John R. Lawson Rock & Oil, Inc. v. State Air Resources Bd.John R. Lawson Rock & Oil, Inc. v. State Air Resources Bd.
OPINION
APPEAL from a judgment of the Superior Court of Fresno County. Mark Wood Snauffer, Judge.
Xavier Becerra, Attorney General, Robert W. Byrne, Assistant Attorney General, Randy L. Barrow and Nhu Q. Nguyen, Deputy Attorneys General, for Defendants and Appellants.
Wanger Jones Helsley, Timothy Jones, John P. Kinsey, and Steven K. Vote for Plaintiffs and Respondents.
Dorothy Rothrock; Heather Wallace; and Michael Jacob for California Manufacturers & Technology Association, Automotive Specialty Products Alliance, California Business Properties Association, California Chamber of Commerce, California Independent Oil Marketers Association, California Professional Association of Specialty Contractors, California Retailers Association, Consumer Specialty Products Association, National Elevator Industry, Inc., and Pacific Merchant Shipping Association as Amici Curiae on behalf of Plaintiffs and Respondents.
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This case involves modifications to a set of regulations first adopted in 2008, known as the “Truck and Bus Regulation” (the regulations). In 2014, the State Air Resources Board (the Board) adopted proposed modifications to the Truck and Bus Regulation, extending certain deadlines for small fleet operators to comply with the regulations. John R. Lawson Rock & Oil, Inc. (Lawson), a fleet operator that had already incurred financial liability complying with the regulations, along with a related interest group, the California Trucking Association (collectively respondents), filed a writ petition against the Board and Richard Corey in his official capacity as Executive Officer of the Board
The trial court ultimately ruled in respondents’ favor on both claims. With respect to CEQA, the court concluded the Board made several errors, including approving a project prior to the completion of an environmental study, adopting the wrong baseline for its analysis, incorrectly concluding the modifications would have no significant adverse impact on the environment, and improperly applying a piecemeal approach to the environmental review. With respect to the APA, the trial court found the Board conducted an incomplete economic impact analysis.
For the following reasons we conclude the trial court correctly determined the Board’s actions violated CEQA. We find, however, that the violations are narrower than found by the trial court. We further find the Board’s conduct violated the APA, voiding the modified regulations. We therefore affirm the trial court’s judgment on the grounds set forth below.
FACTUAL AND PROCEDURAL BACKGROUND
In January 2010 a regulatory scheme called the Truck and Bus Regulation, first passed in late 2008, became effective. (See
Shortly before the regulations became effective, staff notified the Board that the ongoing global recession had substantially reduced overall trucking activity since the regulations were first envisioned, potentially warranting modifications to the expected regulations. The Board responded by delaying some reporting deadlines and requesting proposals for modifications to the regulations. The subsequent proposal resulted in certain modifications to the original regulations that would delay the initial compliance dates by a year and further defer engine replacements by two or more years for most fleets. These changes also eliminated a requirement that certain light trucks utilize a particulate matter filter and provided a 10-year window where only engines 20 years old, or older, would require modernization. The Board notes in its briefing that no legal challenges were filed against these modifications.
In October 2013, the Board received a status update on the Truck and Bus Regulation. In this update, the Board was informed that staff had been working with regulated fleets to meet compliance deadlines. Staff reported that, while “the vast majority of the 260,000 trucks registered in California [that] must comply with the requirements of the regulation [were] already compliant,” 20,000 trucks still needed a filter, of which nearly 15,000 were in small fleets of three or fewer. Staff identified January 1, 2014, as a critical upcoming milestone “because it’s the first time at least one vehicle for each of these fleets need[s] to become compliant,” while noting that “small fleets typically have least access to capital, creating additional challenges” toward compliance.
As part of this update, staff identified “what [the Board] is doing to assist fleets in transitioning into compliance as we approach the upcoming compliance date.” Staff pointed to several funding programs available to assist fleets with required modifications and noted “[s]taff is also proposing some new regulatory flexibility to be added to the regulation.” As part of this regulatory flexibility, staff indicated it was “proposing to issue a regulatory advisory that would provide fleets that order a [particulate matter] filter or a replacement truck or that are eligible and apply for a grant or a loan to have until July 1, 2014, to complete the steps necessary to come into compliance” and stated “because we are planning to make regulatory changes to provide relief, we believe it is appropriate to provide access to these provisions while staff finalizes them to present to the Board by April 2014.” All these proposals were part of what staff described as “a comprehensive strategy which will help many of [the currently noncompliant] fleets transition into compliant trucks.” Staff explained that, moving forward, “staff will assess the emission and economic impacts of proposed regulatory changes,” and “return to the Board by April 2014 with proposed amendments.” In the meantime, staff noted they would issue a regulatory advisory to allow fleet operators to take advantage of the planned flexibility. Based on this presentation, the Board indicated its staff should examine these changes while some members expressed thanks that flexibility was being built into the regulations.
