Case Title: Comm. for Better Environ. v. So. Coast Air Quality, etc.

Citation: 48 Cal. 4th 310

Docket Number: S161190

State: california

Court: California Supreme Court

Date: 2010-03-15T00:00:00Z

Document:
1 
Filed 3/15/10 
 
 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
COMMUNITIES FOR A BETTER  
) 
ENVIRONMENT, 
) 
 
 
) 
 
Plaintiff and Appellant, 
) 
 
 
) 
S161190 
 
v. 
) 
 
 
) 
Ct.App. 2/2 B193500 
SOUTH COAST AIR QUALITY  
) 
MANAGEMENT DISTRICT et al., 
) 
 
) 
Los Angeles County 
 
Defendants and Respondents; )  
Super. Ct. No. BS091275 
 
 
)  
 
CONOCOPHILLIPS COMPANY, 
) 
 
 
) 
 
Real Party in Interest and 
) 
 
Respondent.  
) 
 
____________________________________) 
 
 
) 
CARLOS VALDEZ et al., 
) 
 
 
) 
 
Plaintiffs and Appellants, 
) 
 
 
) 
 
v. 
)  
Los Angeles County 
 
 
)  
Super. Ct. No. BS091276 
SOUTH COAST AIR QUALITY  
)  
MANAGEMENT DISTRICT et al., 
) 
 
) 
 
Defendants and Respondents; )  
 
 
)  
CONOCOPHILLIPS COMPANY, 
) 
 
 
) 
 
Real Party in Interest and 
) 
 
Respondent.  
) 
 
____________________________________) 
2 
The California Environmental Quality Act (CEQA) (Pub. Resources Code, 
§ 21000 et seq.)1 requires a public agency to prepare an environmental impact 
report (EIR) only on projects that may have significant environmental effects 
(§§ 21100, subd. (a), 21151, subd. (a)).  To decide whether a given project‟s 
environmental effects are likely to be significant, the agency must use some 
measure of the environment‟s state absent the project, a measure sometimes 
referred to as the “baseline” for environmental analysis.  According to an 
administrative guideline for CEQA‟s application, the baseline “normally” consists 
of “the physical environmental conditions in the vicinity of the project, as they 
exist at the time . . . environmental analysis is commenced . . . .”  (Cal. Code 
Regs., tit. 14, § 15125, subd. (a).) 
In the present case, ConocoPhillips Company (ConocoPhillips), the private 
proponent of a project to conduct a new industrial process at a petroleum refinery, 
and the South Coast Air Quality Management District (District), whose failure to 
prepare an EIR before approving the refinery project is at issue, contend that the 
existence of valid permits to operate industrial equipment used in the project at 
particular levels establishes an exception to the general rule that existing physical 
conditions serve as the baseline for measuring a project‟s environmental effects.  
Instead, they maintain, the analytical baseline for a project employing existing 
equipment should be the maximum permitted operating capacity of the equipment, 
even if the equipment is operating below those levels at the time the 
environmental analysis is begun.  Failure to use the maximum permitted 
                                              
