Poet v. State Air Resources Board

Filed 7/15/13

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

POET, LLC et al.,

F064045

Plaintiffs and Appellants,

(Super. Ct. No. 09CECG04659 )

v.

CALIFORNIA AIR RESOURCES BOARD et OPINION

al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Fresno County. Jeffrey Y.

Hamilton, Jr., Judge.

Wanger Jones Helsley, Timothy Jones, John P. Kinsey, and Daren A. Stemwedel

for Plaintiffs and Appellants.

Kamala D. Harris, Attorney General, Kathleen A. Kenealy, Senior Assistant

Attorney General, Robert W. Bryne, Gavin G. McCabe, Supervising Deputy Attorneys

General, Mark W. Poole, David A. Zonana, and M. Elaine Meckenstock, Deputy

Attorneys General, for Defendants and Respondents.

* Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is

certified for publication with the exception of part V. of the Discussion.

Kahn, Soares, & Conway, Louis A. Brown, and Joshua J. Bettencourt for National

Biodiesel Board and California Biodiesel Alliance as Amici Curiae on behalf of

Defendants and Respondents.

Shute, Mihaly & Weinberger, Matthew D. Zinn; Timothy J. O‟Connor; and

Matthew Vespa for American Lung Association in California, Coalition for Clean Air,

Conservation Law Foundation, Environmental Defense Fund, and Sierra Club

Environmental Law Program as Amici Curiae on behalf of Defendants and Respondents.

J. Nathan Jensen for Clean Energy as Amicus Curiae on behalf of Defendants and

Respondents.

Judi K. Mosley for Pacific Gas and Electric Company as Amicus Curiae on behalf

of Defendants and Respondents.

-ooOoo-

INTRODUCTION

As part of developing solutions to global warming, the California Legislature

adopted the California Global Warming Solutions Act of 2006 (the Act) and established

the first comprehensive greenhouse gas regulatory program in the United States. The

California Air Resources Board (ARB) is the state agency charged with regulating the

sources of emissions of greenhouse gases that cause global warming. The goal of the Act

is to reduce greenhouse gas emissions to 1990 levels by 2020, by regulation to establish a

statewide cap on greenhouse gas emissions beginning in 2012. California‟s single largest

source of greenhouse gas emissions, which include carbon dioxide and other carbon

compounds, is the fuel used for transportation. To reduce the emissions from

transportation, ARB adopted a number of regulations, including the Low Carbon Fuel

Standards (LCFS) regulations that require the reduction of the carbon content of

transportation fuels sold, supplied or offered for sale in California.

ARB‟s task of creating the LCFS regulations was complex and presented many

questions of science, economics and law. ARB‟s proposed regulations were required to

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meet substantive requirements of the Act, procedural requirements for rulemaking in

California‟s Administrative Procedures Act (APA), and substantive and procedural

requirements in the California Environmental Quality Act (CEQA). Furthermore, the Act

required the LCFS regulations, as well as other greenhouse gas measures, to be in place

by January 1, 2010. In sum, ARB was given a difficult task and the pressure of a

statutory deadline.

ARB‟s efforts to complete the LCFS regulations on time satisfied a vast majority

of the applicable legal requirements, but ran afoul of several procedural requirements

imposed by CEQA and the APA. While these procedural violations are not trivial, they

do not require us to automatically discard the existing LCFS regulations and order ARB

to restart the complex rulemaking process anew. The statutes in question allow courts to

tailor the remedy to the circumstances of each case and, therefore, we may consider the

public interests affected by setting aside the LCFS regulations. Those public interests

include adverse environmental impacts and, in particular, whether suspending the LCFS

regulations would result in more environmental harm than allowing them to remain in

effect pending the completion of ARB‟s corrective action. Because of the potential

adverse environmental impacts, as well as other disruptions, we will allow the LCFS

regulations to remain operative while ARB complies with the procedural requirements it

failed to satisfy. In other words, we will avoid the irony of violations of an

environmental protection statute being used to set aside a regulation that restricts the

release of pollutants into the environment.

Summary of Legal Issues and Our Conclusions

POET, LLC and James M. Lyons (plaintiffs) have challenged the LCFS

regulations on the grounds that ARB violated the APA and CEQA during the adoption

process. Plaintiffs contend ARB violated the APA by excluding from the rulemaking file

made available to the public certain emails from consultants. The emails concerned the

computer model ARB used to calculate the indirect carbon emissions attributable to

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ethanol due to land use changes caused by the increased demand for the crops used to

produce ethanol. Assigning ethanol a higher carbon content based on indirect land use

change is controversial because many uncertainties affect the estimates for the land use

changes and the carbon emissions resulting from those changes. Also, ethanol is the only

biofuel given an increased carbon rating based on land use changes.

Plaintiffs also contend ARB violated CEQA by (1) giving its “approval” to the

regulations before the environmental review was complete, (2) splitting the authority to

approve or disapprove the regulations from the responsibility of completing the

environmental review, and (3) impermissibly deferring the analysis and formulation of

mitigation measures for potential increases in the emission of nitrogen oxide (NOx)

resulting from the increased use of biodiesel.

We conclude that plaintiffs‟ APA claim has merit because the emails contain

“other factual information” that was “submitted to” ARB and thus are required to be

included in ARB‟s rulemaking file.1

Analyzing the CEQA challenges under the independent standard of review, we

conclude that ARB prematurely approved the LCFS regulations at its public hearing on

April 23, 2009, well before it completed its environmental review. CEQA Guidelines

mandate that approval of the LCFS regulations follow completion of the environmental

review.2 We also conclude ARB violated CEQA by splitting the authority between ARB

and its Executive Officer (Executive Officer) to approve the project from the

1 This requirement is set forth in subdivision (b)(6) of Government Code section

11347.3.

2 “Guidelines” refers to the regulations that implement CEQA and are set forth in

California Code of Regulations, title 14, section 15000 et seq. Guidelines section 15004,

subdivision (a) governs the timing of environmental review relative to a project‟s

approval and Guidelines section 15352 defines “approval.” These provisions apply even

though ARB conducted its environmental review under a certified regulatory program,

rather than using an environmental impact report (EIR). (See Guidelines, § 15250.)

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responsibility for completing the environmental review. Finally, we conclude that ARB

violated CEQA by deferring the formulation of mitigation measures for NOx emissions

from biodiesel without committing to specific performance criteria for judging the

efficacy of the future mitigation measures. As a result of this failure, ARB failed to

qualify for the exception to the general rule prohibiting the deferral of the formulation of

mitigation measures.

To remedy these CEQA and APA violations, we direct the trial court to issue a

writ of mandate directing ARB to set aside its approval of the subject LCFS regulations

while allowing the regulations to remain in effect pending ARB‟s taking action to comply

with the statutes.

We therefore reverse the judgment.

FACTS

Initial Legislation

In 2006, the Legislature passed Assembly Bill No. 32 (AB 32), which became the

Global Warming Solutions Act of 2006. AB 32 is codified at Health and Safety Code

sections 38500 through 38599 and requires California‟s statewide greenhouse gas

emissions to be lowered to 1990 levels by 2020.3 (Health & Saf. Code, § 38550.)

AB 32 designated ARB as the state agency charged with monitoring and

regulating the sources of emissions of greenhouse gases. (Health & Saf. Code, § 38510.)

AB 32 directed ARB to take certain action, such as preparing a “scoping plan” to achieve

maximum technologically feasible and cost-effective reduction in global warming,

3 The term “greenhouse gases” (GHG) is defined by AB 32 to include carbon

dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs),

perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and nitrogen triflouride (NF3).

(Health & Saf. Code, § 38505, subd. (g).) More generally, greenhouse gases are

described as “any gas that absorbs infrared radiation in the atmosphere” and,

consequently, also include water vapor, ozone (O3) and hydrochlorofluorocarbons

(HCFCs).

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adopting measures that could be implemented quickly (i.e., “discrete early action”), and

formulating other measures that would require more time to study and implement. AB 32

also imposed timelines for these actions.

The requirements of AB 32 relevant to this appeal concern (1) the scoping plan for

reducing greenhouse gases and (2) discrete early action. The scoping plan, which

addresses many measures besides the LCFS regulations, includes an overview of

standards for lowering the carbon content of transportation fuel. AB 32 required ARB to

prepare and approve the scoping plan by January 1, 2009. (Health & Saf. Code, § 38561,

subd. (a).) The scoping plan was required to “identify and make recommendations on

direct emission reduction measures, alternative compliance mechanisms, market-based

compliance mechanisms, and potential monetary and nonmonetary incentives for sources

and categories of sources that the [ARB] finds are necessary or desirable to facilitate the

achievement of the maximum feasible and cost-effective reductions of greenhouse gas

emissions by 2020.”4 (Health & Saf. Code, § 38561, subd. (b).)

The “discrete early action” provisions of AB 32 are relevant because the

regulations implementing standards for lowering the carbon content of fuel were early

action measures. AB 32 directed ARB, by June 30, 2007, to publish a list of the

greenhouse gas emission reduction measures that would qualify as “discrete early

action.” (Health & Saf. Code, § 38560.5, subd. (a).) Regulations implementing the

discrete early actions were to be adopted by January 1, 2010. (Health & Saf. Code, §

38560.5, subd. (b).) This is the deadline ARB attempted to meet in promulgating the

regulations governing the carbon content of transportation fuels.

4 ARB‟s December 2008 scoping plan was previously challenged on the grounds

it did not comply with the requirements of AB 32. The challenge was rejected in

Association of Irritated Residents v. State Air Resources Bd. (2012) 206 Cal.App.4th

1487.

6.

Low Carbon Fuel Standard (LCFS)

In January 2007, Governor Schwarzenegger issued Executive Order S-01-07,

which (1) set a statewide goal of reducing the carbon intensity of California‟s

transportation fuels by at least 10 percent by 2020, (2) called for the establishment of a

LCFS for transportation fuels, and (3) directed the ARB to determine if a LCFS could be

adopted as a discrete early action measure pursuant to AB 32.

In September 2007, ARB included a LCFS in its list of nine potential discrete

early actions. The list also included measures on the electrification of ships while they

were in port, improved landfill methane gas capture, a tire inflation program, and the

reduction of PFC‟s in semiconductor manufacturing.

The scoping plan, eventually adopted in December 2008, included a LCFS that

identified transportation as the largest single source of greenhouse gas emissions in

California and stated that greenhouse gas emissions could be reduced by improving

vehicle efficiency, lowering vehicle miles traveled and reducing the carbon intensity5 of

transportation fuels consumed in California. The scoping plan also stated that the LCFS

adopted would provide flexibility to fuel providers in how they meet the requirements

and would examine the impacts of the full fuel cycle of transportation fuels.6 ARB

5 The concept of “carbon intensity” is important to the LCFS regulations. Those

regulations define “carbon intensity” as “the amount of lifecycle greenhouse gas

emissions, per unit of energy of fuel delivered, expressed in grams of carbon dioxide

equivalent per megajoule (gCO2E/MJ).” (Cal. Code Regs., tit. 17, § 95481, subd.

(a)(16).) The term “carbon dioxide equivalent” is defined as “the amount of carbon

dioxide by weight that would produce the same global warming impact as a given weight

of another greenhouse gas, based on the best available science .…” (Health & Saf. Code,

§ 38505, subd. (c).)

6 The full fuel cycle or lifecycle sometimes is referred to as “well-to-wheels” for

fossil fuels and “seed-to-wheels” or “field-to-wheels” for biofuels. A fuel “pathway,”

which is considered in establishing the fuel‟s carbon intensity, consists of all the steps in

producing, transporting and using that fuel.

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expected the LCFS to transform the state‟s energy portfolio and move California towards

less dependence upon one source of fuel for transportation.

Rulemaking

In August 2007, ARB began consulting with the public about a LCFS. In 2008

and early 2009, ARB staff conducted 16 public workshops on proposed LCFS throughout

California and participated in numerous meetings with various stakeholders. ARB refers

to these meetings, workshops and matters as informal rulemaking activity.

ARB staff used the information gathered during its workshops with the public, as

well as its own scientific and technical analysis (which included the use of consultants),

in preparing a formal proposal for the LCFS regulations. The proposed regulations were

part of the “Staff Report: Initial Statement of Reasons” published on March 5, 2009

(ISOR).

Carbon Content Standards—Carbon Intensity Values

The proposed LCFS regulations aimed to achieve a reduction in greenhouse gas

emission by establishing performance standards, expressed as carbon intensity values,

that fuel producers and importers were required to meet each year beginning in 2011.

For example, for 2011 the standard proposed for gasoline and its replacements was

set at 95.61 grams of carbon dioxide equivalent per megajoule or gCO2E/MJ.7 Each year

the standard was reduced and, by 2020, reached 86.27 gCO2E/MJ. The baseline carbon

content used in developing the yearly standard for gasoline was derived from

reformulated gasoline mixed with corn-derived ethanol.

The other standard for transportation fuels applies to diesel fuel and its

replacements. The benchmark for diesel fuel was established using low sulfur diesel fuel.

The acronym “gCO2E/MJ” is among those listed in the final regulation. (Cal.

7

Code Regs., tit. 17, § 95481, subd. (b)(13).)

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For 2011, the carbon intensity value for diesel fuel and its substitutes was set at 94.47

gCO2E/MJ. By 2020, the standard was reduced to 85.24 gCO2E/MJ.

To determine whether or not a regulated party would meet the yearly standard, the

proposed LCFS assigned carbon intensity values for various types of fuels and required

the regulated party to calculate the average carbon intensity of all the fuel it provided for

that year. The proposed LCFS regulations did not prohibit or require the use of any

particular type of fuel. Instead, regulated parties were given the freedom to determine the

mix of fuels they would use to meet that the annual standard. When a regulated party

came in below the annual standard, credits would be generated and could be sold to other

regulated parties or carried over to subsequent years.

The carbon intensity values assigned to particular fuel lifecycles were important to

the producers of that fuel, as well as the regulated parties in California, because those

values created an incentive or disincentive to use that fuel. For instance, when an

alternative fuel has a lower carbon intensity value than the gasoline or diesel benchmark,

producers and importers have an incentive to use that alternate fuel as a substitute for the

higher carbon intensity fuels they sold in the past. Therefore, the assigned carbon

intensity values would ultimately affect the demand and price of that alternative fuel.

Controversies arose regarding the carbon intensity values assigned as producers of the

various types of fuel vied for favorable terms for their product.

Lifecycle Analysis

The carbon intensity value assigned to the various fuels was determined using a

lifecycle analysis. This analysis estimates the aggregate quantity of greenhouse gas

emissions from all steps in a fuel‟s lifecycle, including the direct effects of producing and

using the fuel, and the indirect effects that may result from the increased production of

that fuel. A fuel‟s lifecycle can be divided chronologically into two stages: (1) all the

steps leading up to the delivery of the finished fuel or blendstock into a vehicle‟s fuel

tank and (2) the combustion of the fuel in the vehicle. When the fuel is derived from

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crops, the steps occurring before combustion include: (1) farming practices, such as

seedbed preparation and fertilizer and pesticide use; (2) harvesting the crop; (3) collecting

and transporting the crop to a fuel processing plant; (4) the fuel production process,

which involves variables such as the type of fuel used; the energy efficiency of the

production technology, and the co-products generated; and (5) the transportation and

distribution of the fuel to its end users. Crop yield is another variable that affects the

carbon intensity values assigned to a biofuel produced from that crop.

