Stanford Law School - Robert Crown Law Library

Filed 3/15/10

IN THE SUPREME COURT OF CALIFORNIA

COMMUNITIES FOR A BETTER
ENVIRONMENT,
Plaintiff and Appellant,
S161190
v.
Ct.App. 2/2 B193500
SOUTH COAST AIR QUALITY
MANAGEMENT DISTRICT et al.,
Los Angeles County
Defendants and Respondents; )
Super. Ct. No. BS091275
CONOCOPHILLIPS COMPANY,
Real Party in Interest and
Respondent.
____________________________________)

CARLOS VALDEZ et al.,
Plaintiffs and Appellants,
v.
Los Angeles County
Super. Ct. No. BS091276
SOUTH COAST AIR QUALITY
MANAGEMENT DISTRICT et al.,
Defendants and Respondents; )
CONOCOPHILLIPS COMPANY,
Real Party in Interest and
Respondent.

1

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The California Environmental Quality Act (CEQA) (Pub. Resources Code,
§ 21000 et seq.)1 requires a public agency to prepare an environmental impact
report (EIR) only on projects that may have significant environmental effects
(§§ 21100, subd. (a), 21151, subd. (a)). To decide whether a given project‟s
environmental effects are likely to be significant, the agency must use some
measure of the environment‟s state absent the project, a measure sometimes
referred to as the “baseline” for environmental analysis. According to an
administrative guideline for CEQA‟s application, the baseline “normally” consists
of “the physical environmental conditions in the vicinity of the project, as they
exist at the time . . . environmental analysis is commenced . . . .” (Cal. Code
Regs., tit. 14, § 15125, subd. (a).)
In the present case, ConocoPhillips Company (ConocoPhillips), the private
proponent of a project to conduct a new industrial process at a petroleum refinery,
and the South Coast Air Quality Management District (District), whose failure to
prepare an EIR before approving the refinery project is at issue, contend that the
existence of valid permits to operate industrial equipment used in the project at
particular levels establishes an exception to the general rule that existing physical
conditions serve as the baseline for measuring a project‟s environmental effects.
Instead, they maintain, the analytical baseline for a project employing existing
equipment should be the maximum permitted operating capacity of the equipment,
even if the equipment is operating below those levels at the time the
environmental analysis is begun. Failure to use the maximum permitted

1
All further unspecified statutory references are to the Public Resources
Code.
2

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operations as a baseline, they argue, would contravene CEQA‟s statute of
limitations and deprive the permit holder of its vested rights.
We conclude neither the statute of limitations, nor principles of vested
rights, nor the CEQA case law on which ConocoPhillips and the District rely
justifies employing as an analytical baseline for a new project the maximum
capacity allowed under prior equipment permits, rather than the physical
conditions actually existing at the time of analysis. The District therefore abused
its discretion in determining the project at issue would have no significant
environmental effects compared to a baseline of maximum permitted capacity.
We leave for the District on remand, however, to resolve exactly how the existing
physical conditions — assertedly subject to operational variation over time —
should be measured.
FACTUAL AND PROCEDURAL BACKGROUND
Real party in interest ConocoPhillips operates a petroleum refinery in
Wilmington, an area of the City of Los Angeles. The refinery, occupying
approximately 400 acres bordering commercial, recreational, and residential areas,
produces gasoline, jet fuel, diesel fuel, and other chemical products. The present
dispute arises from ConocoPhillips‟s project to produce ultra low sulfur diesel
fuel.
Plaintiffs are Communities for a Better Environment (an environmental
organization), Southern California Pipe Trades District Council 16 and
Steamfitters & Pipefitters Local 250 (labor organizations), and Carlos Valdez and
other individuals. The individual plaintiffs and members of the plaintiff
organizations live and/or work near the ConocoPhillips refinery.
Defendant District is the agency responsible for regulating nonvehicular air
pollution in the South Coast Air Basin, an area encompassing all of Orange
County and portions of San Bernardino, Riverside, and Los Angeles Counties,
3

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including the Wilmington area. (Health & Saf. Code, §§ 40000, 40410; Cal. Code
Regs., tit. 17, § 60104.)
In 2000 and 2001, the District, the federal Environmental Protection
Agency, and the California Air Resources Board issued regulations requiring a
reduction by mid-2006 in the sulfur content of motor vehicle diesel fuel to 15 parts
per million by weight. These rules were designed to reduce the harmful
environmental effects resulting from emissions of sulfur oxides and other toxins
from diesel-fueled motor vehicles.
To comply with these regulations, ConocoPhillips developed plans for an
Ultra Low Sulfur Diesel Fuel Project (the Diesel Project), which involved
replacing or modifying hydrotreater reactors, a cooling tower, storage tank, and
compressor; installing new pipelines and pumps; and substantially increasing
operation of the existing cogeneration plant and four boilers, which provide steam
for refinery operations. The cogeneration plant and boilers were subject to prior
permits that state a maximum rate of heat production for each piece of equipment.
ConocoPhillips applied to the District for a permit to construct the above
modifications. After completing an initial study to determine the environmental
impacts of the proposed Diesel Project, the District presented the results of its
investigation in a draft negative declaration, concluding the project did not have
the potential to adversely affect the environment.
Plaintiffs submitted comments on the draft negative declaration, arguing the
Diesel Project would have significant adverse impacts on the environment and
thus an EIR should be prepared to identify mitigation measures. One of plaintiffs‟
experts estimated the project would increase nitrogen oxide (NOx) emissions by as
much as 661 pounds per day, greatly exceeding the District‟s significance
4

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threshold of 55 pounds per day.2 NOx is a major contributor to smog formation
and can cause adverse health effects, especially aggravation of respiratory disease.
The District determined that increased steam generation from the
cogeneration plant and boilers, along with other new activities, would create an
additional 237 to 456 pounds per day of NOx emissions, of which between 201
and 420 pounds would be caused by increased operation of the steam generating
equipment. The higher estimates represented “worst-case” conditions in which the
refinery would have to use boiler 4, the oldest boiler at the plant. In its final
negative declaration (the Negative Declaration), however, the District concluded
the Diesel Project “could not have a significant effect on the environment.” While
it noted the increased operation of existing steam generation equipment would
cause additional NOx emissions, the District did not consider these increases to be
part of the Diesel Project because they did not exceed the maximum rate of heat
production allowed under existing permits.
Crucially, the District 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
proposed Diesel Project. The District reasoned that ConocoPhillips had permits to
operate the equipment, the refinery was an established use with operations
fluctuating over time, and the proposed Diesel Project did not call for any

2
CEQA regulations encourage public agencies to develop and publish
thresholds of significance, levels of a particular environmental effect “non-
compliance with which means the effect will normally be determined
to be significant by the agency and compliance with which means the effect
normally will be determined to be less than significant.” (Cal. Code Regs., tit. 14,
§ 15064.7, subd. (a).) The District‟s threshold for operational NOx emissions is
55 pounds per day.
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equipment to exceed its permitted capacity. Applying this baseline in the
Negative Declaration, not even the “worst-case” scenario produced significant
NOx emission increases under CEQA. The District ultimately issued a notice of
determination, approved the Diesel Project, and issued a permit to construct the
modifications to the refinery.3
In their second amended petitions for writ of mandate, plaintiffs alleged the
District had violated CEQA by failing to prepare an EIR before approving the
Diesel Project. The trial court denied the petitions and entered judgment for the
District and ConocoPhillips.
On appeal, plaintiffs argued substantial evidence supported a fair argument
that the Diesel Project would have a significant environmental impact requiring
the District to prepare an EIR. The Court of Appeal agreed, holding that increased
use of existing equipment should have been evaluated as part of the Diesel Project,
not as part of the baseline and, if the proper baseline had been used, the evidence
of significant impact would be sufficient to require an EIR. In CEQA cases, the
court explained, the proper baseline measurement should rest on “ „realized
physical conditions on the ground‟ ” instead of “ „merely hypothetical
conditions.‟ ” Rejecting other challenges to the Negative Declaration, the court
reversed in part, affirmed in part, and remanded with directions the District be
ordered to prepare an EIR.
We granted the District and ConocoPhillips‟s joint petition for review.

