By Boyd Hill

California’s Third District Court of Appeal in Tsakopoulos Investments, LLC v. County of Sacramento upheld the trial court’s decision denying a writ petition under the California Environmental Quality Act (CEQA) challenging a community master plan Environmental Impact Report’s (EIR) analyses of the plan’s climate change greenhouse gas emissions methodology for determining and applying thresholds of significance for project impacts. [Tsakopoulos Investments, LLC v. County of Sacramento, ___Cal.App.5th___, Case No. C095631 (3rd Dist. Sept. 7, 2023).]

Factual Background

The Mather South Community Master Plan (Project) consists of up to 3,522 residential dwelling units, a 28-acre environmental education campus including 200 multi-family dwelling units, a 21-acre research and development park, two elementary schools, a 6-acre community center, 21 acres of commercial-retail with up to 225,000 square feet of retail space, 44 acres of parkland, and 157 acres of open space areas on a site of 848 acres in the County of Sacramento (County).

The Project is one of four major future urban growth areas located along the Jackson Road corridor referred to as the Jackson Highway Master Plans. The Project permitting approvals include general plan amendments, a special plan amendment, a zoning ordinance amendment, and adoption of a development agreement.

County is the lead agency for the project and also owns the Project site. Real party in interest Mather South, LLC (Mather), is the Project applicant and holds the rights to develop the Project pursuant to a purchase and sale agreement with County.

Mather applied for the Project permits in 2013. The County released the notice of preparation of an environmental impact report in June 2014, and revised the notice in January 2017 due to substantial changes to the Project’s land use plan. The draft EIR was released on January 8, 2019, and, after several public hearings, the County published the final EIR on January 17, 2020. County approved the EIR at a hearing on January 28, 2020, adopting CEQA findings of fact, a statement of overriding considerations, and a mitigation monitoring and reporting program.

Tsakopoulos Investments, LLC, (Tsakopoulos) filed the petition challenging the County’s certification of the final report and approval of the project. Tsakopoulos asserted several violations of CEQA, all of which the trial court determined were unfounded.

Tsakopoulos appealed, claiming the EIR is deficient in three respects: (1) the climate change analysis was based on a methodology that the California Supreme Court in Center for Biological Diversity v. Department of Fish & Wildlife, 62 Cal.4th 204 (2015) (Center for Biological Diversity) and the Fourth District Court of Appeal in Golden Door Properties, LLC v. County of San Diego, 27 Cal.App.5th 892 (2018) (Golden Door Properties) previously rejected as unsupported by substantial evidence; (2) the County failed to assess the impacts from construction-related greenhouse gas emissions in its climate change analysis; and (3) the County failed to analyze the human health impacts associated with the” project’s emissions from criteria pollutants.

The Court of Appeal’s Decision

The Court of Appeal affirmed the trial court’s judgment under the CEQA abuse of discretion standard for adequacy of discussion of environmental impacts. Determining whether the agency made the correct analysis is a mixed question of law and fact. As to the published portion of the decision on the first issue of climate change analysis methodology, the deferential substantial evidence standard applies to factual determinations of which methodology to employ for analyzing an environmental effect.

Greenhouse Gas Reduction Targets

A 2005 Executive Order set overall greenhouse gas emissions reduction targets for California to: (1) reduce emissions to 2000 levels by 2010; (2) reduce emissions to 1990 levels by 2020; and (3) reduce emissions to 80 percent below 1990 levels by 2050.

The 2006 Global Warming Solutions Act calls for reduction of emissions to 1990 levels by the year 2020 and designates the State Air Resources Board (CARB) to regulate greenhouse gas emissions. CARB was required to determine the statewide level of greenhouse gas emissions in 1990 and a statewide emissions limit to be achieved by 2020. CARB was also required to prepare and approve by January 1, 2009, a scoping plan for achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions by 2020.

In its 2008 Climate Change Scoping Plan (Scoping Plan), CARB found that reducing greenhouse gas emissions to 1990 levels means cutting approximately 30 percent from business-as-usual emission levels projected for 2020, or about 15 percent from then-existing levels. The Scoping Plan set out a comprehensive array of emissions reduction approaches and tools to meet the goal, including expanding energy efficiency programs, achieving a statewide renewable energy mix of 33 percent

CARB had estimated statewide 1990 emissions of 427 million metric tons (MMT) of carbon dioxide equivalent (CDE). In the Scoping Plan, CARB broke down the estimated emissions by economic sector for the period 2002 to 2004, finding they totaled 469 MMT of CDE annually. Those annual emissions were then projected forward to the year 2020, employing population and economic growth estimates, yielding a business-as-usual figure of 596 MMT of CDE. The target of 427 MMT of CDE is about 29 percent below the 2020 forecast of 596 MMT of CDE, achieving CARB’s 30 percent reduction goal.