The Board’s Regulatory Advisory
In November 2013, the Board issued the expected Regulatory Advisory concerning its plans to modify the current regulations. The Regulatory Advisory described steps the Board “is taking to assist vehicle owners with the transition to the upcoming January 1, 2014, particulate matter . . . filter compliance deadline under the Truck and Bus [R]egulation” and expressed its overall goal as providing “additional time for owners to complete their good
Truck owners were also allowed “to take advantage of the following anticipated regulatory changes for all vehicles” prior to the expected April 2014 hearing at which the matter would be again discussed. Staff outlined these anticipated changes as: (1) reopening the period for vehicles to opt-in to the existing low mileage agricultural vehicle extension; (2) reopening the period for vehicles to opt-in to the existing low mileage construction truck extension; (3) reopening the period for vehicles to opt-in to the existing particulate matter phase-in requirements; (4) increasing the thresholds for low-use exemptions; and (5) expanding the definition of “ ‘NOx exempt’ ” areas. Staff also explained that the “PM filter requirements for vehicles operated exclusively in the existing and newly proposed ‘NOx exempt’ areas . . . will be delayed one year until January 1, 2015.” The advisory further explained that “while . . . staff anticipates proposing amendments similar to these administrative changes at the Board’s regularly scheduled April 2014 meeting, the changes will not be finalized until approved by the Board.” However, “[i]n the event that the proposed amendments differ from those identified above and impact a fleet’s ability to comply with the regulation, . . . staff will provide fleets that have reported their intent to use these options additional time beyond the Board’s April 2014 meeting to come into compliance.”
The Initial Statement of Reasons
On March 5, 2014, the Board released a staff report, which included its Proposed Amendments to the Truck and Bus Regulation and its Initial Statement of Reasons for Proposed Rulemaking (initial statement). The initial statement provided recommendations for modifications in line with those discussed at the October 2013 meeting and, relevant to this appeal, included distinct subsections discussing air quality, the environmental impacts analysis, and the economic impacts analysis and assessment. With respect to the disputed modifications, the initial statement sought to provide relief in areas with cleaner air by delaying the compliance schedule for all vehicles operating solely within certain exempt areas by one year for initial compliance and four years for final compliance. For small fleets outside of these areas, staff proposed “to defer the compliance requirements for the second and third truck in a small fleet by one year and two years, respectively. . . .” No
For fleets that had already complied with the prior particulate matter regulations, staff recommended extending the time they could use existing particulate matter retrofits, extending the use of credits with respect to the use of particulate matter filters, and allowing operators to continue operating if retrofitted particulate matter filters are recalled, all of which generally extended relevant deadlines for complying fleets. The credit program generally allowed trucks fitted with compliant particulate matter filters prior to 2012 to count against other trucks in the fleet that would otherwise need to be upgraded until the new deadlines were reached. The changes would also delay the point at which trucks outfitted with a particulate matter filter prior to 2014 would have to upgrade their engine to a 2010 model level.
The air quality section of the initial statement identified several reasons why reducing diesel particulate matter and black carbon—“a major constituent of diesel [particulate matter]”—was important nationally and locally, particularly in the South Coast and San Joaquin Valley regions. This section also included updated information about the types of trucks subject to regulation and their use in California. In conjunction with Appendix F to the initial statement, the air quality section explained that current pollution estimates now included “up-to-date (2013) fuel sales and use data,” the “latest nationwide truck sales projected in the Annual Energy Outlook,” improved matching of engine and truck model years from prior estimates, and updated information “on how truck owners are actually complying” with the previously passed regulations. The air quality section then provided several charts showing how oxides of nitrogen and particulate matter emissions would decrease from the current levels estimated under the updated methodology and compared those reductions to the estimated reductions if the current regulations were left in place. As one example of how this data was presented, the below chart shows how the current data regarding particulate matter emissions (marked as the “Without Truck and Bus Regulation” line) compares to the data “With Adopted Regulation” and “With Proposed Amendments.”
Finally, the economic impacts analysis and assessment section claimed to discuss “the effect of the proposed amendments on individual fleet owners and businesses affected by the regulation.” It generally concluded that the amendments “would reduce compliance costs for many fleet owners” by allowing “fleet owners more time to make the required upgrades, thereby providing time for used compliant truck prices to naturally decline.” The section then discussed numerous expected costs, including vehicle price and replacement costs, retrofitting particulate matter filter costs, and other similar matters associated with the regulations. Within these analyses, staff considered things such as differences in impact between in-state and out-of-state fleets, differences in impact on high-mileage fleets, and annual operational, maintenance, and reporting costs. The section further considered the specific impact the modifications had on small businesses within California, noting “the proposed amendments would not impose any additional costs on small businesses, and should result in small businesses, many of them small fleets, being able to spread out” their compliance costs. At the same time, the section explained “the [amendments] could have a negative economic impact on retrofit manufacturers and installers,” among others.
