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Climate change, CEQA, GHG emissions, effects and compliance: 'TBD'

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Sloshing through the murky water, barely able to see inches before your face in the dark of the night. Something went terribly wrong with the tropical excursion, so lovely in that brochure. No maps. No direction. The guide set the course, required its traverse, then was nowhere to be found.

An illustration perhaps extreme; however, the State's enactment of the Global Warming Solutions Act of 2006 (AB 32) is not too dissimilar. AB 32 and initial case law interpreting it impose immediate obligations on a large pool of entities including government agencies, businesses, builders and developers to address global warming and climate change. Yet, that's where clarity in the law ends.

California legislators are proud to be first in the nation to regulate greenhouse gas (GHG) emissions, but at what cost? There is little guidance to direct those affected by the AB 32 requirements on how actually to accomplish compliance. The result -- stakeholders are subject to the increased potential for costly litigation and consequent project delays, until such time as implementing regulations and CEQA guidelines are created. What we do know: Climate change legislation has and will continue to heavily impact every entity involved with the building sector. Buildings (homes and commercial) are considered by the state to be the second largest contributor to GHG emissions in California. As such, the building and land use sectors must "go green." But what does that mean?

Almost two years ago, AB 32 was adopted. Effective Jan. 1, 2007, this law thrust California to the international forefront in the realm of global warming. AB 32 sets future reduction targets for greenhouse gas emissions. GHGs are defined to include six major gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N20), hydroflurocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6). AB 32 requires the California Air Resources Board (ARB): i) to adopt rules and regulations to reduce GHG to 1990 levels by 2020; ii) to implement mandatory emissions reporting by 2008; iii) to adopt early action measures by 2010; and iv) to develop a market-based compliance program to achieve the emissions cap.

ARB must establish GHG limits and measures by 2011, which must be implemented by 2012. Moreover, the governor set an even longer-range goal. Executive Order S-3-05 sets a target GHG emissions reduction to 80 percent below 1990 levels by 2050. These are the goals. How do we accomplish them?

Three early action measures to reduce GHG emissions were expanded into 44 recommended measures published by ARB in the Expanded List of Early Action Measures. These Early Action Measures are to be enforceable by Jan. 1, 2010. These measures focus on various business sectors and target specific products and manufacturing systems. Businesses should periodically monitor these measures for applicability and reporting requirements. The measures are frequently updated and can be accessed on the ARB Web site at arb.ca.gov/cc/ccea/reports/reports.htm.

In 2007, SB 97 amended the California Environmental Quality Act (CEQA) statute establishing that GHG emissions and their effects are appropriate subjects for CEQA analysis. This law directs the California Office of Planning and Resources (OPR) to develop CEQA guidelines on how state and local agencies should analyze and, when necessary, mitigate GHG emissions. Drafts of these new CEQA Guidelines are to be developed by July 1, 2009, and certified and adopted on or before Jan. 1, 2010. These future guidelines should someday provide regulatory guidance on the analysis and mitigation of GHG in CEQA documents. Until that time...

On June 19, 2008, the OPR issued a Technical Advisory, CEQA and Climate Change: Addressing Climate Change Through California Environmental Quality Act Review (OPR's Advisory). OPR's Advisory intends to fill the gap until OPR disseminates CEQA draft guidelines. It provides OPR's "perspective" on "the emerging role of CEQA in addressing climate change and GHG emissions." Essentially, the OPR places the burden of devising a strategy to deal with GHG emissions squarely on lead agencies. Each lead agency must apply a consistent approach involving three basic steps: identify and quantify GHG emissions (estimate emissions from vehicular traffic, water usage, energy consumption and construction activities); assess the significance of the impact on climate change (use a project by project analysis that documents the project's direct, indirect and cumulative impacts); and if the impact is found to be significant, identify alternatives and/or mitigation measures that will reduce the impact.

Developers and environmentalists will no doubt be troubled by lead agencies having unfettered discretion to evaluate, analyze and potentially require GHG emissions mitigation.

Developers may prefer requirements that are not too strict. Environmentalists' preference may be for interpretations that are not too liberal. Implementation falling too far on either side of the spectrum may not efficiently accomplish the purposes of AB 32. In addition, agencies suffer from ambiguity as well.