Fuel Pathways

Because the steps before combustion are not the same for each specific kind of

fuel, the proposed LCFS regulations identified different fuel pathways for estimating the

carbon intensity value assigned to that fuel. A fuel pathway consists of all the steps in

producing, transporting and using that fuel. One example of different fuel pathways

involves ethanol produced in the Midwest using corn and a dry milling process, as

compared to a wet milling process. Each milling process produces a distiller‟s grain co-

product. When a plant using the dry milling process dries its distiller‟s grain co-product,

it uses more energy and, thus, the ethanol produced in such a plant is assigned a higher

carbon intensity value than ethanol produced in a plant that sells its co-product as wet

distiller‟s grain. Ultimately, the LCFS regulations included 35 different pathways for

corn ethanol and six different pathways for sugarcane ethanol.8

ARB staff calculated carbon intensity values assigned to a fuel‟s direct emissions using

the Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation model,

modified for use in California (CA-GREET). The CA-GREET model is, in essence, a

8 These different pathways and the corresponding carbon intensity values are

listed in Table 6 in section 95486 of title 17 of the California Code of Regulations, which

is referred to as the “Lookup Table.”

10.

very large spreadsheet that performs accounting for greenhouse gas emissions in the

calculation of the lifecycle emissions associated with a fuel.

Land Use Changes

In addition to the direct emissions associated with producing, transporting and

using fuels, the lifecycle analysis considers the indirect effect on greenhouse gases that

are caused by a particular fuel. ARB staff identified land use changes resulting from

increased use of some crop-based biofuels as a significant source of additional

greenhouse gas emissions. Assessing land use changes is based on the idea that a large

increase in biofuel demand in the United States will cause land to be converted to

farming both in the United States and in countries that trade agricultural products with the

United States.9 Emissions from land use changes were the only indirect effects included

for consideration in the proposed LCFS regulations.

ARB staff chose the Global Trade Analysis Project (GTAP) model for assessing

the land use change impacts of increased biofuel production levels. ARB‟s staff‟s use of

the GTAP model was a cooperative effort with researchers from the University of

California at Berkeley and Purdue University.10 The GTAP model was used to estimate

the amounts and types of land across the globe that would be converted to agricultural

production.

The analyses ARB conducted using the GTAP model resulted in estimates of the

carbon intensity component that should be added to ethanol to account for land use

9 Changes in land use affect both carbon storage and the release of greenhouse

gases. For example, grassland and forest store carbon at different rates than cropland. A

rapidly growing forest can sequester a large amount of carbon both above and below

ground. Converting that land to agricultural use disturbs the soil and releases carbon

dioxide into the atmosphere.

10 Consultants from these universities sent emails to ARB regarding the GTAP

model. (See fn. 19, post.) The nondisclosure of four of these emails is the subject of

plaintiffs‟ APA claim.

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changes. Based on these analyses, ARB‟s staff proposed that 30 gCO2E/MJ be added to

the carbon intensity value assigned to each of the 11 different pathways identified for the

production of ethanol from corn. These additional 30 units are noteworthy because,

before they were added, all 11 pathways had a total carbon intensity value below the

2020 standard set for gasoline and its substitutes. After the addition for the indirect effect

of land use change, only two of the pathways had a carbon intensity value below the 2020

standard. Furthermore, the total carbon intensity value of five of the pathways was raised

above the 2011 standard of 95.61 gCO2E/MJ. As a result, ethanol from these five

pathways would hinder, rather than help, a regulated party comply with the standards set

for 2011 and thereafter. The ISOR also proposed to set 46 gCO2E/MJ as the carbon

intensity related to land use changes associated with ethanol produced from Brazilian

sugarcane.11

45-Day Public Comment Period

ARB‟s March 5, 2009, publication of the ISOR started a 45-day public comment

period. Along with the ISOR, ARB made available the technical appendices and

approximately 10,000 pages of reference materials.

During the comment period, ARB received written comments from stakeholders

and other interested parties consisting of nearly 2,100 pages. In addition, written

comments presented to ARB during the April 23, 2009, hearing total 290 pages.

Comments Regarding Emissions from Biodiesel

One of the controversial positions taken in the ISOR concerned whether the

substitution of biodiesel for petroleum-based diesel would increase emissions of NOx. In

the ISOR, ARB‟s staff assumed that there would be no increase in the NOx emissions

11 The final regulation contained many more ethanol pathways. Table 6 in

section 95486 of title 17 of the California Code of Regulations includes 35 different

pathways for corn ethanol and six different pathways for sugarcane ethanol. The carbon

intensity for land use effects remained at 30 and 46 gCO2E/MJ, respectively.

12.

based on the position that, after conducting a test program for biodiesel, ARB would

institute regulations setting fuel specifications for biodiesel that would ensure NOx

emissions did not increase.

ARB received a number of comments challenging the assumption that biodiesel

use would not increase NOx emissions. In response to these comments, ARB reiterated

its position that it would “ensure that biodiesel fuel use does not increase NOx emissions

significantly by promulgating a new motor vehicle fuel specification for biodiesel.”

Additional information regarding biodiesel and the controversy regarding NOx

emissions is set forth in part IV.A, post.

Resolution 09-31

After the close of the comment period, ARB held a public hearing on April 23,

2009. At the close of the hearing, the Board12 passed resolution number 09-31

(Resolution 09-31) in which the Board approved for adoption13 the proposed LCFS

regulations with certain modifications and designated the Executive Officer14 of ARB as

the decisionmaker for purposes of responding to environmental issues and making further

nonsubstantive modifications. More details regarding the contents of Resolution 09-31

and the Executive Officer‟s role are set forth in part II.D.2, post.

12 For purposes of this opinion, the term “Board” is not synonymous with ARB.

Instead, “Board” is used narrowly and refers to the group of individuals acting in its

capacity as the governing entity of ARB.

13 As used by the Board in Resolution 09-31, the phrase “approves for adoption”

is not the same as “adoption.” As used by the Board, “adoption” occurred as a result of

the Executive Officer‟s action in November 2009 and March 2010.

14 Health and Safety Code section 39515 provides that the Board shall appoint an

executive officer and may delegate any duty to the executive officer that the Board deems

appropriate. Health and Safety Code section 39516 creates a presumption that powers

and duties are delegated to the executive officer unless the Board‟s minutes show that

power or duty was explicitly reserved by the Board for its own action. In this case, some

powers were reserved by the Board.

13.

After the hearing, ARB issued a press release stating: “Today, the Air Resources

Board adopted a regulation that will implement Governor Schwarzenegger‟s Low Carbon

Fuel Standard calling for the reduction of greenhouse gas emissions from California‟s

transportation fuels by ten percent by 2020.” (Underlining omitted.)

Resolution 09-31, establishing the LCFS and adopted for approval on April 23,

2009, included a finding that indirect land use change had been appropriately included in

the analysis of the lifecycle of some crop-based biofuels and that excluding the effects of

land use change would delay the development of truly low-carbon fuels and jeopardize

the achievement of the 2020 goal of a 10 percent reduction in carbon intensity.

Resolution 09-31 also approved the Carbon Intensity Lookup Table in section 95486 of

title 17 of the California Code of Regulations and gave the Executive Officer the

authority to revise the fuel pathways and carbon intensity values set forth in that table,

except for the carbon intensity values based on land use changes. Therefore, the 30 and

46 gCO2E/MJ assigned to ethanol from corn and sugarcane, respectively, to account for

carbon emissions from land use changes was established by the Board at the April 23,

2009, public hearing and could not have been changed by the Executive Officer.

The Board‟s actions on April 23, 2009, are important for purposes of this appeal

because those actions are the basis for plaintiffs‟ argument that ARB prematurely

approved the LCFS regulations before completing its environmental review and thereby

violated CEQA.

Executive Officer’s Actions

As directed by Resolution 09-31, the Executive Officer incorporated the

modifications approved by the Board at the April 23, 2009, hearing, along with

appropriate conforming modifications, and made the modifications available for a

supplemental comment period of 15 days. The notice of the public availability of the

modified text and additional documents was issued on July 20, 2009, and August 19,

2009, was set as the deadline for public comment.

14.

Further modifications to the LCFS regulations were made available to the public

in a second 15-day notice dated September 23, 2009.

Executive Order R-09-014

On November 25, 2009, the Executive Officer issued Executive Order R-09-014,

which adopted the LCFS regulations except for (1) a severability provision that had been

inadvertently omitted and (2) provisions regarding the carbon intensity values for

biodiesel converted from Midwest soybeans and renewable diesel converted from

Midwest soybeans. On the same date, ARB issued a notice of decision and response to

significant environmental issues, stating that the executive order had adopted the LCFS

regulations and comments raising significant environmental issues had been responded to

in an attached Final Statement of Reasons (FSOR).15

The LCFS regulations adopted by Executive Order R-09-014 were the subject of a

notice of approval of regulatory action issued by the Office of Administrative Law on

January 12, 2010. The notice stated that the regulatory action became effective on

January 12, 2010, which was only 11 days after the statutory deadline for regulations

implementing discrete early action.16

Executive Order R-10-003

On March 4, 2010, the Executive Officer issued Executive Order R-10-003, which

adopted amendments to provisions of the LCFS regulations regarding the matters not

included in the initial regulations. ARB also filed a notice of decision with the Resources

Agency of California regarding the action taken by Executive Order R-10-003.

15 The FSOR, which is nearly 1,000 pages long, is part of the administrative

record.

16 Health and Safety Code section 38560.5, subdivision (b) sets January 1, 2010,

as the deadline for adopting discrete early action measures that reduce greenhouse gases.

15.

On April 15, 2010, the Office of Administrative Law issued a notice of approval

of regulatory action approving the amendments to the LCFS regulations concerning the

carbon intensity values for biodiesel and renewable diesel fuel made from Midwest

soybeans and the severability clause. The notice stated that the regulatory action became

effective on April 15, 2010. The LCFS regulations are set forth in sections 95480

through 95490 of title 17 of the California Code of Regulations.

Procedural History

Plaintiffs POET, LLC (POET) and James M. Lyons initiated this litigation on

December 23, 2009, by filing a petition for writ of mandate and complaint for declaratory

and injunctive relief.17

POET produces corn ethanol. In an April 2009 comment letter, POET asserted it

was “currently the largest producer of ethanol in the world” and had started its ethanol

business in the 1980‟s in Minnesota. POET currently operates plants across the Midwest

from Ohio to South Dakota. POET alleged its ethanol is used in California and the

implementation of the LCFS regulations would cause it injury.

James M. Lyons is a California resident who commented on the LCFS regulation,

opposed its approval and alleged he would be injured by its implementation without full

compliance with CEQA. Lyons is a partner in Sierra Research, which has an office in

Sacramento, California. His April 22, 2009, comment letter addressed emission effects

of new vehicle purchases involving ultra-low emission vehicles and partial zero emission

vehicles.

17 The plaintiffs in this lawsuit are not plaintiffs in the federal lawsuit challenging

the LCFS regulations on the grounds that the regulations were preempted by the federal

Clean Air Act and the federal Energy Independence and Security Act or violated the

dormant commerce clause. (Rocky Mountain Farmers Union v. Goldstene (E.D.Cal.

2011) 843 F.Supp.2d 1042.) In the federal lawsuit, the district court granted a

preliminary injunction prohibiting the enforcement of the LCFS regulations and the Ninth

Circuit Court of Appeals stayed that injunction pending the appeal.

16.

On January 22, 2010, plaintiffs filed a first amended petition and complaint, which

is the operative pleading in this case. The pleading named as defendants (1) ARB, (2)

James N. Goldstene in his official capacity as the Executive Officer of ARB, (3) Lori

Andreoni, in her official capacity as a Manager of ARB, and (4) Ellen Peter, in her

official capacity as Chief Counsel of ARB (collectively, defendants). Plaintiffs alleged

25 causes of action for violations of CEQA, the APA and the Health and Safety Code.

Attached to the first amended petition and complaint were many documents that

plaintiffs obtained from ARB in response to an August 2009 request for records pursuant

to the California Public Records Act, Government Code section 6250 et seq.18 The

attached documents included numerous emails from consultants hired by ARB to assist it

in developing the LCFS regulation, including four emails that plaintiffs claim should

have been disclosed to the public during the rulemaking process before the hearing on

April 23, 2009.19 Plaintiffs‟ second and fifteenth causes of action alleged that ARB‟s

exclusion of those emails from the public file documenting its rulemaking activity

violated ARB‟s own regulations and section 11347.3 of the APA.

As to CEQA compliance, the first cause of action alleged CEQA required the

decision maker to respond to comments in writing before approving a regulation change.

The first cause of action also alleged how ARB‟s delegation to the Executive Officer,

staff members and consultants of the responsibility for considering, reviewing and

preparing responses to the comments on environmental effects, violated CEQA. Thus,

18 Counsel for plaintiffs submitted the request to ARB in August 2009, which was

before the Executive Officer released his responses to the public comments on the

proposed regulation or issued Executive Order R-09-014 adopting the first portion of the

LCFS regulations. ARB responded to the records request by releasing numerous

documents related to the LCFS regulations.

19 Three of the emails were sent to ARB by Dr. Thomas W. Hertel of Purdue

University. The other email was sent to ARB by Richard Plevin, a research scientist at

University of California at Berkeley.

17.

the first cause of action challenges both the timing of ARB‟s approval of the LCFS

regulations and the delegation of authority to the Executive Officer.

Plaintiffs‟ fifth cause of action alleged ARB violated CEQA by (1) failing to

mitigate or consider mitigation for increases in NOx emissions caused by the use of

biodiesel and (2) impermissibly adjourning for further study any effort to address the

potential increase in NOx emissions.

In March 2011, plaintiffs filed their opening brief on the merits in the trial court,

along with a declaration that included as attachments a number of emails plaintiffs

obtained from ARB pursuant to their Public Records Act request.

In May 2011, ARB filed its brief on the merits and a motion to strike (1)

documents attached to the declaration filed in support of plaintiffs‟ opening brief and (2)

documents attached to plaintiffs‟ pleading. ARB characterized the documents as extra-

record evidence and irrelevant.

Following a hearing on the merits of the writ petition and the motion to strike, the

trial court filed a statement of decision and ruling on motion to strike on November 2,

2011. The court granted ARB‟s motion to strike plaintiffs‟ extra-record evidence, denied

plaintiffs‟ petition for a writ of mandamus, and filed a judgment in favor of ARB.

DISCUSSION

I. CEQA AND CERTIFIED REGULATORY PROGRAMS20

ARB promulgated the LCFS regulations under a regulatory program certified by

the Secretary of Resources as meeting the requirements of section 21080.5. (Guidelines,

§ 15251, subd. (d) [ARB included in list of certified regulatory programs].) When a

regulatory program of a state agency requires the preparation of a plan or other written

documentation containing the environmental information specified by CEQA section

20 All statutory references in parts I through IV and part VI of this opinion are to

the Public Resources Code, unless otherwise indicated.

18.

21080.5 and has been certified, the state agency may rely on that plan or other

documentation in lieu of an EIR. (CEQA, § 21080.5, subds. (a) & (d)(3).) The rationale

for this rule is to avoid the redundancy that would result if environmental issues were

addressed in both program-related documents and an EIR. (San Mateo County Coastal

Landowners’ Assn. v. County of San Mateo (1995) 38 Cal.App.4th 523, 551-552.) Stated

from a slightly different perspective, regulatory programs are certified when they involve

“the same consideration of environmental issues as is provided by use of EIRs and

negative declarations.” (Guidelines, § 15002, subd. (l).)

Because ARB acted under a certified regulatory program, no EIR was prepared

and circulated in this case. Consequently, we will provide a brief overview of certified

regulatory programs and the rules of law that apply to (1) agency action under such a

program and (2) judicial review of that action for CEQA compliance.

A. Overview of Certified Regulatory Programs

When a regulatory program of a state agency has been certified, action taken under

the program “is exempt from Chapter 3 (commencing with Section 21100), Chapter 4

(commencing with Section 21150), and Section 21167, except as provided” in the

statutory provisions governing master EIR‟s.21 (§ 21080.5, subd. (c).) The practical

effect of this exemption is that a state agency acting under a certified regulatory program

need not comply with the requirements for preparing initial studies, negative declarations

or EIR‟s. (Guidelines, § 15250; 2 Kostka & Zischke, Practice Under the Cal.

