In a partially published 102-page opinion filed June 26, 2025, the Second District Court of Appeal (Div. 7) resolved cross-appeals by affirming the trial court’s judgment invalidating Los Angeles County’s 2019 EIR certification and project approvals for the Centennial Specific Plan, a 12,323-acre development on the historic Tejon Ranch in the County’s Antelope Valley Area south of Kern County. Center for Biological Diversity v. County of Los Angeles (Centennial Founders, LLC, et al., Real Parties in Interest) (2025) _____ Cal.App.5th _____. The Court of Appeal agreed with the trial court in all respects, holding the EIR’s GHG and off-site wildfire impacts analyses were deficient, while rejecting challenges to its analyses, discussion, and mitigation for wildlife movement corridors and native vegetation and to its alternatives analysis. (Per this blog’s standard practice, this post will discuss only the published portion of the opinion, which addressed only the GHG issues.)
The Centennial Project, EIR and Trial Court Litigation
The mixed-use project – which has evolved for over two decades – proposes 19,333 residential units on 40 percent of the site; business, commercial and industrial uses on 15 percent; and open space for the remaining 45 percent. This translates to 6,699 developed acres and 5,624 open space acres, and is a scaled-down version of the development originally proposed in 2003 that would have had approximately 23,000 residential units and 3,829 acres of open space. After notices of preparation issued in 2004 and 2015, County issued a DEIR in 2017, released final and consolidated final EIRs in 2018, and certified the EIR in 2019, adopting CEQA findings and a statement of overriding considerations in approving the project.
Petitioners Center for Biological Diversity (CBD) and California Native Plant Society (CNPS) (collectively, the “Center”), and Climate Resolve each filed a writ petition challenging the project and EIR on CEQA and Planning and Zoning Law grounds. After briefing, argument, and much procedural wrangling, the full details which are irrelevant here, the trial court ultimately granted all the petitions “on two grounds: (1) the EIR’s discussion of greenhouse gas emissions improperly relied on state cap-and-trade regulations to reduce greenhouse gas emissions impacts below the level of significance, and (2) the EIR failed to analyze off-site wildfire impacts beyond the Centennial project site.” (In an interesting twist, Climate Resolve settled with real parties, the Tejon Ranch developers, in a settlement not involving the Center or the County, and ended up supporting the real party appellants as an amicus curiae on appeal.)
County did not appeal, but the Tejon Ranch developers (real parties) appealed from the GHG and wildfire portions of the judgment adverse to them, and the Center cross-appealed from the aforementioned wildlife and native plant impact issues that they lost on.
The Court of Appeal’s Opinion
In the opinion’s published portion, the Court of Appeal rejected Tejon’s contentions that County could apply the state’s cap-and-trade program to reduce the project’s GHG emissions under the authority of Association of Irritated Residents v. Kern County Bd. Of Supervisors (2017) 17 Cal.App.5th 708 (“AIR”) (my December 1, 2017 post on which can be found here), and that the EIR’s analysis was not misleading because it was otherwise CEQA-compliant and did not claim “mitigation credit” for the assertedly offset emissions. Rather, the Court held AIR was not on point because, unlike the oil refinery whose modification was the project at issue there, the Centennial project is a land-use project that is not a “covered entity” under the cap-and-trade program, which “appl[ies] [only] to specified categories of industrial facilities and fuel and power suppliers.” (Citing 17 Cal. Code Regs., §§ 95801-96022.) Further, the Court found the CEQA Guidelines’ “additionality” requirement in Guideline § 15126.4(c)(3) foreclosed County’s application of the already legally required cap-and-trade compliance of different, “upstream” covered entities to offset the Centennial project’s estimated GHG emissions.
Cap-and-Trade Compliance Cannot Serve As Mitigation For Downstream
GHG Emissions of Land Use Projects By Non-Covered Entities
Per the Court, the County’s Centennial project EIR ran afoul of these legal limitations in its discussion of the Centennial project’s GHG emissions, which listed various quantified and nonquantified mitigation measures, and categorized the cap-and-trade program as a nonquantified measure expected to further reduce Project GHG emissions beyond the quantified measures. It applied two thresholds of significance (Thresholds 21-1 and 21-2) that it claimed incorporated two potential “pathways” to GHG analysis compliance recognized in the Supreme Court’s landmark Newhall Ranch case, Center for Biological Diversity v. Department of Fish & Wildlife (2015) 62 Cal.4th 204, 229-230 (my December 2, 2015 post on which can be found here); these “pathways” were: (1) compliance with regulatory programs designed to reduce GHG emissions and that contribute to achieving statewide goals, and (2) compliance with a local climate action plan (“CAP”) or other geographically specific GHG reduction plans. (Ibid.)
