1. Latham & Watkins operates as a limited liability partnership worldwide with affiliated limited liability partnerships conducting the practice in the United Kingdom, France and Italy. ©Copyright 2008 Latham & Watkins. All Rights Reserved. SB 375 (Steinberg) — Carbon Caps, Transportation, Housing and CEQA Paul N. Singarella Partner, Latham & Watkins LLP

2. 2 Agenda SB 375 (Steinberg) – An overview Signed by Governor on September 30, 2008 SB 375 – How it will affect the regulated community SB 375 – Cleanup legislation Potential issues

3. 3 SB 375 (Steinberg) California’s latest carbon legislation Another major step to an economy and a way-of-life constrained by carbon caps Out in front of what seems inevitable nationally: A national carbon cap under new federal legislation A National Ambient Air Quality Standard for carbon dioxide from U.S. EPA

4. 4 SB 375 (Steinberg) Achieve goals of AB 32, the Global Warming Solutions Act of 2006 (Nuñez) For cars and light trucks By reducing Greenhouse Gas (“GHG”) emissions By promoting smart growth, transit-oriented development, and reducing sprawl

5. 5 AB 32 (2006) Requires GHGs to be reduced to 1990 levels by 2020 Source: California Air Resources Board (CARB) Transportation Global Warming Solutions Act of 2006

6. 6 GHG Emissions from Transportation SB 375 targets this sector

7. 7 Ways to Reduce Carbon Emissions from Cars and Light Trucks Change the vehicles Change the fuels Reduce miles traveled Reduce congestion Focus of SB 375

8. 8 SB 375: Legislative Declaration “Greenhouse gas emissions from automobiles and light trucks can be substantially reduced by new vehicle technology and by the increased use of low carbon fuel. However, even taking these measures into account, it will be necessary to achieve significant additional greenhouse gas reductions from changed land use patterns and improved transportation. Without improved land use and transportation policy, California will not be able to achieve the goals of AB 32.” - SB 375, Section 1(c)

9. 9 SB 375: Main Features “New Age” Travel Demand Modeling Regional GHG Emission Reduction Targets (“Carbon Targets”) Sustainable Communities Strategies (“SCS”) In Regional Transportation Plans (“RTPs”) Alternative Planning Strategies (“APS”) If SCS does not meet Target Separate from RTP Regional Housing Needs Allocation (“RHNA”) General Plan and Housing Element Updates Transportation Funding Changes CEQA Streamlining

10. 10 Travel Demand Modeling California Transportation Commission Guidelines Revised on May 29, 2008 to address climate change and GHG emissions California Air Resources Board Consultation SB 375 Encourages Use of CTC Guidelines Hire an expert; follow overhaul of CTC Guidelines under SB 375

11. 11 SB 375 Carbon Targets Regional carbon caps For 2020 and 2035 For cars and light trucks Intended to drive: Development patterns Transportation networks Must also account for: Vehicle changes Fuel changes May be expressed on gross basis, or on a personal or household basis E.g., GHG/person E.g., GHG/household

12. 12 SB 375 Carbon Targets Enforceable standards? Role in CEQA and land use entitlement? Will CARB adopt under AB 32? Can CARB resist?

13. 13 Timeline for Carbon Caps for Cars and Light Trucks 20082009201020112012 CARB adopted statewide 2020 GHG emissions limit at 1990 levels. 1. Jan 1, 2008 (AB 32) CARB adopts AB 32 Scoping Plan containing sector-based GHG reductions, including for transportation. 2. Jan 1, 2009 (AB 32) CARB appoints Regional Targets Advisory Committee (RTAC) to recommend factors and methodologies for setting GHG emission reduction targets.* 3. Jan 31, 2009 (SB 375) RTAC reports its recommendations to CARB. 4. Sep 30, 2009 (SB 375) CARB provides Targets for each region. 5. Jun 30, 2010 (SB 375) AB 32 “emission limits” to meet 2020 cap become “operative.” 8. Jan 1, 2012 (AB 32) CARB provides final targets for each region. 6. Sep 30, 2010 (SB 375) CARB adopts GHG “emission limits” and “emission reduction measures.” 7. Jan 1, 2011 (AB 32) * These GHG emission reduction targets (hereinafter “Targets”) referred to on this chart are for cars and light trucks only.