1 
All further unspecified statutory references are to the Public Resources 
Code. 
3 
operations as a baseline, they argue, would contravene CEQA‟s statute of 
limitations and deprive the permit holder of its vested rights. 
We conclude neither the statute of limitations, nor principles of vested 
rights, nor the CEQA case law on which ConocoPhillips and the District rely 
justifies employing as an analytical baseline for a new project the maximum 
capacity allowed under prior equipment permits, rather than the physical 
conditions actually existing at the time of analysis.  The District therefore abused 
its discretion in determining the project at issue would have no significant 
environmental effects compared to a baseline of maximum permitted capacity.  
We leave for the District on remand, however, to resolve exactly how the existing 
physical conditions — assertedly subject to operational variation over time — 
should be measured. 
FACTUAL AND PROCEDURAL BACKGROUND 
Real party in interest ConocoPhillips operates a petroleum refinery in 
Wilmington, an area of the City of Los Angeles.  The refinery, occupying 
approximately 400 acres bordering commercial, recreational, and residential areas, 
produces gasoline, jet fuel, diesel fuel, and other chemical products.  The present 
dispute arises from ConocoPhillips‟s project to produce ultra low sulfur diesel 
fuel. 
Plaintiffs are Communities for a Better Environment (an environmental 
organization), Southern California Pipe Trades District Council 16 and 
Steamfitters & Pipefitters Local 250 (labor organizations), and Carlos Valdez and 
other individuals.  The individual plaintiffs and members of the plaintiff 
organizations live and/or work near the ConocoPhillips refinery. 
Defendant District is the agency responsible for regulating nonvehicular air 
pollution in the South Coast Air Basin, an area encompassing all of Orange 
County and portions of San Bernardino, Riverside, and Los Angeles Counties, 
4 
including the Wilmington area.  (Health & Saf. Code, §§ 40000, 40410; Cal. Code 
Regs., tit. 17, § 60104.)   
In 2000 and 2001, the District, the federal Environmental Protection 
Agency, and the California Air Resources Board issued regulations requiring a 
reduction by mid-2006 in the sulfur content of motor vehicle diesel fuel to 15 parts 
per million by weight.  These rules were designed to reduce the harmful 
environmental effects resulting from emissions of sulfur oxides and other toxins 
from diesel-fueled motor vehicles.  
To comply with these regulations, ConocoPhillips developed plans for an 
Ultra Low Sulfur Diesel Fuel Project (the Diesel Project), which involved 
replacing or modifying hydrotreater reactors, a cooling tower, storage tank, and 
compressor; installing new pipelines and pumps; and substantially increasing 
operation of the existing cogeneration plant and four boilers, which provide steam 
for refinery operations.  The cogeneration plant and boilers were subject to prior 
permits that state a maximum rate of heat production for each piece of equipment. 
ConocoPhillips applied to the District for a permit to construct the above 
modifications.  After completing an initial study to determine the environmental 
impacts of the proposed Diesel Project, the District presented the results of its 
investigation in a draft negative declaration, concluding the project did not have 
the potential to adversely affect the environment. 
Plaintiffs submitted comments on the draft negative declaration, arguing the 
Diesel Project would have significant adverse impacts on the environment and 
thus an EIR should be prepared to identify mitigation measures.  One of plaintiffs‟ 
experts estimated the project would increase nitrogen oxide (NOx) emissions by as 
much as 661 pounds per day, greatly exceeding the District‟s significance 
5 
threshold of 55 pounds per day.2  NOx is a major contributor to smog formation 
and can cause adverse health effects, especially aggravation of respiratory disease. 
The District determined that increased steam generation from the 
cogeneration plant and boilers, along with other new activities, would create an 
additional 237 to 456 pounds per day of NOx emissions, of which between 201 
and 420 pounds would be caused by increased operation of the steam generating 
equipment.  The higher estimates represented “worst-case” conditions in which the 
refinery would have to use boiler 4, the oldest boiler at the plant.  In its final 
negative declaration (the Negative Declaration), however, the District concluded 
the Diesel Project “could not have a significant effect on the environment.”  While 
it noted the increased operation of existing steam generation equipment would 
cause additional NOx emissions, the District did not consider these increases to be 
part of the Diesel Project because they did not exceed the maximum rate of heat 
production allowed under existing permits. 
Crucially, the District treated any additional NOx emissions stemming from 
increased plant operations within previously permitted levels as part of the 
baseline measurement for environmental review, rather than as part of the 
proposed Diesel Project.  The District reasoned that ConocoPhillips had permits to 
operate the equipment, the refinery was an established use with operations 
fluctuating over time, and the proposed Diesel Project did not call for any 
                                              
2  
CEQA regulations encourage public agencies to develop and publish 
thresholds of significance, levels of a particular environmental effect “non-
compliance with which means the effect will normally be determined 
to be significant by the agency and compliance with which means the effect 
normally will be determined to be less than significant.”  (Cal. Code Regs., tit. 14, 
§ 15064.7, subd. (a).)  The District‟s threshold for operational NOx emissions is 
55 pounds per day. 
6 
equipment to exceed its permitted capacity.  Applying this baseline in the 
Negative Declaration, not even the “worst-case” scenario produced significant 
NOx emission increases under CEQA.  The District ultimately issued a notice of 
determination, approved the Diesel Project, and issued a permit to construct the 
modifications to the refinery.3 
In their second amended petitions for writ of mandate, plaintiffs alleged the 
District had violated CEQA by failing to prepare an EIR before approving the 
Diesel Project.  The trial court denied the petitions and entered judgment for the 
District and ConocoPhillips. 
On appeal, plaintiffs argued substantial evidence supported a fair argument 
that the Diesel Project would have a significant environmental impact requiring 
the District to prepare an EIR.  The Court of Appeal agreed, holding that increased 
use of existing equipment should have been evaluated as part of the Diesel Project, 
not as part of the baseline and, if the proper baseline had been used, the evidence 
of significant impact would be sufficient to require an EIR.  In CEQA cases, the 
court explained, the proper baseline measurement should rest on “ „realized 
physical conditions on the ground‟ ” instead of “ „merely hypothetical 
conditions.‟ ”  Rejecting other challenges to the Negative Declaration, the court 
reversed in part, affirmed in part, and remanded with directions the District be 
ordered to prepare an EIR.  
We granted the District and ConocoPhillips‟s joint petition for review. 
                                              
3  
The request of amicus curiae California Building Industry Association for 
judicial notice of materials related to the City of Los Angeles‟s Adaptive Reuse 
Program is denied on grounds of irrelevance. 
7 
DISCUSSION 
As noted in the introduction, a public agency pursuing or approving a 
project need not prepare an EIR unless the project may result in a “significant 
effect on the environment” (§§ 21100, subd. (a), 21151, subd. (a)), defined as a 
“substantial, or potentially substantial, adverse change in the environment” 
(§ 21068).  If the agency‟s initial study of a project produces substantial evidence 
supporting a fair argument the project may have significant adverse effects, the 
agency must (assuming the project is not exempt from CEQA) prepare an EIR.  
(Cal. Code Regs., tit. 14, § 15064, subd. (f)(1);4 No Oil, Inc. v. City of Los Angeles 
(1974) 13 Cal.3d 68, 75.)  If the initial study instead indicates the project will have 
no significant environmental effects, the agency may, as the District did here, so 
state in a negative declaration.  (Cal. Code Regs., tit. 14, § 15064, subd. (f)(3).)   
An agency that, relying on a standard inconsistent with CEQA and the 
CEQA Guidelines, prepares only a negative declaration has not proceeded in the 
manner required by law and has thus abused its discretion, calling for a judicial 
remedy.  (§ 21168.5; Vineyard Area Citizens for Responsible Growth, Inc. v. City 
of Rancho Cordova, supra, 40 Cal.4th at p. 426; No Oil, Inc. v. City of Los 
Angeles, supra, 13 Cal.3d at p. 88.)  In part I, post, we conclude the District‟s 
choice of a baseline for NOx emissions was inconsistent with CEQA and the 
                                              