As part of the economic analysis, staff completed a Standardized Regulatory Impacts Assessment (standardized assessment or SRIA), which was ultimately submitted to the Department of Finance for review and approval. Included within this assessment was a discussion of costs and cost savings arising from the proposed amendments. In its discussion on the costs and cost savings for businesses, staff concluded, “The businesses required to comply are throughout the state of California, while all regulated businesses can benefit from the compliance delays, the businesses that have already complied would not be affected.” The report did not identify any analysis supporting this conclusion. In a later section on macroeconomic impacts, the assessment looked at competitiveness and job impacts in California, among other factors. Here, when discussing competiveness, the assessment focused on “competitive advantage[s] of businesses outside of California to those in California” and found “no direct impact on competitiveness.” The report noted that, while some businesses “have indicated that the compliance requirements would negatively impact their ability to achieve the necessary profits to stay in business,” the amendments were designed “to provide the flexibility necessary to ensure these businesses are not eliminated” and the “strategy will be beneficial for California due to a favorable change in the trade balance between California and the rest of the world . . . .” With respect to job impacts, the assessment found there would “be no net loss in jobs over the
Comments, Responses, and Approvals
Following release of the initial statement, the Board solicited and received public comments on its proposals. These comments included several from Lawson, which raised the issues litigated in this matter.
On April 24, 2014, the Board held another public meeting, at which time it was updated on the status of its proposed modifications. In that presentation, staff recommended adopting the proposed modifications with several non-substantive changes requiring a 15-day public comment period under the APA. The Board adopted this recommendation and initially approved the modified regulations by way of Resolution 14-3, on April 25, 2014. As part of this approval, the Board approved and released written responses to comments on the environmental impacts analysis related to the modified regulations, rejecting all public criticisms of the document.
When providing the 15-day comment period, and a second 15-day comment period required after additional changes were made that increased compliance times for the second truck in a small fleet, among other matters, the Board noted that staff “has determined that these modifications do not change implementation of the regulation in any way that alters any of the conclusions of the environmental analysis . . . included in the Staff Report released on March 5, 2014,” and that the “modifications do not cause any changes that alter the air quality emissions assessment or otherwise result in any other significant adverse environmental impacts . . . .”
Following these comment periods, the Board held another public meeting and received another update on the modifications. The staff update noted the original environmental analysis found no adverse environmental impacts and the 15-day changes did not alter that conclusion. Staff noted additional environmental comments had been received and responded to and recommended reaffirming the Board’s finding of no adverse environmental impact and adopting the final regulation order.
On November 20, 2014, the Board issued Resolution 14-41, adopting the final regulation order for the modified regulations and the written responses to the environmental and economic comments previously discussed. In line with this action, the Board issued its Final Statement of Reasons for Rulemaking, which incorporated the initial statement and provided written responses to all the comments received from the public. Included in these comments
The Present Proceedings
On May 23, 2014, respondents filed their initial petition for a writ of mandate and complaint for declaratory and injunctive relief based on the Board’s conduct to that point. The petition and complaint was amended in July 2014 and faced a quick demurrer on the grounds that the regulatory proceedings were not complete. On December 23, 2014, after the Board issued its final approval, respondents filed a second amended petition and complaint, which remains the operative pleading in this case.
The trial court held hearings on September 18 and October 16, 2015, before issuing its Final Statement of Decision on June 7, 2016. The trial court first concluded the Board engaged in post hoc environmental review by approving amendments before the environmental review process was complete. The court reasoned the Board began carrying out and implementing the proposed amendments as early as November 2013, and the Board’s April 25, 2014, approval was also premature given that additional environmental review remained. The court next found the Board should have prepared the
Based on these findings, the trial court granted respondents’ writ petition, voided the Board’s approval of the 2014 Amendments to the Truck and Bus Regulation and certification of the environmental documents related to the 2014 Amendments, and issued a peremptory writ of mandamus to the Board ordering it “to comply with CEQA and the APA before taking any further action to approve, implement or enforce the 2014 Amendments.” The court denied respondents’ request for declaratory relief and awarded respondents their fees and costs.
This appeal timely followed.
DISCUSSION
Alleged CEQA Violations
The underlying writ petition includes multiple allegations of error under CEQA. Although we need not reach every allegation, our ultimate finding of CEQA error requires us to consider several alleged errors in order to ensure future compliance with CEQA should the Board continue to pursue modifications to the current regulations. Accordingly, we begin by identifying some basic CEQA principles, before analyzing those alleged errors.
