## Analyzing AB32 And California's Environmental Quality Act (CEQA) To Realize Requirements And Navigate 

## Between Regulatory Demands For Cyclic Steam Injection Project

Bob Poole, Public & Government Affairs Manager

INFOCAST Water Management For Shale Plays West 2014 

## May 28

- 30 Denver, Colorado2 Santa Maria Energy Oil Drilling & Production Plan (Diatomite formation ): 

###  Development of 136 production oil wells (26 existing pilot project wells and 110 new wells) 

###  Two steam generators, connecting pipelines, oil processing facilities and related ancillary equipment 

###  32 acre site in an existing State Designated Orcutt Oil Field (Santa Barbara County) 

###  Utilizing the enhanced oil recovery (EOR) technique known as cyclic steaming

Laguna County Sanitation District Recycled Water Pipeline : 

###  Construction/Installation of an 8

- mile 16” buried pipeline 

###  Delivery of tertiary treated recycled water from the LCSD wastewater reclamation plant in Santa Maria to Santa Maria Energy’s Orcutt Oil Field 

###  Treated water used to generate steam for the EOR cyclic steaming technique to produce oil from the Diatomite formation 

###  Project includes opportunities for additional connections to the pipeline for other potential future uses 

## A Tale of Two Projects . . .3 Complying with California’s Cap and Trade GHG Mitigation Program.

Addressing Local CEQA GHG Requirements

Reviewing Discretionary Approval Process Under CEQA

Collaborating with Local Air Pollution C ontrol District o n GHG Environmental Analysis

Navigating the Politics of Climate Change with Local Anti

- Oil Groups 

## Steam Injection for Production in California’s Diatomite45 

## Photomicrograph of Diatomite6 

##  Cyclic steam injection 

###  Injection 

###  Soak 

###  Production



##  Real time monitoring and analysis 

## Enhanced Oil Recovery7 

## Creating the Steam

Confidential & Proprietary8 

## Injecting the Steam and Producing the Oil9 Mitigation measures include (to reach 29%): Elimination of existing open pipe flare (16,444) Installation pipelines Elimination of trucking Cap

- and

- Trade compliance Oak Tree Planting

On

- site efficiencies
Offsets

Additional Measures (not credited to SME): Use of high efficiency generators Road Paving Elimination of flaring future production Sponsorship of new program to support County’s Climate Action Plan ($50,000 per year for 10 years) Avoided transportation

- related GHGs from foreign imports 

## Greenhouse Gas Emissions10 

##  AB 32: Global Warming Climate Solutions Act passed in 2008


##  Oil production facilities are covered entities under California’s Cap

- and

- Trade program 

## California is a Leader in GHG Reduction11 Governor’s Exec. Order S

- 03

- 05 (2005 )
Established statewide GHG reduction goals
Mid

- term

— achieve 1990 emissions by 2020 Long

- term

— achieve 80% < 1990 emissions by 2050

California Global Warming Solutions Act (2006 )
AB 32 codifies mid

- term goal into law CARB is lead agency to implement AB 32 

## California & Global Climate Change12 

## The State GHG Emission Trend13 Approved in 2008

Updated every five years to ensure California remains on track to reach 2050 goal

Climate change priorities for the next five years were defined in 2013 via Scoping Plan update

Relies on several command and control measures to reduce GHG emissions, including: Regulation of landfills and certain commercial refrigerant operations Pavley I automobile standards Regional transportation measures Energy efficiency Cap

- and

- Trade 

## AB 32 Scoping Plan14 First Scoping Plan (2008 ) 29% reduction from Business as Usual (BAU) emissions

Revised Scoping Plan (2011 )
Revised to 16% estimated reduction below BAU

Five

- Year Update (2013 )
Revised to 15.3% reduction below BAU 

## AB 32 Scoping Plan15 

## CARB 2020 Target History

Forecasted Statewide
GHG Emissions (MTCO2e) Original BAU
Estimate 2020 596,000,000

Revised BAU
Estimate (Economic Downturn) 507,000,000



## 2020 Target (1990 Levels) 

## 472,000,000 16% 29%16 Vital Scoping Plan component for both mid

- & long

- term targets

Primary program to reduce GHG in industrial sector
20% of state’s GHG emissions Includes cement plants, refineries, & oil/gas extraction