14. 14 Sustainable Communities Strategy (“SCS”) New element of Regional Transportation Plan (“RTP”) Metropolitan Planning Organizations (“MPOs”), like SCAG, prepare RTPs and these new SCSs With local input New requirement: RTP must be an “internally consistent document.” Meaning, that its Fiscal Element, which influences how transportation dollars are allocated, must reflect the SCS.

15. 15 Sustainable Communities Strategy: Content Achieve SB 375 Carbon Targets, if feasible Utilize most recent planning assumptions from relevant General Plans Address housing needs, distribution and intensities for all “economic segments of the population.” Forecast development pattern Identify a transportation network

16. 16 Sustainable Communities Strategy: Review Reviewed by CARB Can only accept or reject Test: achieve Carbon Target? If rejected by CARB: Revise to meet Carbon Target, or Adopt Alternative Planning Strategy (“APS”) Minimum: CARB must “accept” that APS would achieve Carbon Target.

17. 17 Influence of Carbon Targets and SCS/APS on Land Use Law? “Nothing in this section shall require a city’s or county’s land use policies and regulations, including its general plan, to be consistent with the regional transportation plan or an alternative planning strategy.” Section 65080(b)(2)(J). Consistency not required. “The local government must under undertake a major revision to its general plan in order to accommodate the housing related policies of a sustainable communities strategy or an alternative planning strategy.” Section 65583(f)(3). Accommodation is required.

18. 18 Influence of Carbon Targets and SCS/APS on Land Use Law Major Revisions of General Plans Conforming Sustainable Communities Strategy Alternative Planning Strategy Regional Carbon Targets Cities/Counties must “accommodate” one or other MPO can elect between MUNIMUNI MPOMPO CARBCARB

19. 19 Regional Housing Needs Allocation (“RHNA”) – One More Twist Also prepared by the MPOs, such as SCAG New requirement: Housing shall be allocated “consistent with” the development pattern of the SCS If the SCS is consistent with the Carbon Target, then RHNA is too

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21. 21 Non-Conforming General Plan and RHNA Invitation for entitlement battle Leaves lead agencies on their own to meet carbon laws

22. 22 SCAG RHNA Timeline SCAG adopted current RHNA. Jul 2007 SCAG adopted current RTP. May 2008 SCAG’s next RTP, which must include a sustainable community strategy (SCS). May 2012 SCAG adopts RHNA (Cal. Gov. Code § 65584(b)). Nov 2012 2007200820092010201120122013 Nov 2013 CARB accepts or rejects SCS. July 2012 4-year cycle 18-month gap between the adoption of the first post SB 375 RTP and the adoption of the housing element. Cities adopt the fifth revision of the housing element and RHNA (Cal. Gov. Code § 65588(e)(7)(A)).

23. 23 Housing Planning The Regional Housing Need Allocation (RHNA) plan is used by cities to prepare and update the local housing element. The Regional Transportation Plan (RTP) is used by MPOs, including the Southern California Associations of Governments (SCAG), to determine future transportation investment strategies. The RHNA plan is based on the short term forecast of households. The RTP is based on the long term forecast of socioeconomic variables at the transportation analysis zone. The RHNA plan was developed every 5 years. The RTP is developed every 4 years. The RHNA plan and the RTP were developed on different planning schedules. The last RHNA was adopted by SCAG on July 12 2007, while the last RTP was adopted on May 8, 2008. Prior to SB 375: Pursuant to SB 375: Synchronizing the RHNA and the RTP SCAG must now coordinate the RHNA plan with its long range growth forecast developed in the RTP. Non-attainment regions (i.e., SCAG) must revise their housing element every 8 years, thus synchronizing it with the RTP 4-year cycle. SCAG will adopt its next RTP in May 2012 and the next RHNA in November 2012.