3
The request of amicus curiae California Building Industry Association for
judicial notice of materials related to the City of Los Angeles‟s Adaptive Reuse
Program is denied on grounds of irrelevance.
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DISCUSSION
As noted in the introduction, a public agency pursuing or approving a
project need not prepare an EIR unless the project may result in a “significant
effect on the environment” (§§ 21100, subd. (a), 21151, subd. (a)), defined as a
“substantial, or potentially substantial, adverse change in the environment”
(§ 21068). If the agency‟s initial study of a project produces substantial evidence
supporting a fair argument the project may have significant adverse effects, the
agency must (assuming the project is not exempt from CEQA) prepare an EIR.
(Cal. Code Regs., tit. 14, § 15064, subd. (f)(1);4 No Oil, Inc. v. City of Los Angeles
(1974) 13 Cal.3d 68, 75.) If the initial study instead indicates the project will have
no significant environmental effects, the agency may, as the District did here, so
state in a negative declaration. (Cal. Code Regs., tit. 14, § 15064, subd. (f)(3).)
An agency that, relying on a standard inconsistent with CEQA and the
CEQA Guidelines, prepares only a negative declaration has not proceeded in the
manner required by law and has thus abused its discretion, calling for a judicial
remedy. (§ 21168.5; Vineyard Area Citizens for Responsible Growth, Inc. v. City
of Rancho Cordova, supra, 40 Cal.4th at p. 426; No Oil, Inc. v. City of Los
Angeles, supra, 13 Cal.3d at p. 88.) In part I, post, we conclude the District‟s
choice of a baseline for NOx emissions was inconsistent with CEQA and the

4
The regulations guiding application of CEQA, found in title 14 of the
California Code of Regulations, section 15000 et seq., are often, and will
sometimes be here, referred to as the CEQA Guidelines. “The CEQA Guidelines,
promulgated by the state‟s Resources Agency, are authorized by Public Resources
Code section 21083. In interpreting CEQA, we accord the Guidelines great
weight except where they are clearly unauthorized or erroneous.” (Vineyard Area
Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40
Cal.4th 412, 428, fn. 5.)
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CEQA Guidelines; the District should have looked to the existing physical
conditions, rather than to the maximum permitted operation of the boilers.
If no EIR has been prepared for a nonexempt project, but substantial
evidence in the record supports a fair argument that the project may result in
significant adverse impacts, the proper remedy is to order preparation of an EIR.
(No Oil, Inc. v. City of Los Angeles, supra, 13 Cal.3d at pp. 75, 88; Brentwood
Assn. for No Drilling, Inc. v. City of Los Angeles (1982) 134 Cal.App.3d 491, 504-
505.) In part II, post, we conclude that, using the correct baseline of physical
conditions existing at the time environmental analysis was begun, a fair argument
based on substantial evidence can be made that the Diesel Project will increase
NOx emissions significantly. The appropriate remedy is therefore to order the
District to set aside its Negative Declaration and project approval and to prepare
an EIR that will evaluate, along with any other potentially significant impacts,
these increased emissions. (See § 21168.9.)
I. Prior Operating Permits Do Not in Themselves Establish a Baseline
for CEQA Review of a New Project
In the Negative Declaration, the District acknowledged the Diesel Project
would require increased use of the refinery‟s steam generation equipment, which it
estimated would increase NOx emissions by between 201 and 420 pounds per day,
depending on which boilers were used to generate the steam. Although this
estimated increase exceeded the District‟s established significance threshold of 55
pounds per day, the District did not consider it a significant environmental effect
of the project: “[T]he emissions associated with increased utilization of this
existing equipment were considered baseline as opposed to proposed project
because the Refinery holds valid permits to operate this equipment, and the
equipment will continue to operate within their existing permit conditions and
limits.” In this court, the District and ConocoPhillips continue to espouse the view
8

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that the maximum operating levels allowed under ConocoPhillips‟s boiler permits
was the correct baseline against which to compare the Diesel Project‟s NOx
emissions, while plaintiffs maintain the District was required instead to use the
actually existing levels of operation as a baseline and treat any increase over that
baseline as a project impact.
Section 15125, subdivision (a) of the CEQA Guidelines provides: “An EIR
must include a description of the physical environmental conditions in the vicinity
of the project, as they exist at the time the notice of preparation is published, or if
no notice of preparation is published, at the time environmental analysis is
commenced, from both a local and regional perspective. This environmental
setting will normally constitute the baseline physical conditions by which a lead
agency determines whether an impact is significant.” (Cal. Code Regs., tit. 14,
§ 15125, subd. (a), italics added.)5 A long line of Court of Appeal decisions holds,
in similar terms, that the impacts of a proposed project are ordinarily to be
compared to the actual environmental conditions existing at the time of CEQA
analysis, rather than to allowable conditions defined by a plan or regulatory
framework. This line of authority includes cases where a plan or regulation
allowed for greater development or more intense activity than had so far actually

5
Although this regulation refers specifically to the analysis in an EIR, the
agency determination it addresses — “whether an impact is significant” — also
arises at the initial study phase of CEQA review, when the agency must decide
whether there are any significant environmental effects requiring assessment in an
EIR. As all parties agree, the regulation is thus equally applicable at this phase.
(See §§ 21060, 21068 [single definition of “ „[s]ignificant effect on the
environment‟ ” applies throughout CEQA]; Fat v. County of Sacramento (2002)
97 Cal.App.4th 1270, 1277-1278.)
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occurred,6 as well as cases where actual development or activity had, by the time
CEQA analysis was begun, already exceeded that allowed under the existing
regulations.7 In each of these decisions, the appellate court concluded the baseline
for CEQA analysis must be the “existing physical conditions in the affected area”
(Environmental Planning & Information Council v. County of El Dorado, supra,