Environmental Quality Act (Cont.Ed.Bar 2d ed. 2013) § 21.2, p. 1084 (2 Kostka &

Zischke).) The agency‟s actions, however, remain subject to other provisions of CEQA.

(Guidelines, § 15250.)

21 Generally, Chapter 3 of CEQA governs the preparation of EIR‟s by state

agencies and Chapter 4 governs the preparation of EIR‟s by local agencies.

19.

ARB‟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. (Cal. Code Regs., tit.

17, § 60005, subd. (a).) It is ARB‟s policy “to prepare staff reports in a manner

consistent with the environmental protection purposes of [ARB‟s] regulatory program

and with the goals and policies of [CEQA].” (Cal. Code Regs., tit. 17, § 60005, subd.

(b).) The provisions of the regulatory program also address environmental alternatives

and responses to comments to the environmental assessment. (Cal. Code Regs., tit. 17,

§§ 60006, 60007.)

B. Judicial Review

1. General Principles Regarding Abuse of Discretion

Where a public agency has taken quasi-legislative action, such as ARB‟s approval

and adoption of the LCFS regulations, judicial review of that action for compliance with

CEQA “shall extend only to whether there was a prejudicial abuse of discretion.”

(§ 21168.5; see Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho

Cordova (2007) 40 Cal.4th 412, 426 [review for abuse of discretion] (Vineyard Area).)

Such an abuse “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.”

(§ 21168.5.) This statutory language has been interpreted as classifying abuses of

discretion into two types of agency error—namely, legal error (the failure to proceed in

the manner required by law) and factual error (making findings that are not supported by

substantial evidence). (Vineyard Area, supra, at p. 426.)

Each type of error is subject to a different standard of judicial review. (Madera

Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48, 101 [in CEQA

20.

matter, appropriate standard of review depends on whether a legal or factual question is

being reviewed].)

As to legal error, courts conduct an independent review to determine whether the

public agency proceeded in the manner required by law. (Vineyard Area, supra, 40

Cal.4th at p. 426.) Alternatively, when reviewing an agency‟s factual determinations for

error, courts apply the substantial evidence standard. (Ibid.) As a result of the two

standards, “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.” (Id. at p. 435.)

In accordance with this principle, we will scrutinize each of plaintiffs‟ CEQA

claims to determine whether the alleged defect is predominantly one of improper

procedure or a disagreement with the agency‟s factual findings.

2. ARB’s Approach to Judicial Review and Applicable Law

The cornerstone of ARB‟s analysis of the CEQA claims is its certified regulatory

program. In ARB‟s view, the fact it acted under a certified regulatory program plays a

key role in determining the applicable standards of judicial review.

With respect to legal error—that is, whether it “has not proceeded in a manner

required by law” (§ 21168.5)—ARB contends: “The procedures by which ARB is to be

judged are those set forth in its certified regulatory program. (See Pub. Resource Code, §

21080.5(c); Sierra Club v. State Bd. of Forestry (1994) 7 Cal.4th 1215, 1236.)”

This contention is an incomplete statement of the procedures that ARB must

follow to satisfy CEQA. A certified regulatory program is exempt from the procedures

regarding the preparation of a negative declaration or EIR, but the “certified program

remains subject to other provisions in CEQA such as the policy of avoiding significant

adverse effects on the environment where feasible.” (Guidelines, § 15250.) Thus,

ARB‟s approach to legal error is unduly narrow because it ignores the procedures in the

21.

“other provisions in CEQA” (ibid.) applicable to the action taken by ARB under its

certified regulatory program.

Another aspect of the analysis of legal error that is important in this appeal

concerns the Guidelines and their role in determining whether ARB failed to proceed in a

manner required by law. ARB‟s respondent‟s brief contends that “in analyzing

compliance with a certified regulatory program, the CEQA Guidelines do not directly

apply to the environmental documentation. [Citation.]” This contention appears to be

the basis for ARB‟s failure to cite any Guideline concerning the “other provisions in

CEQA” (Guidelines, § 15250) that are applicable to certified regulatory programs. For

example, ARB did not cite Guidelines section 15352, which defines the “approval” of a

CEQA project or the Guidelines that address the timing of that approval.

To complete the description of ARB‟s approach to judicial review, we note that

ARB also contends that (1) the documents prepared under a certified regulatory program

are to be judged under the deferential substantial evidence standard, (2) ARB‟s

substantive determinations are entitled to deference, and (3) this deference extends to its

interpretation of statutes and regulations.

3. Our Approach to Judicial Review

Our inquiry into the standards of judicial review that apply to the CEQA claims

presented in this appeal begins with the following basic question: Are the standards of

judicial review applicable to agency action taken under a certified regulatory program

determined by the same analysis used in other CEQA contexts, such as those involving

the preparation of an EIR? We conclude the same analysis is used to determine the

appropriate standard of judicial review. (See 2 Kostka & Zischke, supra, § 21.1, p. 1084

[standard of review is the same when challenged action was taken under a certified

regulatory program].)

Our conclusion is based on the wording of section 21168.5, which refers to “any

action or proceeding” challenging an agency decision on the grounds of noncompliance

22.

with CEQA. Plaintiffs‟ lawsuit clearly qualifies as an “action or proceeding.” The

statute‟s use of the word “any” is not qualified and, thus, provides no basis for

concluding section 21168.5 does not apply to plaintiffs‟ CEQA claims. (See Estate of

Lucas (1943) 23 Cal.2d 454, 465 [statutory reference to “„any claim”” and “„any suit””

construed broadly].) Furthermore, neither section 21168.5 nor any other provision in

CEQA expressly excludes decisions made under a certified regulatory program from the

standards of judicial review contained in section 21168.5.

Therefore, under the abuse of discretion standard set forth in section 21168.5, we

will independently review claims of legal error and apply the substantial evidence

standard to claims that ARB committed factual error. Our choice between independent

and substantial evidence review is guided by the California Supreme Court‟s statement

that “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 Area, supra, 40 Cal.4th at p. 435.) Thus, when plaintiffs‟

CEQA claim is predominantly one of procedure, we will conduct an independent review.

When plaintiffs‟ CEQA claim disputes the factual findings made by ARB, we will review

the record to determine whether the challenged finding is supported by substantial

evidence.

II. PROJECT APPROVAL AND TIMING OF PREPARATION OF CEQA

DOCUMENTATION

Our “scrutiny [of] the nature of the alleged defect” (Vineyard Area, supra, 40

Cal.4th at p. 435) in plaintiffs‟ first CEQA claim begins with an examination of the

parties‟ contentions and the requirements of CEQA that plaintiffs allege were violated.

A. Contentions of the Parties

Plaintiffs contend that ARB violated CEQA by approving the LCFS regulations

before it completed the environmental review process required by CEQA. Plaintiffs

reference the definition of “approval” in Guidelines section 15352 and contend that

23.

ARB‟s “approval” of the LCFS regulations occurred on April 23, 2009, when the Board

passed Resolution 09-31.

In response, ARB contends that plaintiffs‟ argument “rests on a false premise: that

ARB completed its rulemaking process at its Board meeting on April 23, 2009.” ARB

asserts that Resolution 09-31 was merely the initial approval and that the final LCFS

regulations were not adopted until November 25, 2009, and March 4, 2010, as reflected

in Executive Order R-09-014 and Executive Order R-10-003, respectively. These

executive orders were issued after the Executive Officer completed ARB‟s environmental

review process by issuing written responses to public comments. In ARB‟s view, it fully

complied with its certified regulatory program and CEQA because it completed the

environmental review before the LCFS regulations became final.

Plaintiffs argue that ARB‟s position contains legal error because ARB has treated

“approval” as occurring when “ARB completed its rulemaking process” or “when the

LCFS regulations became final .…” Plaintiffs suggest this legal error occurred because

ARB ignored the definition of “approval” contained in Guidelines section 15352 as well

as Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116 (Save Tara), a Supreme

Court case that discussed the application of this definition of “approval.”

The parties‟ contentions can be read as presuming that CEQA requires agencies

acting under a certified regulatory program to complete their environmental review

before approving their project. Rather than simply joining this presumption, we will set

forth the basis for the principle that environmental review must be completed before

project approval and discuss how “approval” is defined for purposes of this requirement.

B. Statutory and Regulatory Provisions

1. Timing of Environmental Review and Project Approval

A certified regulatory program remains subject to the provisions of CEQA outside

the scope of the exemption provided by subdivision (c) of section 21080.5. (2 Kostka &

24.

Zischke, supra, § 21.11, p. 1093; Guidelines, § 15250.) Thus, certified regulatory

programs are subject to CEQA‟s broad policy goals and substantive standards. (City of

Arcadia v. State Water Resources Control Bd. (2006) 135 Cal.App.4th 1392, 1422; 2

Kostka & Zischke, supra, § 21.11, p. 1093.) Those policies and standards include those

set forth in the Legislature‟s declaration of its intent and its declaration of policy. (§§

21000, 21002; 2 Kostka & Zischke, supra, § 21.11, p. 1094.)

The Legislature‟s declaration of the policy underlying CEQA is contained in

section 21002, which provides:

“The Legislature finds and declares that it is the policy of the state that

public agencies should not approve projects as proposed if there are

feasible alternatives or feasible mitigation measures available which would

substantially lessen the significant environmental effects of such projects,

and that the procedures required by this division are intended to assist

public agencies in systematically identifying both the significant effects of

proposed projects and the feasible alternatives or feasible mitigation

measures which will avoid or substantially lessen such significant effects.”

(Italics added.)22

This declaration of policy is supplemented by the Guidelines, which identify the

basic purposes of CEQA: “(1) Inform governmental decision makers and the public

about the potential, significant environmental effects of proposed activities. [¶] (2)

Identify ways that environmental damage can be avoided or significantly reduced. [¶] (3)

Prevent significant, avoidable damage to the environment by requiring changes in

projects through the use of alternatives or mitigation measures when the governmental

agency finds the changes to be feasible. [¶] (4) Disclose to the public the reasons why a

22 Section 21002 indicates the importance of the agency‟s inquiry into alternatives

and mitigation measures for the project. The premature approval of a project restricts the

consideration of feasible alternatives and mitigation measures and, thus, is not consistent

with this policy.

25.

governmental agency approved the project in the manner the agency chose if significant

environmental effects are involved.”23 (Guidelines, § 15002, subd. (a).)

The first three purposes are best served when the environmental review document,

such as an EIR or its equivalent, “provide[s] decision makers with information they can

use in deciding whether to approve a proposed project, not [informs] them of the

environmental effects of projects that they have already approved.” (Laurel Heights

Improvement Assn. v. Regents of University of California (1998) 47 Cal.3d 376, 394.)

When an environmental review occurs after approval of the project, it is likely to become

nothing more than a post hoc rationalization to support action already taken. (Ibid.) In

short, the policy declaration in section 21002 implies that an evaluation of environmental

issues, such as feasible alternatives and mitigations measures, should occur before an

agency approves a project.

This implication is borne out by CEQA‟s explicit requirements for EIRs. Section

21061 addresses the timing of environmental review as it relates to the approval of a

project for which an EIR was prepared. It provides that an EIR “is an informational

document which, when its preparation is required by [CEQA], shall be considered by

every public agency prior to its approval or disapproval of a project.” (§ 21061, italics

added.)24

23 Political accountability, informed self-government and environmental

protection are promoted by the information and disclosure functions of CEQA.

(Consolidated Irrigation Dist. v. Superior Court (2012) 205 Cal.App.4th 697, 717.)

24 This mandatory language concerning EIR‟s does not apply in this case. (See §

21080.5, subd. (a) [certified regulatory program may rely on approved documentation in

lieu of an EIR]; Guidelines, § 15251, subd. (d) [ARB listed as a certified program].) We

have included the requirement for EIR‟s here because it is part of the statutory scheme

that establishes the context for the issue raised in this appeal and it provides a point of

comparison.

26.

CEQA does not explicitly address the timing of project “approval” when the

environmental review is contained in documents generated under a certified regulatory

program. The Guidelines, however, do address this question. Specifically, Guidelines

section 15004, subdivision (a) states: “Before granting any approval of a project subject

to CEQA, every lead agency or responsible agency shall consider a final EIR or negative

declaration or another document authorized by these guidelines to be used in the place of

an EIR or negative declaration. See the definition of „approval‟ in Section 15352.”

(Italics added.)

We conclude that the phrase “another document authorized by these guidelines to

be used in place of an EIR” (Guidelines, § 15004, subd. (a)) includes “a plan or other

written documentation containing environmental information” referred to in section

21080.5 and prepared under a certified regulatory program. Such a plan or document

“may be submitted in lieu of [an EIR].” (§ 21080.5, subd. (a); see Guidelines, § 15252

[document of certified regulatory program used as substitute for EIR].) Therefore, we

conclude that the timing requirement set forth in Guidelines section 15004, subdivision

(a) applies to the environmental review documents prepared by ARB in this case—that is,

the staff reports and written responses to comments that ARB used in lieu of an EIR.

(See Cal. Code Regs., tit. 17, §§ 60005, subd. (a) & 60007.)25

Guidelines section 15004, subdivision (b)26 addresses the requirement that the

CEQA documents be considered before project approval by setting forth the general

25 California Code of Regulations, title 17, section 60007, subdivision (a)

provides “If comments are received during the evaluation process which raise significant

environmental issues associated with the proposed action, the staff shall summarize and

respond to the comments either orally or in a supplemental written report. Prior to taking

final action on any proposal for which significant environmental issues have been raised,

the decision maker shall approve a written response to each such issue.”

26 Portions of subdivision (b) of Guidelines section 15004 reads:

27.

principle that “[c]hoosing the precise time for CEQA compliance involves the balancing

of competing factors.” The next sentence explains this balancing process by stating that

“EIRs and negative declarations should be prepared as early as feasible in the planning

process to enable environmental considerations to influence project program and design

and yet late enough to provide meaningful information for environmental assessment.”27

(Guidelines, § 15004, subd. (b).)

The requirement that the CEQA document be considered before project approval

is reflected in the corollary that “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.”

(Guidelines, § 15004, subd. (b)(2), italics added.) To illustrate this point, the Guidelines

state that a public agency shall not “take any action which gives impetus to a planned or

foreseeable project in a manner that forecloses alternatives or mitigation measures that

“Choosing the precise time for CEQA compliance involves a

balancing of competing factors. EIRs and negative declarations should be

prepared as early as feasible in the planning process to enable

environmental considerations to influence project program and design and

yet late enough to provide meaningful information for environmental

assessment. [¶]…[¶]

“(2) To implement the above principles, 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. For example, agencies shall not: [¶]…[¶]

“(B) Otherwise take any action which gives impetus to a planned or

foreseeable project in a manner that forecloses alternatives or mitigation measures

that would ordinarily be part of CEQA review of that public project.”

27Construed literally, this sentence does not apply in this case because it does not

mention environmental review documents prepared in lieu of an EIR.

28.

would ordinarily be part of CEQA review of that public project.” (Guidelines, § 15004,

subd. (b)(2)(B).)

In closing our overview of the timing requirement, we will consider an argument

that might be implied from (1) ARB‟s position that the Guidelines are not directly

applicable to its environmental review documents and (2) ARB‟s failure to mention or

even cite Guidelines section 15004. ARB might be of the view that the timing

requirement in subdivision (a) of Guidelines section 15004 does not apply to its action in

promulgating the LCFS regulations.

