Environmental Law UpdateEnvironmental Law Update Editor: Rafe Petersen, Holland & Knight LLP, 2099 Pennsylvania Avenue., N.W., Suite 100, Washington, DC 20006-6801, rafe.petersen@hklaw.com. Guest Editor : Chelsea Holloway, Holland & Knight, 50 California Street, Suite 2800, San Francisco, CA 94111, chelsea.holloway@hklaw.com.

Probate & Property Magazine, September/October 2009, Volume 23, Number 5

Environmental Law Update

Environmental Law Update provides information on developments in environmental law as it applies to property, probate, and trust matters. The editors of Probate & Property welcome information and suggestions from readers.

California"s Sweeping Climate Change Legislation May Set Precedent for National Regulation of Greenhouse Gas Emissions

A triad of legislative initiatives aimed at reducing greenhouse gas (GHG) emissions has emerged in California. With California taking the leadership role in addressing climate change as one of the first states to regulate GHG, the state"s innovative approaches to address climate change may ultimately provide a road map for federal policy and other state efforts. This trend was already witnessed when President Obama announced on May 19, 2009, that the federal government will adopt motor vehicle fuel efficiency standards similar to those that were first enacted under California"s Assembly Bill 1493 in 2002, but that were then stalled by lawsuits brought by automobile dealers in 2004. Accordingly, it is worthwhile to review California"s more recent climate change legislation to anticipate possible future trends. In particular, the following initiatives will affect a wide spectrum of California agencies, industries, and real estate developers: AB 32, which mandates the reduction of statewide GHG emissions to 1990 levels by 2020; SB 375, which seeks to limit transportation-related GHG emissions by improving the efficiency of regional land development patterns; and SB 97, which directs the Governor"s Office of Planning and Research to prepare and submit guidelines for the analysis and mitigation of GHG emissions and their effects under the California Environmental Quality Act (CEQA). The following discussion provides a brief summary of the key components of these GHG initiatives.

AB 32: California"s Global Warming Solutions Act of 2006

California"s Global Warming Solutions Act of 2006, commonly known as AB 32, is the first comprehensive GHG regulatory program in the United States. AB 32 regulates GHG emissions from most industries in the state and requires the reduction of statewide GHG emissions to 1990 levels by 2020. Notably, AB 32 does not contain detailed control measures. Rather, it is similar to the federal Clean Air Act in that it creates statewide GHG limits and then requires such limits to be met via sector-specific GHG emission reduction measures to be developed and regulated by the state air resources agency, the California Air Resources Board (CARB). AB 32 first required CARB to develop an inventory of GHG emissions and to determine a baseline for 1990 emissions. CARB also was required to adopt a scoping plan for achieving the maximum technologically feasible and cost-effective reductions in GHG emissions to meet AB 32"s GHG-reduction goals. The scoping plan adopted by CARB on December 11, 2008, is notable in its breadth as it reaches nearly all sectors of GHG-generating activities, allowing flexibility in achieving GHG-reduction goals in some sectors, while requiring technology-forcing upgrades in others. Now that an implementation schedule for the scoping plan has been released, the state is moving quickly in executing the specific scoping plan measures. CARB also will implement AB 32"s mandate for significant sources to report GHG emissions and will establish a cap-and-trade system for five economic sectors—transportation, electricity generation, commercial, residential, and industry.

SB 375: Land Use-Based Model

SB 375 was signed by Governor Schwarzenegger in 2008 and is designed to limit GHG emissions from cars and light trucks by improving the efficiency of regional land-development patterns. SB 375 makes the finding that even with new federal and state mileage standards for light trucks and cars and improved lower carbon fuels, "it will be necessary to achieve significant additional greenhouse gas reductions from changed land-use patterns and improved transportation." To promote regional land-use patterns that would limit GHG emissions, SB 375 requires Metropolitan Planning Organizations (MPOs) to develop a "sustainable communities strategy" within regional transportation plans that will achieve CARB-approved GHG emissions reduction targets. By requiring regional transportation plans to include CARB-endorsed sustainable communities strategies, SB 375 could result in limiting federal transportation funding for those regions that do not successfully comply with its numerous new regional planning requirements. As a first step, CARB appointed a Regional Targets Advisory Committee (RTAC) in January 2009 to recommend factors to be considered and methodologies to be used for setting GHG-reduction targets. In conducting due diligence for future development projects, it will be important for agencies and private parties to consider the transit-oriented nature of a project to evaluate whether the project is consistent with SB 375"s goals. In particular, brownfields redevelopment projects are particularly well suited to achieve SB 375"s goals as the legislation encourages dense, urban infill projects, a setting in which many brownfields redevelopment projects are located. Finally, SB 375 incentivizes transit-oriented projects by allowing streamlined environmental review processing under CEQA for projects that meet qualifying criteria.

SB 97: Analysis of Climate Mitigation Measures

Although AB 32 and SB 375 have set forth aggressive GHG-reduction goals, regulations have not yet been adopted to implement the legislation. Nonetheless, the legislature and several trial courts have determined that climate change should be analyzed under the state"s environmental review statute, the California Environmental Quality Act (CEQA). CEQA requires disclosure and analysis of potential environmental effects of any project that is either carried out or approved by a public entity, and adoption of feasible mitigation measures or alternative projects when significant effects are identified. In 2007, the legislature adopted SB 97, which requires the Governor"s Office of Planning and Research (OPR) to develop CEQA guidelines "for the mitigation of greenhouse gas emissions or the effects of greenhouse gas emissions" under CEQA by January 2010. As OPR drafts CEQA guidelines for climate change analysis, several state and influential local agencies have already weighed in on climate change analysis under CEQA. Although the agencies are agreed on the need to conduct GHG analysis and some of the necessary analytical components, questions remain as to the appropriate thresholds that will determine whether a proposed project will have a significant adverse effect on climate change and thus require the adoption of GHG mitigation measures. As lead agencies attempt to comply with the new regulations, future trial and appellate court rulings on the legality of legislative and agency efforts to regulate and reduce GHG emissions and project proponent"s success in reducing such emissions are expected.

Conclusion

Although California is one of the first states to jump into the fray of climate change issues, others will undoubtedly follow. In turn, President Obama"s clearly expressed intention to address clean air, clean energy technology, climate change, and renewable resources leaves little doubt that the new Administration will address GHG. Given that California has taken the lead on these issues, it is unquestionable that we will learn from California"s efforts.

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