6
Environmental Planning & Information Council v. County of El Dorado
(1982) 131 Cal.App.3d 350, 354, 357-358 (effects of a proposed area plan for land
development must be compared to the existing physical conditions in the area,
rather than to development permitted under the county‟s general plan); City of
Carmel-by-the-Sea v. Board of Supervisors (1986) 183 Cal.App.3d 229, 246-247
(effects of rezoning must be compared to the existing physical environment, rather
than to development allowed under a prior land use plan); County of Amador v. El
Dorado County Water Agency (1999) 76 Cal.App.4th 931, 955 (baseline for water
diversion project was actually existing stream flows, not minimum stream flows
set by federal license); Save Our Peninsula Committee v. Monterey County Bd. of
Supervisors (2001) 87 Cal.App.4th 99, 121 (water use baseline for analysis of
proposed land development was actual use without the project, not what the
applicant was entitled to use for irrigation); San Joaquin Raptor Rescue Center v.
County of Merced (2007) 149 Cal.App.4th 645, 658 (baseline for proposed
expansion of a mining operation must be the “realized physical conditions on the
ground, as opposed to merely hypothetical conditions allowable under existing
plans”); Woodward Park Homeowners Assn., Inc. v. City of Fresno (2007) 150
Cal.App.4th 683, 693, 706-710 (effects of a large office and shopping center
development must be compared to the current undeveloped condition of the
property, rather than to an office park that could be developed under existing
zoning).
7
Riverwatch v. County of San Diego (1999) 76 Cal.App.4th 1428, 1452-
1453 (baseline for a proposed quarry development was the actual condition of the
land, even though some existing environmental degradation had resulted from
prior illegal mining and clearing activities); Fat v. County of Sacramento, supra,
97 Cal.App.4th at pages 1278-1280 (baseline for airport expansion was existing
airport operations, even though the airport had been operating and had expanded
without a required permit for several years); Eureka Citizens for Responsible
Government v. City of Eureka (2007) 147 Cal.App.4th 357, 370-371 (baseline for
proposed school playground use was the existing playground facility, even though
prior construction of the facility may have violated the city‟s code).
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131 Cal.App.3d at p. 354), that is, the “ „real conditions on the ground‟ ” (Save
Our Peninsula Committee v. Monterey County Bd. of Supervisors, supra, 87
Cal.App.4th at p. 121; see City of Carmel-by-the-Sea v. Board of Supervisors,
supra, 183 Cal.App.3d at p. 246), rather than the level of development or activity
that could or should have been present according to a plan or regulation.
Applied here, this general rule leads to the conclusion the District erred in
using the boilers‟ maximum permitted operational levels as a baseline. By treating
all operation of the boilers within the individual limits of their permits to be part of
the environmental setting, or baseline, the District ensured that no emissions from
increased boiler operation would be considered an environmental impact so long
as no single boiler operated beyond its permitted capacity. Thus, the District‟s
baseline operational level was the collective maximum capacity of the boilers;
under the Negative Declaration‟s analysis, all four boilers could be run at
maximum capacity simultaneously without creating any potential environmental
impact. Yet the District acknowledged that in ordinary operation any given boiler
ran at the maximum allowed capacity only when one or more of the other boilers
was shut down for maintenance; operation of the boilers simultaneously at their
collective maximum was not the norm.
Simultaneous maximum operation, then, is not a realistic description of the
existing conditions without the Diesel Project. Indeed, the Negative Declaration
does not attempt to justify its maximum permitted capacity baseline as reflecting
the actually existing physical conditions without the Diesel Project. Rather, the
Negative Declaration reasons that the increased steam production the Diesel
Project called for was within the boiler permits‟ maximum operational levels and
“could, therefore, occur even if the proposed project did not commence (exist).”
By comparing the proposed project to what could happen, rather than to what was
actually happening, the District set the baseline not according to “established
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levels of a particular use,” but by “merely hypothetical conditions allowable”
under the permits. (San Joaquin Raptor Rescue Center v. County of Merced,
supra, 149 Cal.App.4th at p. 658.) Like an EIR, an initial study or negative
declaration “must focus on impacts to the existing environment, not hypothetical
situations.” (County of Amador v. El Dorado County Water Agency, supra, 76
Cal.App.4th at p. 955.)
An approach using hypothetical allowable conditions as the baseline results
in “illusory” comparisons that “can only mislead the public as to the reality of the
impacts and subvert full consideration of the actual environmental impacts,” a
result at direct odds with CEQA‟s intent. (Environmental Planning & Information
Council v. County of El Dorado, supra, 131 Cal.App.3d at p. 358.) The District‟s
use of the prior permits‟ maximum operating levels as a baseline appears to have
had that effect here, providing an illusory basis for a finding of no significant
adverse effect despite an acknowledged increase in NOx emissions exceeding the
District‟s published significance threshold.
The District and ConocoPhillips distinguish the cases cited above and argue
for an exception from the “normal[]” rule of CEQA Guidelines section 15125, on
the ground that here ConocoPhillips held an entitlement to operate the refinery
boilers at the levels stated in the permits; in contrast, land use plans and zoning
ordinances, considered in the cited cases, create no development entitlements in
landowners. To employ an analytical baseline below the maximum levels stated
in the boiler permits, they maintain, would defeat the company‟s vested rights and
contravene CEQA‟s statute of limitations, section 21167. For reasons given
below, we disagree.
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Vested Rights
The doctrine of vested rights as developed in land use law states that a
property owner who, in good faith reliance on a government permit, has performed
substantial work and incurred substantial liabilities has a vested right to complete
construction under the permit and to use the premises as the permit allows. (Russ
Bldg. Partnership v. City and County of San Francisco (1988) 44 Cal.3d 839, 845-
846.) Thus, “a permittee who has expended substantial sums under a permit
cannot be deprived by a subsequent zoning ordinance of the right to complete
construction and to use the premises as authorized by the permit.” (County of San
Diego v. McClurken (1951) 37 Cal.2d 683, 691.)8
We fail to see how using the boilers‟ actual preproject NOx emissions as a
baseline for analyzing the Diesel Project‟s effects would impinge on any vested
rights ConocoPhillips holds to operate the boilers at permitted levels. The project
under review by the District here is ConocoPhillips‟s proposal to produce ultra
low sulfur diesel fuel using a combination of existing, new, and modified refinery
equipment. ConocoPhillips‟s right to operate the boilers at any particular level is
not itself at issue. As demonstrated below, CEQA analysis of the Diesel Project,
even if it used existing conditions as a baseline instead of the permit maximums,
could not result in an order that ConocoPhillips reduce or limit its use of an
individual boiler below the previously permitted level.