We reject this position. Instead, we conclude that certified regulatory programs,

while exempt from certain requirements of CEQA, are not exempt from the timing

requirement in Guidelines section 15004. Our conclusion is based on the language used

in subdivision (a) of Guidelines section 15004, which extends beyond EIRs and includes

other documents authorized for use in place of EIRs. In addition, the timing requirement

is derived from the Legislature‟s policy declaration in section 21002,28 a provision of

CEQA that applies to certified regulatory programs. The policy of environmental review

of feasible alternatives and mitigation measures makes practical sense only if that review

occurs before an agency approves a project. (Laurel Heights Improvement Assn. v.

Regents of University of California, supra, 47 Cal.3d at p. 394.) Otherwise, the review is

likely to be a post hoc rationalization. (Ibid.)

2. Definition of “Approval”

The parties disagree over when ARB is deemed to have approved the LCFS

regulations. Our analysis of this issue begins with the definition of the word “approval.”

28 “[P]ublic agencies should not approve projects as proposed if there are feasible

alternatives or feasible mitigation measures available which would substantially lessen

the significant environmental effects of such projects.” (§ 21002.)

29.

The word “approval” and variants such as “approve” appear in both CEQA and

the Guidelines, but CEQA itself does not define these terms. Guidelines section 15352,

subdivision (a) however, define “approval” as follows:

“„Approval‟ means 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. The exact date of approval of any project is a

matter determined by each public agency according to its rules, regulations,

and ordinances. Legislative action in regard to a project often constitutes

approval.”

For purposes of this case, we will apply the definition of “approval” set forth in

subdivision (a) of Guidelines section 15352.

ARB‟s appellate brief lacks any mention of Guidelines section 15352 or the case

law applying its definition of “approval.” At oral argument, counsel for ARB argued that

the second sentence of the definition of “approval” regarding the “exact date of approval”

supports the conclusion that the LCFS regulations were not approved for purposes of

CEQA until the Executive Officer took final action. We reject this argument. First, ARB

has not adopted a rule or regulation that identifies the exact date when approval occurs

for purposes of CEQA. Second, the ARB regulation that states the decision maker shall

approve a written response to each significant environmental issue raised “[p]rior to

taking final action on any proposal” does not, in our view, establish that “approval” for

purposes of CEQA occurs when the decision maker takes “final action.” (See Cal. Code

Regs., tit. 17, § 60007, subd. (a).)

Thus, we conclude that the definition of approval contained in Guidelines section

15352 applies even though ARB acted under a certified regulatory program. As a result,

we must determine when ARB made the decision that committed it to a definite course of

action in regard to the LCFS regulations.

30.

C. Judicial Review

Whether we conduct an independent review or apply the substantial evidence

standard depends on “the nature of the alleged [CEQA] defect.” (Vineyard Area, supra,

40 Cal.4th at p. 435.) We must determine “whether the claim is predominantly one of

improper procedure or a dispute over the facts.” (Ibid.)

The California Supreme Court‟s position on the standard of review applicable to

the question of the timing of project approval relative to the environmental review is set

forth in Save Tara, supra, 45 Cal.4th 116. Save Tara involved a city‟s agreement to sell

land and allow private development of that land so long as the developers complied with

CEQA. The Supreme Court considered whether entry into that agreement constituted

“approval” of the project and, thus, was required to be preceded by the preparation of an

EIR. (Save Tara, supra, at p. 121.) The court concluded that “the City of West

Hollywood‟s conditional agreement to sell land for private development, coupled with

financial support, public statements, and other actions by its officials committing the city

to the development, was, for CEQA purposes, an approval of the project .…” (Id. at pp.

121-122.) As to the standard of review, the court determined “that postponement of an

EIR until after the project approval constitutes procedural error that is independently

reviewable .…” (Id. at p. 131, fn. 10.)

D. Analysis of When Approval Occurred

1. Principles Governing the Inquiry into Approval

The Supreme Court‟s decision in Save Tara, supra, 45 Cal.4th 116 is the leading

case regarding the application of the definition of “approval” contained in Guidelines

section 15352. (See City of Santee v. County of San Diego (2010) 186 Cal.App.4th 55,

61 [Save Tara provides “significant and controlling elaboration” of the definitions of

“approval” and “project”].) The legal question we must decide is whether the general

principles set forth in Save Tara regarding the application of the definition of “approval”

should be extended to the instant case. We conclude they should.

31.

There are two main differences between the situation presented in Save Tara and

the facts of the instant case. First, Save Tara involved a project that would be completed

by private parties. Here, the project is being carried out by ARB, a public agency.

Second, the environmental review document prepared for the project in Save Tara was an

EIR. Here, there is no EIR because the implementation of the LCFS regulations is being

accomplished under a certified state regulatory program. We conclude that the general

principles regarding “approval” set forth in Save Tara should be extended to projects

undertaken by public agencies under certified regulatory programs. Our conclusion is

based on the text of the regulatory definition and the fundamental policies underlying

CEQA.

Subdivision (a) of Guidelines 15352 states: “„Approval‟ means 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.” This definition explicitly refers to

projects “to be carried out by any person.” The term “any person” is broad and includes

both public entities and private parties. Therefore, the definition of “approval” in

subdivision (a) of Guidelines section 15352 applies to both public and private CEQA

projects.

Furthermore, nothing in the definition of “approval” suggests that it is limited to

situations involving EIR‟s or otherwise does not extend to projects subject to

environmental review under a certified regulatory program. Other provisions in the

Guidelines indicate the definition of approval does not change when a certified regulatory

program is involved. Specifically, Guidelines section 15004, subdivision (a) includes a

cross-reference to Guidelines section 15352 and the definition of “approval” and sets

forth the principle that documents prepared in place of an EIR (such as those prepared

under a certified regulatory program) shall be considered before granting any approval to

the project.

32.

The legislative policy considerations important to the timing of environmental

review were identified by the Supreme Court in the following paragraph:

“This court, like the CEQA Guidelines, has thus recognized two

considerations of legislative policy important to the timing of mandated

EIR preparation: (1) that CEQA not be interpreted to require an EIR before

the project is well enough defined to allow for meaningful environmental

evaluation; and (2) that CEQA not be interpreted as allowing an EIR to be

delayed beyond the time when it can, as a practical matter, serve its

intended function of informing and guiding decision makers.” (Save Tara,

supra, 45 Cal.4th at p. 130.)

The intended function of the environmental review documents prepared under a

certified regulatory program in lieu of an EIR is the same as that served by an EIR. (See

Guidelines, § 15002, subd. (a) [basic purposes of CEQA].) Regulatory programs are

certified when they involve “the same consideration of environmental issues as is

provided by the use of EIRs and negative declarations.” (Guidelines, § 15002, subd. (l).)

To inform and guide decision makers, these documents must be considered before

approval of the project. (See Laurel Heights Improvement Assn. v. Regents of University

of California, supra, 47 Cal.3d at p. 394 [when environmental review occurs after

approval of the project, it is likely to become nothing more than a post hoc rationalization

to support action already taken].) The “same consideration of environmental issues”

(Guidelines, § 15002, subd. (l)) would not occur under a certified regulatory program if

the environmental review documents were not completed until after the project was

approved.

In summary, nothing in the text of CEQA, the Guidelines or the underlying

purposes of CEQA leads us to conclude that different timing considerations should be

applied to environmental review conducted under a certified regulatory program.

Regardless of context, it is a matter of commonsense that decisionmaking is aided when

information is received prior to the decision, not after it is made. Thus, we will apply the

33.

general principles set forth in Save Tara regarding the application of the definition of

“approval” to the facts of this case.

The next legal question we address concerns the conditions set forth in Resolution

09-31, adopted on April 23, 2009, and how those conditions affect when the approval

occurred.

In Save Tara, supra, 45 Cal.4th 116, the city council approved an agreement to

sell land to private developers that included a predevelopment loan to the developers of

nearly half a million dollars. (Id. at p. 124.) The agreement required the satisfaction of

certain conditions, including that the developers take the actions necessary to comply

with CEQA. (Save Tara, supra, at p. 124.) The existence of this condition led the

Supreme Court to address “whether an agency may delay EIR preparation by making its

final approval of a project contingent on subsequent CEQA compliance, while otherwise

agreeing to go forward with the project.” (Id. at p. 128.) Similarly, the present case

presents the question whether the CEQA compliance conditions contained in Resolution

09-31 affected when the “approval” of the LCFS regulations occurred.

In Save Tara, the city and developers argued that a CEQA compliance condition in

an agreement to convey or develop property eliminated the need for the preparation of an

EIR. (Save Tara, supra, 45 Cal.4th at p. 132.) In contrast, the plaintiffs argued that a

CEQA compliance condition never should postpone environmental review. The Supreme

Court rejected the bright-line rules proposed by the litigants, stating that neither position

was “consistent with CEQA‟s interpretation and policy foundation.” (Save Tara, supra,

at p. 138.) Instead, the court adopted a position that requires a case-by-case analysis:

“A CEQA compliance condition can be a legitimate ingredient in a

preliminary public-private agreement for exploration of a proposed project,

but if the agreement, viewed in light of all the surrounding circumstances,

commits the public agency as a practical matter to the project, the simple

insertion of a CEQA compliance condition will not save the agreement

from being considered an approval requiring prior environmental review.”

(Id. at p. 132.)

34.

The court‟s position was consistent with “the general principle that before

conducting CEQA review, agencies must not „take any action‟ that significantly furthers

a project „in a manner that forecloses alternatives or mitigation measures that would

ordinarily be part of CEQA review of that public project.‟ (Cal. Code Regs., tit. 14, §

15004, subd. (b)(2)(B); [citations].” (Save Tara, supra, 45 Cal.4th at p. 138.) The

general principle set forth in subdivision (b)(2)(B) of Guidelines section 15004 is not, by

its terms, limited to projects involving EIR‟s and, therefore, we conclude that it also

applies to projects that are subject to environmental review under a certified regulatory

program. Thus, we conclude the Supreme Court's statements regarding conditional

development agreements can be applied to ARB‟s resolutions concerning the LCFS

regulations. Accordingly, in the following quote from Save Tara, we have replaced the

references to conditional development agreements with references to the resolutions of

ARB.

“In applying this principle to conditional [resolutions of ARB],

courts should look not only to the terms of the [resolution] but to the

surrounding circumstances to determine whether, as a practical matter, the

agency has committed itself to the project as a whole or to any particular

features, so as to effectively preclude any alternatives or mitigation

measures that CEQA would otherwise require to be considered, including

the alternative of not going forward with the project. [Citation.] In this

analysis, the [resolution‟s] conditioning of final approval on CEQA

compliance is relevant but not determinative.” (Save Tara, supra, 45

Cal.4th at p. 139.)

Our application of the foregoing principle to the present case will involve an

examination of the terms of the resolution passed by the Board as well as the surrounding

circumstances to determine whether the ARB, as a practical matter, committed itself to

the LCFS regulations, or any particular feature of those regulations, at the April 23, 2009,

public hearing, so as to effectively “preclude any alternatives or mitigation … including

the alternative of not going forward with the project….” (Save Tara, supra, 45 Cal.4th at

p. 139.)

35.

2. Application of Principles to Facts of this Case

Plaintiffs‟ position that the ARB approved the LCFS regulations on April 23,

2009, is based on (1) the wording of documents created by ARB and (2) the practical

effect of the provisions in Resolution 09-31.

Plaintiffs cite documents created by ARB that state the LCFS regulations were

either “approved” or “approved for adoption” at the April 23, 2009, public hearing.

Plaintiffs argue that these statements amount to an admission that, for purposes of CEQA,

the Board gave its “approval” to the LCFS regulations at the April 2009 hearing.

As to the practical effect of the resolutions passed by the Board at the April 23,

2009, hearing, plaintiffs‟ argument is based on the wording of those resolutions and the

way they were implemented. Plaintiffs contend that, before the environmental review

was completed, the resolutions effectively foreclosed the consideration of alternatives

and mitigation, “including the alternative of not going forward with the project” (Save

Tara, supra, 45 Cal.4th at p. 139).

Before describing ARB‟s documents that plaintiffs‟ claim show the LCFS

regulations were approved at the April 23, 2009, hearing, we will address whether those

documents are relevant to the inquiry regarding when approval occurred. In Save Tara,

supra, 45 Cal.4th at page 139, the Supreme Court stated that courts should look to the

surrounding circumstances to determine whether the agency committed itself to the

project. We conclude the relevant “surrounding circumstances” include documents in

which the public agency has described its actions regarding the project, especially where

those documents are released to the public. For instance, in Save Tara, the city‟s public

announcements were part of the evidence that demonstrated the city had committed itself

to a definite course of action regarding the development project. (Id. at p. 142.)

Plaintiffs have cited a number of documents prepared by ARB, including (1) the

notice of the Board‟s public hearing on April 23, 2009, (2) Board Resolution 09-31, (3)

36.

ARB‟s press release issued on April 23, 2009, and (4) the notices of decision filed with

the Resources Agency of California.29

The notice of public hearing regarding the LCFS regulations stated that ARB “will

conduct a public hearing at the time and place noted below to consider adoption of a

regulation to implement the Low Carbon Fuel Standard (LCFS).” (Italics added.)

At the end of the public hearing on April 23, 2009, the Board passed Resolution

09-31, which included the following provisions:

“NOW, THEREFORE, BE IT RESOLVED that the Board hereby approves

for adoption new sections [of the LCFS regulations] as set forth in

Attachment A hereto, with the modifications described in Attachment B

hereto.

“BE IT FURTHER RESOVLED that the Board directs the Executive

Officer: (1) to incorporate into the approved regulations and incorporated

document the modifications described in Attachment B hereto and such

other conforming modifications as may be appropriate; (2) to make the

modified regulations (with the modifications clearly identified) and any

additional documents or information available for public comment for a

period of at least 30 days; (3) to consider any comments on the

modifications received during the supplemental comment period; and then

(4) either to adopt the regulations as made available with any appropriate

additional nonsubstantial modifications, to make additional modifications

available for public comment for an additional period of at least 15 days, or

to present the regulations to the Board for further consideration if he

determines that this is warranted.”

After the hearing, the ARB issued a press release stating: “Today, the Air

Resources Board adopted a regulation that will implement Governor Schwarzenegger‟s

29 When an agency acting under a certified regulatory program files a notice of

decision that complies with section 21080.5, subdivision (d)(2)(E), a 30-day statute of

limitations begins to run. (Guidelines, § 15112, subd. (c)(3).)

37.

Low Carbon Fuel Standard calling for the reduction of greenhouse gas emissions from

California‟s transportation fuels by ten percent by 2020.” (Underlining omitted.)30

The November 25, 2009, notice of decision related to the LCFS regulations and

issued by the ARB included the following two lines:

“Approved by: Resolution 09-31

“Adopted by: Executive Order R-09-014”

The notice of decision also stated that “[c]omments raising significant

environmental issues have been responded to in the Final Statement of Reasons

(Attached).”

A subsequent notice of decision filed with the Resources Agency of California on

March 4, 2010, relating to modifications to the LCFS regulations included the following

lines:

“Approved by: Resolution 09-31

“Adopted by: Executive Order R-10-003”

Each of the notices of decision states that the LCFS regulations were approved by

Resolution 09-31, which the Board passed on April 23, 2009.

Plaintiffs also refer to an update regarding the LCFS regulations that ARB

released in October 2009, which stated: “On April 23, 2009, the California Air

Resources Board (ARB/Board) approved the Low Carbon Fuel Standard (LCFS) for

transportation fuels in used in California.” (Italics added.) The update also stated: “The

Board-approved revisions to the regulation are undergoing public review and as such are

subject to change.” (Italics added.)

30

Before their vote on Resolution 09-31, ARB members described their action on

April 23, 2009, as “historic.”

38.