CEQA and the Board’s Regulatory Program
The Board is not subject to the full scope of CEQA. Rather, it utilizes its own regulatory program when adopting or amending standards for the
The Board’s “regulatory program is contained in sections 60005, 60006 and 60007 of title 17 of the California Code of Regulations. These provisions require the preparation of a staff report at least 45 days before the public hearing on a proposed regulation, which report is required to be available for public review and comment. (
Although the Board follows slightly different procedures, we analyze the Board’s conduct for compliance with CEQA’s policies and legal mandates. (POET I, supra, 218 Cal.App.4th at p. 711.)
General Standards of Review
In reviewing an agency’s compliance with CEQA during the course of its legislative or quasi-legislative actions, the trial court’s inquiry during a mandamus proceeding “ ‘shall extend only to whether there was a prejudicial abuse of discretion,’ ” which is established “ ‘if the agency has not proceeded in a manner required by law or if the determination or decision is not supported by substantial evidence.’ ” (Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, 426 (Vineyard), citing
“In evaluating an EIR [or substitute environmental document] for CEQA compliance, . . . a reviewing court must adjust its scrutiny to the nature of the alleged defect, depending on whether the claim is predominantly one of improper procedure or a dispute over the facts.” (Vineyard, supra, 40 Cal.4th at p. 435.) When the claim is predominantly one of procedure, courts conduct an independent review of the agency’s action, but when a challenge is made to a factual finding of the agency, we will review the record to determine whether the finding is supported by substantial evidence. (POET I, supra, 218 Cal.App.4th at p. 713.) When the informational requirements of CEQA have not been met, an agency has failed to proceed in a manner required by law and has therefore abused its discretion. (California Sportfishing, supra, 160 Cal.App.4th at p. 1644.) In assessing such a claim, courts apply an independent or de novo standard of review to the agency’s action. (Communities for a Better Environment v. City of Richmond (2010) 184 Cal.App.4th 70, 83.)
On appeal, we review the agency’s action rather than the trial court’s ruling, applying the same standard as the trial court. (Vineyard, supra, 40 Cal.4th at p. 427.) “We therefore resolve the substantive CEQA issues . . . by independently determining whether the administrative record demonstrates any legal error by the [agency] and whether it contains substantial evidence to support the [agency’s] factual determinations.” (Ibid.)
The Board’s Approval of the Modifications
Although the Board is not subject to the full extent of CEQA regulations when utilizing its certified regulatory program, it is subject to various CEQA principles relevant to its regulatory actions. One of these principles is the expectation that CEQA documents, and by extension CEQA compliant documents like the Board’s staff report, “be considered before project approval.” (POET I, supra, 218 Cal.App.4th at p. 716.) As explained in the CEQA Guidelines, “public agencies shall not undertake actions concerning the proposed public project that would have a significant adverse effect or limit the choice of alternatives or mitigation measures, before completion of CEQA compliance.” (
timing requirement. (POET I, supra, 218 Cal.App.4th at p. 717 [“[W]e conclude that certified regulatory programs, while exempt from certain requirements of CEQA, are not exempt from the timing requirement in Guidelines section 15004.”].)
The parties dispute whether the Board satisfied this timing requirement. According to respondents, the Board took two distinct steps that committed it to a definite course of action with respect to the proposed modifications. First, respondents contend the Board violated CEQA when its staff issued Regulatory Advisory 13-28 in November 2013. Respondents argue the Board necessarily limited its choice of alternatives or mitigation measures and committed itself to a definite course of action on the modifications when it issued an advisory telling fleet owners they could “ ‘report and take advantage of applicable anticipated regulatory changes.’ ” Second, respondents see a CEQA violation at the time the Board first approved the Amendments at the April 25, 2014, meeting. Respondents posit that the Board’s CEQA review was not complete, according to regulatory rules, until the Board filed a Notice of Decision, which did not occur until November 2014, and that the approval in April 2014 included language demonstrating the environmental review was ongoing.
The Board disagrees. With respect to its conduct in issuing the Regulatory Advisory, the Board argues the advisory itself was not a project and did not bind the Board to adopting the proposed amendments or preclude consideration of alternatives. Rather, the Board states that it “was simply allowing vehicle owners an opportunity to report their intent to use amended provisions if they became available and be eligible for some delay in enforcement, if they reported that intent,” conduct the Board contends is perfectly acceptable given its inherent discretion “to determine where, when, and how to utilize its enforcement resources.” It further suggests any error at this stage is “moot and irrelevant because by the time the writ petition was filed, [the Board] did in fact conduct the full CEQA review of the proposed regulatory modifications.” On the matter of its April 2014 approval, the Board’s position is that it met all CEQA requirements prior to the April 2014 approval and that respondents are mistaking routine boilerplate language in its notice of approval for an admission that further environmental review was applicable.
