Court Rules Against Refinery in First-Ever Greenhouse Gas Decision

In the first-ever appellate court decision regarding the California Environmental Quality Act and climate change, the First District Court of Appeal has held that the future development of a plan for greenhouse gas mitigation constituted improperly deferred mitigation. For that reason and others, the court ruled the environmental impact report for an oil refinery project was invalid.

The City of Richmond and Chevron Products Company gave the First District Court of Appeal the opportunity to break new legal ground regarding an environmental impact report's treatment of greenhouse gas emissions (GHG). The court in Communities for a Better Environment v. City of Richmond found the EIR prepared for the construction of an energy and hydrogen renewal project inadequate in its project description and its intended strategy for mitigating GHGs.

Chevron proposed the project in order to upgrade its Richmond refinery. In July 2008, the City Council voted, 5-4, to approve the project. The city imposed numerous conditions to address project impacts and concluded that all of the project's significant environmental effects had been eliminated or substantially lessened where feasible.

A collection of environmental groups, led by Communities for a Better Environment, challenged the approval based on the California Environmental Quality Act (CEQA). The Contra Costa County Superior Court found the EIR was deficient because 1) the project description was unclear or inconsistent as to whether the project would enable Chevron to process a heavier crude slate than it was currently processing; 2) the city had improperly deferred the formulation of GHG mitigation measures; and 3) Chevron had improperly piecemealed the project by failing to include a hydrogen pipeline as part of the project. The city and Chevron appealed.

The factors that likely influenced the appellate court's decision include:

A deal in which Chevron would pay the city $61 million dollars to fund civic improvement; the city would fast track additional project permits

The fact that the project as described in its Security and Exchange Commission documentation, provided under oath, contradicted the project description in the EIR

The city's delay in concluding that the project's GHG emissions would create a significant impact on the environment, coupled with the fact that the plan for mitigating this contribution would not be developed until one year after the issuance of the project's conditional use permit

This case is significant because it is the first appellate case requiring the quantification and mitigation of greenhouse gas emissions for a project analyzed prior to the adoption of the California Environmental Quality Act guidelines relating to GHG (see CP&DR Environment Watch, January 1, 2010). Many jurisdictions have prepared, or are preparing, climate action plans to guide GHG emission mitigation, but this decision suggests that future development of such plans may not serve as sufficient mitigation.

Project Description

The appellate court first considered the adequacy of the project description. The environmental groups argued that the EIR omitted pertinent information. At issue was whether or not the project would enable the refinery to process heavier crude. According to the EIR, the "project would not alter the refinery's current design for processing intermediate and light crudes." As a result, the EIR did not contain any data regarding the current crude mix processed at the refinery and did not analyze the environmental impacts of processing heavier crude.

Some evidence, however, indicated the project would allow the refinery to process heavier crude. For example, the EIR explained that the project is proposed within the context of "a crude oil supply that is increasingly heavier," and consequently, the project was "designed to allow more flexibility in refining future crude supplies." Further, a disclosure document submitted to the Securities and Exchange Commission following the 2007 fiscal year cited the central purpose of the project as enabling the processing of heavier crude.

The court concluded the EIR failed CEQA's informational purpose because the project description was inadequate with respect to whether the project would enable the refinery to process heavier crude, and failed to properly establish and analyze baseline conditions for measuring the project's potential impacts.

Deferred Mitigation Of GHG

The court found the EIR improperly deferred the development of greenhouse gas mitigation measures. The court relied on the Global Warming Solutions Act of 2006 (Health & Safety Code, 38500 et seq., better known as AB 32) and a "white paper" prepared by the California Air Pollution Control Officers Association as evidence that "climate change impacts are significant environmental impacts requiring analysis under CEQA." The court criticized the timing of what it characterized as the city's  "post-EIR" determination that project's 898,000 metric ton increase in carbon dioxide emissions was significant.

The court focused on the mitigation measure proposed after the city did make a finding of significance. The mitigation measure required Chevron to submit to the city "a plan for achieving complete reduction of GHG emissions" within one year of project approval. The EIR certified by the City Council concluded that implementation of the mitigation measure would "result in no net increase in GHG emissions over the project baseline." In other words, the mitigation measure would reduce the GHG impact to less than significant.

The court found this to be a classic case of deferred mitigation. "Numerous cases illustrate that reliance on tentative plans for future mitigation after completion of the CEQA process significantly undermines CEQA's goal of full disclosure and informed decision making," Presiding Justice Ignazio Ruvolo wrote for the unanimous three-judge panel.

The court noted the decisions in California Native Plant Society v. City of Rancho Cordova, (2009) 172 Cal.App.4th 703 (see CP&DR Legal Digest, May 2009), and Sacramento Old City Association v. City Council, (1991) 220 Cal.App.3d 1011, allow a lead agency to defer the formulation of specific mitigation measures, but only if the agency first:

Undertook a complete analysis of the significant environmental impact;

 Proposed potential mitigation measures early in the planning process; and

Articulated specific performance criteria that would ensure that adequate mitigation measures were eventually implemented.

Richmond performed none of these tasks and instead relied on the fact that scientific information about GHG and techniques for mitigating GHG impacts were constantly expanding during the years the project was under review, making it difficult to decide which specific actions to take. The court rejected this approach.

"The difficulties caused by evolving technologies and scientific protocols do not justify a lead agency's failure to met its responsibilities under CEQA by not even attempting to formulate a legally adequate mitigation plan," Ruvolo wrote.

Finally, the court noted that the inadequacy of the project description was a more fundamental flaw than the inadequacy of the GHG mitigation measure. But because the EIR must be revised anyway, Ruvolo wrote, "[T]he revised EIR should take advantage of any pertinent new information in analyzing the project's potential  greenhouse gas emissions and their cumulative impact on climate change, as well as defining legally adequate mitigation measures to avoid those impact." The court directed the parties to new CEQA Guidelines 15064.4 relating to the determination of significance of a project's GHG emissions and 15183.5 relating to tiering.

Piecemealing

The environmental groups also asserted the city had improperly piecemealed the project by failing to include and analyze a proposed hydrogen pipeline that would transport excess hydrogen to other hydrogen consumers as part of the project. The law prohibits agencies and applicants from chopping a project into smaller pieces to avoid the appearance a project will cause environmental impacts. Here, however, the court found that the project and the proposed pipeline would perform entirely independent and unrelated functions and, therefore, their separate treatment did not constitute illegal piecemealing under CEQA.

The Case:

Communities for a Better Environment v. City of Richmond, No. A125618, 2010 DJDAR 6136. Filed April 26, 2010.

The Lawyers: 

For Chevron: Ronald E. Van Buskirk, Pillsbury, Winthrop, Shaw, Pittman, (415) 983-1496.

For the city: K. Scott Dickey, chief deputy city attorney, (415) 678-3827.

For Communities for a Better Environment: Adrienne L. Bloch, (510) 302-0430.