4  
The regulations guiding application of CEQA, found in title 14 of the 
California Code of Regulations, section 15000 et seq., are often, and will 
sometimes be here, referred to as the CEQA Guidelines.  “The CEQA Guidelines, 
promulgated by the state‟s Resources Agency, are authorized by Public Resources 
Code section 21083.  In interpreting CEQA, we accord the Guidelines great 
weight except where they are clearly unauthorized or erroneous.”  (Vineyard Area 
Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 
Cal.4th 412, 428, fn. 5.) 
8 
CEQA Guidelines; the District should have looked to the existing physical 
conditions, rather than to the maximum permitted operation of the boilers.   
If no EIR has been prepared for a nonexempt project, but substantial 
evidence in the record supports a fair argument that the project may result in 
significant adverse impacts, the proper remedy is to order preparation of an EIR.  
(No Oil, Inc. v. City of Los Angeles, supra, 13 Cal.3d at pp. 75, 88; Brentwood 
Assn. for No Drilling, Inc. v. City of Los Angeles (1982) 134 Cal.App.3d 491, 504-
505.)  In part II, post, we conclude that, using the correct baseline of physical 
conditions existing at the time environmental analysis was begun, a fair argument 
based on substantial evidence can be made that the Diesel Project will increase 
NOx emissions significantly.  The appropriate remedy is therefore to order the 
District to set aside its Negative Declaration and project approval and to prepare 
an EIR that will evaluate, along with any other potentially significant impacts, 
these increased emissions.  (See § 21168.9.) 
I.  Prior Operating Permits Do Not in Themselves Establish a Baseline 
for CEQA Review of a New Project 
In the Negative Declaration, the District acknowledged the Diesel Project 
would require increased use of the refinery‟s steam generation equipment, which it 
estimated would increase NOx emissions by between 201 and 420 pounds per day, 
depending on which boilers were used to generate the steam.  Although this 
estimated increase exceeded the District‟s established significance threshold of 55 
pounds per day, the District did not consider it a significant environmental effect 
of the project:  “[T]he emissions associated with increased utilization of this 
existing equipment were considered baseline as opposed to proposed project 
because the Refinery holds valid permits to operate this equipment, and the 
equipment will continue to operate within their existing permit conditions and 
limits.”  In this court, the District and ConocoPhillips continue to espouse the view 
9 
that the maximum operating levels allowed under ConocoPhillips‟s boiler permits 
was the correct baseline against which to compare the Diesel Project‟s NOx 
emissions, while plaintiffs maintain the District was required instead to use the 
actually existing levels of operation as a baseline and treat any increase over that 
baseline as a project impact. 
Section 15125, subdivision (a) of the CEQA Guidelines provides:  “An EIR 
must include a description of the physical environmental conditions in the vicinity 
of the project, as they exist at the time the notice of preparation is published, or if 
no notice of preparation is published, at the time environmental analysis is 
commenced, from both a local and regional perspective.  This environmental 
setting will normally constitute the baseline physical conditions by which a lead 
agency determines whether an impact is significant.”  (Cal. Code Regs., tit. 14, 
§ 15125, subd. (a), italics added.)5  A long line of Court of Appeal decisions holds, 
in similar terms, that the impacts of a proposed project are ordinarily to be 
compared to the actual environmental conditions existing at the time of CEQA 
analysis, rather than to allowable conditions defined by a plan or regulatory 
framework.  This line of authority includes cases where a plan or regulation 
allowed for greater development or more intense activity than had so far actually  
                                              
5  
Although this regulation refers specifically to the analysis in an EIR, the 
agency determination it addresses — “whether an impact is significant” — also 
arises at the initial study phase of CEQA review, when the agency must decide 
whether there are any significant environmental effects requiring assessment in an 
EIR.  As all parties agree, the regulation is thus equally applicable at this phase.  
(See §§ 21060, 21068 [single definition of “ „[s]ignificant effect on the 
environment‟ ” applies throughout CEQA]; Fat v. County of Sacramento (2002) 
97 Cal.App.4th 1270, 1277-1278.) 
10 
occurred,6 as well as cases where actual development or activity had, by the time 
CEQA analysis was begun, already exceeded that allowed under the existing 
regulations.7  In each of these decisions, the appellate court concluded the baseline 
for CEQA analysis must be the “existing physical conditions in the affected area” 
(Environmental Planning & Information Council v. County of El Dorado, supra, 
                                              
