Wednesday, March 17, 2010

Baseline for EIR Analysis Should Generally be Physical Conditions Existing at Time of Analysis

Communities For A Better Environment v. South Coast Air Quality Management District, No. S161190 (March 15, 2010) available at CourtWebsite

From the California Supreme Court

The Supreme Court of California held that when performing an environmental analysis, the analytical baseline against which project effects are measured should generally be the physical conditions existing at the time of the analysis, rather than the maximum capacity allowed under prior equipment permits. The Court added that for environmental conditions that vary from year to year, it may be appropriate to utilize a baseline that reflects these fluctuations. This decision impacts parties involved in environmental review pursuant to the CEQA.

In the case, ConocoPhillips developed plans for an ultra low sulfur diesel fuel project that, among other things, involved increasing the operations of existing cogeneration plants and four boilers. The plants and boilers were subject to prior permits that stated a maximum rate of heat production for each piece of equipment. ConocoPhillips applied to the South Coast Air Quality Management District (SCAQMD) for a permit to construct all the modifications necessary for the project. SCAQMD concluded that the project did not have the potential to adversely affect the environment and thus a negative declaration, rather than an EIR, was prepared. The plaintiff argued that the project would have significant adverse impacts on the environment because there would be an increase in nitrogen oxide (NOx), and therefore an EIR should have been prepared instead of a negative declaration. SCAQMD did note that the increased operation of existing equipment would cause additional NOx emissions, however, SCAQMD did not consider these increases to be part of the project because they did not exceed the maximum rate of heat production allowed under existing permits. SCAQMD treated any additional NOx emissions stemming from increased plant operations within previously permitted levels as part of the baseline measurement for environmental review, rather than as part of the project. The trial court entered judgment for SCAQMD and ConocoPhillips. On appeal, the Court of Appeal held that the increased use of existing equipment should have been evaluated as part of the project, not as part of the baseline.

The Supreme Court largely affirmed the Court of Appeal and concluded that prior operating permits did not themselves establish a baseline for CEQA review, but rather the physical conditions actually existing at the time of analysis established the baseline. SCAQMD and ConocoPhillips cited several Court of Appeal decisions as supporting the use of maximum operational levels allowed under a permit, rather than existing physical conditions, as a CEQA baseline. Rather than overrule that existing case law, the Court distinguished the cases from SCAQMD’s case. The Court stated that in each of the Court of Appeal decisions, the appellate court characterized the project at issue as merely a modification of a previously-analyzed project and thus requiring only a limited CEQA review, or as merely the continued operation of an existing facility without significant expansion of use and thus exempt from CEQA review. Here, the Court noted as important that SCAQMD had treated the ConocoPhillips project as a new project by requiring ConocoPhillips to apply for a new permit rather than finding that it was exempt as the continued operation of an existing facility. For this reason, the Court also refused to characterize the ConocoPhillips project as a modification of a previously-analyzed project.