24. 24 CEQA Reform Residential or Mixed-Use Project I.Is the project a residential or mixed-use project? a) Does it contain at least 75% residential use? OR c) Is it a TPP as defined in § 21155(b))? (§ 21159.28(d)) Not Exempted from CEQA II. Is the residential or mixed-use project consistent with the Sustainable Communities Strategy (SCS) OR Alternative Planning Strategy (APS)? (§21159.28(a)) III.Does the project incorporate the mitigation measures required by an applicable prior environmental document? (§21159.28(a)) Streamlined CEQA: A project of this type is “not required to reference, describe, or discuss (1) growth inducing impacts; or (2) any project specific or cumulative impacts from cars and light-duty truck trips generated by the project on global warming or the regional transportation network.” (§21159.28(a)) Streamlined EIR: Any EIR prepared for a project of this type is “not required to reference, describe, or discuss a reduced residential density alternative to address the effects of car and light-duty truck trips generated by the project.” (§21159.28(b))

25. 25 CEQA Reform Transit Priority Projects (TPPs) I. Is the project a Transit Priority Project (TPP)? a) Does it contain at least 50% residential use? AND b) Does it provide a minimum net density of at least 20 dwelling units per acre? AND c) Is it within ½ mile of a major transit stop or high-quality transit corridor? (§ 21155(b)) Not totally exempted from CEQA, but it may still qualify as a residential or mix-use project. See next flow chart. II. Is the TPP consistent with the Sustainable Communities Strategy (SCS) OR Alternative Planning Strategy (APS)? (§21155(a)) Not Exempted from CEQA III. Does the project: a) comply with the 8 environmental criteria listed in § 21155.1(a)(1)-(8), AND b) comply with the 7 land use criteria listed in § 21155.1(b)(1)-(7), AND c) meet at least one of the following: (1) at least 20% of the housing will be sold to families of moderate income AND the TPP developer provides sufficient legal commitments to ensure availability of affordable housing, OR (2) the developer has paid or will pay fees to result in the development of an equivalent number of units that would otherwise be required, OR (3) TPP provides at least 5 acres per 1,000 residents of public open space. TPP is declared a SUSTAINABLE COMMUNITIES PROJECT (SCP) and is entirely exempt from CEQA (§ 21155.1) IV.Has the TPP incorporated all feasible mitigation measures, performance standards, or criteria set forth in previous EIRs? § 21155.2(a). TPP is eligible for 2 kinds of review: Sustainable Communities Environmental Assessment § 21155.2(b) Streamlined EIR § 21155.2(c)

26. 26 Cleanup Legislation Issue 1. CEQA Relief for Transportation Projects Proposal Provide CEQA relief to Transportation Network of CARB- Accepted SCS or APS Make CEQA relief available at programmatic level through MPO EIR Clarify that roads and streets and ingress and egress from qualifying residential and mixed use projects also get the CEQA relief already contained in SB 375 Goes to SB 375 project definitions Consider level-of-service objective

27. 27 Cleanup Legislation Issue 2. AB 32 Safe Harbor Proposal Specify that transportation and housing that complies with a CARB-accepted SCS or APS also complies with AB 32 Does not address Green Building or LEED Standards More a VMT issue

28. 28 Cleanup Legislation Issue 3. Proposition 1B and Measure M Projects 4. Jobs and Infrastructure Proposal Clarify that these projects are not subject to the SCS process, and do not thereby violate AB 32. Consider creating Sustainable Jobs and Sustainable Infrastructure plans that likewise would benefit from streamlined, programmatic CEQA review and which would enjoy a safe harbor from AB 32.