8
The doctrine is grounded in the constitutional prohibition against the taking
of property without due process (Russ Bldg. Partnership v. City and County of San
Francisco, supra, 44 Cal.3d at p. 846) and is related to the traditional protection
for nonconforming uses established at the time zoning restrictions become
effective, which in turn derives in part from the “doubtful constitutionality of
compelling the immediate discontinuance of nonconforming uses” (County of San
Diego v. McClurken, supra, 37 Cal.2d at p. 686).
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First, using existing conditions as a baseline for CEQA analysis, the
District might conclude the Diesel Project‟s increased steam demands would result
in a significant increase in NOx emissions. As a measure in mitigation of this
significant adverse effect, the District could condition its approval of the Diesel
Project on compliance with a limit on NOx emissions from the boilers.
(§§ 21002.1, subd. (b), 21081, subd. (a)(1); Cal. Code Regs., tit. 14, §§ 15040,
15126.4, subd. (a)(2).) Such a condition, however, would not deprive
ConocoPhillips of any vested right; the boiler permits give ConocoPhillips no
vested right to pollute the air at any particular level. (See Sherwin-Williams Co. v.
South Coast Air Quality Management Dist. (2001) 86 Cal.App.4th 1258, 1273
[plaintiffs‟ proprietary paint formulas did not give them “a property right to emit”
air pollutants]; Mobil Oil Corp. v. Superior Court (1976) 59 Cal.App.3d 293, 305
[oil companies‟ right “to continue releasing gasoline vapors into the atmosphere is
neither fundamental nor vested”].) Indeed, both the District and ConocoPhillips
acknowledge that irrespective of the Diesel Project the District may, in the course
of its regulatory duties, require ConocoPhillips to modify its boilers to reduce their
pollution, as it has in fact done in the past. Requiring pollution control mitigation
as a condition of approving a new set of refinery operations does not amount to a
prohibition on boiler operation in contravention of the preexisting permits and
would not deprive ConocoPhillips of any vested right it holds under the boiler
permits.
Alternatively, if a significant increase in NOx emissions from the Diesel
Project were identified and the District found it could not feasibly be mitigated,
the District might, for this reason, deny the new permits sought for the Diesel
Project. (§ 21081; Cal. Code Regs., tit. 14, § 15042.) But this result, too, would
not affect ConocoPhillips‟s right to continue operating the boilers for other
refinery processes. ConocoPhillips does not, and could not, argue its boiler
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permits gave it a vested right to use the boilers for the Diesel Project — a new set
of operations that was not in existence when the boiler permits were issued and for
which ConocoPhillips seeks a new permit from the District. Disapproval of the
Diesel Project because of increased NOx emissions (or for any other reason)
would not in any way prevent ConocoPhillips from operating its boilers at levels
allowed under the preexisting permits, as it did before the Diesel Project was
initiated.9
Finally, beyond the fact CEQA review of the Diesel Project could not affect
ConocoPhillips‟s right to continue operating the boilers, the District‟s and
ConocoPhillips‟s contentions fail for a more fundamental reason. Even if
environmental review were to indicate that the project‟s adverse effects could be
mitigated only by a condition requiring ConocoPhillips to reduce or limit its use of
an individual boiler below the previously permitted level, but ConocoPhillips‟s
vested rights precluded imposition of that condition, CEQA would still demand an
analysis of the project‟s true effects. That a particular mitigation measure may be
infeasible or precluded, as by the applicant‟s vested rights, is not a justification for
not performing environmental review; it does not excuse the agency from
following the dictates of CEQA and realistically analyzing the project‟s effects.
After proper analysis, the agency might decide to disapprove the project because
of its immitigable adverse effects or to approve it with a finding of overriding
considerations. (§ 21081, subd. (b).) In short, an applicant‟s vested rights might

9
A third possibility is that the District would find a significant increase in
NOx emissions that could not feasibly be mitigated, but approve the Diesel Project
anyway with a finding of overriding considerations. (§ 21081, subd. (b); Cal.
Code Regs., tit. 14, § 15093.) Obviously, this would not impinge on any vested
right ConocoPhillips holds.
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constitute a valid reason to forgo particular mitigation measures, but are not an
excuse to avoid realistic CEQA analysis.
Statute of Limitations
The District‟s and ConocoPhillips‟s claim that use of an existing conditions
baseline would violate the statute of limitations fails for the same principal reason:
CEQA analysis of the Diesel Project does not constitute review of the District‟s
long-final decisions to issue the boiler permits. Section 21167 places relatively
short time limits (between 30 and 180 days, depending on the type of challenge)
on actions “to attack, review, set aside, void or annul” a public agency‟s “acts or
decisions” for noncompliance with CEQA. But plaintiffs do not seek to review or
set aside the District‟s approval of the boiler permits; they seek to review and set
aside the District‟s approval of the Diesel Project, and as to that project no claim
of untimeliness has been made. As explained earlier, moreover, the type of CEQA
review for which plaintiffs argue — using existing physical conditions as the
baseline to assess the Diesel Project‟s environmental impacts — could not result in
an order revoking or revising the boiler permits. And even if section 21167‟s time
limits would preclude employing such an order as mitigation, such preclusion
would not excuse the District from performing the realistic assessment of
environmental effects CEQA demands. The statute of limitations thus has no
bearing here on the proper choice of analytical baseline.10

10
For the same reasons, the District‟s argument that considering increased
NOx emissions from the boilers as an impact of the Diesel Project would be
applying CEQA retroactively to pre-CEQA projects (see § 21169) has no merit;
the Diesel Project is not a pre-CEQA project, though it uses some equipment
predating CEQA. Nor was the Diesel Project, first proposed in 2003, within the
1972 moratorium for ongoing projects (§ 21171), as ConocoPhillips argues. Nor,
finally, was approval of the Diesel Project a nondiscretionary decision for the
District (see § 21080, subd. (a)); even if the District lacked discretion to order any

(footnote continued on next page)
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Court of Appeal Decisions
The District and ConocoPhillips cite 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. In each of these decisions,
however, the appellate court characterized the project at issue as merely a
modification of a previously analyzed project and hence requiring only limited
CEQA review under section 21166 and CEQA Guidelines section 15162 (Cal.
Code Regs., tit. 14, § 15162), or as merely the continued operation of an existing
facility without significant expansion of use and hence exempt from CEQA review
under CEQA Guidelines section 15301 (Cal. Code Regs., tit. 14, § 15301), or
both.11 The Diesel Project, in contrast, cannot be characterized as merely the
modification of a previously analyzed project to operate refinery boilers or the
continued operation of the boilers without significant expansion of use. Rather,

(footnote continued from previous page)
one boiler to be used below its permitted capacity, the District retained discretion
to disapprove a new project on the ground it would increase air pollution from the
boilers collectively.
11
See Fairview Neighbors v. County of Ventura (1999) 70 Cal.App.4th 238,
242-243 (application for a permit to increase mine production treated as the
continued operation of an existing facility and modification of the project
authorized in a prior permit issued after CEQA analysis); Temecula Band of
Luiseño Mission Indians v. Rancho Cal. Water Dist. (1996) 43 Cal.App.4th 425,
437-438 (modified pipeline design and route for water supply project that had
already undergone CEQA review); Bloom v. McGurk (1994) 26 Cal.App.4th 1307,
1311-1312 (renewal of a medical waste treatment facility‟s permit with no change
in operations exempt as the continued operation of an existing facility); Benton v.
Board of Supervisors (1991) 226 Cal.App.3d 1467, 1477-1484 (modified location
of winery construction project on which CEQA review was already complete);
Committee for a Progressive Gilroy v. State Water Resources Control Bd. (1987)
192 Cal.App.3d 847, 862-865 (restoration of a sewage treatment plant‟s operation
to the originally approved level was the continued operation of an existing facility
and did not require supplemental CEQA analysis).
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the Diesel Project proposed adding a new refining process to the facility, requiring
the installation of new equipment as well as the modification and significantly
increased operation of other equipment. ConocoPhillips applied for a new permit
for the Diesel Project, and the District treated it as a new project, finding not that it
was exempt as the continued operation of an existing facility (Cal. Code Regs., tit.
14, § 15301) or subject to limited review as only a modification of a previously
analyzed project (§ 21166; Cal. Code Regs., tit. 14, § 15162), but rather that,
although a new project subject to CEQA review, it had no potential significant
adverse effects requiring analysis in an EIR (Cal. Code Regs., tit. 14, § 15064,
subd. (f)(3)).
None of the cited decisions, therefore, persuades us the preexisting boiler
permits, by themselves, establish the proper baseline for CEQA analysis of the
Diesel Project. We conclude the District‟s use of the maximum capacity levels set
in prior boiler permits, rather than the actually existing levels of emissions from
the boilers, as a baseline to analyze NOx emissions from the Diesel Project was
inconsistent with CEQA and the CEQA Guidelines.12 In the next part, we

