In an opinion filed August 15, and modified and certified for publication on September 13, 2024, the Fourth District Court of Appeal (Div. 2) resolved cross-appeals from a judgment granting a limited writ by reversing with directions to deny the writ. The Court thus found the City of Upland’s (City) Mitigated Negative Declaration (MND) for approvals of a 201,096-square foot parcel-delivery warehouse project legally adequate under CEQA. Upland Community First v. City of Upland (2024) ___ Cal.App.5th ___. In doing so, the Court not only upheld an environmental document (an MND) that is, in general, notoriously difficult to defend under CEQA’s applicable “fair argument” standard of review, but also upheld, as supported by substantial evidence: (1) City’s application of a stringent 3,000 MTCO2 e/year quantitative threshold of significance to the project’s GHG emissions, and (2) City’s determination that the project’s “net-over-baseline” GHC emissions would not exceed that threshold – despite some effort being required to “connect the dots” regarding the record evidence to show the City’s math in reaching that determination. While ultimately irrelevant to the outcome in their favor, the Court also held that City and the project’s developer (Bridge) forfeited – by failing to timely raise – their alternative argument that the project’s GHG emissions were insignificant based on a different, qualitative “threshold,” i.e., City’s finding that the project was consistent with its Climate Action Plan (UCAP). Finally, the Court rejected all of project opponent UCF’s appellate challenges to City’s MND based on allegedly faulty traffic and VMT analyses.
The Project, City’s MND Analyses, And The Trial Court Litigation
In April 2020, City adopted its MND and approved various land use entitlements for the project, a 201,096-square foot “warehouse/parcel delivery service building” on a 50.25-acre parcel near the Cable Airport currently being used for a rock and gravel crushing operation. City’s MND analyzed the project’s GHG emissions under two quantitative thresholds of significance: (1) a 10,000 metric tons of carbon dioxide equivalent per year (MTCO2 e/year) threshold (“10,000 TOS”) that MND comments indicated was appropriate for large stationary-source industrial projects (e.g., powerplants, factories); and (2) a 3,000 MTCO2 e/year threshold of significance (“3,000 TOS”) commenters deemed appropriate for mixed-use commercial/industrial projects with primary mobile source emissions (like the project). Bridge added sustainability features to the project such as roof-top solar and EV charging stations to ensure its GHG emissions would fall under the more stringent 3,000 TOS.
UCF filed a writ of mandate action seeking to set aside the MND and project approvals, claiming a fair argument could be made that the project may have significant GHG emissions, traffic, and air quality impacts, and that an EIR should therefore have been prepared. The trial court acknowledged City’s discretion to select an appropriate threshold of significance, and expressed its view that an EIR was not necessarily required, but nonetheless granted the petition because it did not believe substantial evidence in the record supported City’s use of either the 10,000 TOS or the 3,000 TOS. Both UCF and Bridge appealed the portions of the ruling adverse to them.
The Court of Appeal’s Opinion
In reversing with directions to deny the writ, the Court of Appeal found substantial evidence supported both City’s use of the 3,000 TOS and its determination that the project’s GHG emissions would not exceed it, thus dispensing with the need for it to consider Bridge’s alternative arguments about compliance with the 10,000 TOS and the UCAP (the latter of which it found Bridge forfeited by failing to timely raise it as a defense in the trial court).
Key legal principles, takeaways, and points of interest from the Court’s opinion granting Bridge’s appeal, and denying that of UCF, include:
General Standards for Use and Judicial Review of MNDs
- A negative declaration is appropriate if, after the agency’s initial study, “[t]here is no substantial evidence, in light of the whole record … that the project may have a significant effect on the environment[.]” (Citing and quoting Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52 Cal.4th 155, 171; see Pub. Resources Code, § 21080(c)(1); CEQA Guidelines, § 15064(f)(3).)
- “If, however, substantial evidence shows the project may have a significant environmental impact, but the impact can be mitigated to insignificance through project revisions that the applicant agrees to before the agency approves the project, the public agency may prepare a mitigated negative declaration (MND) for the project.” (Citing Pub. Resources Code, § 21064.5; CEQA Guidelines, § 15064(f)(2).)