We conclude that these documents show the LCFS regulations had significant

bureaucratic momentum after they were approved for adoption by the Board on April 23,

2009. ARB‟s press release stated that the Board “adopted a regulation that will

implement Governor Schwarzenegger‟s Low Carbon Fuel Standard .…” The phrase

“adopted a regulation” describes what happened in the past and the phrase “will

implement Governor Schwarzenegger‟s Low Carbon Fuel Standard” describes ARB‟s

view of what will happen in the future. This unqualified public statement about the

future “increased the political stakes” (Save Tara, supra, 45 Cal.4th at p. 135) and left

little doubt that ARB was committed to implementing the LCFS regulations as a result of

the action taken by the Board on April 23, 2009.

Next, we examine the terms of the resolutions passed by the Board on April 23,

2009, “to determine whether, as a practical matter, the agency has committed itself to the

project as a whole or to any particular features, so as to effectively preclude any

alternatives or mitigation measures .…” (Save Tara, supra, 45 Cal.4th at p. 139.)

Plaintiffs argue that the terms of Resolution 09-31 committed ARB to particular

features of the LCFS regulations because, among other things, the Executive Officer was

not authorized to decline to implement the regulation—that is, he could not choose “the

alternative of not going forward with the project.” (Save Tara, supra, 45 Cal.4th at p.

139.)

Plaintiffs‟ argument accurately characterizes the authority of the Executive

Officer. The Board required the Executive Officer “either [(a)] to adopt the regulations

as made available with any appropriate additional nonsubstantial modifications, [(b)] to

make additional modifications available for public comment for an additional period of at

least 15 days, or [(c)] to present the regulations to the Board for further consideration if

he determines that this is warranted.” Under this grant of authority, the Executive Officer

could not scrap the LCFS regulations and begin anew based on information learned

during his environmental review. The most he could do was decline to adopt the

39.

regulations and refer them back to the Board, an option that was not practical in view of

the January 1, 2010, deadline set for discrete early action regulations by Health and

Safety Code section 38560.5, subdivision (b).

The Board also gave the Executive Officer the authority to “add new or

customized fuel pathways and carbon intensity values to the Carbon Intensity Lookup

Table in section 95486, [and] revise any existing fuel pathway or carbon intensity value

(except values based on land use or other indirect effects that are specified in the Carbon

Intensity Lookup Table in section 95486 as adopted in this rulemaking) .…” (Italics

added.) Plaintiffs argue the stated exception prohibited the Executive Officer from

modifying the 30 gCO2E/MJ added to the carbon intensity value of ethanol produced

from corn to account for indirect effects from land use changes and, thus, demonstrates

that the Board was committed to particular features of the LCFS regulation as approved

at the April 23, 2009, public hearing. We agree. The Board‟s resolution effectively

precluded the Executive Officer from adopting alternatives to the carbon intensity values

based on land use or other indirect effects.31

Based on the foregoing and the absence of any analysis of Guidelines section

15352 and Save Tara in the appellate briefing submitted on behalf of ARB, we conclude

that ARB committed itself to a definite course of action regarding the LCFS regulations

when it passed Resolution 09-31 and issued the related press release on April 23, 2009.

Therefore, we conclude April 23, 2009, is the date of ARB‟s “approval” of the LCFS

regulations for purposes of Guidelines section 15352 and CEQA.

Lastly, we discuss ARB‟s argument that because plaintiffs are “mistaken about

when the LCFS regulations became final, their argument fails.” This argument assumes

31 As discussed earlier in this opinion, a significant portion of the carbon intensity

values assigned to ethanol pathways is intended to represent the greenhouse gas

emissions attributable to land use changes caused by increased demand for ethanol. (See

fn. 11 and accompanying text, ante.)

40.

that the critical date is when the regulations became final. This assumption is wrong and

cannot be squared with the statements about finality made by the Supreme Court in Save

Tara, supra, 45 Cal.4th 116.

In Save Tara, the city‟s “final approval” of the project was contingent upon

subsequent CEQA compliance. (Save Tara, supra, 45 Cal.4th at p. 128.) The court

addressed the finality aspect of approval by stating: “Just as CEQA itself requires

environmental review before a project‟s approval, not necessarily its final approval

[citations], so the guideline defines „approval‟ as occurring when the agency first

exercises its discretion to execute a contract or grant financial assistance, not when the

last such discretionary decision is made.” (Id. at p. 134.)

Consequently, ARB‟s assertion that the “final LCFS regulation as modified was

not adopted until November 25, 2009, in Executive Order R-09-014, and March 4, 2010,

in Executive Order R-10-003” might be a proper use of the word “final.” But, the

concept of finality has little impact on the relevant legal question concerning when

“approval” occurred. (See Guidelines, § 15352.)

E. Postapproval Environmental Review Violated CEQA

The fact that the environmental review under ARB‟s certified regulatory program

had not been completed by April 23, 2009, is not disputed by ARB. The incompleteness

is illustrated by, among other things, the following sentence in the resolutions passed by

the Board on April 23, 2009: “The Executive Officer is the decision maker for the

purposes of title 17, California Code of Regulations, section 60007 and responding to

environmental issues raised on the proposed regulation, and by approving this Resolution

09-31, the Board is not prejudging any of the responses that will be made by the

Executive Officer to these environmental issues.” This resolution plainly indicates that

part of the environmental review under the certified regulatory program (i.e., response to

comments) would occur after April 23, 2009.

41.

Based on the fact that the environmental review was not finished when ARB

“approved” the project on April 23, 2009, it follows that ARB violated CEQA‟s

requirement that project approval must occur after the public agency has considered the

environmental review documentation prepared to satisfy CEQA. (See Guidelines, §

15004, subd. (a) [agency shall consider environmental review document before granting

any approval].)

III. SPLITTING DECISIONMAKING AUTHORITY

A. Contentions of the Parties

Plaintiffs‟ second CEQA claim concerns who approved the project and whether

the required environmental review was done by someone who could act as a decision

maker.

Plaintiffs view CEQA as requiring the decision maker who approves the project to

be the person or entity that has completed the environmental review process. Plaintiffs

assert that ARB violated this procedural rule of law because the Board approved the

LCFS regulations while the responsibility of completing the environmental review

process was delegated to the Executive Officer. To support their view of the law,

plaintiffs argue that CEQA‟s prohibition against improperly delegating authority is based

on the rationale that an environmental review document “cannot serve its informational

function unless it is reviewed and considered by the governmental body which takes

action having an effect upon the environment.” (Kleist v. City of Glendale (1976) 56

Cal.App.3d 770, 779.)

ARB counters plaintiffs‟ position by contending it properly conducted the

environmental review and properly delegated responsibility to the Executive Officer to

finalize the LCFS regulations and respond to significant environmental issues. ARB

supports this contention by asserting (1) the “decision-maker” in ARB rulemakings

encompasses both the Board and the Executive Officer, (2) the Health and Safety Code

explicitly authorizes ARB‟s hybrid decisionmaking structure, (3) the regulatory history of

42.

ARB‟s certified regulatory program confirms the Executive Officer is properly

considered a “decision maker” for ARB rulemaking, and (4) ARB‟s CEQA findings and

delegation to the Executive Officer in Resolution 09-31 are consistent with CEQA and

the Health and Safety Code.

ARB‟s arguments regarding improper delegation of authority, like its arguments

regarding premature approval of the project, are based on its position that the critical

point in the rulemaking process is the adoption of the final regulation. For example,

ARB argues that the Executive Officer was the final “decision maker” and “properly

executed each of his delegated responsibilities in analyzing and approving the responses

to comments raising significant environmental issues, and properly adopted the final

regulation.” ARB also asserts: “Viewed in the correct light, it is simply inaccurate to

argue that ARB took final action on the proposed regulation prior to considering and

approving a written response to each issue raising significant environmental effects.”

(Italics added.)32

B. Principles of Law

Plaintiffs‟ arguments regarding the improper delegation of authority reference (1)

the principles regarding the delegation of authority in Guidelines section 15025, (2) the

definition of “decision-making body” contained in Guidelines section 15356, and (3) case

law that discusses the delegation of authority.

1. Regulatory Provisions

Subdivision (a) of Guidelines section 15025 states that a “public agency may

assign specific functions to its staff to assist in administering CEQA.” A nonexclusive

list of those delegable functions includes “[p]reparing a negative declaration or EIR,”

32ARB‟s arguments are flawed because they assiduously ignore the concept of

“approval” and how it is defined for purposes of CEQA.

43.

“[p]reparing responses to comments on environmental documents,” and filing notices.

(Guidelines, § 15025, subd. (a)(3), (5) & (6).)33

Conversely, subdivision (b) of Guidelines 15025 states that “[t]he decisionmaking

body of a public agency shall not delegate the following functions: [¶] (1) Reviewing and

considering a final EIR or approving a negative declaration prior to approving a project.

[¶] (2) The making of findings required by Sections 15091 and 15093.” (Italics added.)

Although this subdivision does not refer to documents that may be used in place of an

EIR, plaintiffs contend that the prohibition against delegation also applies to documents

that are the functional equivalent of an EIR and, therefore, applies in this case.

The term “decision-making body” is defined by Guidelines section 15356 as “any

person or group of people within a public agency permitted by law to approve or

disapprove the project at issue.”

2. Case Law Regarding Delegation of Authority

In Kleist v. City of Glendale, supra, 56 Cal.App.3d 770, a property owner filed a

petition for writ of mandate alleging the city council violated CEQA when it rezoned

certain property at the request of a developer. The trial court granted the petition and the

appellate court affirmed. (Kleist v. City of Glendale, supra, at p. 779.) One of the issues

addressed on appeal was whether the city council could delegate review, consideration

and certification of an EIR to a special board created by city ordinance, prior to approval

of the project by the city council. The appellate court concluded that the city council

itself was required to review and consider the EIR, stating: “Delegation is inconsistent

with the purpose of the review and consideration function since it insulates the members

of the council from public awareness and possible reaction to the individual members‟

environmental and economic values. Delegation is inconsistent with the purposes of the

33 We note that “preparing” these documents is not the same as reviewing,

considering or certifying the documents.

44.

EIR itself.… The EIR cannot serve its informational function unless it is reviewed and

considered by the governmental body which takes action having an effect upon the

environment.” (Ibid.)

In Sundstrom v. County of Mendocino (1988) 202 Cal.App.3d 296 (Sundstrom), an

owner of property located near a proposed private sewage treatment plant filed a petition

for a writ of mandate that challenged the county board of supervisor‟s issuance of a use

permit for the construction of the plant. The use permit included a condition that required

the applicant to submit a hydrological study, which would be subject to review and

approval by the county planning commission. (Id. at p. 306.) The use permit also

required that any mitigation measures recommended by the hydrological study be

incorporated into the project‟s plans. (Ibid.)

The neighboring landowner in Sundstrom asserted various procedural and

substantive violations of CEQA tainted the county‟s adoption of a negative declaration

for the project. (Sundstrom, supra, 202 Cal.App.3d at p. 304.) The trial court denied the

property owner‟s petition. (Id. at p. 301.) The appellate court reversed and directed the

trial court to issue the requested writ of mandate. (Id. at p. 314.) Among other things,

the appellate court concluded that the conditions contained in the use permit “improperly

delegate[d] the County‟s legal responsibility to assess environmental impact by directing

the applicant himself to conduct the hydrological studies subject to the approval of the

planning commission staff.” (Id. at p. 307.) The county‟s board of supervisors could not

delegate its responsibility to assess the project‟s environmental impacts to the staff of the

planning commission. (Ibid.)

Plaintiffs also cited El Morro Community Assn. v. California Dept. of Parks &

Recreation (2004) 122 Cal.App.4th 1341 as an example where the action necessary for

CEQA compliance was taken by a proper decision maker. In that case, the California

Department of Parks and Recreation (Department) proposed a project that involved the

conversion of a mobile home park to a public campground and other facilities. (El

45.

Morro, supra, at p. 1346.) A homeowners‟ group asserted that the Department had failed

to proceed in the manner required by law because the EIR was not certified by the

“decision maker” and, instead, was certified by a deputy director. (Id. at p. 1349.) The

appellate court concluded the Department had proceeded as required by law because the

deputy director was the person authorized by the Department to certify the EIR and

approve the project and, therefore, the deputy director was the “„decision-making body‟”

under the definition contained in Guidelines section 15356. (Id. at pp. 1349-1350.)

Based on the foregoing cases and Guidelines sections 15025 and 15356, plaintiffs

assert that the Executive Officer should not have been given the responsibility to finalize

the environmental assessment because he did not have the authority to approve or

disapprove the project--he was not the decisionmaker.

C. Analysis

Earlier, we concluded that the Board gave its “approval” to the LCFS regulations

before the Executive Officer completed the environmental review of the project and, as a

result, violated CEQA. Our conclusion that the Board “approved” the project on April

23, 2009, necessarily requires us to reject ARB‟s position that the Executive Officer

properly adopted the final regulation. The Executive Officer‟s adoption of the final

regulation was improper because it violated the timing requirement of CEQA that

“approval” occur after consideration of the environmental review documents. This flaw

in the timing of the project‟s approval has tainted the procedures used by ARB and

prevents us from analyzing, in isolation, the claim that the Executive Officer was not a

proper decision maker.

The application of the concept of “approval” and our earlier conclusion that the

“approval” came at an improper time leads us to the further conclusion that the Executive

Officer, in the circumstances presented, cannot qualify as the “[d]ecision-making body”

46.

under the definition contained in Guidelines section 15356.34 The term “decision-making

body” means “any person … within a public agency permitted by law to approve or

disapprove the project at issue.” (Guidelines, § 15356.) When the Board approved the

project at the April 23, 2009, public hearing, it acted as the “decision-making body.”

Subsequent action by the Executive Officer could not have been taken in the capacity of

“decision-making body” because that role had been filled already by the Board. In short,

once the Board approved the project, it makes no sense to say the Executive Officer was

the person permitted by law to “approve” the project for purposes of CEQA.

Based on our reading of the case law, the principle that prohibits the delegation of

authority to a person or entity that is not a decision-making body includes a corollary

proposition that CEQA is violated when the authority to approve or disapprove the

project is separated from the responsibility to complete the environmental review.

(Sundstrom, supra, 202 Cal.App.3d at p. 307; Kleist v. City of Glendale, supra, 56

Cal.App.3d at pp. 778-779.) This conclusion is based on a fundamental policy of CEQA.

For an environmental review document to serve CEQA‟s basic purpose of informing

governmental decision makers about environmental issues,35 that document must be

reviewed and considered by the same person or group of persons who make the decision

to approve or disapprove the project at issue. In other words, the separation of the

approval function from the review and consideration of the environmental assessment is

inconsistent with the purpose served by an environmental assessment as it insulates the

person or group approving the project “from public awareness and the possible reaction

to the individual members‟ environmental and economic values.” (Kleist v. City of

34 This conclusion is limited to the facts presented. It does not imply that ARB‟s

Executive Officer can never be the decision-making body—that is, the person authorized

by law to approve or disapprove the project.

35 Guidelines section 15002, subdivision (a)(1).

47.

Glendale, supra, at p. 779.) This purpose of CEQA and the underlying policy applies

with equal force whether the environmental review document is an EIR or documentation

prepared under a certified regulatory program. (See §§ 21002, 21080.5; Guidelines, §

15250.)

Under the facts of this case, it is clear that ARB violated a fundamental policy of

CEQA when it gave the responsibility for completing the environmental review process

to the Executive Officer because he did not have the authority to approve or disapprove

the project. In particular, the Executive Officer had no authority to alter the way the

Board resolved the controversy regarding the carbon intensity values added to certain fuel

pathways to account for indirect effects caused by land use changes.

IV. DEFERRED FORMULATION OF MITIGATION MEASURES FOR

NITROGEN OXIDE

Plaintiffs‟ third CEQA claim asserts that ARB impermissibly deferred its analysis

and mitigation of potential increases in NOx emissions resulting from the increased use

of biodiesel fuel that will be caused by the LCFS regulations.

