On June 12, 2020, the Fourth District Court Appeal issued a decision in Golden Door Properties, LLC v. County of San Diego (2020) 50 Cal.App.5th 467 invalidating San Diego County’s approval of a Climate Action Plan and related Guidelines for Determining Significance of Climate Change, and holding that the County’s Supplemental Environmental Impact Report failed to comply with CEQA. In what is now the third published decision dealing with San Diego County’s 2011 general plan update process, the Fourth District panel largely affirmed the trial court’s judgment in the three consolidated cases challenging the County’s adoption of the CAP and SEIR, including with respect to the primary issue in the case—whether the County’s GHG mitigation measure allowing for the purchase of out-of-County carbon offset credits complied with CEQA. The appellate court reversed the trial court’s judgment on some issues, however, finding the CAP to be sufficiently consistent with the County’s general plan update and the County’s responses to comments on the SEIR adequate under CEQA.

Background

In 2011, San Diego County prepared a Program Environmental Impact Report (PEIR) and adopted a general plan update (GPU) for the unincorporated areas of the County. In order to mitigate GHG emissions that would result from buildout of the general plan update to a level consistent with State-mandated GHG emissions reductions targets, the PEIR included a mitigation measure requiring that the County prepare a climate action plan (CAP). The County began preparing the CAP following the adoption of the GPU, which generally entailed establishing a baseline inventory of known and foreseeable GHG emissions in the County and developing 26 GHG emissions reduction measures for future development projects to implement. The County also prepared a checklist and Guidelines for Determining the Significance of GHG Emissions so that future projects’ consistency with the CAP could be assessed as part of the CEQA process.

In 2018, in order to evaluate the environmental impacts of implementing the CAP, the County prepared a Supplemental EIR (SEIR). The SEIR acknowledged that more than 20 projects proposing general plan amendments were in-process but not approved at the time the SEIR was prepared, and that such projects could result in significant GHG emissions not accounted for in the CAP. To mitigate these potentially significant GHG emissions, the County devised a mitigation measure, M-GHG-1, requiring that any projects that would increase the density or intensity of land use above what is permitted under the GPU to mitigate emissions to a level consistent with the CAP assumptions (i.e., net zero or no new emissions). Under M-GHG-1, mitigation of GHG-emissions was to be accomplished first by incorporating all feasible onsite design features, such as measures to prioritize transit, biking, and walking. Then, in the event project design features were unavailable or insufficient to fully mitigate the additional GHG emissions, M-GHG-1 allowed for the use of offsite mitigation, including the purchase of carbon offset credits, which could be obtained from certain qualifying registries relying on offsets located virtually anywhere in the world.

Following the County’s adoption of the SEIR, CAP, and related Guidelines for Determining the Significance of GHG Emissions, Sierra Club and Golden Door Properties filed separate petitions for a writ of mandate challenging the County’s approvals, alleging multiple violations arising under CEQA and Planning and Zoning Law. After consolidating the two actions (along with a third, previously-stayed case), the trial court granted a peremptory writ of mandate, ordering the County to set aside its approvals. The trial court determined that the CAP was inconsistent with the General Plan, and that mitigation measure M-GHG-1’s reliance on out-of-County carbon offsets violated CEQA. The trial court also determined that the SEIR violated CEQA by inadequately analyzing cumulative impacts, impacts to energy and environmental justice, and project alternatives, and that the County failed to adequately respond to comments on the draft SEIR.

Following the entry of judgment and issuance of the writ, the County appealed.

Court of Appeal

While the appellate court’s 123-page decision addresses a host of legal issues, the primary issue on appeal was whether the SEIR mitigation measure M-GHG-1 violated CEQA’s requirements for mitigation due to the standards imposed, or lack thereof, for the use of out-of-County offsets to mitigate GHG emissions in projects requiring a general plan amendment. Citing CEQA Guidelines section 15126.4, subdivision (c)(3), the court explained that while it is well-established that the use of offsets can be part of a GHG mitigation strategy, the use of such offsets must be “properly restricted” with “verified offsets” that ensure GHG reductions in fact occur. Here, the appellate court held, M-GHG-1 failed to satisfy CEQA’s requirements for adequate GHG mitigation.

Relying heavily on the standards governing the State Cap-and-Trade Program and related California Air Resources Board regulations, the court of appeal agreed with the trial court that the County’s GHG mitigation measure M-GHG-1 lacked sufficient performance standards to ensure the offsets relied on are “real, permanent, verifiable, and enforceable.” Specifically, the court noted that while M-GHG-1 contained some standards governing the entities through which offsets may be purchased, namely, a CARB-approved registry or “any other reputable registry or entity that issues carbon offsets consistent with … [Health and Safety Code] section 38562 [subdivision] (d)(1),” M-GHG-1 did not include any standards or protocols that such qualifying registries must implement to ensure the validity of the offset credits claimed. In the absence of such standards or safeguards, the court found that M-GHG-1 failed to adequately ensure offsets are real, additional, and enforceable and for that reason was inadequate under CEQA.

In addition to the lack of sufficient standards for out-of-County carbon offsets, the court of appeal also held that M-GHG-1 violated CEQA as the measure improperly deferred mitigation. Under M-GHG-1, the County planning director was afforded discretion to approve the use of particular offsets, including determinations such as whether the issuing entity is “reputable” and whether there are no other “financially feasible” offsets “available” in a closer location. On this issue, the court explained that while CEQA allows the specific details of a mitigation measure to be developed after project approval where it is impractical or otherwise infeasible to do so during the environmental review process, in such instances that agency must (1) commit itself to the mitigation, (2) adopt specific performance standards the mitigation will achieve, and (3) identifies the type(s) of potential action(s) that can feasibly achieve that performance standard and that will be considered, analyzed, and potentially incorporated in the mitigation measure.n this case, the court held that M-GHG-1 failed to meet these requirements.

In holding M-GHG-1 violated CEQA as an improper deferral of mitigation, the court of appeal emphasized that M-GHG-1 contained no objective standards for the director to apply in determining whether offsets originating in foreign countries are real, permanent, verifiable, enforceable, and additional. As the court explained, M-GHG-1 entrusted the planning director with making several determinations such as whether the proposed offset registry is “reputable” or whether other offsets are “financially feasible,” however, the measure lacked objective criteria to govern such determinations. Further, the court held that because M-GHG-1 failed to comply with CEQA, the County’s CAP was also inadequate, because, to the extent the CAP assumed that in-process and future projects requiring a general plan amendment would not result in significant GHG impacts based on compliance with M-GHG-1, the County’s finding was not supported by substantial evidence.

In addition to the court’s lengthy analysis of M-GHG-1, the court of appeal’s decision also considered the plaintiff’s arguments that the County’s SEIR failed to comply with CEQA on several other grounds. The appellate court largely agreed with the plaintiffs and affirmed the trial court’s decision, including finding that the SEIR’s cumulative impact analysis was inadequate by failing to analyze impacts other than GHG emissions; that the County’s finding of consistency with the SANDAG Regional Transportation Plan was not supported by substantial evidence; and that the County’s alternatives analysis was inadequate for failing to consider a project alternative aimed at reducing vehicle miles traveled or “VMT”. The appellate court reversed the trial court’s judgment on two issues, however, finding the County’s determination the CAP was consistent with the general plan update was adequately supported under the highly deferential standard of review and that the County’s responses to comments on the draft SEIR were sufficient under CEQA.