CEQA to Project Proponents: ‘Why Can’t You Do Solar?’

Real Estate and Land Use

What Happened

A mammoth case out of Lake Tahoe affirms a new environmental review obligation for project proponents: Why can’t you do solar? Upending what traditionally was a relatively straightforward analysis regarding the capacity of utility providers and avoidance of waste and inefficiency, the court of appeal held that the California Environmental Quality Act (CEQA) requires affirmative consideration of incorporating renewable energy sources at the project level. The case also includes an important precedent on quantifying the significance of greenhouse gas emissions and acceptable forms of mitigation for those emissions.

At issue in League to Save Lake Tahoe Mountain Area Preservation Foundation v. County of Placer was Placer County’s (County) approval of a specific plan, related zone changes and a development agreement (Approvals) allowing construction of 760 residential units, 6.6 acres of commercial space, and conservation of 6,760 acres of forest (Project). Several environmental groups challenged the environmental impact report (EIR) supporting the Approvals in two separate lawsuits that the trial court consolidated into a single proceeding.

Mandate to Consider Renewable Sources of Energy

The “Energy Consumption” holding of the court is the last of many in the voluminous ruling, but it is the most novel and potentially far reaching. Evaluation of energy consumption is not new in CEQA, and the Project EIR here took the standard approach. The County’s test for gauging the significance of the Project’s impact on energy consumption was “the [P]roject’s impact would be potentially significant if it would result in inefficient and wasteful consumption of energy during construction or operations or require new or expanded energy facilities that could cause significant environmental effects.” Answering both components in the negative, the County found the Project’s energy consumption impact less than significant.

One draft EIR commenter asked the County to evaluate requiring the Project to use only 100 percent renewable energy “or some lesser percentage as may be feasible.” The commenter also asked the County to consider approaches for “reducing reliance on fossil fuels, increasing reliance on renewable resources, reducing peak loads, and reducing impacts of relying on remote generation facilities.” The County’s response to the comments was a standard one: “[T]he project was found not to result in inefficient or wasteful consumption of energy.” Accordingly, the County refused any further analysis or mitigation.

In the litigation, plaintiffs challenged the EIR as out of compliance with CEQA because in the analysis of energy consumption, the EIR “did not identify or discuss impacts on renewable energy content as an element of the energy conservation analysis.” Further, they asserted that “the final EIR ‘did not discuss either decreasing reliance on fossil fuels or increasing reliance on renewable energy resources.’” The court summarized the plaintiffs’ claim as follows: “[T]he Committee is arguing that an EIR’s analysis of a project’s impacts on energy resources must include a discussion of whether the project could increase its reliance on renewable energy sources to meet its energy demand as part of determining whether the project’s energy impacts are significant.” The court agreed with the plaintiffs.

Specifically, the court held:

[A]n EIR should address the project’s potential to increase its use of renewable energy sources for at least two purposes. First, when the EIR analyzes the project’s energy use to determine if it creates significant effects, it should discuss whether any renewable energy features could be incorporated into the project. [Citation.] The EIR’s determination of whether the potential impact is significant is to be based on this discussion. Second, if the EIR concludes the project’s impact on energy resources is significant, it should consider mitigating the impact by requiring uses of alternate fuels, particularly renewable ones, if applicable.

The court relied heavily on CEQA Guideline Section 15126.2, subdivision (b) that states that an EIR’s analysis of energy consumption “should include the project’s energy use for all project phases and components, including transportation-related energy, during construction and operation. In addition to building code compliance, other relevant considerations may include, among others, . . . any renewable energy features that could be incorporated into the project. . . . This analysis is subject to the rule of reason and shall focus on energy use that is caused by the project.” (Emphasis added.) Further, the court quoted CEQA Guidelines Appendix F that states: “The goal of conserving energy implies the wise and efficient use of energy. The means of achieving this goal include:

(1) decreasing overall per capita energy consumption,
(2) decreasing reliance on fossil fuels such as coal, natural gas and oil, and
(3) increasing reliance on renewable energy sources.”

The court recognized that both the residential and commercial components of the Project must comply with—and here actually surpass—state building energy efficiency standards in Title 24 of the California Code of Regulations, resulting in more than 25 percent reduction in energy use in residences and 30 percent reduction in commercial relative to 2008. Nonetheless, “because the EIR did not address whether any renewable energy features could be incorporated into the project as part of determining whether the [P]roject’s impacts on energy resources were significant,” the court held, “it did not comply with CEQA’s procedural requirements, a prejudicial error.”

Quantifying the Significance of Greenhouse Gas Impacts and Related Mitigation

Presently, the penultimate authority on quantifying the significance of a given project’s impacts on climate change is Center for Biological Diversity v. Department of Fish & Wildlife (2015) 62 Cal.4th 204, the so-called Newhall Ranch case. The California Supreme Court issued Newhall Ranch while this Project’s draft EIR was circulating for public comment.

The County’s methodology for evaluating the significance of this Project’s climate impacts—a so-called efficiency analysis that tracked the Project’s emission levels with the then-governing emission objectives for the state—was similar to the approach invalidated by the Supreme Court in Newhall Ranch. However, unlike the EIR at issue in Newall Ranch, this EIR concluded that the Project’s impact on climate would be potentially significant and unavoidable. Thus, the court agreed with the County’s determination that the EIR would not have to be recirculated in light of Newall Ranch, notwithstanding the plaintiffs’ objections.

But while the court upheld the County’s decision not to recirculate the EIR, it invalidated the County’s primary mitigation measure for climate impacts. Newhall Ranch invalidated the EIR’s utilization of the efficiency approach, holding that there was not substantial evidence in the record tying the state’s expectations for emission reduction levels from new community development specifically, as opposed to average overall emission reductions economy-wide. In crafting a mitigation measure responsive to Newhall Ranch, the County here imposed a requirement that all future subdivision maps for the Project would be subject to a requirement to evaluate their impact on climate relative to any new regulations or programs specifying the distinction and standard identified in Newhall Ranch.

However, the court noted that no such regulations existed at that time, nor was there any guarantee of such regulations or programs being adopted in the future. Thus, the mandate for future subdivision maps was contingent on a trigger—the new regulations or programs—that may never come into being. Accordingly, the court invalidated the mitigation measure as potentially indefinitely deferred in violation of CEQA.

Why It Matters

It can be easy to lose or overlook the court’s energy consumption holding here amid the multitude of other holdings in this lengthy opinion. But while those are instructive on existing points of law and CEQA practice, the mandate to independently consider incorporation of renewable sources of energy at the project level is novel and likely highly impactful. Additionally, the court’s rather perfunctory ruling gives little direction on how extensive that consideration must be. Recall that the one commenter on this EIR wanted the County to evaluate an approach where the Project relied exclusively, 100 percent, on renewable sources of energy. While CEQA’s “rule of reason” and feasibility safeguards will still apply, there will likely be more challenges relative to individual projects’ consideration of energy sources and consumption beyond just plugging into the local utility provider.

For more information, please contact the author, David C. Smith, or any of your Manatt contacts for further guidance.

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