Summary of CAPCOA Significance Threshold Options April 30, 2008 SCAQMD Diamond Bar, California

Evaluation of CAPCOA Proposals AQMD staff identified Pros and Cons of each proposal for discussion purposes, most from CAPCOA White Paper AQMD staff identified Pros and Cons of each proposal for discussion purposes, most from CAPCOA White Paper Seeking Working Group input: Seeking Working Group input: Additional Pros & Cons Additional Pros & Cons Any new or modified options Any new or modified options Use worksheet provided Use worksheet provided Should option be dropped or further evaluated Should option be dropped or further evaluated

CAPCOA Proposals - No GHG Significance Threshold Pros: None Pros: None Cons: - Cities & counties in the same air district could develop a patchwork of GHG thresholds Cons: - Cities & counties in the same air district could develop a patchwork of GHG thresholds Lack of a GHG threshold does not relieve the lead agency from making a significance determination; could create legal vulnerability Lack of a GHG threshold does not relieve the lead agency from making a significance determination; could create legal vulnerability Significance made on a case-by-case basis, resulting in inconsistent policies within or between agencies Significance made on a case-by-case basis, resulting in inconsistent policies within or between agencies Lack of GHG threshold could make determining significance more resource intensive Lack of GHG threshold could make determining significance more resource intensive

CAPCOA Proposals - Zero Significance Threshold Pros: - Greater GHG emission reductions because mitigation would be required of all projects with any GHG emission increase Pros: - Greater GHG emission reductions because mitigation would be required of all projects with any GHG emission increase Cons: - Greater administrative/resources costs through preparation of EIRs instead of NDs or NOEs Cons: - Greater administrative/resources costs through preparation of EIRs instead of NDs or NOEs There may not be meaningful mitigation for small projects There may not be meaningful mitigation for small projects Available mitigation may consist only of buying GHG offsets, which may create EJ concerns because of associated criteria pollutant emissions Available mitigation may consist only of buying GHG offsets, which may create EJ concerns because of associated criteria pollutant emissions Offset creation may not be fully established Offset creation may not be fully established

CAPCOA Proposals – Non-zero Significance Thresholds: Statute/ Executive Order Approaches 1.1: Uniform percentage-based reduction from business as usual (BAU) – e.g., 33% based on 2020 target or 80 % based on 2050 target 1.1: Uniform percentage-based reduction from business as usual (BAU) – e.g., 33% based on 2020 target or 80 % based on 2050 target Pros: Could reduce resource impacts spent preparing/reviewing environmental analysis Pros: Could reduce resource impacts spent preparing/reviewing environmental analysis  Achieves GHG reductions in parallel with AB 32  Single threshold easier to apply to projects & more easily understood by applicants & lead agencies Cons: Could be viewed as setting a de minimis level Cons: Could be viewed as setting a de minimis level  Fewer projects would trigger significance, therefore, less mitigation  BAU defined by CARB, may be difficult to define for all projects

CAPCOA Proposals – Non-zero Significance Thresholds: Statute/ Executive Order Approaches (Cont.) 1.2: Uniform percentage based reduction for new development compared to BAU 1.2: Uniform percentage based reduction for new development compared to BAU Pros: same as 1.1 Pros: same as 1.1  Would produce greater percentage reductions compared to 1.1  Single threshold easier to apply to projects & more easily understood by applicants & lead agencies Cons: same as 1.1 Cons: same as 1.1  Would require substantially greater percentage reductions compared to 1.1, which may be difficult to achieve  BAU defined by CARB, may be difficult to define for all projects

CAPCOA Proposals – Non-zero Significance Thresholds: Statute/ Executive Order Approaches (Cont.) 1.3: Uniform percentage-based reduction by economic sector 1.3: Uniform percentage-based reduction by economic sector Pros: Best regulatory approach for each sector Pros: Best regulatory approach for each sector  Takes into account costs & control technology  Avoids over or under regulation of GHGs Cons: Requires extensive information on emission inventories Cons: Requires extensive information on emission inventories  Requires extensive information on control technologies  Difficult to determine percent reductions per industry  Because of information requirements, may be more viable in the long term