The Board Violated CEQA by Approving a Project Too Early
We begin with analyzing the Board’s conduct when issuing the Regulatory Advisory. We ultimately find this action constituted the approval of a project under CEQA. Contrary to the framework of the Board’s arguments, the project in this instance was not the advisory, but the proposed regulatory modifications. The Board’s issuance of a public Regulatory Advisory stating that fleet operators could take advantage of the proposed regulatory modifications before they were enacted, and would not be subject to enforcement actions or penalties if those modifications were not enacted, is sufficient conduct to constitute approval of those regulations under CEQA. As the required environmental review was incomplete at the time of the CEQA project approval, the Board violated CEQA’s timing requirement.
A project is a broad concept under CEQA that asks whether certain entities’ activities “ ‘may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.’ ” (Friends of the Sierra Railroad v. Tuolumne Park & Recreation Dist. (2007) 147 Cal.App.4th 643, 653.) Analogous to this case, “[t]his means that agency action approving or opening the way for a future development can be part of a project and can trigger CEQA even if the action takes place prior to planning or approval of all the specific features of the planned development.” (Id. at p. 654.) This “opening the way” can trigger CEQA where it constitutes an approval.
Although we agree with the Board that issuing the Regulatory Advisory itself did not constitute a project, this does not end our inquiry. The modification of current regulations may constitute a project. (POET, LLC v. State Air Resources Bd. (2017) 12 Cal.App.5th 52, 73-74 (POET II).)
Prior to issuing the Regulatory Advisory, staff identified proposed modifications to the current framework of the Truck and Bus Regulation, modifications it called a comprehensive compliance strategy. The Board and its staff then indicated their intent not to prosecute those that failed to comply with the current controlling regulations if they identified their intent to comply with the expected proposal. The potential modifications were sufficiently detailed to allow staff to indicate they would quickly present modifications based on their presented outline to the Board and could rely on that outline as a basis for choosing not to enforce the present regulations. Such a plan is certainly
While the Board contends no project approval could exist prior to the formal approval from the Board, this is not correct. An approval under CEQA is “the decision by a public agency which commits the agency to a definite course of action in regard to a project intended to be carried out by any person.” (
Our Supreme Court provided an extensive analysis of this principle with respect to public/private development agreements in Save Tara. In that case, the city council for West Hollywood entered into a development agreement that was contingent on later CEQA review and other regulatory approvals. (Save Tara, supra, 45 Cal.4th at pp. 123-124.) The court found this agreement violated CEQA’s timing requirement, noting in its analysis that the agreement included a loan not conditioned on CEQA compliance, that the city had made several statements suggesting it was committed to the project (Save Tara, supra, at pp. 140-142), and that the “[c]ity [had] proceeded with tenant relocation on the assumption the property would be redeveloped as in the proposed project” (id. at p. 142).
In its discussion regarding the general principles of CEQA’s timing requirement, the Supreme Court explicitly rejected the city’s argument that approval could not occur until the relevant agency entered into an unconditional agreement irrevocably vesting development rights. (Save Tara, supra, 45 Cal.4th at p. 134.) In language pertinent to this case, the court noted it had previously found approval “even though further discretionary governmental decisions would be needed before any environmental change could occur” (ibid.) and explained that limiting approval to unconditional agreements would ignore situations where bureaucratic and financial momentum had built irresistibly behind a proposed project, creating a strong incentive to ignore environmental concerns. (Id. at p. 135.) Notably, however, the court also
with the project.” (Id. at pp. 138-139.) The court instructed reviewing courts to look “not only to the terms of the agreement but to the surrounding circumstances” when making this determination. (Id. at p. 139.)
The core principles set forth in Save Tara equally apply to public regulatory action, such as the proposed amendments at issue here. (POET I, supra, 218 Cal.App.4th at p. 719.) While the facts shedding light on the agency’s rule-making process will be different from those arising when an agency approves a development agreement, such differences are immaterial to the core issue whether the agency has taken any steps foreclosing alternatives, including that of not going forward, or has otherwise created bureaucratic or financial momentum sufficient to incentivize ignoring environmental concerns.
Under that standard, we conclude the Board did take action that significantly furthered the proposed regulations in a manner that foreclosed the alternative of not modifying the regulations. As the Board notes in its briefing, it was updated on issues regarding full implementation of the existing regulations in October 2013. At that time it was informed compliance was required by January 1, 2014, and that many small fleets were facing economic challenges in meeting this deadline. In response to this information, the Board directed its staff to propose modifications to the regulations. While such conduct certainly built momentum behind a change to the regulations, such momentum was well in line with Save Tara’s reminder that agencies may express interest in or even inclination toward proposed projects.