12
The Court of Appeal held the District had erred in relying on NOx emission
levels set in a different permit, a refinery-wide permit issued under the District‟s
RECLAIM (Regional Clean Air Incentives Market) pollution reduction program.
In this court, however, neither the District nor ConocoPhillips relies on the
RECLAIM permit to support the Negative Declaration‟s no-significant-impact
conclusion, and the District insists the RECLAIM permit is “irrelevant” because
the District‟s baseline determination “was entirely unrelated to the refinery‟s
status as a RECLAIM facility.” While the Court of Appeal‟s reading of the
Negative Declaration was not without foundation — the District did at points
appear to rely in part on the RECLAIM permit — we accept the District‟s
concession that the RECLAIM permit is irrelevant to the baseline for NOx
emissions from the existing boilers.
18

---

consider the District‟s and ConocoPhillips‟s arguments regarding the proper
manner of measuring actually existing emissions.
II. The Record Supports a Fair Argument the Diesel Project Will
Have Significant Adverse Effects
The Negative Declaration estimates the Diesel Project will result in
increased NOx emissions of 201 to 420 additional pounds per day due to increased
demand for steam from the boilers, and up to 456 pounds per day in total. As the
District‟s established significance threshold for NOx is 55 pounds per day, these
estimates constitute substantial evidence supporting a fair argument for a
significant adverse impact.
The District and ConocoPhillips emphasize that refinery operations are
highly complex and that these operations, including the steam generation system,
vary greatly with the season, crude oil supplies, market conditions, and other
factors. ConocoPhillips objects to the Court of Appeal‟s mandate that annual
averages be used to arrive at a baseline of daily emissions, arguing this fails to
account for day-to-day fluctuations and neglects to consider the significance of
peak production periods.
We do not attempt here to answer any technical questions as to how
existing refinery operations should be measured for baseline purposes in this case
or how similar baseline conditions should be measured in future cases. CEQA
Guidelines section 15125 (Cal. Code Regs., tit. 14, § 15125, subd. (a)) directs that
the lead agency “normally” use a measure of physical conditions “at the time the
notice of preparation [of an EIR] is published, or if no notice of preparation is
published, at the time environmental analysis is commenced.” But, as one
appellate court observed, “the date for establishing baseline cannot be a rigid one.
Environmental conditions may vary from year to year and in some cases it is
necessary to consider conditions over a range of time periods.” (Save Our
19

---

Peninsula Committee v. Monterey County Bd. of Supervisors, supra, 87
Cal.App.4th at p. 125.) In some circumstances, peak impacts or recurring periods
of resource scarcity may be as important environmentally as average conditions.
Where environmental conditions are expected to change quickly during the period
of environmental review for reasons other than the proposed project, project
effects might reasonably be compared to predicted conditions at the expected date
of approval, rather than to conditions at the time analysis is begun. (Id. at pp. 125-
126.) A temporary lull or spike in operations that happens to occur at the time
environmental review for a new project begins should not depress or elevate the
baseline; overreliance on short-term activity averages might encourage companies
to temporarily increase operations artificially, simply in order to establish a higher
baseline.
Neither CEQA nor the CEQA Guidelines mandates a uniform, inflexible
rule for determination of the existing conditions baseline. Rather, an agency
enjoys the discretion to decide, in the first instance, exactly how the existing
physical conditions without the project can most realistically be measured, subject
to review, as with all CEQA factual determinations, for support by substantial
evidence. (See Vineyard Area Citizens for Responsible Growth, Inc. v. City of
Rancho Cordova, supra, 40 Cal.4th at p. 435.)
That refinery operations fluctuate over time, however, does not excuse the
District from estimating the increase in NOx emissions, if any, the Diesel Project
will create. Indeed, the District already made one such estimate in the Negative
Declaration, finding the project would increase steam demand to a degree that
would result in between 201 and 420 additional pounds per day of NOx emissions
from the boilers. The Negative Declaration, though it does not explicitly employ
an existing conditions baseline, implicitly uses a baseline — an unstated one — in
estimating the increased rate at which the boilers will need to operate and the
20

---

resulting increase in NOx emissions. The District is not necessarily required to
use the same measurement method in the EIR as in the Negative Declaration.
Whatever method the District uses, however, the comparison must be between
existing physical conditions without the Diesel Project and the conditions expected
to be produced by the project. Without such a comparison, the EIR will not
inform decision makers and the public of the project‟s significant environmental
impacts, as CEQA mandates. (§ 21100.)
DISPOSITION
The judgment of the Court of Appeal is affirmed.
WERDEGAR, J.
WE CONCUR:
GEORGE, C. J.
BAXTER, J.
CHIN, J.
MORENO, J.
POLLAK, J.*
PREMO, J.**

_____________________________________
*
Associate Justice of the Court of Appeal, First Appellate District, Division
Three, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
**
Associate Justice of the Court of Appeal, Sixth Appellate District, assigned
by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
21

---

See last page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Communities for a Better Environment v. South Coast Air Quality Management Dist.
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted XXX 158 Cal.App.4th 1336
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S161190
Date Filed: March 15, 2010
__________________________________________________________________________________

Court:

Superior
County: Los Angeles
Judge: Andria K. Richey

__________________________________________________________________________________

Attorneys for Appellant:

Adrienne L. Bloch, Shana Lazerow; Lozeau|Drury and Richard T. Drury for Plaintiff and Appellant
Communities for a Better Environment.

Richard M. Frank; Adams Broadwell Joseph & Cardozo, Marc D. Joseph and Richard T. Drury for
Plaintiffs and Appellants Carlos Valdez et al.

Bill Lockyer and Edmund G. Brown, Jr., Attorneys General, Tom Green and Dane R. Gillette, Chief
Assistant Attorneys General, Theodora P. Berger and Pamela C. Hamanaka, Assistant Attorneys General,
Sally Magnani Knox, Lisa Trankley and Susan L. Durbin, Deputy Attorneys General for State of California
as Amicus Curiae on behalf of Plaintiffs and Appellants.

Luke Cole for Association of Irritated Residents, California Communities Against Toxics, California
Environmental Rights Alliance, California Safe Schools, Center on Race, Poverty and the Environment,
Coalition for a Safe Environment, Community Water Center, Tricounty Watchdogs and Youth United for
Community Action as Amici Curiae on behalf of Plaintiffs and Appellants.

Frank G. Wells Environmental Law Clinic and Sean B. Hecht for Sierra Club, Endangered Habitats
League, National Resources Defense Council and Planning and Conservation League as Amici Curiae on
behalf of Plaintiffs and Appellants.

__________________________________________________________________________________

Attorneys for Respondent:

Kurt R. Wiese, Barbara Baird; Woodruff, Spradlin & Smart, Bradley R. Hogin, Edward L. Bertrand and
Ricia R. Hager for Defendants and Respondents.

Lewis Brisbois Bisgaard & Smith, Daniel V. Hyde, Paul J. Beck and Azusa K. Tokudome for California
Association of Sanitation Agencies as Amicus Curiae on behalf of Plaintiffs and Appellants.

---

Page 2 – S161190 – counsel continued

Attorneys for Respondent:

Latham & Watkins, Robert A. Wyman, Jr., and Emily Taylor for Regulatory Flexibility Group as Amicus
Curiae on behalf of Defendants and Respondents.