In assessing the Centennial project’s GHG emissions against Threshold 21-1, the EIR found it “consistent with” a wide range of regulatory programs designed to reduce GHGs, including the statewide cap-and-trade program. It stated that “approximately 96 percent of its estimated 157,642 MTCO2 e/year in unmitigated GHG emissions “are covered by, and subject to, the purchase of emission allowances under the new expanded Cap and Trade Program” and asserted that cap-and-trade compliance by “upstream” fuel and energy providers would reduce to zero a range of the Centennial project’s estimated direct and indirect emissions from its “downstream” consumption of electric power, natural gas, and transportation fuels. Its logic appears to have been that such GHG emissions were already “covered,” accounted for, and fully mitigated for by virtue of being fully “offset” by upstream entities’ cap-and-trade compliance. These offset assertions were prominently made in various places, including a table, throughout the EIR, and also in the County’s CEQA findings.
After finding the project was consistent with two local CAPs, and examining Thresholds 21-1 and 21-2, the EIR concluded “project-level” GHG emissions were less than significant under both, but “conservatively determined” that the GHG impact on climate change would nonetheless be “cumulatively considerable” and thus “significant and unavoidable,” despite the project’s satisfying “multiple pathways to compliance.” This was due to the impact’s “inherently cumulative … nature” and County’s lack of “jurisdictional control” over many GHG reduction measures. The EIR’s discussion of mitigation measures reflected a similar analysis and significance determination.
After reviewing in detail the legal background and relevant provisions of the State’s cap-and-trade program – under which covered industrial entities use tradeable “allowances” and “offsets” to comply with their legally “capped” emissions allocations – the Court found the Centennial project EIR’s analysis was flawed and prejudicially misleading. “Covered entities” under the cap-and-trade program, as defined by regulation, “include large industrial facilities such as refineries, electricity generating facilities, iron and steel production facilities, cement and glass production facilities, oil and gas production facilities, and other specified industrial facilities that have exceeded [GHG] emission thresholds for their industry.” (Citing 17 Cal. Code Regs., §§ 95811(a)-(b), 95812, and Our Children’s Earth Foundation v. State Air Resources Bd. (2015) 234 Cal.App.4th 870, 876.) Such entities must comply with cap-and-trade limitations addressing emissions produced at their facilities. “Covered entities” also include “suppliers” and “providers” of natural gas and transportation fuels whose cap-and-trade compliance obligations are based on GHG emissions that would result “downstream” from the full combustion of the fuels they supply, rather than being produced at their facilities. The Centennial project’s EIR reasoned that its project-specific unmitigated GHG emissions impacts – the great majority of which were apparently from its “downstream” consumption of fuels and power provided by upstream entities covered by cap-and-trade – were already “offset” and thus mitigated by the upstream entities’ cap-and-trade compliance.
The EIR’s and real party appellants’ position has a certain logical appeal in that it seems redundant – and, indeed, potentially illegal – to be forced to mitigate twice for the same GHG emissions. However, the trial court – and the Court of Appeal in fully affirming its judgment – saw it quite differently. First, because the Centennial project is a mixed-use land use project that does not fall within the cap-and-trade program’s definition of an energy producer or industrial facility, it is not a “covered entity” under the cap-and-trade program, as was the oil refinery in AIR, and it is thus “not directly subject to compliance obligations under [that] program.” Accordingly, the Court appeared to view the attempted conflation of a covered industrial entity’s cap-and-trade compliance with a downstream land use project’s GHG mitigation as an “apples and oranges” situation by virtue of the fact that the cap-and-trade program simply does not apply to land use developments like the Centennial project – the unspoken premise being that if an entity isn’t “covered” by cap-and-trade, its emissions can’t be, either.
Second, the Court reasoned that the EIR’s use of upstream energy and fuel suppliers’ cap-and-trade “offsets” in analyzing the significance of the Centennial project’s GHG emissions violates CEQA, not only because Centennial is not a “covered” industrial-type entity, but because CEQA Guidelines § 15126.4(c)(3) restricts off-site GHG mitigation measures to “offsets that are not otherwise required.” (Emph. added.) This “additionality” requirement – similar to that which applies to offsets under cap-and-trade – treats GHG reductions otherwise required by law or regulation in the absence of the project at issue as part of the “baseline” and disqualifies such reductions from counting as permissible mitigation. In other words, CEQA (like the cap-and-trade program) prohibits the “double counting” of offsets; since any offsets used for cap-and-trade compliance are already “otherwise required” as part of that program, they cannot be “double-counted” as CEQA mitigation for a “downstream” non-covered entity, i.e., for a land use project that consumes the fuels supplied by a covered entity.