However, shortly after providing those instructions, staff responded, in November 2013, with draft modifications and an advisory to the public regarding the proposal. While the advisory informed the public that further action by the Board was necessary to implement any changes, and warned that the Board and staff may propose amendments, it expressly stated that, should modifications occur that “impact a fleet’s ability to comply with the regulation, [the Board’s] staff will provide fleets that have reported their intentto use these options additional time beyond the Board’s April 2014 meeting to come into compliance.” Thus, at the point of the November 2013
We conclude such conduct qualifies as approval of the modified regulations under
The Board argues that such a conclusion cannot stand because the Board was merely exercising its well-settled powers of prosecutorial discretion with respect to regulatory enforcement. Noting there is no case law on record suggesting the Board’s “exercise of its prosecutorial discretion is constrained by
As the Board cited in its own briefing, “[a] decision to devote available facilities and personnel to selected areas and to abstain from active
Remedy for Early Approval
“Directing an agency to void its approval of the project is a typical remedy . . . for a
We conclude that, to the extent the trial court intended to specifically order the preparation of the functional equivalent of an EIR, it erred. We note, however, that the court’s actual judgment imposes no direct requirement to do so. We consider this issue, however, based on the parties’ competing interpretations.
In this case, we do not believe the Board lacks discretion to act in compliance with
The Board’s Choice of a Baseline
Although the Board’s early approval requires that we void approval of the contested modifications, as we have noted the Board may continue to pursue those or similar modifications. As such, we turn to the actual environmental analysis completed to determine whether it ultimately complied with
Standards of Review and Applicable Law
The baseline determination is an important component of the
The Board Selected an Appropriate Baseline
The arguments presented on appeal walk a tightrope between the two standards of review noted above. Both parties agree, consistent with the case law, the Board should normally adopt as a baseline “the physical environmental conditions in the vicinity of the project, as they exist . . . at the time the environmental analysis is commenced . . . .” (
Regardless of where the arguments fall specifically, we do not agree with respondents that the Board either adopted a baseline that was inconsistent with
Communities provides strong support for our conclusion. Like our case, Communities involved an agency issuing a negative declaration. However, in that case, the declaration arose because the baseline chosen for the project was the operation of certain boilers at their full permitted operational levels, despite the fact simultaneous maximum operation was not a realistic
In line with Communities, the administrative record in this case demonstrates that full compliance with the existing regulatory standards would also create an illusory comparison. The record basis for proposing a delay in the regulatory mandates was the recognized fact that limitations in credit and capital had left many small fleet operators unable to comply with the standards as written. There were many who had not yet complied and it takes no unrealistic inference to recognize that future emissions estimates based on full compliance would mislead the public as to the effectiveness of the current regulations. Indeed, the natural unevenness in implementation and enforcement ofregulations means regulatory expectations based on full compliance are rarely likely to accurately identify the current environmental conditions relating to those regulations. Nor should such predictions be used.
Although respondents seek to distinguish Communities in the context of this argument, they do so by arguing the trial court “found that the ‘ “existing conditions” included the [Existing Regulations], and the emissions reductions that could be expected from enforcement of that regulation.’ ” This argument adds no weight to respondents’ positions. We do not review the trial court’s action, nor do we defer to the trial court’s findings in these matters. (Center for Biological Diversity, supra, 62 Cal.4th at p. 215 [“In determining whether
Likewise, we find substantial evidence supports the Board’s decision to measure current existing conditions without reference to future expected reductions based on existing regulations. As a matter of logic, future expected reductions are not inherently relevant to a measurement of existing conditions in the same way that constantly fluctuating conditions, such as existed in Communities, supra, 48 Cal.4th at pages 327-328, would be to ensuring decision makers are provided adequate information on the project’s impacts. Thus, the Board was within its discretion to determine reliance on such factors when measuring the baseline was not proper. Moreover, the record before us demonstrates that these expected reductions were already in jeopardy due to financial costs associated with upgrading existing vehicles not in compliance and the continued issues with availability of capital for small fleets following the global recession. The Board was considering alternatives to the regulations based on this evidence and we conclude such information constitutes substantial evidence supporting the Board’s decision to measure based exclusively on current outputs.
Ultimately, we take no issue with respondents’ statement that “[p]lainly, the ‘existing environmental conditions’ include applicable laws and regulations,” but such a recitation does not prove the error respondents pursue. By adopting as a baseline the current environmental conditions, the Board did take into account the applicable laws and regulations as they had affected the environment to that point in time. Indeed, the initial report noted in Appendix F the many ways the Board updated its analysis to determine the most current environmental conditions. That the Board properly exercised its discretion when not adjusting its baseline to include speculative future reductions based on expected implementations under those laws and regulations does not mean those laws and regulations were retroactively excluded from the Board’s baseline analysis. We find no error in this methodology.