Weston Benshoof Rochefort Rubalcava & MacCuish, Alston & Bird, Ward L. Benshoof, Jocelyn D.
Thompson; Cox Castle & Nicholson and Michael H. Zishke for Real Party in Interest and Respondent.

Diepenbrock Harrison, Mark D. Harrison and Dan M. Silverboard for California Construction and
Industrial Materials Association as Amicus Curiae on behalf of Real Party in Interest and Respondent.

Manatt, Phelps & Phillips and Michael M. Berger for Western Independent Refiners Association as Amicus
Curiae on behalf of Defendants and Respondents and Real Party in Interest and Respondent.

Pillsbury Winthrop Shaw Pittman, Kevin M. Fong and David R. Farabee for Western States Petroleum
Association as Amicus Curiae on behalf of Defendants and Respondents and Real Party in Interest and
Respondent.

Kronick, Moskovitz, Tiedemann & Girard, P. Addison Covert, Robin Leslie Stewart and Stacy L. Asato
Toledo for California School Boards Association as Amicus Curiae on behalf of Defendants and
Respondents and Real Party in Interest and Respondent.

Brownstein Hyatt Farber Schreck and Lisabeth D. Rothman for California Building Industry Association as
Amicus Curiae on behalf of Defendants and Respondents and Real Party in Interest and Respondent.

---

Counsel who argued in Supreme Court (not intended for publication with opinion):

Richard M. Frank
School of Law
358 Boalt Hall
University of California
Berkeley, CA 94720
(510) 642-8305

Bradley R. Hogin
Woodruff, Spradlin & Smart
555 Anton Boulevard, Suite 1200
Costa Mesa, CA 92626-7670
(714) 558-7000

Jocelyn D. Thompson
Alston & Bird
333 South Hope Street, 16th Floor
Los Angeles, CA 90071
(213) 576-1000

---

Petition for review after the Court of Appeal affirmed in part and reversed in part the judgment in an action for writ of administrative mandate. This case presents the following issue: In determining whether a project requires the preparation of an environmental impact report under the California Environmental Quality Act (Pub. Resources Code, section 21000 et seq.), is the maximum amount of emissions allowed a facility under an existing permit part of the baseline against which future environmental impacts should be assessed, even though (a) the facility's current operations did not reach that level of emissions and (b) the level of emissions allowed by the permit had not been subjected to CEQA review?

Opinion Information

Date:	Citation:	Docket Number:	Category:	Status:
Mon, 03/15/2010	48 Cal. 4th 310, 226 P.3d 985, 106 Cal. Rptr. 3d 502	S161190	Review - Civil Appeal	submitted/opinion due

Opinion Authors
Opinion	Justice Kathryn M. Werdegar
Concur	Chief Justice Ronald M. George, Justice Carlos R. Moreno, Justice Marvin R. Baxter, Justice Ming W. Chin