The Scoping Plan’s 2020 forecast is referred to as a ‘business-as-usual’ projection because it assumes no conservation or regulatory efforts beyond what was in place when the forecast was made.

New Target; Local Government and Project Guidance

A 2015 Executive Order established a new state greenhouse gas reduction target of 40 percent below 1990 emissions levels by 2030, making it possible to reach the ultimate goal of reducing emissions to 80 percent below 1990 levels by 2030.

In 2017, CARB adopted an updated Scoping Plan to provide guidance to support local governments in their efforts to reduce greenhouse gas emissions. CARB recommended that local governments evaluate and adopt goals that align with the statewide per capita targets and develop plans to achieve the local goals. The statewide per capita goals were developed by applying the percent reductions necessary to reach the 2030 and 2050 climate goals to the state’s 1990 emissions limit. Emissions inventories and reduction goals were to be expressed in mass emissions, per capita emissions, and service population emissions.

CARB explained that local governments can start by developing a community-wide greenhouse gas emissions target consistent with the accepted protocols. They can then calculate greenhouse gas emissions thresholds by applying the percent reductions necessary to reach 2030 and 2050 climate goals (i.e., 40 percent and 80 percent, respectively) to their community-wide greenhouse gas emissions target.

Since the statewide per capita targets are based on the statewide greenhouse gas emissions inventory that includes all emissions sectors in the state, it is appropriate for local jurisdictions to derive evidence-based local per capita goals based on local emissions sectors and population projections that are consistent with the framework used to develop the statewide per capita targets.

CARB also discussed project-level greenhouse gas emissions reduction actions and thresholds. CARB recommended that projects incorporate design features and greenhouse gas reduction measures, to the degree feasible, to minimize greenhouse gas emissions. CARB stated that lead agencies have the discretion to develop evidence-based numeric thresholds (mass emissions, per capita, or per service population) consistent with this Scoping Plan, the state’s long-term greenhouse gas goals, and climate change science.

CEQA Greenhouse Gas Emissions Guideline

CEQA Guidelines section 15064.4, subdivision (a) requires a lead agency to make a good-faith effort, based to the extent possible on scientific and factual data, to describe, calculate or estimate the amount of greenhouse gas emissions resulting from a project. The lead agency shall have discretion to determine in the context of a particular project, whether to: (1) quantify greenhouse gas emissions resulting from a project; and/or (2) rely on a qualitative analysis or performance-based standards.

Guidelines section 15064.4, subdivision (b) provides that when assessing the significance of greenhouse gas emissions, the agency should consider these factors among others: (1) The extent to which the project may increase or reduce greenhouse gas emissions as compared to the existing environmental setting; (2) whether the project emissions exceed a threshold of significance that the lead agency determines applies to the project; (3) the extent to which the project complies with regulations or requirements adopted to implement a statewide, regional, or local plan for the reduction or mitigation of greenhouse gas emissions.

Guidelines section 15064.4, subdivision (c) provides that a lead agency may use a model or methodology to estimate greenhouse gas emissions resulting from a project. The lead agency must support its selection of a model or methodology with substantial evidence and explain any limitations with the methodology.

Prior Decisions Rejecting Emissions Estimation Methodologies

In Center for Biological Diversity v. Department of Fish & Wildlife, 62 Cal.4th 204 (2015) (Center for Biological Diversity), the California Supreme Court considered whether the lead agency’s determination that a project’s estimated greenhouse gas emissions would not have a significant environmental impact was supported by substantial evidence in the administrative record.

The lead agency disclosed the project’s likely increase in emissions over the existing environment, informing the reader that the project would increase greenhouse gas emissions by 269,053 metric tons of carbon dioxide equivalent compared to the existing environmental setting, but declined to consider the impact significant based on the size of that increase alone because of the absence of scientific and factual information regarding when particular quantities of greenhouse gas emissions become significant. As for a significance threshold, the lead agency asserted that no agency had adopted an applicable threshold.

The lead agency next considered whether the proposed project’s emissions would impede the State of California’s compliance with the statutory emissions reduction mandate. The lead agency estimated project emissions at 390,046 metric tons of carbon dioxide equivalent per year if the proposed project and resulting development were constructed consistent with CARB’s assumptions for the business-as-usual scenario.