Possibility the Project Will Substantially Impact the Environment
Having determined the Board adopted a proper baseline, we next consider whether respondents produced any evidence supporting a fair argument that the project would have a substantial impact on the environment. In doing so, we take up respondents’ related argument concerning how
The parties’ dispute with respect to this issue centers on the criteria relied upon by the Board to assess whether any alleged impacts on the environment from modifying the regulation are significant. According to the Board, the modifications had no substantial impact under two different analyses. First, when measured against the current output of pollutants, the Board found that implementing the amendments would result in a continual decrease in pollutant output. Thus, at no point would the regulations result in an absolute increase in pollutants. Second, when compared to California’s long term air pollution reduction plans, the Board found implementation of the amendments resulted in a slower projected decrease in pollutants but that this slower pace would have no impact on California’s ability to meet its 2023 emission goals. Respondents do not directly attack these findings. Rather, respondents contend a fair argument exists that three types of pollutants, oxides of nitrogen, particulate matter, and greenhouse gases, will increase in the short term over the measurements that would have existed had the originalregulations remained in place. Respondents claim these increases are significant, both at a local and statewide level.
Standard of Review and Applicable Law
“ ‘
As the
Despite the encouragement to develop thresholds of significance and to consider environmental impacts against certain standards, such comparisons “cannot be used to determine automatically whether a given effect will or will not be significant. . . . In each instance, notwithstanding compliance with a pertinent threshold of significance, the agency must still consider any fair argument that a certain environmental effect may be significant.” (Amador Waterways, supra, 116 Cal.App.4th at pp. 1108-1109.) In other words, “[a] lead agency cannot avoid finding a potentially significant effect on the environment by rotely applying standards of significance that do not address that potential effect.” (Rominger, supra, 229 Cal.App.4th at p. 717.) Thus, if one can point to substantial evidence in the record that a project might constitute a significant effect on the environment notwithstanding the agency’s applied standard of significance, then the agency cannot avoid its obligation to prepare an EIR by rotely relying on its standard. (Ibid.)
In reviewing an agency’s decision to adopt a negative declaration, courts utilize the same fair argument test applied by the agency. (Rominger, supra, 229 Cal.App.4th at p. 713substantial evidence supporting a fair argument that the proposed project may have a significant adverse effect on the environment.” (Citizens for the Restoration of L Street v. City of Fresno (2014) 229 Cal.App.4th 340, 364.) “The fair argument standard is a low threshold.” (Ibid.) We review this issue independently. (Rominger, supra, 229 Cal.App.4th at p. 713.)
The Board Ignored a Fair Argument in this Case
In challenging the Board’s decision in this case, respondents needed “to ‘ “demonstrate by citation to the record the existence of substantial evidence supporting a fair argument of significant environmental impact.” ’ ” (Rominger, supra, 229 Cal.App.4th at p. 727
The Board does not directly tackle these alleged increases in its briefing.5 Rather, in its opening brief, the Board recognizes that it found emissions are projected to decline at a slower pace between 2015 and 2017, with the overall decrease being nearly identical by 2018. It then concedes, “this comparison could show the potential for a lower rate of reductions, and thus, an unrealized emissions benefit,” before, without citation to the
record, arguing “the emissions reductions as projected in 2010 were no longer valid and reliable to use as a baseline in 2014.” In reply, it further attempts to tie its baseline determination to the significance issue by arguing that “in erroneously finding [the Board] used the incorrect baseline, the trial court improperly found a ‘fair argument.’ ” (Boldface & some capitalization omitted.) Ultimately, the Board’s argument is that the evidence supports the Board’s “finding of no significant impacts because the 2014 amendments result in the
As noted above, the Board cannot simply rely on its settled baseline determination and factors of significance in the face of substantial evidence the project might have a significant impact on the environment. (Rominger, supra, 229 Cal.App.4th at p. 717Center for Biological Diversity, supra, 62 Cal.4th at p. 223), its reliance on these significance standards did not alleviate it from its obligation to proceed further if respondents identified evidence in the record suggesting the project may significantly impact the environment under different standards.