Dockets
Feb 25 2008	Joinder to petition filed   RPI/Respondent Conocophillips Company Attorney Jocelyn D. Thompson
Feb 26 2008	Petition for review filed   Respondent South Coast Air Quality Management District CRC 8.25 Attorney Bradley R. Hogin
Feb 26 2008	Record requested
Mar 14 2008	Request for depublication filed (another request pending)   Non-party California Association of Sanitation Agencies by Roberta Leslie Larson, Somach Simmons & Dunn, counsel
Mar 14 2008	Answer to petition for review filed   Appellants Carlos Valdez, etal ~Attorney Richard T. Drury Appellant Communities for a Better Environment ~Attorney Adrienne L. Bloch
Mar 17 2008	Request for depublication (petition for review pending)   real party in interest ConocoPhillips Company attorney Jocelyn Thompson
Mar 17 2008	Request for depublication (petition for review pending)   respondent South Coast Air Quality Management District Attorney Bradley R. Hogin
Mar 24 2008	Opposition filed   Communities for a Better Environment and Carlos Valdez, et al., aplts.
Mar 25 2008	Reply to answer to petition filed
Apr 16 2008	Petition for review granted (civil case)   The petition for review is granted. George, C.J., was absent and did not participate. Kennard and Corrigan, JJ., were recused and did not participate. Votes: Werdegar, A.C.J., Baxter, Chin, and Moreno, JJ.)
Apr 22 2008	Received Court of Appeal record
Apr 23 2008	Certification of interested entities or persons filed   Attorney Ward L. Benshoof for RPI Conocophillips Co.
Apr 25 2008	Received Court of Appeal record
Apr 29 2008	Received additional record   18 doghouses
Apr 30 2008	Certification of interested entities or persons filed   counsel for aplt. Comm. for a Better Environment
May 1 2008	Certification of interested entities or persons filed   counsel resp. (Carlos Valdez, et al.,)
May 7 2008	Request for extension of time filed   to file opening brief/merits to June 15, 2008 Respondent Southcoast Air Quality Management
May 7 2008	Certification of interested entities or persons filed   Respondent Southcoast Air Quality Management
May 7 2008	Request for extension of time filed   to file opening brief/merits to June 15, 2008 Real party in interest Conocophillips Company
May 13 2008	Extension of time granted   On application of real party in interest, Conocophillips Company, and good cause appearing, it is ordered that the time to serve and file the opening brief on the merits is hereby extended to and including June 16, 2008.
May 13 2008	Extension of time granted   On application of respondent, South Coast Air Quality Management District, and good cause appearing, it is ordered that the time to serve and file the opening brief on the merits is hereby extended to and including June 16, 2008.
Jun 16 2008	Opening brief on the merits filed   RPI Conocophillips Company Attorney Jocelyn Thompson
Jun 17 2008	Opening brief on the merits filed   Respondents South Coast Air Quality Management District Attorney Bradley R. Hogin
Jun 17 2008	Request for judicial notice filed (granted case)   Respondent, South Coast Air Quality Management District attorney Bradley R. Hogin
Jun 23 2008	Request for extension of time filed   to file answer brief on the merits by Carlos Valdez, et al., appellants -- to & including Sept. 12, 2008. Marc D. Joseph, counsel
Jun 26 2008	Request for extension of time filed   counsel for appellants (Comm. for a Better Environ,) requests extension of time to Sept. 12, 2008, to file the answer brief on the merits.
Jun 30 2008	Extension of time granted   On application of appellant and good cause appearing, it ordered that the time to serve and file the answer brief on the merits is extended to and including September 12, 2008. No further extensions will be granted.
Jul 31 2008	Extension of time granted   On application of appellants, Communities for a Better Environment et al., and good cause appearing, it is ordered that the time to serve and file the appellants' answer brief on the merits is hereby extended to and including September 12, 2008.
Sep 3 2008	Filed:   change of firm name Attorney Jocelyn Thompson
Sep 12 2008	Answer brief on the merits filed   counsel for Comm. for a Better Environment
Oct 2 2008	Reply brief filed (case not yet fully briefed)   Conocophillips Company, Rpi
Oct 3 2008	Reply brief filed (case fully briefed)   South Coast Air Quality Management District, respondent CRC 8.25 submitted with a "Second Request for Judicial Notice"
Oct 3 2008	Request for judicial notice filed (granted case)   South Coast Air Quality Management District, respondent submitted concurrent with their Reply on Brief the Merits
Oct 30 2008	Received application to file Amicus Curiae Brief   Association of Irritated Residents, et al., Luke Cole, counsel (brief under separete cover) w/Request for Judicial Notice.
Oct 31 2008	Received application to file Amicus Curiae Brief   California School Boards Association in support of Southcoast Air Quality Management District and Conocophillips Company
Oct 31 2008	Received application to file Amicus Curiae Brief   California Association of Sanitation Agencies in support of respondents ~ So. Coast Air Quality Management District and Conocophillips Company
Oct 31 2008	Received application to file Amicus Curiae Brief   and proposed amicus brief Regulatory Flexibility Group ~ supports South Coast Air Quality Management District, respondent
Nov 3 2008	Received application to file Amicus Curiae Brief   and brief of California Building Industry Association supports real parties in interest and respondents, Conocophilips Company and South Coast Air Quality Management District. submitted with a request for judicial notice
Nov 3 2008	Received:   request for judicial notice in support of California Building Industry Association's amicus brief
Nov 3 2008	Received application to file Amicus Curiae Brief   Western Independent Refiners Association ~Attorney Michael M. Berger
Nov 3 2008	Received application to file Amicus Curiae Brief   Sierra Club, et al., in support of appellants (non-party)
Nov 3 2008	Received application to file Amicus Curiae Brief   Calif. Construction and Industrial Materials Assoc. in support of real party in interest. (non-party)
Nov 3 2008	Received application to file Amicus Curiae Brief   Western States Petroleum Association in support of real party in interest (non-party)
Nov 10 2008	Amicus curiae brief filed   The application of California Association of Sanitation Agencies for permission to file an amicus curiae brief in support of respondents is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Nov 10 2008	Permission to file amicus curiae brief granted   California Association of Sanitation Agencies.
Nov 10 2008	Amicus curiae brief filed   The application of California Construction and Industrial Materials Association for permission to file an amicus curiae brief in support of real party in interest is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Nov 10 2008	Permission to file amicus curiae brief granted   California Construction and Industrial Materials Association
Nov 10 2008	Amicus curiae brief filed   California School Boards Association.
Nov 10 2008	Permission to file amicus curiae brief granted   The application of California School Boards Association for permission to file an amicus curiae brief in support of respondents is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Nov 10 2008	Amicus curiae brief filed   Sierra Club, et al.
Nov 10 2008	Permission to file amicus curiae brief granted   The application of Sierra Club, et al. for permission to file an amicus curiae brief in support of appellants is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Nov 10 2008	Amicus curiae brief filed   Western States Petroleum Association.
Nov 10 2008	Permission to file amicus curiae brief granted   The application of Western States Petroleum Association for permission to file an amicus curiae brief in support of respondents is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Nov 10 2008	Amicus curiae brief filed   Regulatory Flexibility Group.
Nov 10 2008	Permission to file amicus curiae brief granted   The application of Regulatory Flexibility Group for permission to file an amicus curiae brief in support of respondents is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Nov 10 2008	Amicus curiae brief filed   Association of Irritated Residents.
Nov 10 2008	Permission to file amicus curiae brief granted   The application of Association of Irritated Residents for permission to file an amicus curiae brief in support of petitioner is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filling of the brief.
Nov 10 2008	Request for judicial notice filed (granted case)   Association of Irritated Residents Luke Cole, counsel
Nov 10 2008	Amicus curiae brief filed   Western Independent Refiners Association
Nov 10 2008	Permission to file amicus curiae brief granted   The application of Western Independent Refiners Association for permission to file an amicus curiae brief in support of real party in interest and respondent is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Nov 10 2008	Amicus curiae brief filed   California Building Industry Association
Nov 10 2008	Permission to file amicus curiae brief granted   The application of California Building Industry for permission to file an amicus curiae in support of respondent and real party in interest. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Nov 10 2008	Request for judicial notice filed (granted case)   California Building Industry Association
Dec 1 2008	Response to amicus curiae brief filed   by South Coast Air Quality Management District, respondent to AC brief of Sierra Club.
Dec 1 2008	Response to amicus curiae brief filed   Conocophillips Company, rpi responding to AC brief of Sierra Club, et al.,
Dec 1 2008	Response to amicus curiae brief filed   Conocophillips Company, rpi responding to AC brief of Irritated Residents, et al.,
Dec 1 2008	Filed:   counsel for resps. (Valdez) Memorandum of Pts. and Authors. in Opposition to Req. for Judicial Ntc. by Calif. Bldg. Industry Assoc.
Dec 1 2008	Application filed   by counsel for resp. (Valdez) Permission to file a single consolidated answer to amicus curiae briefs.
Dec 1 2008	Association of attorneys filed for:   counsel for resps. (Valdez) associates the law firm of Richard M. Frank, School of Law, as co-counsel
Dec 2 2008	Response to amicus curiae brief filed   by South Coast Air Quality Management District, respondent responding to AC brief of Association of Irritated Residents CRC 8.25
Dec 3 2008	Response to amicus curiae brief filed   counsel for resps. ( C.Valdez) consolidated answer to a/c brief. w/permission.
Dec 3 2008	Association of attorneys filed for:   counsel for resp. Comm. for a Better Environm't associates Richard T. Drury as counsel.
Dec 4 2008	Received:   amended proof of service for response to a.c. brief submitted by Resp., South Coast Air Quality Management District ~ [re: response to amicus brief of Sierra Club]
Dec 4 2008	Received:   amended proof of service for response to a.c. brief submitted by Resp., South Coast Air Quality Management District ~ (re: response to amicus brief of Association of Irritated Residents et al.,}
Mar 2 2009	Change of contact information filed for:   Calif. Bldg. Industry Assoc.
Dec 2 2009	Case ordered on calendar   to be argued on January 6, 2010, at 9:00 a.m., in San Francisco.
Dec 11 2009	Request for judicial notice granted   The requests for judicial notice by South Coast Air Quality Management District, filed June 17, 2008 and October 2, 2008 are granted.
Dec 14 2009	Order filed   The request of counsel for respondents and real party in interest in the above-referenced cause to allow separate counsel to argue on behalf of respondents and real party in interest at oral argument is hereby granted. The request to allocate to respondents South Coast Air Quality Management District et al. 20 minutes, and real party in interest ConocoPhillips Company 10 minutes of the 30-minute allotted time for oral argument is granted.
Dec 29 2009	Filed:   by counsel for South Coast Air Quality Mgmt. District, and jointly on behalf of Real Party in Interest ConocoPhillips, Application for Leave to Cite Additional Authorities at Oral Argument.
Dec 30 2009	Received:   from counsel for Real Parties in Interest Conocophillips, copy of letter from opposing party expressing no objection to counsel citing additional authorities at oral argument.
Jan 5 2010	Note: Mail returned (unable to forward)   Mail for Marc D. Joseph returned as "not deliverable; unable to forward"
Jan 6 2010	Cause argued and submitted
Jan 6 2010	Note: Mail returned (unable to forward)   Mail for Michael J. Strumwasser returned as "forward time expired; return to sender"
Mar 12 2010	Notice of forthcoming opinion posted   To be filed Monday, March 15, 2010 at 10 a.m.