6  
Environmental Planning & Information Council v. County of El Dorado 
(1982) 131 Cal.App.3d 350, 354, 357-358 (effects of a proposed area plan for land 
development must be compared to the existing physical conditions in the area, 
rather than to development permitted under the county‟s general plan); City of 
Carmel-by-the-Sea v. Board of Supervisors (1986) 183 Cal.App.3d 229, 246-247 
(effects of rezoning must be compared to the existing physical environment, rather 
than to development allowed under a prior land use plan); County of Amador v. El 
Dorado County Water Agency (1999) 76 Cal.App.4th 931, 955 (baseline for water 
diversion project was actually existing stream flows, not minimum stream flows 
set by federal license); Save Our Peninsula Committee v. Monterey County Bd. of 
Supervisors (2001) 87 Cal.App.4th 99, 121 (water use baseline for analysis of 
proposed land development was actual use without the project, not what the 
applicant was entitled to use for irrigation); San Joaquin Raptor Rescue Center v. 
County of Merced (2007) 149 Cal.App.4th 645, 658 (baseline for proposed 
expansion of a mining operation must be the “realized physical conditions on the 
ground, as opposed to merely hypothetical conditions allowable under existing 
plans”); Woodward Park Homeowners Assn., Inc. v. City of Fresno (2007) 150 
Cal.App.4th 683, 693, 706-710 (effects of a large office and shopping center 
development must be compared to the current undeveloped condition of the 
property, rather than to an office park that could be developed under existing 
zoning). 
7  
Riverwatch v. County of San Diego (1999) 76 Cal.App.4th 1428, 1452-
1453 (baseline for a proposed quarry development was the actual condition of the 
land, even though some existing environmental degradation had resulted from 
prior illegal mining and clearing activities); Fat v. County of Sacramento, supra, 
97 Cal.App.4th at pages 1278-1280 (baseline for airport expansion was existing 
airport operations, even though the airport had been operating and had expanded 
without a required permit for several years); Eureka Citizens for Responsible 
Government v. City of Eureka (2007) 147 Cal.App.4th 357, 370-371 (baseline for 
proposed school playground use was the existing playground facility, even though 
prior construction of the facility may have violated the city‟s code). 
11 
131 Cal.App.3d at p. 354), that is, the “ „real conditions on the ground‟ ” (Save 
Our Peninsula Committee v. Monterey County Bd. of Supervisors, supra, 87 
Cal.App.4th at p. 121; see City of Carmel-by-the-Sea v. Board of Supervisors, 
supra, 183 Cal.App.3d at p. 246), rather than the level of development or activity 
that could or should have been present according to a plan or regulation.  
Applied here, this general rule leads to the conclusion the District erred in 
using the boilers‟ maximum permitted operational levels as a baseline.  By treating 
all operation of the boilers within the individual limits of their permits to be part of 
the environmental setting, or baseline, the District ensured that no emissions from 
increased boiler operation would be considered an environmental impact so long 
as no single boiler operated beyond its permitted capacity.  Thus, the District‟s 
baseline operational level was the collective maximum capacity of the boilers; 
under the Negative Declaration‟s analysis, all four boilers could be run at 
maximum capacity simultaneously without creating any potential environmental 
impact.  Yet the District acknowledged that in ordinary operation any given boiler 
ran at the maximum allowed capacity only when one or more of the other boilers 
was shut down for maintenance; operation of the boilers simultaneously at their 
collective maximum was not the norm. 
Simultaneous maximum operation, then, is not a realistic description of the 
existing conditions without the Diesel Project.  Indeed, the Negative Declaration 
does not attempt to justify its maximum permitted capacity baseline as reflecting 
the actually existing physical conditions without the Diesel Project.  Rather, the 
Negative Declaration reasons that the increased steam production the Diesel 
Project called for was within the boiler permits‟ maximum operational levels and 
“could, therefore, occur even if the proposed project did not commence (exist).”  
By comparing the proposed project to what could happen, rather than to what was 
actually happening, the District set the baseline not according to “established 
12 
levels of a particular use,” but by “merely hypothetical conditions allowable” 
under the permits.  (San Joaquin Raptor Rescue Center v. County of Merced, 
supra, 149 Cal.App.4th at p. 658.)  Like an EIR, an initial study or negative 
declaration “must focus on impacts to the existing environment, not hypothetical 
situations.”  (County of Amador v. El Dorado County Water Agency, supra, 76 
Cal.App.4th at p. 955.)   
An approach using hypothetical allowable conditions as the baseline results 
in “illusory” comparisons that “can only mislead the public as to the reality of the 
impacts and subvert full consideration of the actual environmental impacts,” a 
result at direct odds with CEQA‟s intent.  (Environmental Planning & Information 
Council v. County of El Dorado, supra, 131 Cal.App.3d at p. 358.)  The District‟s 
use of the prior permits‟ maximum operating levels as a baseline appears to have 
had that effect here, providing an illusory basis for a finding of no significant 
adverse effect despite an acknowledged increase in NOx emissions exceeding the 
District‟s published significance threshold.   
The District and ConocoPhillips distinguish the cases cited above and argue 
for an exception from the “normal[]” rule of CEQA Guidelines section 15125, on 
the ground that here ConocoPhillips held an entitlement to operate the refinery 
boilers at the levels stated in the permits; in contrast, land use plans and zoning 
ordinances, considered in the cited cases, create no development entitlements in 
landowners.  To employ an analytical baseline below the maximum levels stated 
in the boiler permits, they maintain, would defeat the company‟s vested rights and 
contravene CEQA‟s statute of limitations, section 21167.  For reasons given 
below, we disagree. 
13 
Vested Rights 
The doctrine of vested rights as developed in land use law states that a 
property owner who, in good faith reliance on a government permit, has performed 
substantial work and incurred substantial liabilities has a vested right to complete 
construction under the permit and to use the premises as the permit allows.  (Russ 
Bldg. Partnership v. City and County of San Francisco (1988) 44 Cal.3d 839, 845-
846.)  Thus, “a permittee who has expended substantial sums under a permit 
cannot be deprived by a subsequent zoning ordinance of the right to complete 
construction and to use the premises as authorized by the permit.”  (County of San 
Diego v. McClurken (1951) 37 Cal.2d 683, 691.)8 
We fail to see how using the boilers‟ actual preproject NOx emissions as a 
baseline for analyzing the Diesel Project‟s effects would impinge on any vested 
rights ConocoPhillips holds to operate the boilers at permitted levels.  The project 
under review by the District here is ConocoPhillips‟s proposal to produce ultra 
low sulfur diesel fuel using a combination of existing, new, and modified refinery 
equipment.  ConocoPhillips‟s right to operate the boilers at any particular level is 
not itself at issue.  As demonstrated below, CEQA analysis of the Diesel Project, 
even if it used existing conditions as a baseline instead of the permit maximums, 
could not result in an order that ConocoPhillips reduce or limit its use of an 
individual boiler below the previously permitted level. 
                                              
