An Inconvenient Truth CEQA and Climate Change Impacts San Diego Housing Federation Annual Conference October 14, 2010

1. An Inconvenient Truth � CEQA and Climate Change ImpactsSan Diego Housing Federation Annual ConferenceOctober 14, 2010 Josh Mukhopadhyay Goldfarb & Lipman LLP 1300 Clay St, 11th Fl Oakland, CA 94612 510 836-6336 jm@goldfarblipman.com

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3. II. Goals Statutes and regulatory guidance on climate change and CEQA Short term solution: project-level guidance Long-term solution: program-level documents 11/4/2011 3

4. III. Relevance to Affordable Housing Developers Projects that previously qualified for negative declarations, mitigated negative declarations, or CEQA exemptions may now be pushed towards conducting an EIR Climate change will provide project opponents with additional leverage to exact concessions/draw out the environmental review process General political pressure/expectation to be �green�, including climate change analysis and mitigation 11/4/2011 4

5. IV. California's Climate Change Legislation

6. 1. Key Climate Change Legislation AB 32: California Global Warming Solutions Act of 2006 SB 375: Transportation and Land Use Planning SB 97: CEQA: Greenhouse Gas Emissions 6

7. 2. AB 32 Key Provisions Establish 1990 Baseline for Greenhouse Gas (GHG) emissions Cut 2020 GHG emissions to 1990 levels Cut 2050 GHG emissions 80% below 1990 levels Designate the California Air Resources Board (ARB) as the lead agency for drafting and implementing AB 32 regulations 7

8. 3. AB 32 Implementation Timeline Jan 1, 2009: Adopt scoping plan indicating how emissions reductions will be achieved from significant GHG sources <completed> 2009: Draft rules to implement the measures described in the scoping plan <completed> 2010: Public comment on proposed rules <underway> Jan 1, 2011: Rulemaking complete, opportunity to revise during 2011 Jan 1, 2012: Rules become effective Dec 31, 2020: Deadline for reducing greenhouse gases to 1990 levels 8

9. 4. AB 32 Emissions Reduction Inventory and Targets 1990: 427 Million Metric Tons (MMTs) GHGs emitted statewide 1990 population 30 million = 14.2 tons/person 9

10. 5. AB 32 Emissions Reduction Inventory and Targets (cont.) 2004 Inventory: 480 MMT 2004 population 36 million = 16 tons/person 2020 Business-as-Usual Projection: 596 MMT 2020 goal: 427 MMT 2020 projected population 44 million = 9.7 tons/person 2050 goal: 85.4 MMT 2050 projected population 60 million = 1.4 tons/person For reference, a 1,000 mile plane flight currently emits ~0.2 tons GHGs 10

11. 6. AB 32 Commercial/Residential Energy and Electricity Sector Reduction Targets From 2002-2004, the commercial/residential energy and electricity sectors averaged 32% of statewide GHG emissions (150 MMT). Residential buildings accounted for about 65% of the commercial/residential energy sector�s emissions. These sectors are expected to grow 24% by 2020 (185.9 MMT) to accommodate the housing and energy needs of the 8 million people California expects to add between 2004 and 2020. 11

12. 7. There are Two Ways to Reduce the Commercial/Residential Energy and Electricity Sector�s GHG Emissions: Lower carbon content fuel sources for electricity generation (renewable energy, carbon capture and sequestration, etc.) Reduce energy consumption in commercial and residential buildings (construction, heating/cooling, water/sewage, etc.) 12

13. 8. AB 32 Transportation Sector Reduction Targets From 2002-2004, the transportation sector averaged 38% of statewide GHG emissions (179.3 MMT). A 25% increase is expected by 2020 (225.4 MMT) because: Population is increasing Cars/person is increasing even faster Vehicle Miles Traveled (VMTs) is increasing faster still 13

