emissions are not a local impact, they’re a global impact. Decision-making at the local level doesn’t take into consideration the fact that it has repercussions over a larger area. It’s different from dealing with trips and traffic. The focus on greenhouse gas emissions has created a new lens for regulation and has really led to a paradigm shift in the approach.

For instance, it may make sense in terms of reducing emissions to have a high-density project at a certain location, but if [with] a CEQA analysis, a smaller-scale project on the surface has less of an impact. That’s the intent of SB 375 to have a reference point for that. But how you factor that into a CEQA analysis of an individual project is where it gets more complicated. That’s what led to the CEQA streamlining process for projects that are consistent with the SB 375 plan, to a certain extent.

GlobeSt.com: Can or should other states look at adopting something similar?

Watson: In California, the vehicle miles traveled is a bigger factor, perhaps. I would think it’s more of a model in the sense of each region evaluating its contribution to greenhouse gas emissions, and it may not be VMT in Connecticut, Manhattan or other areas. It may be something else. If it’s not a vehicle miles traveled issue, SB 375 is not the right antidote. But the idea is to actually figure out what the sources are and what the strategy should be. What can be exported to other areas is the notion that you can’t just look at things on the local level when talking about greenhouse gas emissions. There has to be some sort of regional platform to consider these things.

GlobeSt.com: Can this make a huge difference in California?

Watson: AB 32 is already making a huge difference because it’s changed the lexicon. This prism of greenhouse gas emissions has changed the framework pretty rapidly. It’s a consciousness at all levels, including elected officials, decision-makers, professional planners, and citizens.

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