8  
The doctrine is grounded in the constitutional prohibition against the taking 
of property without due process (Russ Bldg. Partnership v. City and County of San 
Francisco, supra, 44 Cal.3d at p. 846) and is related to the traditional protection 
for nonconforming uses established at the time zoning restrictions become 
effective, which in turn derives in part from the “doubtful constitutionality of 
compelling the immediate discontinuance of nonconforming uses” (County of San 
Diego v. McClurken, supra, 37 Cal.2d at p. 686). 
14 
First, using existing conditions as a baseline for CEQA analysis, the 
District might conclude the Diesel Project‟s increased steam demands would result 
in a significant increase in NOx emissions.  As a measure in mitigation of this 
significant adverse effect, the District could condition its approval of the Diesel 
Project on compliance with a limit on NOx emissions from the boilers.  
(§§ 21002.1, subd. (b), 21081, subd. (a)(1); Cal. Code Regs., tit. 14, §§ 15040, 
15126.4, subd. (a)(2).)  Such a condition, however, would not deprive 
ConocoPhillips of any vested right; the boiler permits give ConocoPhillips no 
vested right to pollute the air at any particular level.  (See Sherwin-Williams Co. v. 
South Coast Air Quality Management Dist. (2001) 86 Cal.App.4th 1258, 1273 
[plaintiffs‟ proprietary paint formulas did not give them “a property right to emit” 
air pollutants]; Mobil Oil Corp. v. Superior Court (1976) 59 Cal.App.3d 293, 305 
[oil companies‟ right “to continue releasing gasoline vapors into the atmosphere is 
neither fundamental nor vested”].)  Indeed, both the District and ConocoPhillips 
acknowledge that irrespective of the Diesel Project the District may, in the course 
of its regulatory duties, require ConocoPhillips to modify its boilers to reduce their 
pollution, as it has in fact done in the past.  Requiring pollution control mitigation 
as a condition of approving a new set of refinery operations does not amount to a 
prohibition on boiler operation in contravention of the preexisting permits and 
would not deprive ConocoPhillips of any vested right it holds under the boiler 
permits. 
Alternatively, if a significant increase in NOx emissions from the Diesel 
Project were identified and the District found it could not feasibly be mitigated, 
the District might, for this reason, deny the new permits sought for the Diesel 
Project.  (§ 21081; Cal. Code Regs., tit. 14, § 15042.)  But this result, too, would 
not affect ConocoPhillips‟s right to continue operating the boilers for other 
refinery processes.  ConocoPhillips does not, and could not, argue its boiler 
15 
permits gave it a vested right to use the boilers for the Diesel Project — a new set 
of operations that was not in existence when the boiler permits were issued and for 
which ConocoPhillips seeks a new permit from the District.  Disapproval of the 
Diesel Project because of increased NOx emissions (or for any other reason) 
would not in any way prevent ConocoPhillips from operating its boilers at levels 
allowed under the preexisting permits, as it did before the Diesel Project was 
initiated.9 
Finally, beyond the fact CEQA review of the Diesel Project could not affect 
ConocoPhillips‟s right to continue operating the boilers, the District‟s and 
ConocoPhillips‟s contentions fail for a more fundamental reason.  Even if 
environmental review were to indicate that the project‟s adverse effects could be 
mitigated only by a condition requiring ConocoPhillips to reduce or limit its use of 
an individual boiler below the previously permitted level, but ConocoPhillips‟s 
vested rights precluded imposition of that condition, CEQA would still demand an 
analysis of the project‟s true effects.  That a particular mitigation measure may be 
infeasible or precluded, as by the applicant‟s vested rights, is not a justification for 
not performing environmental review; it does not excuse the agency from 
following the dictates of CEQA and realistically analyzing the project‟s effects.  
After proper analysis, the agency might decide to disapprove the project because 
of its immitigable adverse effects or to approve it with a finding of overriding 
considerations.  (§ 21081, subd. (b).)  In short, an applicant‟s vested rights might 
                                              