14. 9. Three Ways To Reduce The Transportation Sector's GHG Emissions: Lower carbon content fuel sources (biofuels, electric vehicles) Greater efficiency (increased gas mileage, hybrid-electric vehicles, high speed rail) Land use strategies (infill/transit-oriented development, improved public transportation) 14

15. 10. SB375: Transportation, Land Use, and Housing Planning Aligns the timelines for housing elements (RHNA allocations) and regional transportation planning (RTPs) Sets regional land use-based GHG reduction targets and requires the RTP to include a Sustainable Communities Strategy (SCS) that meets these targets Transportation projects must be consistent with the SCS to receive state funding, but local plans do not need to conform with the SCS Provides CEQA incentives 11/4/2011 15

16. AB32�s land use target is modest, but keeping VMTs stable, much less reducing them, is an enormous challenge for SB375: Meeting the land use target will require VMTs to be cut 3-4% below 2008 levels VMT increases threaten to swamp efficiency and fuel source improvements and cause a net increase transportation emissions SB375 is intended to create a better climate for dense, infill housing that is near transit and close to jobs and services SB375�s CEQA streamlining and exemptions may work to the benefit of affordable housing developers 16

17. 11. SB375: Reduction Targets from 2005 Base Year 17

18. Vehicles for change Proposition 23 Existing suspension language Consequences SB 375 remains in place GHG Analysis requirement under CEQA remains in place Guidance from ARB may be interrupted, leaving lead agencies and project proponents in the lurch while still having to comply with GHG regulations 11/4/2011 18

19. V. CEQA and Climate Change

20. 1. SB 97 Required that the CEQA Guidelines Be Revised To Address Analysis of Climate Change Impacts Senate Bill 97 (SB 97) mandated that the California Natural Resources Agency (the �Resources Agency�) adopt new CEQA Guidelines for "the mitigation of greenhouse gas (�GHG�) emissions or the effects of GHG emissions" by January 1, 2010. These revised CEQA Guidelines became effective on March 18, 2010. Available at http://ceres.ca.gov/ceqa/guidelines/ 20

21. 2. How does this guidance fit into the existing model? 11/4/2011 21

22. 3. CEQA In Brief Is it a �project�? Is the project exempt? Is the impact significant? If not, file Negative Declaration Can the impact be mitigated below a level of significance? If so, file Mitigated Negative Declaration If not, complete Environmental Impact Report and issue Statement of Overriding Considerations 22

23. 4. Revised CEQA Guidelines Must Analyze GHG Emissions, direct or indirect, and determine their significance and if they conflict with any applicable GHG reduction plan Lead agency has discretion to conduct qualitative or quantitative analysis, but using a non-quantitative standard where a model exists for the source of greenhouse gas emissions opens you to legal challenges 23

24. Revised CEQA Guidelines � Cont�d Lead agency has discretion to select a significance threshold, but its choice must be supported by evidence Lead agency can determine a project has no significant impact if it is compliant with a GHG reduction plan Locally significant impacts can be justified by citing regional benefits 24

25. 5. Take home lessons GHG evaluation should be a standard part of CEQA documents Credible analytical methods exist Feasible mitigation measures are available Challenging issue continues to be thresholds of significance Handle GHG programmatically in larger-scale plans and streamline later projects Watch for conclusion of various threshold proposals 25

26. 6. Interim Approach for Projects Environmental Background Identify Impacts Determine Significance Analyze Alternatives Mitigate Impacts 11/4/2011 26

27. Environmental Background Step 1 � Describe the existing global context in which climate change impacts are occurring and are expected to occur in the future Step 2 � Summarize the relevant state laws that address climate change (e.g. AB32) Step 3 � Describe any relevant statewide and/or regional GHG inventories to which the project would contribute 11/4/2011 27

28. Environmental Impacts Step 4 � Using modeling software such as URBEMIS, quantify the project's direct and indirect GHG emissions and compare them to baseline conditions, including: Construction emissions Operational emissions Step 5 � Convert the GHG emissions into CO2 equivalents using an established "carbon calculator" 11/4/2011 28