Because the lead agency’s estimate of actual annual project emissions was 31 percent below its business-as-usual estimate, exceeding CARB’s determination of a 29 percent reduction from business as usual needed statewide, the lead agency concluded the project’s likely greenhouse gas emissions would not impede achievement of greenhouse gas reduction goals and would therefore be less than significant for CEQA purposes.

The Supreme Court in Center for Biological Diversity held that the lead agency abused its discretion in finding, on the basis of the business-as-usual comparison, that the project’s greenhouse gas emissions would have no cumulatively significant impact on the environment because the administrative record disclosed no substantial evidence that the project-level reduction of 31 percent in comparison to business as usual was consistent with achieving the statewide goal of a 29 percent reduction from business as usual.

According to the Supreme Court, the Scoping Plan nowhere related that statewide level of reduction effort to the percentage of reduction that would or should be required from individual projects, and nothing in the administrative record indicated the required percentage reduction from business as usual is the same for an individual project as for the entire state population and economy. There was:

. . .no expert opinion stating generally that the Scoping Plan contemplated the same emission reductions from new buildings as from existing ones, or more particularly that the Scoping Plan’s statewide standard of a 29 percent reduction from business as usual applies without modification to a new residential or mixed-use development project.

Nothing in the administrative record showed the statewide density assumptions used in the established growth model used to develop the business-as-usual projection in the 2008 Scoping Plan mirrored conditions in the Santa Clarita Valley.

The deficiency in Center for Biological Diversity stemmed from taking a quantitative comparison method developed by the Scoping Plan as a measure of the greenhouse gas emissions reduction effort required by the state as a whole, and attempting to use that method, without consideration of any changes or adjustments, for a purpose very different from its original design: to measure the efficiency and conservation measures incorporated in a specific land use development proposed for a specific location.

In Golden Door Properties, LLC v. County of San Diego, 27 Cal.App.5th 892 (2018) (Golden Door Properties), the Fourth District Court of Appeal struck down a guidance document adopted by the County of San Diego, which included an efficiency metric of 4.9 metric tons of carbon dioxide equivalent per service population per year for 2020 as a measure to determine the significance of greenhouse gas impacts for development proposals. The County of San Diego explained the efficiency metric would be used to determine whether a project complied with the greenhouse gas reduction requirements.

After concluding the efficiency metric established a threshold of significance, the court explained a threshold of significance developed in reliance on statewide standards must be justified by substantial evidence to explain why it is sufficient for use in projects in the County of San Diego. The County of San Diego argued that because the efficiency metric was based on service population per year, it supplied San Diego specific data.

The appellate court disagreed. The service population number relies on statewide service population and greenhouse gas inventory data; it does not address the County of San Diego specifically, and it does not explain why using statewide data is appropriate for setting the metric for the County of San Diego. Additionally, the efficiency metric allows the threshold to be applied evenly to most project types, but it does not account for variations between different types of development; nor does it explain why the per person limit would be appropriately evenly applied despite project differences.

County’s Emissions Estimation Methodology

 The methodology underlying the greenhouse gas emissions thresholds of significance used by the County was established in a 2011 general plan update EIR. The County adopted a significance threshold of whether any portion of the project will significantly hinder attainment of the state’s goals to reduce greenhouse gas emissions to 1990 levels by the year 2020.

The County used a model to inventory the estimated greenhouse gas emissions in the County and incorporated cities within the County to develop a regional picture. The calculated greenhouse gas emissions were divided between residential, commercial, industrial, transportation, off-road vehicle use, waste, wastewater treatment, agriculture, high global warming potential contributors (e.g., refrigerants), and airport sectors. The emissions inventories for the residential, commercial, and industrial sectors were based on energy usage, whereas the emissions inventories for the transportation sector, for example, were based on exhaust emissions.

Because the 2008 Scoping Plan was the only regulatory document adopted by the state that sets a greenhouse gas reduction goal, the County decided to rely on the underlying strategy and assumptions of the Scoping Plan to develop County targets.

The County then established three thresholds of significance for development based on the 2020 emissions reduction goal—one for residential, one for commercial and industrial, and one for transportation. Each sector 2020 target was derived by using their percentage of the 2005 baseline total and multiplying it by the total minimum reduction required. The targets were derived using housing projections and projections of commercial and industrial square footage provided by the Sacramento Area Council of Governments.