Here, we find respondents did just that. Although respondents raise the issue in the context of determining a proper baseline, they correctly note that under the
Contentions Under the APA
Although we find the modified regulations cannot stand under
Relevant APA Principles
Born from a perception that “ ‘there existed too many regulations imposing greater than necessary burdens on the state and particularly upon small businesses,’ ” the
regulations by state agencies” and create “an administrative record assuring effective judicial review.” ’ ” (Western States Petroleum Assn. v. Board of Equalization (2013) 57 Cal.4th 401, 424-425 (Western States).) In other words, the
As part of the initial disclosures required under step two, a rulemaking agency “must include ‘[f]acts, evidence, documents, testimony, or other evidence on which the agency relies to support an initial determination that the action will not have a significant adverse economic impact on business.’ ” (Western States, supra, 57 Cal.4th at p. 425.) The agency’s initial statement is followed by a public comment period, after which, “if the agency decides to enact the regulation, it must prepare a ‘final statement of reasons’ for adopting the proposed rule, which must include ‘[a]n update of the information contained in the initial statement of reasons.’ ” (Id. at p. 426) This final statement “must also include ‘[a] summary of each objection or recommendation made regarding the specific adoption, amendment, or repeal proposed, together with an explanation of how the proposed action has been changed to accommodate each objection or recommendation, or the reasons for making no change.’ ” (Ibid.) This aspect of the procedures is referred to as the economic impact assessment requirement. (Id. at p. 425.)
Looking at this requirement more granularly, under
An agency’s initial determination “ ‘need not be conclusive, and the qualifying adjective “significant” indicates that the agency need not assess or declare all adverse economic impact[s] anticipated.’ ” (Western States, supra, 57 Cal.4th at p. 428.) Similarly, “an agency’s initial determination of economic impact need not exhaustively examine the subject or involve extensive data collection. The agency is required only to ‘make an initial showing that there was some factual basis for [its] decision.’ ” (Id. at p. 429) Indeed, “a regulation will not be invalidated simply because of disagreement over the strict accuracy of cost estimates on which the agency relied to support its initial determination.” (Ibid.) Once the initial assessment is complete, “affected parties may comment on the agency’s initial determination and supply additional information relevant to the issue.” (Ibid.) The agency “must respond to the public comments and either change its proposal in response to the comments or explain why it has not.” (Ibid.)
Standard of Review
We review the Board’s “initial determination to determine that the [Board] has substantially complied with its obligations, and whether it is supported by some substantial evidence.” (California Assn. of Medical Products Suppliers v. Maxwell-Jolly(2011) 199 Cal.App.4th 286, 307.) Interpreting the relevant statutes to determine whether the Board has substantially complied with its obligations is a question of law to which we apply an independent standard of review. (POET I, supra, 218 Cal.App.4th at p. 748.)
In its briefing, the Board argues “[t]he standard of review for a purely procedural
We further note this conclusion comports with our Supreme Court’s precedent in Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 576-577, and Armistead v. State Personnel Board (1978) 22 Cal.3d 198, 204-205. Both of those cases explained that an agency’s decision to include non-APA compliant interpretations of legal principles in its regulations will not result in additional deference to the agency.
Here, the Board claims its economic analysis resulted from its interpretation of how the
The Board’s Conduct Violated the APA
As detailed above, under the
the general sentiment that the truck fleets that had already complied would be at a financial disadvantage as compared to the truck fleets that had not yet complied.”
We do not agree with the Board that the economic impact analysis requirements are so narrowly drawn. Nothing in the language of the relevant statutes suggests the economic interests relevant to the
Notably, the Board’s discussions in the relevant documents appear to recognize this requirement, despite its current arguments on appeal. When discussing expected changes in costs for particulate matter filter upgrades for heavier trucks, the initial statement explained “[l]ong-haul trucking fleets that are based in California or outside California do not compete in the same markets as vocational trucks and are affected differently because of their business model and type of truck used.” Likewise, the initial statement, when discussing changes in costs for long-haul fleets, explained there may be potential differences in impact between large and small fleets, “fleet owners that have acted early or have downsized, and owners that cannot afford to comply.” The initial statement also included a separate discussion of impacts on small businesses and took the time to recognize, although not analyze, the fact that there needed to be a balancing between the needs of compliant and non-compliant fleets.
We further recognize that evidence of in-state effects between compliant and non-compliant fleets was presented to the Board in the form of testimonials provided by impacted businesses. These testimonials informed the Board that significant expenditures had been required to comply with the previous compliance deadlines, that non-compliant fleets without those additional expenses were therefore able to undercut compliant fleets on pricing, and that providing additional time for those non-compliant fleets to meet the relevant standards under the modified regulations could result in substantial harm to some of those businesses, including bankruptcy. Such evidence is not mere speculation and in similar contexts, specific testimonial evidence from the public has been readily identified as substantial evidence supporting the need for a response. (See Architectural Heritage Assn. v. County of Monterey (2004) 122 Cal.App.4th 1095, 1117-1118 [discussing relevant evidence in
The Board’s responses to this evidence were insufficient under the
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to respondents.
DETJEN, J.
WE CONCUR:
LEVY, Acting P.J.
POOCHIGIAN, J.