9  
A third possibility is that the District would find a significant increase in 
NOx emissions that could not feasibly be mitigated, but approve the Diesel Project 
anyway with a finding of overriding considerations.  (§ 21081, subd. (b); Cal. 
Code Regs., tit. 14, § 15093.)  Obviously, this would not impinge on any vested 
right ConocoPhillips holds. 
16 
constitute a valid reason to forgo particular mitigation measures, but are not an 
excuse to avoid realistic CEQA analysis.  
Statute of Limitations 
The District‟s and ConocoPhillips‟s claim that use of an existing conditions 
baseline would violate the statute of limitations fails for the same principal reason:  
CEQA analysis of the Diesel Project does not constitute review of the District‟s 
long-final decisions to issue the boiler permits.  Section 21167 places relatively 
short time limits (between 30 and 180 days, depending on the type of challenge) 
on actions “to attack, review, set aside, void or annul” a public agency‟s “acts or 
decisions” for noncompliance with CEQA.  But plaintiffs do not seek to review or 
set aside the District‟s approval of the boiler permits; they seek to review and set 
aside the District‟s approval of the Diesel Project, and as to that project no claim 
of untimeliness has been made.  As explained earlier, moreover, the type of CEQA 
review for which plaintiffs argue — using existing physical conditions as the 
baseline to assess the Diesel Project‟s environmental impacts — could not result in 
an order revoking or revising the boiler permits.  And even if section 21167‟s time 
limits would preclude employing such an order as mitigation, such preclusion 
would not excuse the District from performing the realistic assessment of 
environmental effects CEQA demands.  The statute of limitations thus has no 
bearing here on the proper choice of analytical baseline.10 
                                              
10  
For the same reasons, the District‟s argument that considering increased 
NOx emissions from the boilers as an impact of the Diesel Project would be 
applying CEQA retroactively to pre-CEQA projects (see § 21169) has no merit; 
the Diesel Project is not a pre-CEQA project, though it uses some equipment 
predating CEQA.  Nor was the Diesel Project, first proposed in 2003, within the 
1972 moratorium for ongoing projects (§ 21171), as ConocoPhillips argues.  Nor, 
finally, was approval of the Diesel Project a nondiscretionary decision for the 
District (see § 21080, subd. (a)); even if the District lacked discretion to order any 
 
(footnote continued on next page) 
17 
Court of Appeal Decisions 
The District and ConocoPhillips cite several Court of Appeal decisions as 
supporting the use of maximum operational levels allowed under a permit, rather 
than existing physical conditions, as a CEQA baseline.  In each of these decisions, 
however, the appellate court characterized the project at issue as merely a 
modification of a previously analyzed project and hence requiring only limited 
CEQA review under section 21166 and CEQA Guidelines section 15162 (Cal. 
Code Regs., tit. 14, § 15162), or as merely the continued operation of an existing 
facility without significant expansion of use and hence exempt from CEQA review 
under CEQA Guidelines section 15301 (Cal. Code Regs., tit. 14, § 15301), or 
both.11  The Diesel Project, in contrast, cannot be characterized as merely the 
modification of a previously analyzed project to operate refinery boilers or the 
continued operation of the boilers without significant expansion of use.  Rather, 
                                                                                                                                                              
(footnote continued from previous page) 
one boiler to be used below its permitted capacity, the District retained discretion 
to disapprove a new project on the ground it would increase air pollution from the 
boilers collectively. 
11  
See Fairview Neighbors v. County of Ventura (1999) 70 Cal.App.4th 238, 
242-243 (application for a permit to increase mine production treated as the 
continued operation of an existing facility and modification of the project 
authorized in a prior permit issued after CEQA analysis); Temecula Band of 
Luiseño Mission Indians v. Rancho Cal. Water Dist. (1996) 43 Cal.App.4th 425, 
437-438 (modified pipeline design and route for water supply project that had 
already undergone CEQA review); Bloom v. McGurk (1994) 26 Cal.App.4th 1307, 
1311-1312 (renewal of a medical waste treatment facility‟s permit with no change 
in operations exempt as the continued operation of an existing facility); Benton v. 
Board of Supervisors (1991) 226 Cal.App.3d 1467, 1477-1484 (modified location 
of winery construction project on which CEQA review was already complete); 
Committee for a Progressive Gilroy v. State Water Resources Control Bd. (1987) 
192 Cal.App.3d 847, 862-865 (restoration of a sewage treatment plant‟s operation 
to the originally approved level was the continued operation of an existing facility 
and did not require supplemental CEQA analysis). 
18 
the Diesel Project proposed adding a new refining process to the facility, requiring 
the installation of new equipment as well as the modification and significantly 
increased operation of other equipment.  ConocoPhillips applied for a new permit 
for the Diesel Project, and the District treated it as a new project, finding not that it 
was exempt as the continued operation of an existing facility (Cal. Code Regs., tit. 
14, § 15301) or subject to limited review as only a modification of a previously 
analyzed project (§ 21166; Cal. Code Regs., tit. 14, § 15162), but rather that, 
although a new project subject to CEQA review, it had no potential significant 
adverse effects requiring analysis in an EIR (Cal. Code Regs., tit. 14, § 15064, 
subd. (f)(3)). 
None of the cited decisions, therefore, persuades us the preexisting boiler 
permits, by themselves, establish the proper baseline for CEQA analysis of the 
Diesel Project.  We conclude the District‟s use of the maximum capacity levels set 
in prior boiler permits, rather than the actually existing levels of emissions from 
the boilers, as a baseline to analyze NOx emissions from the Diesel Project was 
inconsistent with CEQA and the CEQA Guidelines.12  In the next part, we 
                                              