CAPCOA Proposals – Non-zero Significance Thresholds: Statute/ Executive Order Approaches (Cont.) 1.4: Uniform percentage-based reduction by region 1.4: Uniform percentage-based reduction by region Pros: Could tailor GHG reductions to region Pros: Could tailor GHG reductions to region  GHG reduction strategies could be integrated with regional GHG reduction plans Cons: Would need to establish region & inventory for the region Cons: Would need to establish region & inventory for the region  Because of the need to develop a regional plan, an interim approach may be needed

CAPCOA Proposals – Non-zero Significance Thresholds: Tiered Approach 2.1: Decision tree approach, e.g., zero 1 st tier, 2 nd tier is quantitative (2.3) 2.1: Decision tree approach, e.g., zero 1 st tier, 2 nd tier is quantitative (2.3) Pros: Allows flexibility by establishing multiple thresholds to cover a wide range of projects Pros: Allows flexibility by establishing multiple thresholds to cover a wide range of projects  2 nd tier may minimize administrative burden & costs  Tiers could be set at different levels depending on GHG emissions, size, & characteristics of projects  Projects exceeding Tier 2 must implement mitigation Cons: Tier 1 – zero threshold, same cons as discussed under zero threshold overhead Cons: Tier 1 – zero threshold, same cons as discussed under zero threshold overhead  Some Tier 2 applications may need to be included in an approved General Plan or other enforceable mechanism

CAPCOA Proposals – Non-zero Significance Thresholds: Tiered Approach (Cont.) 2.2: Quantitative threshold based on market capture, e.g., 90% of projects (900 MT CO2eq/yr) 2.2: Quantitative threshold based on market capture, e.g., 90% of projects (900 MT CO2eq/yr) Pros: Would capture a much larger percentage of CEQA projects (i.e., significant) than currently the case (~42% - 56%) Pros: Would capture a much larger percentage of CEQA projects (i.e., significant) than currently the case (~42% - 56%)  Excludes small projects that have a relatively small contribution to state GHG inventory  Single threshold easier to apply to projects & more easily understood by the public, applicants & lead agencies Cons: Greater administrative & cost burden, especially on larger projects & projects in developing & moderate growth areas Cons: Greater administrative & cost burden, especially on larger projects & projects in developing & moderate growth areas  May not be amenable to industrial projects because of the diversity of these types of projects  On-site mitigation opportunities may be limited

CAPCOA Proposals – Non-zero Significance Thresholds: Tiered Approach (Cont.) 2.3: CARB reporting threshold 25,000 MT CO2eq/year (or 10,000 MT CO2eq/year - Market Advisory Group) 2.3: CARB reporting threshold 25,000 MT CO2eq/year (or 10,000 MT CO2eq/year - Market Advisory Group) Pros: CARB estimates this would capture 90 % of all industrial projects (i.e., significant) Pros: CARB estimates this would capture 90 % of all industrial projects (i.e., significant)  Single threshold easier to apply to projects & more easily understood by applicants & lead agencies Cons: May not be amenable to industrial projects because of the diversity of these types of projects Cons: May not be amenable to industrial projects because of the diversity of these types of projects  On-site mitigation opportunities may be limited

CAPCOA Proposals – Non-zero Significance Thresholds: Tiered Approach (Cont.) 2.4: Regulated emissions inventory capture – based on ratio of criteria pollutant significance threshold to inventory for that pollutant 2.4: Regulated emissions inventory capture – based on ratio of criteria pollutant significance threshold to inventory for that pollutant Pros: Single threshold easier to apply to projects & more easily understood by applicants & lead agencies Pros: Single threshold easier to apply to projects & more easily understood by applicants & lead agencies Cons: Threshold is cumbersome to derive Cons: Threshold is cumbersome to derive  Threshold would change regularly as inventory emissions go up or down  Could have widely divergent thresholds by air basin because agency thresholds and inventories vary

