Poet, LLC v. State Air Resourced Board, F073340

Background

California's Global Warming Solutions Act charged the Air Resources Board (ARB) with reducing GHGs; ARB adopted Low Carbon Fuel Standard (LCFS) regulations in 2009 that incentivized biodiesel/renewable diesel.
In Poet I (2013), this court found ARB violated CEQA by deferring adequate analysis/mitigation of NOx increases from biodiesel, and issued a peremptory writ (February 2014) requiring ARB to address whether the project would have significant NOx impacts, make findings supported by substantial evidence, and adopt mitigation if necessary; the LCFS standards were temporarily preserved pending compliance.
On remand ARB readopted modified LCFS (2015) and adopted Alternative Diesel Fuel (ADF) regulations, issued a Final Environmental Analysis using 2014 as the NOx baseline, concluded NOx would decline from the 2014 baseline, and asked the trial court to discharge the writ.
Plaintiffs challenged ARB’s compliance, arguing ARB misdefined the “project” (excluding the original 2009 regulations), used an improper 2014 baseline (inflated by prior regulatory effects), and thereby understated NOx impacts and failed to make required findings/mitigation analyses.
The trial court discharged the writ; this appeal asks whether ARB complied with paragraph 3 of the writ and, if not, what remedy is appropriate.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Scope of “project” in paragraph 3 of the writ	"Project" includes the whole of ARB’s action: original 2009 LCFS, 2015 readoption, and ADF regs; ARB must analyze cumulative impacts of the entire project	"Project" limited to the new/2015 regulations and future effects only; paragraph 3 concerns future impacts of the readopted regs	Court (de novo) held “project” means the whole of the agency action (original LCFS, 2015 LCFS, and ADF regs); ARB’s narrow reading was incorrect.
Appropriate baseline for NOx analysis	Baseline must be conditions when environmental review began (pre-2009); using 2014 baseline improperly absorbs past impacts and understates future increases	No writ-specified baseline; Guidelines permit using conditions when current environmental analysis commenced (2014); 2014 is a reasonable baseline	Court held ARB’s use of a 2014 baseline unjustified; the proper baseline is existing conditions when initial environmental review began (no later than 2010 unless ARB justifies a later year with substantial evidence).
Whether ARB satisfied paragraph 3 (findings, substantial evidence, mitigation)	ARB failed: wrong project framing and baseline produced misleading NOx analysis; thus it did not make required findings/mitigation	ARB argued it made findings supported by evidence and the trial court should defer; discharge of writ was appropriate under abuse-of-discretion review	Court held ARB did not comply with paragraph 3 or CEQA with respect to NOx: the analysis understated impacts and failed to allocate causation or determine significance; discharge reversed.
Prejudice and remedy	Plaintiffs: errors were prejudicial to CEQA’s informational goals; seek reversal and tailored relief (modify writ; remedy NOx analysis; suspend problematic provisions)	ARB: errors (if any) are not prejudicial; appellate court lacks authority to suspend regs; relief should be limited	Court found prejudice (material informational gaps) and reversed. It remanded with a modified writ: require ARB to redo NOx analysis using proper baseline, make findings supported by substantial evidence, consider mitigation/alternatives; ADF regs remain; diesel-related standards severable but not suspended; 2017 diesel standards frozen pending compliance.

Key Cases Cited

POET, LLC v. State Air Resources Bd., 218 Cal.App.4th 681 (Cal. Ct. App. 2013) (prior opinion identifying CEQA violations and framing remand/writ terms)
Neighbors for Smart Rail v. Exposition Metro Line Construction Authority, 57 Cal.4th 439 (Cal. 2013) (baseline selection and informational purpose of CEQA)
Communities for a Better Environment v. South Coast Air Quality Management Dist., 48 Cal.4th 310 (Cal. 2010) (existing-conditions baseline principle and agency discretion in measurement technique)
Tuolumne County Citizens for Responsible Growth, Inc. v. City of Sonora, 155 Cal.App.4th 1214 (Cal. Ct. App. 2007) (test whether separate acts are "related" and constitute one CEQA project)
Calfarm Ins. Co. v. Deukmejian, 48 Cal.3d 805 (Cal. 1989) (grammatical, functional, and volitional severability analysis)
California Redevelopment Assn. v. Matosantos, 53 Cal.4th 231 (Cal. 2011) (severability clausal weight and analysis)
Sanders v. City of Los Angeles, 3 Cal.3d 252 (Cal. 1970) (appellate remedies when a writ discharge is erroneous; courts may direct further orders to compel obedience)