- “Mitigated negative declarations reflect the policy that a lead agency’s determination of environmental impacts should be based on the form of the project as considered for approval, not as [the project] might otherwise have been constructed or conducted.” (Quoting 1 Kostka & Zischke, Practice Under the California Environmental Quality Act (CEB 2023), §6.60, pp. 6-64.) When an agency circulates the initial study and proposed MND for public comment, the public has an opportunity to review it and determine if the project changes eliminate the significant effects. (See, Rominger v. County of Colusa (2014) 229 Cal.App.4th 690, 713.)
- The trial court and appellate court review an agency’s decision to adopt an MND to determine if substantial evidence in the record supports a “fair argument” that the proposed project may nonetheless have a significant effect on the environment, which presents a question of law; if so, the agency has prejudicially abused its discretion and the MND must be set aside and an EIR prepared. The “fair argument” standard creates a “low threshold” for triggering the EIR requirement. (Citing Preserve Poway v. City of Poway (2016) 245 Cal.App.4th 560, 575-576.)
- The petitioner challenging an MND and project bears “the burden of proving ‘the existence of substantial evidence supporting a fair argument of significant environmental impact.’” (Quoting Jensen v. City of Santa Rosa (2018) 23 Cal.App.5th 877, 886.) Under the fair argument standard, if there is any substantial evidence the project may have a significant impact – and regardless of the existence of other substantial evidence to the contrary – an MND is improper and an EIR must be prepared.
CEQA’s Principles and Rules Governing Analysis of GHG/Climate Change Impacts
- GHG emissions and climate change impacts “are necessarily cumulative impacts” and the requisite inquiry for CEQA purposes in determining whether the impact of an individual project’s emissions is significant is whether it “is cumulatively considerable … when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects.” (Quoting from Center for Biological Diversity v. Department of Fish & Wildlife (2015) 62 Cal.4th 204, 219, citations omitted, cleaned up.)
- CEQA Guidelines § 15064.4 provides guidance to lead agencies for assessing the significance of GHG emissions, and provides that they should make a good-faith effort to describe, calculate or estimate a project’s emissions, and should consider (1) the extent to which the project may increase or reduce GHG emissions compared to the existing environmental setting, (2) whether the emissions exceed a threshold of significance the lead agency determines applies, and (3) the extent to which the project complies with regulations or requirements adopted to implement a statewide, regional or local GHG-emissions reduction or mitigation plan. The Guideline does not mandate the use of numerical thresholds of significance, and grants agencies discretion to use quantitative or qualitative methodologies for GHG analysis, and to determine the appropriate threshold of significance, as long as its determinations are supported by substantial evidence.
Court of Appeal’s Analysis of Bridge’s Appeal
- The City’s original GHG analysis in its draft MND: (1) used the 10,000 TOS; (2) calculated baseline GHG emissions from the rock and gravel crushing operation as 899 MTCO22 e/year (but, importantly, this figure mistakenly excluded emissions from the daily trips made by 78 trucks off-hauling materials from the project site and other diesel-powered heavy equipment); (3) calculated the proposed project’s GHG emissions would be 6,121 MTCO2 e/year; and (4) concluded the project would have no significant GHG emissions impact because its net increase of 5,222 MTCO2 e/year over baseline emissions was below the 10,000 TOS and the project was also consistent with the UCAP.
- During public review, commenters including Dr. Brinda Sarathy, a City resident and Pitzer College Professor of Environmental Analysis, argued the 10,000 TOS was not justified for the project because that threshold properly applied only to large-scale, stationary-source “heavy industrial projects” and that the 3,000 TOS was more appropriate to apply to a “mixed use/commercial” project. Dr. Sarathy documented the SCAQMD had recommended the 3,000 TOS for “nonindustrial projects” and “commercial and mixed-use projects” for “all land use types,” and claimed San Bernardino County had adopted that threshold in 2010 and applied it to “a warehouse project similar in size and operation to the project.” Disagreeing with the trial court’s contrary conclusion, the Court of Appeal held that Dr. Sarathy’s comments and letter, and the whole record – including minutes from relevant GHG CEQA significance threshold stakeholder meetings showing the 3,000 TOS was based on data collected by OPR – showed there was adequate “scientific and factual” basis for City’s use of the 3,000 TOS for the project and thus substantial evidence supported that choice.