A. Facts

One of ARB‟s methods for reducing the carbon content of transportation fuels

used in California is to promote the use of biodiesel, either as a substitute for, or blended

with, petroleum-based diesel fuel. In 2008, approximately 4.2 billion gallons of diesel

fuel were consumed in California, while the state‟s total commercial biodiesel production

capacity was approximately 35 million gallons per year.

Biodiesel and renewable diesel were among the fuels and conversion technologies

discussed in the ISOR as being currently available for commercial use.36 Biodiesel can

36 Chapter III, section B of the ISOR also discussed (1) ethanol from grains and

sugars, (2) biogas from landfills and digesters, (3) compressed and liquefied natural gas,

(4) electricity, and (5) hydrogen.

48.

be made from almost any plant oil or animal fat. The “bio” prefix is used to distinguish

biodiesel from traditional petroleum-based diesel fuel.

The process for making biodiesel uses a catalyst and alcohol to convert oils and

fats into biodiesel.37 In the United States, the plant feedstock (i.e., the vegetable oil) used

for making biodiesel includes soybean, peanut, canola, cottonseed and corn oil. About 90

percent of U.S. biodiesel is made from soybeans. The animal fats used to make biodiesel

include used restaurant grease (yellow grease) and tallow.

The ISOR includes a chapter that addresses the environmental benefits and

impacts associated with the LCFS regulation. The section on air quality impacts

discusses motor vehicle emissions and includes three paragraphs about biodiesel and

renewable diesel.38 The first of these paragraphs is important to this appeal because it is

at the center of the controversy regarding the deferral of analysis and mitigation. That

paragraph states:

“The main factors that will affect changes in emission rates from

biodiesel as compared to diesel are feedstock composition, changes in

engine technologies, and regulatory action. Biodiesel feedstocks can have a

significant effect on emissions of ROG, PM, and NOx. NOx is of

particular interest because biodiesel has been reported to increase NOx

emissions. ARB staff has assumed that there will be no increase in the

emissions of NOx. This is because staff is currently conducting an

extensive test program for biodiesel and renewable diesel and will follow

that effort with a rulemaking to establish specifications to ensure there is no

increase in NOx.”

37 Renewable diesel is made using a different chemical process that produces

different compounds. In particular, renewable diesel is free of the ester compounds in

biodiesel, which results in reduced particulate matter (PM), NOx, hydrocarbon, and CO

emissions.

38Chapter VIII of the ISOR is titled “Environmental Impacts” and contains 36

pages. Of those pages, 18 are devoted to the section on air quality impacts. The three

paragraphs addressing biodiesel and renewable diesel appear under the heading

“Biodiesel and Renewable Diesel vs. Diesel Vehicles.” (Underlining omitted.)

49.

More details about the emission from vehicles using biodiesel and renewable

diesel are set forth in Appendix F7 of the ISOR, which is titled “Motor Vehicle

Emissions—Biodiesel vs. Diesel.” Appendix F7 states that under the LCFS regulations,

“15% of petroleum diesel will be displaced by renewable alternative diesel fuels

(biodiesel 5% and renewable diesel 10%).”39 The appendix notes that this substitution

away from petroleum-based diesel has the potential to change emission rates and

estimates those changes. In particular, Table F7-1 uses three different scenarios and sets

forth the emissions changes for ROG, NOx and PM expected by 2020. The three

scenarios account for uncertainty in available data and “are presented to cover the range

of possible emission changes that can be expected from the 2020 fleet.” The first

scenario shows no change for the three types of emissions. The second and third

scenarios show decreases in ROG and PM, but an increase in NOx.

The statements in the ISOR about additional rulemaking to establish specifications

for biodiesel were confirmed in Resolution 09-31, which directed the Executive Officer

to work with various stakeholders “to complete the ongoing multimedia evaluation for

biodiesel and renewable diesel; and propose, as appropriate, motor-vehicle fuel

specifications for biodiesel and renewable diesel by December 2009.”

Despite the unresolved issue regarding NOx emissions from biodiesel, the

proposed LCFS regulations included two pathways for biodiesel in the carbon intensity

lookup table for diesel and fuels that substitute for diesel. The pathways addressed two

methods of converting used cooking oil to biodiesel.

In addition, the FSOR released in December 2009 stated that it was ARB‟s “intent

that, by the end of the rulemaking, Table 7 in section 95486(b) will include specified

39 The fact that the use of renewable diesel is expected to be double that of

biodiesel and the fact that renewable lowers NOx emissions creates a question about

whether the potential reductions will partially or completely offset the anticipated

increases caused by biodiesel.

50.

carbon intensity values and supporting documentation for two additional fuel

pathways”—namely, biodiesel converted from Midwest soybeans and renewable diesel

converted from Midwest soybeans. The two additional pathways were to be discussed in

a separate FSOR.

The FSOR also included a response to a comment that challenged ARB‟s

assumption that increased biodiesel usage would not increase NOx emissions. That

response provided in full:

“We acknowledge the reviewer‟s comment that NOx is generally

higher with biodiesel and biodiesel blends than diesel. Also, the NOx

difference typically increases as the blend level increases, with pure

biodiesel (B100) generally having highest NOx difference. Although NOx

is caused by thermal formation, a number of studies show that fuel

specifications can affect NOx emissions. The reviewer notes that fuel

specifications alone cannot make biodiesel NOx neutral, and this may be

the case for higher blends or B100. However, staff believes that lower

blends of biodiesel can be mitigated by adjustments to fuel specifications.

Therefore, staff believes that controlling fuel specifications can, to some

extent, mitigate increases in NOx associated with biodiesel fuels, at least at

lower blend levels. Also, the use of additives and lower NOx biodiesel

may extend the blend level so that NOx can be mitigated.

“Other potential strategies may include blending biodiesel

feedstocks with other low NOx feedstocks, such as renewable diesel or gas-

to-liquids diesel substitutes, to counteract the NOx increase due to

biodiesel. The preliminary results from ARB‟s ongoing biodiesel

emissions study suggest that NOx emissions may be mitigated for biodiesel

blends (up to B20) that are made from soy, which is a feedstock that has

been shown to be on the high end for NOx emissions.”

The FSOR also included a comment from the American Trucking Association

stating it was uncertain how ARB would ensure that that biodiesel use did not increase

NOx emission and expressing the concern that fuel additives to reduce such emissions

might increase fuel costs and adversely impact engine durability or the long term efficacy

of emission control equipment. ARB responded that it would “ensure that biodiesel fuel

use does not increase NOx emissions significantly by promulgating a new motor vehicle

51.

fuel specification for biodiesel,” the adoption of which was “now tentatively scheduled

for 2010.”

This schedule, like the December 2009 date set in Resolution 09-31, was not

achieved. The final report generated by ARB‟s biodiesel emissions study was not issued

until October 2011. The report noted that a number of factors affected NOx emissions,

such as the feedstock used to produce the biodiesel, percentage of biodiesel in the fuel

blend, engine type, and engine operating conditions including load. The report stated that

“further research is needed to understand the impacts biodiesel would have in California

with widespread use.”

As of June 2013, it does not appear that ARB has adopted any regulations

containing fuel specifications for biodiesel.

B. Legal Principles

1. General Rules Regarding Mitigation Measures

A state agency considering proposed action under a certified regulatory program

must not approve or adopt the activity “if there are feasible alternatives or feasible

mitigation measures available that would substantially lessen a significant adverse effect

that the activity may have on the environment.” (§ 21080.5, subd. (d)(2)(A).) As to the

written documentation prepared under a certified regulatory program, it must include a

description of “mitigation measures to minimize any significant adverse effect on the

environment of the activity.” (§ 21080.5, subd. (d)(3)(A).) This obligation to describe

mitigation measures is one of the procedural requirements of CEQA “intended to assist

public agencies in systematically identifying both the significant effects of proposed

projects and the feasible alternatives or feasible mitigation measures which will avoid or

substantially lessen such significant effects.” (§ 21002.)

The foregoing statutory provisions (and the parallel requirements for EIR‟s) are

the basis for the general rule that it is inappropriate to postpone the formulation of

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mitigation measures. (1 Kostka & Zischke, supra, § 14.12, pp. 696-697.) This general

rule against deferral also is set forth in the regulation that governs the contents of EIR‟s:

“Formulation of mitigation measures should not be deferred until some future time.”

(Guidelines, § 15126.4, subd. (a)(1)(B).)

2. Exception Allowing Deferred Formulation of Mitigation Measures

However, this general rule against deferring the formulation of mitigation measure

is not absolute. Courts have recognized that “there are circumstances in which some

aspects of mitigation may appropriately be deferred.” (San Joaquin Raptor Rescue

Center v. County of Merced (2007) 149 Cal.App.4th 645, 670; 1 Kostka & Zischke,

supra, § 14.12, p. 696-697.) The regulation governing the contents of EIR‟s also

acknowledges the existence of the exception: “However, measures may specify

performance standards which would mitigate the significant effect of the project and

which may be accomplished in more than one specified way.” (Guidelines, § 15126.4,

subd. (a)(1)(B).)

There is not a single, all-encompassing statement of the judge-made exception to

the general rule prohibiting the deferral of the formulation of mitigation measures.

Although the parties have agreed that such an exception exists, they have not described

that exception in the same language. Consequently, we will review the way the exception

has been expressed in various cases.40

In Sacramento Old City Assn. v. City Council (1991) 229 Cal.App.3d 1011

(SOCA), the city council decided to expand the downtown convention center and

40 Two early cases addressing the improper deferral of mitigation measures are

Sundstrom, supra, 202 Cal.App.3d 296, and Gentry v. City of Murrieta (1995) 36

Cal.App.4th 1359. Both cases involved negative declarations. Our discussion here is

limited to cases involving EIR‟s or their functional equivalents.

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construct an office tower.41 (Id. at p. 1015.) An association challenged the project‟s EIR

on the ground that it failed to describe and examine “true” mitigation measures for the

project‟s parking impacts. (Id. at p. 1026.) The association argued that the EIR lacked

specific mitigation measures and instead offered a list of seven general measures that

might be included in the city‟s unformulated transportation management plan. The

majority of the court quoted a CEQA commentator for the following principle:

“„[F]or kinds of impacts for which mitigation is known to be feasible, but

where practical considerations prohibit devising such measures early in the

planning process (e.g., at the general plan amendment or rezone stage), the

agency can commit itself to eventually devising measures that will satisfy

specific performance criteria articulated at the time of project approval.

Where future action to carry a project forward is contingent on devising

means to satisfy such criteria, the agency should be able to rely on its

commitment as evidence that significant impacts will in fact be mitigated.

[Citations.]‟” (SOCA, supra, at pp. 1028-1029.)

Under this statement of the exception, it appears that the formulation of mitigation

measures is properly deferred when three elements are satisfied. First, practical

considerations prevented the formulation of mitigations measures at the usual time in the

planning process. Second, the agency committed itself to formulating the mitigation

measures in the future. Third, the agency adopted specific performance criteria that the

mitigation measures were required to satisfy.

In Endangered Habitats League, Inc. v. County of Orange (2005) 131 Cal.App.4th

777 (Endangered Habitats), the Fourth Appellate District addressed the deferred

formulation of mitigation measures using the following language:

“„Deferral of the specifics of mitigation is permissible where the

local entity commits itself to mitigation and lists the alternatives to be

considered, analyzed and possibly incorporated in the mitigation plan.

[Citation.] On the other hand, an agency goes too far when it simply

41 SOCA has been described as the leading case on the issue of deferred

formulation of mitigation measures. (1 Kostka & Zischke, supra, § 14.12, p. 698.)

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requires a project to obtain a … report and then comply with any

recommendations that may be made in the report. [Citation.]‟ If mitigation

is feasible but impractical at the time of a general plan or zoning

amendment, it is sufficient to articulate specific performance criteria and

make further approvals contingent on finding a way to meet them.

[Citation.]” (Endangered Habitats, supra, 131 Cal.App.4th at p. 793.)42

This version of the exception to the general rule prohibiting the deferral of the

formulation of mitigation measures adds an element not mentioned in the material quoted

by the majority in SOCA—namely, the requirement for a list of the mitigation measures

to be considered, analyzed and possibly incorporated in the mitigation plan.

In California Native Plant Society v. City of Rancho Cordova (2009) 172

Cal.App.4th 603 (CNPS), the Third Appellate District‟s discussion of the case law

concerning the deferred formulation of mitigation measures included the following

statement:

“… SOCA stands for the proposition that when a public agency has

evaluated the potentially significant impacts of a project and has indentified

measures that will mitigate those impacts, the agency does not have to

commit to any particular mitigation measure in the EIR, as long as it

commits to mitigating the significant impacts of the project. Moreover,

under SOCA, the details of exactly how mitigation will be achieved under

the identified measures can be deferred pending completion of a future

study.” (Id. at p. 621.)

Later, in less expansive language, the court set forth the principle that “[i]f the

agency has identified one or more mitigation measures and has committed to mitigating

the impact those measures address, then the principles forbidding deferral of mitigation

42 This language from Endangered Habitats also was quoted by this court in San

Joaquin Raptor Rescue Center v. County of Merced, supra, 149 Cal.App.4th 645, 670,

the first case published in this century in which we considered whether to apply the

exception permitting the deferral of mitigation. We also considered the exception and

concluded it did not apply in Gray v. County of Madera (2008) 167 Cal.App.4th 1099,

1121-1122 (Gray), and Madera Oversight Coalition, Inc. v. County of Madera, supra,

199 Cal.App.4th at p. 58, although the discussion in the latter case was not published.

55.

are not implicated.” (CNPS, supra, 172 Cal.App.4th at p. 623, italics added.) We note

that these quotes from CNPS do not mention specific performance criteria like the earlier-

quoted language from SOCA and Endangered Habitats.

In Communities for a Better Environment v. City of Richmond (2010) 184

Cal.App.4th 70 (CBE), the First Appellate District set forth another description of the

exception permitting deferral. After discussing SOCA and CNPS, the court stated that

those cases “permitted the lead agency to defer the formulation of mitigation measures

after the lead agency (1) undertook a complete analysis of the significance of the

environmental impact, (2) proposed potential mitigation measures early in the planning

process, and (3) articulated specific performance criteria that would ensure that adequate

mitigation measures were eventually implemented.” (CBE, supra, at p. 95.)

The foregoing cases demonstrate that the exception allowing the deferral of the

formulation of mitigation measures has been expressed in a variety of ways. From these

cases, we glean two principles that are important to this case. First, the deferral of the

formulation of mitigation measures requires the agency to commit itself to specific

performance criteria for evaluating the efficacy of the measures implemented. Second,

the “activity” constituting the CEQA project may not be undertaken without mitigation

measures being in place “to minimize any significant adverse effect on the environment

of the activity.” (§ 21080.5, subd. (d)(3)(A).) In other words, the deferral relates only to

the formulation of mitigation measures, not the mitigation itself. Once the project

reaches the point where activity will have a significant adverse effect on the environment,

the mitigation measures must be in place.

3. Specific Performance Standards

ARB‟s version of the exception is based primarily on the following quote:

“„Deferral of the specifics of mitigation is permissible where the local entity commits

itself to mitigation and lists the alternatives to be considered, analyzed and possibly

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incorporated in the mitigation plan.‟ … [Citation.]” (Endangered Habitats, supra, 131

Cal.App.4th at p. 793; see CNPS, supra, 172 Cal.App.4th at p. 621.)

ARB‟s version of the exception does not reference “specific performance criteria”

or the future action being “contingent” upon the satisfaction of such criteria. (See SOCA,

supra, 229 Cal.App.3d at 1029; 1 Kostka & Zischke, supra, § 14.12, pp. 697-698

[deferral may be particularly appropriate when performance criteria are identified and

further approvals are made contingent on finding a way to meet those criteria].)