29. Determine Significance Step 6 � Discuss whether the project would enhance or impede the attainment of state GHG reduction targets and its relationship to local plans and policies Step 7 � Describe the cumulative, global climate change impacts to which the project would contribute Step 8 � Describe how the impacts of global climate change could impact the project 11/4/2011 29

30. Analyze Alternatives Step 9 � Include alternatives that would meet the project objectives but would also reduce GHG emissions Mitigate Impacts Step 10 � Identify mitigation measures that would reduce GHG emissions Project re-design and/or operational changes Compensatory mitigation (e.g. carbon offsets, sequestering, etc.) 11/4/2011 30

31. 7. Sample Significance Threshold Analysis Bay Area Air Quality Management District�s has the most detailed guidance: http://www.baaqmd.gov/Divisions/Planning-and-Research/CEQA-GUIDELINES.aspx Residential projects over the screening threshold of 56 (single family) or 78-91 (multifamily, depending on configuration) units will be presumed to produce enough GHGs to create a significant environmental impact Projects over the screening threshold will have to analyze their GHG emissions and compare the result to the quantitative threshold of 1100 MT/year/project or 4.6 MT/person/year (6.6 MT for General Plans) Projects over the quantitative threshold will have to show sufficient mitigation to get under the limit or else complete an EIR This approach has been criticized by the development community as overly-ambitious and costly to implement 31

32. Sample Significance Threshold Analysis � Cont�d 32

33. Sample Significance Threshold Analysis, Cont�d 33

34. Sample Significance Threshold Analysis � Cont�d San Joaquin Valley Air Pollution Control District adopted a more permissive qualitative threshold proposal in Dec 2009: http://www.valleyair.org/Programs/CCAP/CCAP_idx.htm This proposal has received criticism from environmental advocates and the Attorney General�s office: http://ag.ca.gov/globalwarming/pdf/comments_SJVAPCD_threshold_proposal.pdf South Coast Air Quality Management District has a threshold for industrial projects and seems to be taking a wait-and-see approach for a residential standard: http://www.aqmd.gov/hb/2008/December/081231a.htm San Diego County Air Pollution Control District has not provided any guidance 34

35. 8. Sample Mitigation Measures The CEQA guidelines set forth four types of project mitigation measures: Measures in an existing plan or program that are required by the lead agency Project-specific features, design, or other measures Off-site measures, including offsets GHG sequestration There is more specific guidance on GHG mitigation measures from BAAQMD, CAPCOA, the Attorney General�s Office, etc.: Land Use Transportation Demand Management Exceed Title 24 Energy Efficiency Standards Onsite generation Meet Green Building Standards Landscaping/Water Efficiency Non Title 24 Energy Efficiency Improvements Offsite GHG Offsets 35

36. VI. SB 375 and CEQA

37. 1. SB 375 and CEQA SB 97-mandated CEQA Guideline revisions will generally benefit infill development SB 375 provides streamlined environmental review processes for certain residential and mixed-use projects that are consistent with the SCS or APS SB 375 provides an exemption and other benefits for developments that qualify for designation as Transit Priority Projects (TPPs) 37

38. SB 375 and CEQA (continued) If a residential or mixed-use project (maximum 25% commercial use) is consistent with the SCS/APS but cannot fully mitigate its environmental impacts, it can bypass environmental review of: certain climate impacts growth inducing impacts impacts on the regional transportation network 38

39. 2. What is a TPP? Transit Priority Projects are dense and near transit: 50% residential use and a minimum net density of20 units/acre If commercial use is included, floor area ratiomust exceed 0.75 Located within 0.5 miles of a major transit stop or high-quality transit corridor, as identified in the RTP 39