OPR recognizes that "scientific knowledge and understanding of how best to perform this analysis is rudimentary and still evolving," but also delegates to local agencies the obligation to ensure compliance with the law. As an example, an agency's failure to address climate change "adequately" in CEQA documents resulted in a lawsuit filed by the Attorney General against San Bernardino County on CEQA Documents for the County's General Plan. The settlement agreement in that case now delineates county compliance by requiring a GHG reduction policy. The policy will include an inventory of all "known, or reasonably discoverable, sources of greenhouse gases" in the county, an inventory of its 1990 emission levels and projections for 2020, and reduction targets from discretionary land uses by 2020. The lack of statutory or regulatory CEQA guidance is even more perplexing when considering that ARB has recently issued fairly detailed requirements for agency compliance as to an agency's own operations. ARB's "deferral" to agencies to address GHG reductions in CEQA documents inevitably has and will result in dictation on a protracted, case by case basis by courts and/or the Attorney General as to what constitutes sufficient reduction of GHGs in California. An inefficient approach at best, and costly to all parties involved. But, California was first.

Although the ARB issued the Climate Change Draft Scoping Plan, 2008 Discussion Draft (Draft Plan), shortly after the OPR Advisory, it too provides little more detail. The Draft Plan is the framework for achieving the AB 32 and Executive Order S-3-05 target reductions in California's carbon footprint. The Draft Plan will be introduced to the board at a November meeting. Thereafter, the measures in the adopted Scoping Plan will be developed for implementation in 2012.

The Draft Plan contemplates a variety of measures including expanding energy efficiency programs, building standards, creation of market mechanisms to buy and sell GHG reduction credits, and implementation of fees. It also calls for local government leadership in land use and transportation planning to comprehensively support the state goals for GHG reductions.

The Draft Plan addresses a wide variety of topics but is scant on details. Green buildings are defined as buildings that "exceed minimum energy efficiency standards, decrease consumption of potable water, reduce solid waste during construction and operation, and incorporate sustainable and low-emitting materials that contribute to healthy indoor air quality which protects human health and minimizes impacts to the environment." The Draft Plan contemplates future imposition of green building regulations applicable to both new construction and to existing buildings. The state is developing a mandatory Green Building Standards Code (Green Code) instituting minimum environmental performance.

The state's mandate as to its own buildings may be illustrative for understanding "acceptable" compliance. The state has asserted that all state buildings must meet the Leadership in Energy and Environmental Design (LEED) Gold standard, and existing state buildings should be retrofitted to meet the LEED-EB Silver standard. Also, the Draft Plan suggests imposition of a new requirement that any new construction projects seeking eligibility for state solar incentives must include designs that exceed Title 24 Building Energy Efficiency Standards. Finally, ARB directs local agencies to influence reductions of GHG associated with energy, water, waste and vehicle travel by accounting for the environmental impacts of the siting and design of new residential and commercial developments. No further CEQA guidance is provided.

The Green Code applicable to all new construction, adopted by the Green Buildings Standards Commission on July 17, takes effect in January 2009. Compliance will be voluntary until 2010, when its provisions are expected to become mandatory. The commission perceives the voluntary period to be beneficial by allowing builders, local governments and communities time to acclimate to the new rules. The Green Code sets targets for energy efficiency, water consumption, dual plumbing systems for potable and recyclable water, diversion of construction waste from landfills and use of environmentally sensitive materials in construction and design, including eco-friendly flooring, carpeting, paint, coatings, thermal insulation and acoustical wall and ceiling panels. It is unclear how the Green Code will influence CEQA compliance.

So, what can be done today? Get involved. First, every California business must educate itself regarding whether it is subject to AB 32 reporting requirements.

Second, businesses should be familiar with the Draft Plan and its impacts to business operations. Will the business be one that can benefit by a market trading program, or will it be subject to carbon fees? If the answer is yes to either inquiry, such businesses are well advised to participate in the ongoing public dialogue between now and November prior to creation of the final Scoping Plan. ARB will submit the final Scoping Plan to the board for approval and ultimate implementation.

Third, builders, architects and developers must determine project impacts should LEED gold and silver standards (or equivalent) be codified. Fourth, provide support or opposition now when such input may have a meaningful opportunity to influence the standards to which the business or its work-product will be subjected in a few short years. Additionally, developers and environmentalists must become involved locally to influence municipal and regional agencies who are directed both by OPR and by ARB to further the policy of GHG reductions through the CEQA process.

Finally, though it is not the focus of this article, agencies may be well advised to comment on the potentially significant impacts of the Draft Local Government Operations Protocol prior to its adoption.

To date, creation of the laws, policies and papers described herein have involved significant input by various state agencies. Before the courts and the state become the arbitors of local land use planning and the developers of local green building mitigation requirements through legal interpretations of what local agencies can, or must require via CEQA, all stakeholders should become involved now. Whether the obligations are clear or as vague as the murky jungle waters in the deep of night, stakeholders must account for GHG emissions and climate change. The wave of the climate change future is today.

Mittelstadt is a partner with Lewis Brisbois Bisgaard & Smith LLP. The preceding article was previously published in REPA's July newsletter.

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