We disagree with ARB‟s view of the law concerning the deferred formulation of

mitigation measures because, among other things, we already have adopted the position

“that CEQA permits a lead agency to defer specifically detailing mitigation measures as

long as the lead agency commits itself to mitigation and to specific performance

standards .…” (Gray, supra, 167 Cal.App.4th at p. 1119, italics added; see San Joaquin

Raptor Rescue Center v. County of Merced, supra, 149 Cal.App.4th at p. 671 [mitigation

measure required preparation of land management plan for burrowing owl preserve; EIR

improperly deferred formulation of this mitigation measure because it set forth no criteria

or standards of performance]; Endangered Habitats, supra, 131 Cal.App.4th at p. 794

[proposal for noise mitigation rejected because it allowed the approval of grading and

building permits “without setting any standards”].)

ARB has presented no rationale for deviating from this precedent and, therefore,

we will follow our earlier decisions and require an agency to commit to specific

performance standards.43

43 Our conclusion is consistent with the language from the SOCA decision that

states “the agency can commit itself to eventually devising measures that will satisfy

specific performance criteria articulated at the time of project approval” (SOCA, supra,

229 Cal.App.3d at p 1029) as well as the many cases that have referred to specific

performance criteria or standards. (E.g. Rialto Citizens for Responsible Growth v. City of

Rialto (2012) 208 Cal.App.4th 899, 945 [loose or open-ended performance criteria

prohibited]; Endangered Habitats, supra, 131 Cal.App.4th at pp. 793-794.)

57.

Because of ARB‟s view of the law, it has not explicitly addressed the issue

whether it committed to specific performance criteria when it deferred formulating

mitigation measures for the potential increase in NOx emissions from biodiesel.

Nonetheless, the ISOR addressed NOx emissions from biodiesel by stating that ARB‟s

staff would conduct an extensive testing program for biodiesel and “will follow that

effort with a rulemaking to establish specifications to ensure there is no increase in

NOx.” Thus, we will consider whether the statement that ARB‟s future rules will

“establish specifications to ensure that there is no increase in NOx” has articulated

specific performance criteria as required by SOCA and subsequent cases, such as this

court‟s decision in Gray. We conclude that “no increase in NOx” is not a specific

performance criterion.

In CBE, supra, 184 Cal.App.4th 70, another case involving greenhouse gas

emissions, Chevron proposed to replace and upgrade certain manufacturing facilities at

its oil refinery in Richmond. The city council approved the necessary permits and

certified the EIR. (Id. at p. 75.) Late in the environmental review process—that is, in an

addendum circulated four months after issuance of the final EIR—the city belatedly

found that the project‟s greenhouse gas emissions would be a significant impact. (Id. at

pp. 90-91.) The amended EIR addressed this impact by putting forth “some proposed

mitigation measures to ensure that the Project‟s operation „shall result in no net increase

in GHG emissions over the Proposed Project baseline.‟” (Id. at p. 91.) The amended EIR

plan gave Chevron one year to submit to the city, for approval by the city council, “„a

plan for achieving complete reduction of GHG emissions up to the maximum estimated

… Project GHG emissions increase over the baseline (890,000 metric tons per year …).‟”

(Ibid.) The First Appellate District concluded the mitigation plan for greenhouse gases

violated CEQA because the city “delayed making a significance finding until late in the

CEQA process, divulged little or no information about how it quantified the Project‟s

greenhouse gas emissions, offered no assurance that the plan for how the Project‟s

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greenhouse gas emissions would be mitigated to a net-zero standard was both feasible

and efficacious, and created no objective criteria for measuring success.” (CBE, supra,

at p. 95, italics added; see Preserve Wild Santee v. City of Santee (2012) 210 Cal.App.4th

260, [EIR‟s plan for active habitat management of open space preserve did not specify

any performance standards]; Gray, supra, 167 Cal.App.4th at p. 1119 [CEQA violated

because county committed itself to a specific mitigation goal, not a specific performance

standard].)

We conclude that ARB‟s statement that its future rulemaking will “establish

specifications to ensure there is no increase in NOx” suffers from the same defect as the

net-zero standard for greenhouse gas emissions adopted in CBE—it established no

objective performance criteria for measuring whether the stated goal will be achieved.

As a result, we and members of the public have not been informed how ARB will

determine that the requirements it adopts in a fuel specifications regulation will ensure

that use of the biodiesel does not increase NOx emissions. To illustrate this point, it is

unclear what tests will be performed and what measurements will be taken to determine

that biodiesel use is not increasing NOx emissions.

In summary, ARB‟s statement that its rulemaking would “ensure that there is no

increase in NOx” is similar to the “generalized goal of no net increase in greenhouse gas

emissions” that was deemed deficient in CBE, supra, 184 Cal.App.4th at page 93. Thus,

ARB violated CEQA by improperly deferring the formulation of mitigation measures for

the increase in NOx emissions that might result from the increase use of biodiesel fuel

caused by the LCFS regulations.

4. Delayed Mitigation

Here, ARB has gone forward with the project‟s activity—that is, ARB has

implemented the LCFS regulations—without putting in place any mitigation measures for

the potential increase in NOx emissions resulting from the use of biodiesel. This absence

of mitigation measures for project activity constitutes a violation of CEQA. Only the

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formulation of mitigation measures may be deferred, mitigation itself cannot be deferred

past the start of the project activity that causes the adverse environmental impact.

C. Corrective Action on Remand

On remand, ARB may not simply assume that the LCFS regulations will not have

a significant adverse impact on the environment. ARB must make a finding of fact,

supported by substantial evidence, on the question whether the project will have a

significant adverse effect on the environment as a result of the potential increase in NOx

emissions.

If ARB finds that the LCFS regulations will adversely impact the environment by

increasing NOx emissions, then ARB must adopt mitigation measures that minimize the

adverse impact. (See § 21080.5, subd. (d)(3)(A).) Because the LCFS regulations have

been in effect, it is no longer appropriate to defer the implementation of mitigation

measures.

Alternatively, if ARB finds that the LCFS regulations will not adversely impact

the environment by increasing NOx emissions, then no mitigation measures are required

by CEQA. We recognize that the parties disagree on how the potential adverse impacts

of NOx emissions should be analyzed, but are not able resolve those disagreements

because they involve questions of fact that must be addressed in the first instance by

ARB. For example, we cannot define the appropriate geographical area or areas for

analyzing the NOx emissions. Also, we cannot determine whether the NOx emissions

analysis should be done from the perspective that analyzes the project as a whole, each

substitute fuel separate, or some other basis.

60.

V. ADMINISTRATIVE PROCEDURES ACT CHALLENGE*

Under the APA, a public agency is required to maintain a rulemaking file and

make that file available to the public during the comment period for the proposed

regulation. (Gov. Code, § 11347.3.)44 Plaintiffs claim ARB violated the APA by

omitting from the rulemaking file four emails from consultants hired by ARB. The

consultants were Dr. Thomas W. Hertel of Purdue University and Richard Plevin of the

University of California at Berkeley. Hertel‟s emails have particular significance because

he created the GTAP model45 and, in April 2009, was the head of the organization that

maintained it.

Generally, the GTAP model is used to estimate the impacts resulting from changes

in policy. Here, the GTAP model was adapted to estimate the land use changes likely to

result from the proposed LCFS regulations and to estimate how those changes would

impact greenhouse gas emissions. Ultimately, ARB relied on the model‟s estimates of

indirect land use effects to add 30 gCO2E/MJ to the carbon intensity value of ethanol

produced from corn. The application of the GTAP model and the calculation of indirect

impacts from land use changes is a controversial subject.

The four emails are relevant to the interests of POET and other ethanol producers

because they relate to the carbon intensity value assigned to ethanol to account for the

indirect effects of land use changes resulting from the increased demand for ethanol

* See footnote, ante, page 1.

44 All further statutory references in part V of this opinion, unless otherwise

indicated, are to sections of the APA set forth in the Government Code.

45 The LCFS regulations define “GTAP” and “GTAP Model” as the Global Trade

Analysis Project Model (January 2010), which is a software package comprised of (1) a

visual interface for use the with the GTAP databases maintained by Purdue University,

(2) a February 2009 GTAP model customized for corn ethanol, (3) a February 2009

GTAP model customized for sugarcane ethanol, and (4) a compressed file containing the

January 2010 model customized for Midwest soybeans. (Cal. Code Regs., tit. 17, §

95481, subd. (a)(30)(A)-(D).)

61.

caused by the LCFS regulation. The logic of the connection between the emails and the

carbon intensity value assigned to ethanol is based on the following steps: (1) The LCFS

regulations will increase the demand for crops used to produce ethanol. (2) The

increased demand, and related price increases, will cause farmers to convert land from

existing uses to produce either crops used to produce ethanol or food to replace the crops

use to produce ethanol. (3) The changes in land use will release carbon into the

atmosphere and/or lower the rate at which carbon is removed from the atmosphere. For

example, a growing forest removes more carbon than a corn field. (4) These changes in

carbon emissions and storage are indirect effects of using ethanol to satisfy the

requirements of the LCFS regulations and, therefore, should be reflected in the carbon

intensity values assigned to ethanol. (5) ARB used the GTAP to estimate the land use

changes and the carbon intensity value that should be assigned to ethanol to account for

the impact of the land use changes. (6) The emails concern the operation of the GTAP

model and the data fed into that model and, therefore, are relevant to the carbon intensity

value assigned to ethanol.

The basic criticisms of increasing ethanol‟s carbon intensity value based on land

use changes are that (1) other fuels are not required to account for their indirect

greenhouse gas impacts, which gives those other fuels an inappropriate advantage over

ethanol, and (2) the indirect effects are too difficult to quantify at the present because of

incomplete data and assumptions made in modeling the effects.

The other side of the argument asserts that, although uncertainty exists, a start

must be made somewhere. For example, a comment letter dated April 21, 2009, from the

“Union of Concerned Scientists” took the position that the LCFS regulations should use

carbon intensity values that include indirect emissions from land use changes. That letter

asserted:

“There are uncertainties inherent in estimating the magnitude of indirect

land use emissions from biofuels, but assigning a value of zero is clearly

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not supported by the science. The data on land use change indicate that the

emissions related to biofuels are significant and can be quite large.

Grappling with the technical uncertainty and developing a regulation based

on the best available science is preferable to ignoring a major source of

emissions. Over time, greater accuracy and detail in a more refined

analysis can be reflected in future LCFS rulemakings.”

The emails from Hertel and Plevin tie into these arguments because they address

topics such as databases, assumptions used and results produced by the GTAP model.

A. Summary of Legal Issues and Conclusions

Plaintiffs contend that ARB violated the rulemaking procedures of the APA

specifying the contents of the rulemaking file by omitting the consultant emails from that

file, thereby thwarting the public‟s right to information. Plaintiffs further contend that

ARB‟s decision to keep these documents confidential until after the regulation was

finalized constitutes a substantial failure to comply with the APA and, thus, justifies

invalidating the regulation. ARB disagrees with these contentions.

We hold that ARB violated its disclosure obligations under the rulemaking

procedures of the APA. Our holding is based on the following conclusions:

(1) The statutory interpretation of the APA advocated by ARB in this litigation is

entitled to no deference from the courts.

(2) The interpretation of the provisions of the APA presents this court with a

question of law subject to independent review.

(3) The emails contain “other factual information” and were “submitted to the

agency” as those terms are used in section 11347.3, subdivision (b)(6). Therefore, ARB

violated the statute by omitting the emails from the rulemaking file.

As for the appropriate remedy, we conclude that, even if the omissions constitute

“a substantial failure to comply with” the APA as that phrase is used in subdivision (a) of

section 11350, the circumstances of this case do not favor invalidating the LCFS

regulation. Instead, pursuant to our equitable authority, we will direct ARB to include

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the emails in the rulemaking file, which will allow the public to comment on the emails

prior to ARB‟s reconsideration of the LCFS regulations.

B. Statutory Provisions

1. Procedures for Rulemaking

Chapter 3.5, article 5 of the APA governs the adoption and amendment of

regulations by state agencies, a process commonly known as rulemaking. (Syngenta

Crop Protection, Inc. v. Helliker (2006) 138 Cal.App.4th 1135, 1175.) That chapter

establishes “basic minimum procedural requirements” for rulemaking. (§ 11346, subd.

(a).)

Pursuant to those procedural requirements, agencies must, among other things, (1)

give the public notice of the proposed regulatory action; (2) issue a complete text of the

proposed regulation with a statement of reasons for it; (3) give interested parties an

opportunity to comment on the proposed regulation; (4) respond in writing to public

comments; and (5) maintain a file as the record for the rulemaking proceeding.

(Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 568 (Tidewater);46

§ 11347.3, subd. (a).)

One purpose of the APA‟s formal rulemaking procedures is to give those persons

and entities affected by a regulation a voice in its creation. (Tidewater, supra, 14 Cal.4th

at p. 568.) The benefits of public participation in the regulatory process include (1) the

46 Our summary of the APA‟s requirements is tailored to this case and, thus, the

last requirement concerning the file is broader than the description given by the

Tidewater court. In Tidewater, the last requirement listed by our Supreme Court stated

that the agency must “forward a file of all materials on which the agency relied in the

regulatory process to the Office of Administrative Law [citation], which reviews the

regulation for consistency with the law, clarity, and necessity [citation].” (Tidewater,

supra, 14 Cal.4th at p. 568.) Unlike ARB‟s appellate brief, we do not interpret the

Supreme Court‟s more narrow description of an agency‟s duty concerning the file as

curtailing the agency‟s obligation to comply with the other statutory requirements

concerning that file, such as contained in section 11347.3, subdivision (b).

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agency being informed by interested parties about possible unintended consequences of a

proposed regulation and (2) directing the attention of agency policymakers to the public

they serve, thus providing some protection against bureaucratic tyranny. (Id. at p. 569.)

Another purpose of the APA‟s procedural requirements is to create an administrative

record assuring effective judicial review. (Voss v. Superior Court (1996) 46 Cal.App.4th

900, 908.)

Compliance with the rulemaking procedures set forth in chapter 3.5 of the APA is

significant because the “regulation ... may be declared to be invalid for a substantial

failure to comply with [chapter 3.5] .…” (§ 11350, subd. (a).)

2. Maintenance and Use of the Rulemaking File

The APA requires state agencies to maintain a record of the rulemaking

proceeding. (§ 11347.3, subd. (a).) That record is referred to as the “rulemaking file.”

Rulemaking file requirements are outlined in section 11347.3, subdivision (b). The

rulemaking file is used by the state agency and must be made available to others—

namely, the public, the Office of Administrative Law,47 and the courts. (§ 11347.3,

subds. (c), (d).)

The public-availability requirement is in effect throughout the rulemaking

proceedings. (§ 11347.3, subds. (a), (d).) In 2000, the APA was amended to include the

following provision: “Commencing no later than the date that the notice of the proposed

47 Agencies are required to forward the rulemaking file to the Office of

Administrative Law, which may refer to the file when it reviews the regulation for

consistency with the law, clarity and necessity. (§ 11347.3, subd. (c); § 11349.1, subd.

(a).) After conducting this review, the Office of Administrative Law either approves or

disapproves the regulation. (§ 11349.3; Syngenta Crop Protection, Inc. v. Helliker,

supra, 138 Cal.App.4th at pp. 1175-1176.) If the office approves the regulation, it

transmits the regulation to the Secretary of State for filing. (§ 11349.3, subd. (a).) Until

filed with the Secretary of State, a regulation may not be utilized or enforced. (§

11340.5, subd. (a).)

65.

action is published in the California Regulatory Notice Register, and during all

subsequent periods of time that the file is in the agency‟s possession, the agency shall

make the file available to the public for inspection and copying during regular business

hours.” (§ 11347.3, subd. (a); see Stats. 2000, ch. 1060, § 30.) “A major purpose of the

rulemaking statute is to promote meaningful public participation in agency rulemaking—

for this purpose it is helpful to have the rulemaking file available throughout the

rulemaking process.” (Administrative Rulemaking (Oct. 1999) 29 Cal. Law Revision

Com. Rep. (1999) p. 469.)