The Court found further support for its position in a letter from CARB’s executive officer expressing the same legal interpretation, which it granted “some consideration,” pursuant to situational Yamaha deference, as supporting the Court’s “independent interpretation.” It flatly rejected real parties’ contrary arguments that cap-and-trade was specifically intended to cap “downstream” users’ consumption emissions as unsupported by CARB’s record in adopting the program, and unauthorized by AIR.
The Centennial EIR Was Prejudicially Misleading Due to Its Flawed
Treatment of Upstream Cap-and-Trade Compliance As GHG Mitigation
The Court further rejected real parties’ arguments that while the EIR’s relevant passages, read in isolation, “might have caused a little confusion,” it was not misleading taken as a whole because the cap-and-trade discussion was merely a “disclosure” item that was not relied on as “mitigation” to reduce the acknowledged GHG impact to less than significant. In particular, the Court pointed to the EIR’s table showing GHG emissions after cap-and-trade offsets being reduced by 100% in several categories of “covered” emissions, and to its preceding discussion of the cap-and-trade program as a “lawful CEQA mitigation measure” appropriately considered in the significance determination. Based on these and related portions of the EIR, it concluded “[a] decisionmaker or member of the public would reasonably understand the EIR to represent that the cap-and-trade program would offset the project’s remaining unmitigated [GHG] emissions to zero in these categories” and further observed “[t]he CEQA findings [repeatedly] reflect that the [County’s] Board in fact understood it this way in approving the EIR[.]” Indeed, cutting against real parties’ argument that the EIR was not misleading was the fact that the cap-and-trade program’s asserted 96 percent reduction of the project’s estimated unmitigated GHG emissions was cited repeatedly in both the County’s findings and in the EIR’s significance analysis, even though “the cap-and-trade program does not apply to the Centennial project nor does it reduce its greenhouse gas emissions, and it is therefore irrelevant to determining the significance of the project’s emissions.”
Under the circumstances of the case, the Court also rejected real parties’ argument that these identified errors were not prejudicial because the project satisfied an alternative “potential [compliance] pathway” of CAP consistency, essentially holding that the EIR was irredeemably tainted by its misleading and flawed cap-and-trade analysis. Per the Court, the EIR failed in its duty to “reasonably describe the nature and magnitude of the adverse [GHG/climate change] effect” and it noted “[t]he severity of the project’s [GHG] emissions increase is not an “insignificant detail.” Simply labeling an impact “significant,” without conducting CEQA’s required analysis and discussion of its “nature and magnitude,” impermissibly understates and minimizes the cumulative impact, subverting the mitigation analysis and also skewing the “perspective” of project benefits and impacts needed to produce a valid mitigation discussion and statement of overriding considerations. Per the Court, the real parties’ “argument that an EIR’s misleading analysis or omission may be excused because the lead agency found an environmental effect significant but that overriding considerations warranted proceeding with the project anyway “has the process exactly backward …. Before one brings about a potentially significant and irreversible change to the environment, an EIR must be prepared that sufficiently explores the significant environmental effects created by the project.”” (Quoting Berkeley Keep Jets Over the Bay Com. v. Board of Port Comrs. (2001) 91 Cal.App.4th 1344, 1371.) Because the EIR here didn’t do so due to its flawed cap-and-trade analysis (as well as its flawed off-site wildfire analysis, discussed in the opinion’s nonpublished portion), the judgment directing issuance of a writ of mandate setting it aside was affirmed.
Conclusion and Implications
Appellants here made a logically plausible argument to the effect that the Centennial project’s GHG emissions were, in fact, “covered” and already mitigated by cap-and-trade offsets resulting from covered upstream fuel and energy providers’ compliance with that distinct GHG-reduction program. The factors dooming that argument in the Court’s eyes were (1) land use projects like the Centennial project aren’t covered entities within the regulatory scope of the cap-and-trade program, and (2) CEQA’s GHG mitigation provisions forbid the use of offsets already required by another law. Whether the Court’s opinion actually prohibits “double counting” of mitigation for different impacts – or, conversely, requires “double mitigation” for the same GHG emissions impacts – appears to me to be an interesting and debatable question. But at least for now the Court of Appeal has resolved that issue with a clear precedent that will serve to provide practical guidance to CEQA practitioners dealing with these issues.
