New Challenges for CEQA Review of Development Projects After California Supreme Court Invalidates Greenhouse Gas Analysis and Species Mitigation Measures

In a 5-2 ruling that poses significant hurdles for developers addressing greenhouse gas (GHG) compliance and protected species mitigation under the California Environmental Quality Act (CEQA), the California Supreme Court issued an opinion this week stalling development of Newhall Ranch, a large residential and commercial project in northern Los Angeles County.  Center for Biological Diversity v. California Department of Fish and Wildlife (Newhall Land and Farming Company), No. S217763 (November 30, 2015).

While approving the overall methodology, the Court found there was “no substantial evidence” to support the Environmental Impact Report (EIR) conclusion that the completed project’s GHG emissions posed no significant impacts and would be consistent with California A.B. 32’s statewide goal of a 29 percent reduction in such emissions.  The Court also found that the plan adopted by the California Department of Fish and Wildlife (CDFW) to mitigate potential impacts to a fully protected fish species by relocating them to another water body would constitute a prohibited “take” and could not serve as a CEQA mitigation measure.

Despite a lengthy discussion of “potential options” and an acknowledgement that A.B. 32 does not provide a project-specific analytical framework, the Court’s opinion provides little guidance for future GHG analysis for CEQA project settings.  Moreover, the Court’s strict construction approach to “fully protected species” provisions fails to grapple with the complex interrelationship with the newer California species protection laws, leaving landowners, developers and agencies with a daunting and uncertain challenge. 

Landowners and developers will need to take these new requirements into account in designing projects and developing administrative records during CEQA review.   Ultimately, legislative action may be required to clarify CEQA standards that should apply to determine consistency with A.B. 32, and to reconcile inconsistencies in the State’s laws for species relocation and conservation to mitigate potential project impacts.

The Court’s Greenhouse Gas Analysis

The Supreme Court acknowledged that the Newhall Ranch EIR expressly considered whether the proposed project’s emissions would impede A.B. 32’s mandate for GHG emission reductions and appropriately utilized a methodology modeled on the California Air Resources Board’s Scoping Plan, comparing emissions projected for the completed development with a “business as usual” projection that assumed no additional regulatory actions to reduce emissions.

The Court found that using A.B. 32’s statewide goal for GHG reduction as a significance threshold is consistent with CEQA guidelines and noted that the GHG contribution by any one project is unlikely to be significant by itself, given the global scale of climate change.  The Court found, however, that DFW abused its discretion in finding that the project would have no cumulative impact on the environment because there was no substantial evidence in the record that Newhall Ranch’s project level GHG projections were consistent with A.B. 32’s statewide goal of a 29 percent reduction.  The Court observed that it was possible that, because GHG reductions may be more feasible with new development than is feasible with redevelopment or retrofit of older structures and systems, a much greater than 29% reduction in emissions should be expected for projects like Newhall Ranch.  The Court explained:

The EIR simply assumes the level of effort in one context, a 29 percent reduction from business as usual statewide, will suffice in another, a specific land use development.  From the information in the administrative record, we cannot say that conclusion is wrong, but neither can we discern the contours of a logical argument that it is right. 

The Court followed with several pages of “potential options for DFW on remand and for other lead agencies faced with evaluating the cumulative significance of a proposed land use development’s [GHG] emissions.”  One option suggested by the Court was the use of existing numeric thresholds of significance established by Air Districts.  However, the Court acknowledged that a large development like Newhall Ranch would likely exceed those thresholds which, unless mitigated, could result in a finding of significant GHG impacts.  The Court also acknowledged that it could not “guarantee that any of these approaches will be found to satisfy CEQA’s demands as to any particular project.”

The dissenting Justices strongly criticized the Court’s opinion, noting that “the level of detail the majority demands from this EIR is contrary to both our deferential standard of review and our approval of the methodology used to assess greenhouse gas significance,” and taking issue with the majority’s conclusion that the EIR does not adequately explain why the projected GHG emissions were consistent with A.B. 32’s goals.  

The ruling poses significant challenges for landowners and developers seeking to demonstrate compliance with A.B. 32’s statewide GHG reduction requirements in the CEQA review process, especially for larger projects.  As the Court observed, A.B. 32 does not provide a project-specific analytical framework.  Some counties have developed requirements for A.B. 32 compliance, however, and many projects can be designed – and administrative records developed – to meet the new requirements and withstand scrutiny. 

The Court’s Fully Protected Species Analysis

The Court also made an important ruling regarding the treatment of “fully protected species” under California law.  California has an array of laws protecting wildlife species.  The most well known is the California Endangered Species Act (“CESA”), which covers species that have been listed as “threatened” or “endangered.”  Other statutes, including California Fish and Game Code § 5515(b)(9), create a “fully protected species” designation.  Unlike CESA, these provisions lack an explicit exception allowing CDFW to authorize an incidental take of these species in development scenarios.

The “fully protected species” in question was the unarmored three-spine stickleback fish, which is also listed as “endangered” under CESA and the federal Endangered Species Act (“ESA”).  In the Newhall EIR, CDFW adopted a mitigation measure in which the U.S. Fish and Wildlife Service would collect and relocate this fish during project construction affecting the Santa Clarita River.  Although no “taking” of a fully protected species is allowed, CDFW believed that this was not a take because it was an environmentally protective measure that would be carried out by the federal wildlife agency with authority to conserve the species.

The California Supreme Court reversed the lower court’s decision upholding the EIR’s finding of no significant impact based on CDFW’s plan to relocate the fish as a mitigation measure.  The Court ruled that “fully protected species” protection is absolute and, in a CEQA document in a development context, CDFW cannot authorize any incidental take of such species.  Although it conceded that CDFW could take actions to conserve and recover fully protected species, the Court found such actions were categorically prohibited as CEQA mitigation measures for a private project.  The Court also refused to accept CDFW’s argument that it should defer to CDFW’s interpretation of this statute.

This ruling on species protection is significant in several respects.  First, it ignores the complex interplay of the modern wildlife laws – like CESA and the ESA – with the fully protected species laws, essentially finding that the most protective law covering a species must be strictly construed.  Indeed, dissenting Justice Chin persuasively noted that “fully protected species” provisions should be read in the context of other, more recent species protection laws, that the statutory provisions do not suggest that relocation constitutes a “take” of a fully protected species, and that “no one seems to challenge this [CDFW relocation] program’s efficacy in protecting and preserving the species.”

However, until these provisions are harmonized with CESA, Newhall imposes an absolute “no take” prohibition for “fully protected species” in the CEQA context.  Unless the law is amended, it appears CDFW or another lead agency cannot allow any take of such species as a CEQA mitigation measure for a private development, even when the species is dually listed as endangered under CESA, where CDFW does have such incidental take authority.  Since there are 37 bird, fish, reptile, amphibian and mammal species that are “fully protected” under California law (including the golden eagle, blunt-nosed leopard lizard, salt-marsh harvest mouse and brown pelican), this prohibition is very significant for development projects. 

Finally, the decision raises serious questions about the scope of judicial deference to lead agency CEQA findings and wildlife agency interpretation of laws within their purview.  CDFW has often made interpretive calls to harmonize the older California wildlife laws with the modern CESA provisions.  Although the Supreme Court in Newhall recognized that such deference was often appropriate in substantive areas of the agency’s expertise, it stated that the deference it would give to the agency’s statutory interpretation is “limited” because determining a statute’s meaning and effect is “within the constitutional domain of the courts.”