The APA also addresses the role of the rulemaking file in court proceedings

challenging the validity of the regulation. (See § 11350, subd. (a) [validity of regulation

may be challenged in declaratory relief action ].) First, the APA requires the agency to

make the file available to any court reviewing the regulation. (§ 11347.3, subd. (d).)

Second, subdivision (d) of section 11350 provides that in a proceeding concerning the

validity of a regulation, “a court may only consider the following evidence: [¶] (1) The

rulemaking file prepared under Section 11347.3. [¶]…[¶] (3) An item that is required to

be included in the rulemaking file but is not included in the rulemaking file, for the sole

purpose of proving its omission.”48 The Law Revision Commission comment explaining

subdivision (d)(3) of section 11350 states:

“Such evidence may be necessary to prove a substantial failure to follow

required procedures. For example, an agency‟s failure to include a public

comment in a rulemaking file may constitute a substantial failure to follow

required procedures. See Section 11347.3(b)(6) (written public comments

must be included in rulemaking file). Proof of such an omission requires

consideration of the omitted item.” (Cal. Law Revision Com. com., 32D

West‟s Ann. Gov. Code (2005 ed.) foll. § 11350, p. 215; Administrative

Rulemaking (Oct. 1999) 29 Cal. Law Revision Com. Rep., supra, p. 552.)

48 Subparts (2) and (4) of this subdivision are not relevant to this case.

66.

Section 11350, subdivision (d)(3) establishes that the four emails were relevant,

admissible evidence for purposes of proving plaintiffs‟ claim that ARB violated the

APA‟s provisions governing the contents of the rulemaking file.49 The Law Revision

Commission comment also indicates that some failures to include required materials in

the rulemaking file constitute substantial failures to comply with the APA‟s procedural

requirements and, thus, justify declaring the regulation invalid. (See pt. V.F, post.)

3. Mandatory Contents of the Rulemaking File

Section 11347.3, subdivision (b) uses mandatory language in specifying the

contents of the rulemaking file. Specifically, the file “shall include”:

“(6) All data and other factual information, any studies or reports, and

written comments submitted to the agency in connection with the adoption

… of the regulation.

“(7) All data and other factual information, technical, theoretical, and

empirical studies or reports … on which the agency is relying in the

adoption … of a regulation .… [¶]…[¶]

“(11) Any other information, statement, report, or data that the agency is

required by law to consider or prepare in connection with the adoption …

of a regulation.” (§ 11347.3, subd. (b).)

Under these provisions, the rulemaking file must include certain materials that

were (1) submitted to the agency, (2) relied upon by the agency, or (3) required by law to

be considered by the agency.

49 Therefore, subdivision (d)(3) of section 11350 is the basis for our conclusion

that the trial court committed legal error when it granted ARB‟s motion to strike the four

emails and other omitted documents. On remand, the trial court will be directed to vacate

its order granting the motion to strike.

67.

C. Standard of Review for Rulemaking Provision Challenges

Before deciding the proper interpretation of the mandatory provisions of section

11347.3, subdivision (b) and how to apply that interpretation to the facts of this case, we

must resolve a threshold dispute regarding the appropriate standard of review.

1. Contentions of the Parties

Plaintiffs contend that a procedural error, such as the failure to proceed in the

manner required by the APA, is subject to independent review by this court.

In contrast, ARB contends that the standard of review applicable to “a purely

procedural APA claim is not precisely clear.” ARB argues that the most appropriate

standard of review in a situation involving the construction and application of rulemaking

file section 11347.3 is the “independent judgment/great weight standard” discussed by

Justice Mosk in his concurring opinion in Yamaha Corp. of America v. State Bd. of

Equalization (1998) 19 Cal.4th 1, 17 (Yamaha). This label was used to summarize the

principle that construction of a statute by officials charged with its administration is

entitled to great weight, but the final responsibility for the interpretation of the law rests

with the courts. (Ibid.) ARB asserts the independent judgment/great weight standard

applies because:

“Here, both ARB and the Office of Administrative Law, the agency tasked

with ensuring the consistency with the APA, concluded that ARB was in

compliance with the statute.… This is entitled to great weight unless

clearly erroneous or unauthorized. [Citations].”

In addition, ARB argues that a regulation certified by the Office of Administrative

Law is subject to a rebuttable presumption that the regulation was “duly adopted” and in

compliance with all the requirements of chapter 3.5 of the APA. (§ 11343.6, subds. (a) &

(c).) Thus, in ARB‟s view, plaintiffs must overcome the deference given to

interpretations of the agency and the Office of Administrative Law, as well as the

presumption of compliance.

68.

2. General Principles

In Yamaha, the majority opinion discussed the standard of review applicable to an

agency interpretation of a statute.

“Courts must, in short, independently judge the text of the statute,

taking into account and respecting the agency‟s interpretation of its

meaning, of course, whether embodied in a formal rule or less formal

representation. Where the meaning and legal effect of a statute is the issue,

an agency‟s interpretation is one among several tools available to the court.

Depending on the context, it may be helpful, enlightening, even convincing.

It may sometimes be of little worth. [Citation.] Considered alone and apart

from the context and circumstances that produce them, agency

interpretations are not binding or necessarily even authoritative. To quote

the statement of the Law Revision Commission in a recent report, „The

standard for judicial review of agency interpretation of law is the

independent judgment of the court, giving deference to the determination of

the agency appropriate to the circumstances of the agency action.‟

[Citation.]” (Yamaha, supra, 19 Cal.4th at pp. 7-8.)

Pursuant to this general overview of the law, we will determine the deference to be

given to ARB‟s interpretation of the provisions concerning the rulemaking file by

considering the context and circumstances presented in this case.

3. Analysis and Conclusion

We conclude ARB‟s interpretation of the statutory provisions concerning the

rulemaking file is not entitled to deference because (1) ARB‟s interpretation was not set

forth in a formal regulation; (2) ARB is subject to the statute in question, not charged

with its administration (Morris v. Williams (1967) 67 Cal.2d 733, 748); (3) ARB has no

expertise or technical knowledge that gives it special insight into the meaning of the

APA‟s provisions that specify the mandatory contents of a rulemaking file (see

California Society of Anesthesiologists v. Brown (2012) 204 Cal.App.4th 390, 405;

Church v. Jamison (2006) 143 Cal.App.4th 1568, 1579); (4) the interpretation advanced

by ARB in this litigation was not explicitly adopted or approved by the agency‟s senior

officials, such as the Board or the Executive Officer (see Allende v. Department of

California Highway Patrol (2011) 201 Cal.App.4th 1006, 1018 [agency decision

69.

carefully considered by senior agency officials is entitled to greater weight]; Yamaha,

supra, 19 Cal.4th at p. 12 [interpretation contained in an advice letter prepared by a single

staff member receives less deference]); and (5) the record contains no evidence indicating

that the interpretation advanced by counsel in this litigation has a long-standing history at

ARB or any other agency (State of California ex rel. Nee v. Unumprovident Corp. (2006)

140 Cal.App.4th 442, 451 [where agency has neither a formal regulation nor a long-

standing interpretation of a statute, “courts may simply disregard the opinion offered by

the agency”]).

In addition to the foregoing factors, if California court‟s deferred to each public

agency‟s interpretation of the APA‟s provisions governing the contents of the rulemaking

file, several different interpretations could result and the public disclosure provided to

California‟s citizens would vary from agency to agency. To avoid this lack of

uniformity, the judiciary should make the ultimate decision regarding the meaning and

effect of section 11347.3 without deference to the position adopted by the agency.

Therefore, we conclude that the independent standard of appellate review applies

to the interpretation of subdivision (b) of section 11347.3. This statutory interpretation

poses a question of law. (See PM & R Associates v. Workers’ Comp. Appeals Bd. (2000)

80 Cal.App.4th 357, 364 [construction of a statute is a pure question of law subject to

independent review on appeal].) Because there is no dispute regarding the contents of the

four emails in question or the fact that those documents were excluded from the

rulemaking file, the independent standard of review also applies to the application of that

statutory interpretation to the facts of this case. (Twedt v. Franklin (2003) 109

Cal.App.4th 413, 417.)

70.

D. Statutory Construction of Rulemaking Provisions

1. General Principles

Our independent determination of the meaning of sections 11347.3, subdivision

(b) is guided by the following general principles of statutory construction.

A reviewing court‟s fundamental task in construing a statute is to determine the

intent of the lawmakers so as to effectuate the purpose of the statute. (Grayson Services,

Inc. v. Wells Fargo Bank (2011) 199 Cal.App.4th 563, 570; see Code Civ. Proc., § 1859

[in construing a statute, intention of Legislature is to be pursued].) Courts start this task

by scrutinizing the actual words of the statute, giving them their usual, ordinary meaning.

(Grayson Services, Inc. v. Wells Fargo Bank, supra, at p. 570.) When statutory language

is clear and unambiguous (i.e., susceptible to only one reasonable construction), courts

adopt the literal meaning of that language, unless that literal construction would frustrate

the purpose of the statute or produce absurd consequences. (Ibid.)

Alternatively, when the statutory language is ambiguous, courts must select the

construction that comports most closely with the apparent intent of the Legislature, with a

view to promoting rather than defeating the general purpose of the statute. (Grayson

Services, Inc. v. Wells Fargo Bank, supra, 199 Cal.App.4th at p. 570.) The interpretation

of ambiguous wording is guided by the fundamental principle that courts construe those

words in the context and with reference to the entire scheme of law of which they are a

part. (State Farm Mutual Automobile Ins. Co. v. Garamendi (2004) 32 Cal.4th 1029,

1043; see Schatz v. Allen Matkins Leck Gamble & Mallory LLP (2009) 45 Cal.4th 557,

569 [every statute should be construed with reference to the whole system of law of

which is it a part].) Courts resolving statutory ambiguity also may be aided by the

ostensible objects to be achieved by the legislation, the evils to be remedied, the

legislative history, and public policy. (Honchariw v. County of Stanislaus (2011) 200

Cal.App.4th 1066, 1073.) When a court interprets an ambiguous statute, it is not

71.

authorized to rewrite the statute. It must simply declare what is, in terms or in substance,

contained in the statute. (Code Civ. Proc., § 1858.) Court do not have the authority “to

insert what has been omitted, or to omit what has been inserted” by the Legislature.

(Ibid.)

2. Constitutional Directive Concerning Disclosure

In addition to the foregoing general principles of statutory construction, our

interpretation of the APA must follow applicable constitutional directives. At the

November 2, 2004, General Election, California voters adopted such a directive.

(Versaci v. Superior Court (2005) 127 Cal.App.4th 805, 819, fn. 3.) They passed

Proposition 59, known as the “Sunshine Initiative,” which amended article I, section 3 of

the California Constitution by adding subdivision (b). (Versaci, supra, at p. 819, fn. 3.)

Subdivision (b)(1) states that the “people have the right of access to information

concerning the conduct of the people‟s business .…” (Cal. Const., art. I, § 3, subd. (b),

par. (1).) Subdivision (b)(2) is the particular provision that will affect our statutory

interpretation in this case—it provides in pertinent part: “A statute, court rule, or other

authority, including those in effect on the effective date of this subdivision, shall be

broadly construed if it furthers the people‟s right of access, and narrowly construed if it

limits the right of access.” (Cal. Const., art. I, § 3, subd. (b), par. (2).)

Therefore, when a court is confronted with resolving a statutory ambiguity related

to the public‟s access to information, the California Constitution requires the court to

construe the ambiguity to promote the disclosure of information to the public.

3. Contentions of the Parties

Plaintiffs contend that the four emails should have been included in the

rulemaking file because, among other things, they contain “data and other factual

information” that was “submitted to the agency in connection with the adoption … of the

regulation.” (§ 11347.3, subd. (b)(6).)

72.

ARB argues that (1) plaintiffs are raising this interpretation and application of the

statute for the first time on appeal and (2) the emails contain opinions, not facts or data.

In addition, ARB argues that the statutory phrase “submitted to the agency” limits the

scope of section 11347.3, subdivision (b)(6) to items that come from external sources.

Under this interpretation, items from ARB consultants would not be covered because the

consultants are ARB agents and, thus, any item they present would be properly regarded

as an internal item, not an item submitted to ARB from an outside source.

4. Scope of Issues Considered on Appeal

It is well established that appellate courts have the discretion to decide a question

of law raised for the first time on appeal. (Ward v. Taggart (1959) 51 Cal.2d 736, 742.)

Courts are more inclined to exercise this discretion and consider such legal issues where

the public interest or public policy is involved. (Resolution Trust Corp. v. Winslow

(1992) 9 Cal.App.4th 1799, 1810.)

In the instant case, the application of the provisions of section 11347.3,

subdivision (b)(6) to the four emails presents questions of law because the facts are not in

dispute. The contents of the emails appear on the face of the documents and the

circumstances of their delivery to ARB, such as the time and the source, are not disputed.

Furthermore, because of the public interest involved in the proper interpretation and

application of the disclosure provisions of the APA, we will exercise our discretion and

determine the legal issue whether the emails contain “other factual information” and thus

should have been included in the rulemaking file pursuant to section 11347.3, subdivision

(b)(6).

5. Meaning and Application of Section 11347.3, subdivision (b)(6)

Section 11347.3, subdivision (b)(6) requires the rulemaking file to include “[a]ll

data and other factual information, any studies or reports, and written comments

submitted to the agency in connection with the adoption … of the regulation.”

73.

The dispute regarding the meaning and application of subdivision (b)(6) of section

11347.3 concerns the phrases “other factual information” and “submitted to the agency.”

We will begin with the broader question, which involves the phrase “submitted to the

agency” and whether materials sent to the agency by its hired consultants fall within the

scope of that phrase.

Our first inquiry is whether the phrase “submitted to the agency” is ambiguous.

We conclude that each party has set forth a reasonably plausible interpretation. On the

one hand, it is possible to adopt the ordinary meaning of the words of the statute and

conclude that professors and researchers at universities that are geographically separated

from the agency‟s officer are outside the agency and, therefore, items they send to the

agency are “submitted” to the agency. On the other hand, it is possible to use concepts of

agency law and interpret the phrase to exclude emails from consultants based on the view

that such emails are internal communications and an agency does not submit information

or reports to itself. Because each of the competing interpretations is reasonable, we

conclude the statute is ambiguous and, therefore, we will look beyond its text to

determine the proper meaning.

Our examination of matters outside the text includes a consideration of the public

policies implicated by the disclosure of material received by agencies from consultants.

We, like ARB‟s supplemental brief, recognize the tension between the benefits of

disclosure and the benefits of confidentiality. In essence, the question is whether

California will have a more effective procedure for making administrative regulations if

(1) the public has access to information from the agency‟s consultant or (2) that

information is kept confidential. Balancing these conflicting policies of disclosure and

confidentiality might have been a difficult task had the California voters not addressed

the issue. The conflict between the public policies is resolved by applying the

constitutional directive favoring public access to information. (Cal. Const., art. I, § 3,

subd. (b), par. (2).)

74.

Pursuant to the constitutional directive for public access and the disclosure of

information, we interpret section 11347.3, subdivision (b)(6) to mean that emails from

consultants to ARB were “submitted to the agency.”

Next, we consider the meaning of the word “information” in the phrase “other

factual information.” (§ 11347.3, subd. (b)(6).) Webster‟s Third New International

Dictionary defines “information” as “something received or obtained through informing:

as a : knowledge communicated by others or obtained from investigation, study, or

instruction b : knowledge of a particular event or situation : INTELLIGENCE, NEWS,

ADVICES … c : facts or figures ready for communication or use as distinguished from

those incorporated in a formally organized branch of knowledge

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