CAPCOA Proposals – Non-zero Significance Thresholds: Tiered Approach (Cont.) 2.5: Unit-based thresholds based on market capture – similar to 2.2, but based on sector, e.g., 90 % of residential, industrial, commercial, etc. 2.5: Unit-based thresholds based on market capture – similar to 2.2, but based on sector, e.g., 90 % of residential, industrial, commercial, etc. Pros: Same as 2.2 Pros: Same as 2.2 Cons: Same as 2.2 Cons: Same as 2.2

CAPCOA Proposals – Non-zero Significance Thresholds: Tiered Approach (Cont.) 2.6: Projects of statewide, regional, or areawide significance [§15206(b)] 2.6: Projects of statewide, regional, or areawide significance [§15206(b)] Pros: Would provide consistency throughout California Pros: Would provide consistency throughout California  Would capture approximately ½ of future residential development Cons: Would capture substantially less than ½ future commercial development, therefore, less mitigation Cons: Would capture substantially less than ½ future commercial development, therefore, less mitigation  Percentage capture of industrial/manufacturing projects unknown

CAPCOA Proposals – Non-zero Significance Thresholds: Tiered Approach (Cont.) 2.7: Efficiency-based thresholds – GHG emissions per unit of efficiency 2.7: Efficiency-based thresholds – GHG emissions per unit of efficiency Pros: Would benchmark GHG intensity against target levels of efficiency Pros: Would benchmark GHG intensity against target levels of efficiency  Thresholds established to provide future foreseeable GHG reductions compared to BAU  Would support AB 32 goals Cons: Would require substantial data & modeling Cons: Would require substantial data & modeling  May be more appropriate as a long-term threshold

Other Proposals Correlate GHG threshold with established criteria pollutant significance thresholds Correlate GHG threshold with established criteria pollutant significance thresholds Pros: Would capture approximately the same number of projects as is currently the case Pros: Would capture approximately the same number of projects as is currently the case Cons: Could have widely divergent thresholds by air basin because agency thresholds vary Cons: Could have widely divergent thresholds by air basin because agency thresholds vary  Fewer projects would trigger significance, therefore, less mitigation

Other Proposals Efficiency must exceed by some percent, any established efficiency standards Efficiency must exceed by some percent, any established efficiency standards Pros: Same as 2.7 Pros: Same as 2.7  Would capture greater number of projects than 2.7 Cons: Same as 2.7 Cons: Same as 2.7  Would rely on established efficiency standards that may not be available in the short-term

Recommendations Received from Stakeholders County Sanitation Districts L.A. County County Sanitation Districts L.A. County Need to develop mitigation measures concurrently with significance threshold Need to develop mitigation measures concurrently with significance threshold Reject no threshold option Reject no threshold option Reject zero threshold option Reject zero threshold option Threshold should not be used to comply with AB 32 Threshold should not be used to comply with AB 32 Should harmonize thresholds with other jurisdictions Should harmonize thresholds with other jurisdictions Recommends against using life cycle analysis Recommends against using life cycle analysis Mandated GHG emission reductions should not be required until a regional credit market is established Mandated GHG emission reductions should not be required until a regional credit market is established

Recommendations Received from Stakeholders Center for Biological Diversity Center for Biological Diversity Recommends a zero threshold or Recommends a zero threshold or Recommends a threshold that captures 90% of future discretionary projects (900 MT CO2eq/year) Recommends a threshold that captures 90% of future discretionary projects (900 MT CO2eq/year) Concerns regarding increased preparation of EIRs can be addressed with implementation of a mitigation fee & offset program Concerns regarding increased preparation of EIRs can be addressed with implementation of a mitigation fee & offset program