The County explained the total minimum reduction was “based on the proportion that each sector contributes to emissions.” The adopted thresholds were: 1.30 metric tons of carbon dioxide equivalent emissions per capita for residential; 8.08 metric tons of carbon dioxide equivalent emissions per 1,000 square feet for commercial and industrial; and 4.56 metric tons of carbon dioxide equivalent emissions per capita for transportation. The per capita thresholds were calculated based on 2020 population, commercial square footage, and industrial square footage forecasts provided by the Sacramento Area Council of Governments.

Application of the County Methodology to the Project

Applying the general plan methodology to the Project, the County determined: Energy-related emissions associated with the proposed residential land uses would result in 0.52 metric tons of carbon dioxide equivalent per capita, which is below the 0.73 metric tons of carbon dioxide equivalent per-capita threshold. Energy-related emissions from nonresidential land uses would result in 2.28 metric tons of carbon dioxide equivalent per 1,000 square feet, which is below the 4.28 metric tons of carbon dioxide equivalent per 1,000 square feet threshold. There would be a surplus in emissions reductions needed for both the residential and nonresidential sectors, by 1,933 and 2,134 metric tons of carbon dioxide equivalent per year, respectively.

Emissions from project-generated vehicle miles traveled in 2032 would result in 2.50 metric tons of carbon dioxide equivalent per capita, which is above the 1.47 metric tons of carbon dioxide equivalent per-capita threshold. The surplus of emissions reductions from the residential and nonresidential sectors can be applied to greenhouse gas emissions reductions needed for the mobile sector.

The additional reduction of 4,067 metric tons of carbon dioxide equivalent per year would reduce the mobile sector’s per capita emissions to 2.05 metric tons of carbon dioxide equivalent, but would still require an additional reduction of 5,289 metric tons of carbon dioxide equivalent per year to meet the threshold.

Even with the additional reductions in greenhouse gas emissions from the residential and nonresidential energy sectors, Project-generated greenhouse gas emissions would exceed applicable County thresholds of significance for transportation and result in a cumulatively considerable contribution to climate change. This impact would be potentially significant. County adopted three mitigation measures to address those impacts.

Evaluation of County Methodology Under the Court Decisions

The County’s thresholds of significance are distinguishable from the methodology used in the prior cases and were supported by substantial evidence.

The County did not compare the project’s greenhouse gas emissions to the statewide business-as-usual goal, as the lead agency did in Center for Biological Diversity. The County instead developed county-specific thresholds of significance for different sectors and then compared the project’s emissions against those numeric thresholds of significance.

In developing the thresholds of significance, the County used the same framework (but not the same data) that CARB used in the Scoping Plan to calculate the County’s 1990 greenhouse gas emission goals. The County relied on the underlying strategy and assumptions of the Scoping Plan but used county-specific emissions inventories, and county-specific population and housing, commercial, and industrial data.

Unlike the lead agency in Center for Biological Diversity, the County did not use a quantitative comparison method developed by the Scoping Plan as a measure of the greenhouse gas emissions reduction effort required by the state as a whole, without consideration of any changes or adjustments, to measure the efficiency and conservation measures incorporated in a specific land use development proposed for a specific location.

Unlike the lead agency in Golden Door Properties, the County developed different county-specific thresholds of significance for different sectors and then compared the estimated greenhouse gas emissions for the project’s residential, commercial and industrial, and transportation sectors against those thresholds of significance to evaluate the significance of the project’s anticipated emissions.

Conclusion and Implications

This opinion by the Third District Court of Appeal demonstrates the type of location specific emissions methodology that should be undertaken to develop and apply greenhouse gas emissions thresholds of significance, and the analysis that should be used to help provide substantial evidence in support of the methodology. It also helps demonstrate the role of general plan environmental review in establishing the thresholds to be applied to specific projects. The court’s published opinion is available online at: https://www.courts.ca.gov/opinions/documents/C095631.PDF

Boyd L. Hill is a Shareholder in Jackson Tidus’ Land Use Group, and focuses on real estate and land use entitlement matters. Boyd has significant experience in commercial leasing, purchase and sale, title review, escrow and financing matters. He has worked on municipal organization (LAFCO), general and specific plan, use permit, variance, development fees and environmental (CEQA, RWQCB) matters. As a former municipal attorney, Boyd is familiar with municipal authority, procedures, financing, contracting, code enforcement and other legal issues, including those under the Brown Act, Public Records Act, Claims Act, Eminent Domain Law and Political Reform Act. Boyd serves on the Editorial Board of the California Land Use Law & Policy Reporter.