New guidelines for the analysis and mitigation of greenhouse gas (GHG) emissions under the California Environmental Quality Act (CEQA) took effect on March 18, 2010. The guidelines apply to projects of all kinds, including energy projects. The new guidelines accord the agency responsible for the environmental review of a project with a range of discretion on the evaluation of GHG emissions.

The new California guidelines are part of a larger trend in which federal and state agencies across the country are grappling with the standards for the evaluation of climate change under the National Environmental Policy Act (NEPA) and state environmental review acts such as CEQA.

CEQA requires public agencies at all levels of California government to review the environmental impacts of a proposed project, prepare an environmental impact report (EIR) if the project may have a significant effect on the environment, and respond to significant adverse effects. The state Resources Agency has adopted guidelines for the implementation of CEQA. The state, regional or local agency responsible for CEQA review of a particular project is referred to as the "lead" agency.

In 2007, the California Legislature passed SB97, directing the Resources Agency to adopt guidelines for the treatment of GHG emissions under CEQA. On December 30, 2009, the Resources Agency approved the new GHG guidelines as amendments to the existing CEQA guidelines. The new guidelines became law as part of Title 14 of the California Code of Regulations on March 18, 2010.

The heart of the new guidelines is found in Section 15064.4, which governs the determination of the significance of GHG emissions. In its Final Statement of Reasons for Section 15064.4, the Resources Agency emphasized that, consistent with established CEQA practice, "there is no iron-clad definition of 'significance'" for GHG emissions. Within the framework of Section 15064.4, the lead agency responsible for review of a project has considerable discretion in judging the significance of GHG emissions.

To make its determination of significance, the lead agency must first determine the amount of GHG emissions resulting from the project. Based on its review of the facts, the lead agency may quantify GHG emissions or use qualitative analysis or performance standards. For purposes of quantifying GHG emissions, the lead agency has discretion under Section 15064.4 "to select the model or methodology it considers most appropriate."

After determining (whether quantitatively, qualitatively or based on a performance standard) the amount of GHG emissions from a project, the lead agency must determine the significance of the GHG emission, taking into the consideration, among other factors, the following matters specified in Section 15064.4:

• The extent to which the project may increase or reduce greenhouse gas emissions as compared to the existing environmental setting.
• Whether the project emissions exceed a threshold of significance that the lead agency determines applies to the project.
• The extent to which the project complies with regulations or requirements adopted to implement a statewide, regional, or local plan for the reduction or mitigation of greenhouse gas emissions.

The Resources Agency clarified in its Final Statement of Reasons that the new guidelines are "not intended to imply a zero net emissions threshold of significance."

Even if the emissions from a project are anticipated to be below the adopted threshold of significance, the lead agency must still prepare an EIR under the established CEQA principle that an EIR must be prepared if there is a fair argument based on substantial evidence that the project may result in significant GHG impacts. Similarly, even if a project complies with requirements adopted through a public process to implement a plan to reduce or mitigate GHG emissions, an EIR must be prepared if there is substantial evidence that the impacts of a project will be cumulatively significant.

If a lead agency does not have expertise in the evaluation of GHG emissions, it may choose to adopt the threshold of significance developed by another agency with greater expertise. The Resources Agency noted that a number of agencies, such as the Bay Area Air Quality Management District, the City of Davis and the South Coast Air Quality Management District, have developed or are in the process of developing thresholds of significance.

For the time being, until enough agencies have dealt with the new guidelines and common understandings begin to emerge on matters such as the relevant thresholds of significance, it can be expected that lead agencies will be more likely to require EIRs to determine if GHG emissions are significant.

In addition to the determination of the significance of GHG emissions, the new guidelines address mitigation measures to minimize significant effects, tiering and streamlining the analysis of GHG emissions, and other matters. The checklist to be used by lead agencies for the initial evaluation of projects now includes a section to make sure that lead agencies take GHG emissions into account.