Briefs
Jun 16 2008	Opening brief on the merits filed
Jun 17 2008	Opening brief on the merits filed
Sep 12 2008	Answer brief on the merits filed
Oct 2 2008	Reply brief filed (case not yet fully briefed)
Oct 3 2008	Reply brief filed (case fully briefed)
Nov 10 2008	Amicus curiae brief filed
Nov 10 2008	Amicus curiae brief filed
Nov 10 2008	Amicus curiae brief filed
Nov 10 2008	Amicus curiae brief filed
Nov 10 2008	Amicus curiae brief filed
Nov 10 2008	Amicus curiae brief filed
Nov 10 2008	Amicus curiae brief filed
Nov 10 2008	Amicus curiae brief filed
Nov 10 2008	Amicus curiae brief filed
Dec 1 2008	Response to amicus curiae brief filed
Dec 1 2008	Response to amicus curiae brief filed
Dec 1 2008	Response to amicus curiae brief filed
Dec 2 2008	Response to amicus curiae brief filed
Dec 3 2008	Response to amicus curiae brief filed

If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website

May 2, 2010 Annotated by gosnell

Facts and Discussion: ConocoPhillips Company developed plans for an Ultra Low Sulfur Diesel Fuel Project (the Diesel Project), which required modifications of an existing facility in Wilmington, an area of the City of Los Angeles. ConocoPhillips requested a permit to construct the necessary modifications from the South Coast Air Quality Management District (the District). These modifications included the replacement or modifying of hydrotreater reactors, a cooling tower, storage tank, and compressor; installing new pipelines and pumps; and substantially increasing operation of the existing cogeneration plant and four boilers, which provide steam for refinery operations. At issue here are the cogeneration plant and boilers, which had prior permits that stated a maximum rate of heat production for each piece of equipment. The proposed Diesel Project did not call for any equipment to exceed the capacity authorized by the prior permit. The District used the baseline levels from the maximum capacity permitted by the prior permit to complete their initial environmental impacts study, despite the fact that this exceeded the current usage levels. They concluded in a draft negative declaration that the project did not have the potential to adversely affect the environment. Under the California Environmental Quality Act (CEPA), a public agency pursuing or approving a project must prepare an EIR if the project may result in a “significant effect on the environment” (Pub. Resources Code, §21000 et seq.) (assuming the project is not exempt from CEPA). The determination of whether or not an EIR is required is based upon the agency’s initial study; if it produces substantial evidence supporting a fair argument that the project may have significant adverse effects, the agency must prepare the EIR. If it indicates the project will not have significant environmental effects, the agency may so state in a negative declaration. The District so concluded here. The Plaintiffs submitted comments on the draft negative declaration arguing the Diesel Project would have significant adverse environmental impacts, and thus an environmental impact report (EIR) should be prepared. The Plaintiffs are Communities for a Better Environment, Southern California Pipe Trades District Council 16 and Steamfitters & Pipefitters Local 250 (labor organizations), and Carlos Valdez and other individuals who live and/or work near the ConocoPhillips refinery. The Plaintiffs argued that the project would increase nitrogen oxide (NOx) emissions, which contributes to the formation of smog, by as much as 661 pounds per day—well in excess of the District threshold of 55 pounds per day. In its negative declaration, the District noted that increased operation of existing steam generation would increase NOx emissions, but stated they were not considered as a significant environmental impact because they did not exceed the maximum rate of heat production allowed under existing permits (their baseline). Procedural Posture: The trial court denied the petitions for writ of mandate filed by the plaintiffs, who alleged the District had violated CEQA by failing to prepare an environmental impact report (EIR) prior to approving the ConocoPhillips’s Diesel Project. The trial court entered judgment for the District and ConocoPhillips. The plaintiffs appealed, and argued substantial evidence supported that the Diesel Project would have a significant environmental impact, which would require the District to prepare an EIR. The appellate court reversed in part, affirmed in part, and remanded with directions for the District to prepare an EIR. The Court of Appeal held that greater use of existing equipment should have been evaluated, and not be considered part of the baseline as that measurement, under the CEQA, rests on the actual physical conditions on the ground. Following the decision by the Court of Appeal, the District and ConocoPhillips’s filed a joint petition for review with the Supreme Court of California. Issue: In determining whether an environmental impact report is mandated under the California Environmental Quality Act (CEPA) for a proposed project, is the maximum amount of emissions allowed a facility under an existing permit part of the baseline against which future environmental impacts should be assessed? Should this maximum amount allowed under an existing permit be considered even though (a) the facility’s current operations did not reach that level of emissions, and (b) the level of emissions allowed by the permit had not been subjected to CEQA review? Holding: The judgment of the Court of Appeal is affirmed. Justice Werdegar delivered the Supreme Court of California’s unanimous decision that a project requiring preparation of an environmental impact report (EIR) pursuant to the California Environmental Quality Act (CEPA) must compare the impact of a proposed project to the actual environmental conditions existing at the time of the CEQA analysis, rather than to the allowable conditions granted by an existing permit. Here, the Court held that the District did not follow the CEQA and its guidelines when it used the maximum capacity levels set in prior boiler permits, rather than the actually existing levels of emissions from the boilers, as a baseline to analyze emissions from the proposed ConocoPhillips project. The Court reiterated that neither the CEQA nor its guidelines mandate a uniform, inflexible rule for determination of the existing conditions baseline, but that the comparison must be between existing physical conditions prior to the proposed project and the conditions expected to be produced by the project. The District is ordered to set aside its negative declaration and project approval and to prepare an EIR that will evaluate these increased emissions, along with any other significant impacts. Reasoning: The District’s choice of a baseline for NOx emissions was inconsistent with CEQA and its guidelines. Prior operating permits do not in themselves establish a baseline for environmental review of a new project. Under Section 15125 of the CEQA Guidelines, an EIR must consider the environmental conditions “as they exist at the time the notice of preparation is published,” and that setting will “normally constitute the baseline physical conditions by which a lead agency determines whether an impact is significant.” Similarly, Court of Appeals decisions have held that the environmental impacts of a proposed project are generally to be compared to the actual existing conditions at the time of the CEQA analysis, rather than maximum allowable conditions established for a prior existing project at the site. The District incorrectly compared the proposed project to the maximum that could potentially—but was not actually—occur, and therefore failed to meet the intent of the CEQA. The Defendants attempt to distinguish their situation from previous cases on the grounds that the employment of an analytical baseline below the maximum levels stated in the permits would defeat ConocoPhillips’s vested rights. The Court disagrees, stating that ConocoPhillips would not be deprived of any vested right it holds under the boiler permit if the pollution control mitigation were a condition for approval of a new project. Further, even if the vested rights of an applicant constituted a valid reason to forgo a particular mitigation measure(s), they are still not a sufficient excuse to avoid a realistic CEQA analysis. The Court also rejects Defendants’ claim that use of an existing conditions baseline would violate the statute of limitations. Such a claim is refuted on the grounds that the Plaintiffs seek to review the approval of the project and not to attack the District’s decision on grounds of noncompliance with the CEQA. While a statute of limitations exists for the latter, no claim of violation of the statute of limitations has been made for the plaintiffs challenge regarding the project’s approval. The Court further concluded that the record supports a fair argument that the Diesel Project will have significant adverse environmental effects. Additionally, the Court clarifies that the District is not necessarily required to use a rigid measuring method. To meet the CEQA, the District must ensure that, regardless of the method, the environmental impact comparison must be between physical conditions that exist before the project, and those conditions the project is expected to create.

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