- In response to the public comments critiquing City’s initial use of the 10,000 TOS, the City analyzed the 3,000 TOS in a “Supplement GHG Analysis,” under which the project was revised to include Bridge’s sustainability features further reducing its GHG emissions, and the rock-crushing operation’s “baseline” GHG emissions were recalculated (now including the previously omitted emissions from 78 trucks and other heavy-duty diesel equipment) so as to increase from 899 to 2,437 MTCO2 e/year. When all was said and done, and the Court of Appeal had meticulously walked through an explanation of all the numbers in the somewhat convoluted “circumstantial” record evidence, it found that using the recalculated emissions numbers, the project’s net GHG emissions increase was under the 3,000 TOS. Accordingly, substantial evidence supported the City’s conservative application of the 3,000 TOS to this project – which is a “mixed use commercial and industrial project” – and its determination that the project’s GHG emissions impact was less than significant.
- After holding the record sufficiently supported the City’s computation of the updated and increased GHG emissions baseline, the Court of Appeal further held that UCF had failed to exhaust its administrative remedies on and thus forfeited its late-raised claim that City inadequately explained the increased baseline. Further, for reasons the Court explained in more detail in its rejection of UCF’s appeal, no substantial evidence supported a “fair argument” that the project would have “cumulatively considerable” GHG emissions despite compliance with the 3,000 TOS.
Court of Appeal’s Analysis of UCF’s Appeal
- UCF’s appeal arguments – i.e., that City performed a legally inadequate traffic impacts analysis that fatally undercounted vehicles and tainted its air quality and GHG analyses – were uniformly rejected by the Court of Appeal on numerous grounds. The City’s Traffic Impact Analysis (TIA) did not undercount daily passenger car equivalent trips by using a wrong ITE Code for generation rates; rather, expert engineering evidence supported the analysis, which found no significant impacts whether trips were calculated under a “parcel hub” or “fulfillment center” ITE Code classification. City’s responses to comments adequately explained how trip generation rates are based on building square footage, and how the rates were conservatively calculated (including counting 4-axle trucks as three passenger vehicles), and the record also substantiated the source (San Bernardino County Congestion Management Plan) of the conversion factor used. That the record did not contain the voluminous and technical ITE manual itself did not undermine the evidentiary support for the analysis since the expert traffic engineer’s statement providing the manual’s trip generation rates was in the TIA. Nor was the City’s comparison of the project’s LOS impacts favorably to those of a large retail development misleading or illusory.
- Finally, to the extent UCF made arguments based on allegedly faulty LOS analysis, they were moot due to CEQA’s replacement of LOS with VMT as the metric for transportation impacts, which paradigm change became binding on the City in 2020. Per the Court: “Because LOS impacts are no longer considered significant, on remand, the City would not be required to conduct a new LOS Analysis” thus precluding “effective relief on [UCF’s] LOS-related traffic impact claims” and rendering them moot. Further, the Court rejected UCF’s efforts to reframe its LOS claims as VMT claims on appeal, noting that the City prepared a VMT analysis that was not required by CEQA and which was also unchallenged by UCF. Because UCF’s argument that the project could have significant transportation impacts failed, so did its wholly derivative arguments of significant air quality and GHG emissions impacts.
Conclusion and Implications
The Court of Appeal’s opinion serves as a good reminder that MNDs are difficult, but not impossible, to defend, and that careful attention must be paid to the complex technical issues involved in an agency’s calculations of baseline and project GHG emissions and selection of defensible methodologies and applicable thresholds of significance. Factually and scientifically supported expert opinion and evidence is critical to lead agencies producing defensible, CEQA-compliant analyses and conclusions in these highly technical areas.