12  
The Court of Appeal held the District had erred in relying on NOx emission 
levels set in a different permit, a refinery-wide permit issued under the District‟s 
RECLAIM (Regional Clean Air Incentives Market) pollution reduction program.  
In this court, however, neither the District nor ConocoPhillips relies on the 
RECLAIM permit to support the Negative Declaration‟s no-significant-impact 
conclusion, and the District insists the RECLAIM permit is “irrelevant” because 
the District‟s baseline determination “was entirely unrelated to the refinery‟s 
status as a RECLAIM facility.”  While the Court of Appeal‟s reading of the 
Negative Declaration was not without foundation — the District did at points 
appear to rely in part on the RECLAIM permit — we accept the District‟s 
concession that the RECLAIM permit is irrelevant to the baseline for NOx 
emissions from the existing boilers. 
19 
consider the District‟s and ConocoPhillips‟s arguments regarding the proper 
manner of measuring actually existing emissions. 
II.  The Record Supports a Fair Argument the Diesel Project Will 
Have Significant Adverse Effects 
The Negative Declaration estimates the Diesel Project will result in 
increased NOx emissions of 201 to 420 additional pounds per day due to increased 
demand for steam from the boilers, and up to 456 pounds per day in total.  As the 
District‟s established significance threshold for NOx is 55 pounds per day, these 
estimates constitute substantial evidence supporting a fair argument for a 
significant adverse impact.   
The District and ConocoPhillips emphasize that refinery operations are 
highly complex and that these operations, including the steam generation system, 
vary greatly with the season, crude oil supplies, market conditions, and other 
factors.  ConocoPhillips objects to the Court of Appeal‟s mandate that annual 
averages be used to arrive at a baseline of daily emissions, arguing this fails to 
account for day-to-day fluctuations and neglects to consider the significance of 
peak production periods. 
We do not attempt here to answer any technical questions as to how 
existing refinery operations should be measured for baseline purposes in this case 
or how similar baseline conditions should be measured in future cases.  CEQA 
Guidelines section 15125 (Cal. Code Regs., tit. 14, § 15125, subd. (a)) directs that 
the lead agency “normally” use a measure of physical conditions “at the time the 
notice of preparation [of an EIR] is published, or if no notice of preparation is 
published, at the time environmental analysis is commenced.”  But, as one 
appellate court observed, “the date for establishing baseline cannot be a rigid one.  
Environmental conditions may vary from year to year and in some cases it is 
necessary to consider conditions over a range of time periods.”  (Save Our 
20 
Peninsula Committee v. Monterey County Bd. of Supervisors, supra, 87 
Cal.App.4th at p. 125.)  In some circumstances, peak impacts or recurring periods 
of resource scarcity may be as important environmentally as average conditions.  
Where environmental conditions are expected to change quickly during the period 
of environmental review for reasons other than the proposed project, project 
effects might reasonably be compared to predicted conditions at the expected date 
of approval, rather than to conditions at the time analysis is begun.  (Id. at pp. 125-
126.)  A temporary lull or spike in operations that happens to occur at the time 
environmental review for a new project begins should not depress or elevate the 
baseline; overreliance on short-term activity averages might encourage companies 
to temporarily increase operations artificially, simply in order to establish a higher 
baseline.   
Neither CEQA nor the CEQA Guidelines mandates a uniform, inflexible 
rule for determination of the existing conditions baseline.  Rather, an agency 
enjoys the discretion to decide, in the first instance, exactly how the existing 
physical conditions without the project can most realistically be measured, subject 
to review, as with all CEQA factual determinations, for support by substantial 
evidence.  (See Vineyard Area Citizens for Responsible Growth, Inc. v. City of 
Rancho Cordova, supra, 40 Cal.4th at p. 435.) 
That refinery operations fluctuate over time, however, does not excuse the 
District from estimating the increase in NOx emissions, if any, the Diesel Project 
will create.  Indeed, the District already made one such estimate in the Negative 
Declaration, finding the project would increase steam demand to a degree that 
would result in between 201 and 420 additional pounds per day of NOx emissions 
from the boilers.  The Negative Declaration, though it does not explicitly employ 
an existing conditions baseline, implicitly uses a baseline — an unstated one — in 
estimating the increased rate at which the boilers will need to operate and the 
21 
resulting increase in NOx emissions.  The District is not necessarily required to 
use the same measurement method in the EIR as in the Negative Declaration.  
Whatever method the District uses, however, the comparison must be between 
existing physical conditions without the Diesel Project and the conditions expected 
to be produced by the project.  Without such a comparison, the EIR will not 
inform decision makers and the public of the project‟s significant environmental 
impacts, as CEQA mandates.  (§ 21100.) 
DISPOSITION 
The judgment of the Court of Appeal is affirmed. 
 