40. 3. What are TPP Benefits? (continued) TPPs are exempt from CEQA if: Maximum of 8 acres or 200 units and served by existing utilities No significant impact on historic resources 15% more energy efficient and 25% more water efficient than Title 24 standards 5 acres open space per 1000 residents OR 20% moderate income OR 10% low income OR 5% very low income OR in-lieu fee payment 40

41. What are TPP Benefits? (continued) TPPs that do not qualify for the exemption still receive benefits: If a TPP can mitigate its impacts below the level of significance, it can file a �Sustainable Communities Environmental Assessment,� similar to a MND, but with a more favorable �fair argument� standard of review If a TPP cannot mitigate its impacts below the level of significance, it need not analyze off-site alternatives or cumulative impacts that were addressed and mitigated in a prior EIR A community can choose to exempt TPPs from reviewing traffic impacts, instead allowing them to comply with a local traffic mitigation policy 41

42. Early Litigation (post AB32, pre updated CEQA Guidelines) CEQA analysis should include climate change impacts Attempts to evade this obligation by making de minimus effect/lack of guidance arguments were largely unsuccessful This debate has largely been preempted by the CEQA Guideline update 11/4/2011 42

43. VIII. Solutions Short term: use available guidance to comply with climate change analysis requirement; also consider litigation risk Long term: advocate for program-level plans that address climate change Projects can tier off these program-level documents, simplifying their CEQA process 11/4/2011 43

44. IX. CEQA and SB 375 Resources Attorney General's Office Document portal http://www.ag.ca.gov/globalwarming/ Mitigation Measures (12/08) http://ag.ca.gov/globalwarming/pdf/GW_mitigation_measures.pdf Examples of on and off-site mitigation measures Modeling Tools (5/07) http://ag.ca.gov/globalwarming/ceqa/modeling_tools.php Summaries of different modeling tools � see CAPCOA for more details 11/4/2011 44

45. Governor's Office of Planning and Research Technical CEQA Guidance (6/08) http://www.opr.ca.gov/ceqa/pdfs/june08-ceqa.pdf Proposes a three-step analytic process: (1) identify GHG emissions, (2) determine significance, and (3) mitigate impacts California Air Resources Board Document Portal http://www.arb.ca.gov/cc/cc.htm 11/4/2011 45

46. California Air Pollution Control Officers Association CEQA and Climate Change White Paper (1/08) http://www.capcoa.org/CEQA/CAPCOA%20White%20Paper.pdf Various alternatives for modeling tools and significance thresholds Model Policies for GHGs in General Plans (6/09) http://www.capcoa.org/modelpolicies/CAPCOA-ModelPolicies-6-12-09-915am.pdf Quantifying GHG Mitigation Measures (9/10) http://www.capcoa.org/wp-content/uploads/downloads/2010/09/CAPCOA-Quantification-Report-9-14-Final.pdf Greenbelt Alliance URBEMIS Modeling Guidelines Stephanie Reyes <sreyes@greenbeltalliance.org> Modifies the standard ITE traffic model for local behavior and infrastructure 11/4/2011 46

47. SB 375 ULI Impact Analysis Report (6/10) http://www.uli.org/ResearchAndPublications/PolicyPracticePriorityAreas/Sustainability/SB375.aspx NRDC Guide to Communities Tackling Global Warming (6/09) http://www.nrdc.org/globalwarming/sb375/ 11/4/2011 47

48. X. Sources Air Quality Guidelines, Bay Area Air Quality Management District. Communities Tackle Global Warming: A Guide to California�s SB 375, Natural Resources Defense Council. Database of State Incentives for Renewables and Efficiency Growing Cooler, Urban Land Institute. State of California: Air Resources Board (AB 32 Scoping Plan) Governor�s Office of Planning and Research (CEQA Guidelines) Natural Resources Agency (CEQA Guidelines) Curtis Alling, EDAW-AECOM Beth Collins-Burgard, Latham and Watkins, LLP Matt Vespa, Center for Biological Diversity 48