 
 
 
 
 
WERDEGAR, J. 
WE CONCUR: 
GEORGE, C. J. 
BAXTER, J. 
CHIN, J. 
MORENO, J. 
POLLAK, J.* 
PREMO, J.** 
 
 
 
 
 
 
 
 
 
 
 
_____________________________________ 
* 
Associate Justice of the Court of Appeal, First Appellate District, Division 
Three, assigned by the Chief Justice pursuant to article VI, section 6 of the 
California Constitution. 
** 
Associate Justice of the Court of Appeal, Sixth Appellate District, assigned 
by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
 
 
See last page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Communities for a Better Environment v. South Coast Air Quality Management Dist. 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 158 Cal.App.4th 1336 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S161190 
Date Filed: March 15, 2010 
__________________________________________________________________________________ 
 
Court: Superior 
County: Los Angeles 
Judge: Andria K. Richey 
 
__________________________________________________________________________________ 
 
Attorneys for Appellant: 
 
Adrienne L. Bloch, Shana Lazerow; Lozeau|Drury and Richard T. Drury for Plaintiff and Appellant 
Communities for a Better Environment. 
 
Richard M. Frank; Adams Broadwell Joseph & Cardozo, Marc D. Joseph and Richard T. Drury for 
Plaintiffs and Appellants Carlos Valdez et al. 
 
Bill Lockyer and Edmund G. Brown, Jr., Attorneys General, Tom Green and Dane R. Gillette, Chief 
Assistant Attorneys General, Theodora P. Berger and Pamela C. Hamanaka, Assistant Attorneys General, 
Sally Magnani Knox, Lisa Trankley and Susan L. Durbin, Deputy Attorneys General for State of California 
as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Luke Cole for Association of Irritated Residents, California Communities Against Toxics, California 
Environmental Rights Alliance, California Safe Schools, Center on Race, Poverty and the Environment, 
Coalition for a Safe Environment, Community Water Center, Tricounty Watchdogs and Youth United for 
Community Action as Amici Curiae on behalf of Plaintiffs and Appellants. 
 
Frank G. Wells Environmental Law Clinic and Sean B. Hecht for Sierra Club, Endangered Habitats 
League, National Resources Defense Council and Planning and Conservation League as Amici Curiae on 
behalf of Plaintiffs and Appellants. 
 
__________________________________________________________________________________ 
 
Attorneys for Respondent: 
 
Kurt R. Wiese, Barbara Baird; Woodruff, Spradlin & Smart, Bradley R. Hogin, Edward L. Bertrand and 
Ricia R. Hager for Defendants and Respondents. 
 
Lewis Brisbois Bisgaard & Smith, Daniel V. Hyde, Paul J. Beck and Azusa K. Tokudome for California 
Association of Sanitation Agencies as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
 
 
 
 
 
 
Page 2 – S161190 – counsel continued 
 
Attorneys for Respondent: 
 
Latham & Watkins, Robert A. Wyman, Jr., and Emily Taylor for Regulatory Flexibility Group as Amicus 
Curiae on behalf of Defendants and Respondents. 
 
Weston Benshoof Rochefort Rubalcava & MacCuish, Alston & Bird, Ward L. Benshoof, Jocelyn D. 
Thompson; Cox Castle & Nicholson and Michael H. Zishke for Real Party in Interest and Respondent. 
 
Diepenbrock Harrison, Mark D. Harrison and Dan M. Silverboard for California Construction and 
Industrial Materials Association as Amicus Curiae on behalf of Real Party in Interest and Respondent. 
 
Manatt, Phelps & Phillips and Michael M. Berger for Western Independent Refiners Association as Amicus 
Curiae on behalf of Defendants and Respondents and Real Party in Interest and Respondent. 
 
Pillsbury Winthrop Shaw Pittman, Kevin M. Fong and David R. Farabee for Western States Petroleum 
Association as Amicus Curiae on behalf of Defendants and Respondents and Real Party in Interest and 
Respondent. 
 
Kronick, Moskovitz, Tiedemann & Girard, P. Addison Covert, Robin Leslie Stewart and Stacy L. Asato 
Toledo for California School Boards Association as Amicus Curiae on behalf of Defendants and 
Respondents and Real Party in Interest and Respondent. 
 
Brownstein Hyatt Farber Schreck and Lisabeth D. Rothman for California Building Industry Association as 
Amicus Curiae on behalf of Defendants and Respondents and Real Party in Interest and Respondent. 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Richard M. Frank 
School of Law 
358 Boalt Hall 
University of California  
Berkeley, CA  94720 
(510) 642-8305 
 
Bradley R. Hogin 
Woodruff, Spradlin & Smart 
555 Anton Boulevard, Suite 1200 
Costa Mesa, CA  92626-7670 
(714) 558-7000 
 
Jocelyn D. Thompson 
Alston & Bird 
333 South Hope Street, 16th Floor 
Los Angeles, CA  90071 
(213) 576-1000