Market

- based approach Embeds price of carbon into goods & services 

## AB 32’s Cap

- and

- Trade Program17 Vital Scoping Plan component for both mid & long

- term targets

Primary program to reduce GHG in industrial sector
20% of state’s GHG emissions Includes cement plants, refineries, & oil/gas extraction

Market

- based approach Embeds price of carbon into goods & services 

## AB 32’s Cap

- and

- Trade Program18 Sets a firm statewide limit or “cap” on GHGs

Cap declines approximately 3 percent each year Entities subject to cap and trade program are “covered entities ” May trade GHG allowances and offsets used for compliance with the program

Trading creates incentives to reduce GHGs

Funds raised are earmarked for clean technologies 

## AB 32’s Cap

- and

- Trade Program19 California Environmental Quality Act 

## And Then There is CEQA . . .20 Lead Agency has discretion to adopt project

- specific thresholds “The County’s threshold of significance was proper, and did not need to be ‘formally adopted’ under Guidelines § 15064(b) since it was project

- specific and not for general use.” Save Cuyama Valley v. County of Santa Barbara (2013 2d Dist., Div. 6) 213 Cal.App.4th 1059

. Other lead agencies have adopted GHG significance thresholds. 

## Treatment of Greenhouse Gases in CEQA21 Treat as a cumulative impact only

Estimate increase of project’s emissions over baseline

Determine if emissions exceed significance threshold

Determine compliance with statewide, regional, or local plan

Determine project’s “

fair share” of mitigation to alleviate cumulative impact 

## Treatment of Greenhouse Gases in CEQA22 Reduction from BAU

Cap

- and

- trade only : SCAQMD (Valero Project )

29% below BAU : SJVAPCD

Numeric “Bright Line”

10,000 MT/year: All “interim thresholds” pending reevaluation of more full implementation of AB 32 Scoping Plan and emission reductions achieved towards statewide goals
SCAQMD: 90 % capture basis
BAAQMD: 95 % “ “

SLOCAPCD : 94 % “ “ 

## Comparing GHG CEQA Compliance Around the State23 Reduction from BAU

Cap

- and

- trade only

16% below BAU

29% below BAU

50% below BAU

Numeric “Bright Line”

Region 90% capture 10,000 MT/year

Zero emission tolerance

0 net emissions 

## GHG Significance Criteria Options Considered by Santa Barbara County for Santa Maria Energy24 

##  Under the Business

- As

- Usual (BAU) method

, a project demonstrates that it can achieve a certain percentage reduction (here: 29%) in its GHG emissions through various mitigation measures. 

##  Key question : is project’s impact cumulatively significant 

###  No individual project has appreciable impact on global problem 

###  Must evaluate whether the project’s incremental addition of GHG is a cumulative impact in light of global problem and thus significant


##  AB 32 (Global Warming Solutions Act of 2006) is California’s solution to the problem of global climate change. It mandates a return to 1990 emissions levels by 2020.



##  If a project is consistent with achieving AB 32’s emission reduction target, then the project impact does not have cumulative impact because it is helping solve the collective problem of GHG.


##  BAU approach catches all emissions as compared to “Market Capture” (90/95%). 

## BAU Approach

Original % reduction target (2008): 29%

Revised % reduction target (2013): 15.3%25 

##  CARB recently released reports showing that California is well on its way to meeting 2020 goals 1



##  AB 32, Scoping Plan, and Cap

- and

- Trade Program are intended not only to achieve 2020 goals but also 2050 targets



##  BAU threshold accomplishes all of the advantages of “market capture” approach proposed by local environmental community 

###  Market capture is used to “capture” 90% of projects for more extensive analysis (EIR )



##  BAU threshold mandates real mitigation and efficiency measures to reduce GHG
emissions 

###  BAU approach ensures 100% of projects are mitigated 

## Substantial Evidence For Business as Usual (BAU)

1 (Revised) CARB 2011 GHG Reporting and Verification Summary26 

##  BAU threshold is supported by substantial evidence


###  Upheld by two published appellate court decisions: CREED v. City of Chula Vista (197 Cal. App. 4th 327 2011) and Friends of Oroville v. City of Oroville (cert for partial publication filed August 1, 2013), Super. Ct. No. 152682. 

###  Most widely used approach to evaluating GHG impacts statewide
e.g. San Diego County, City of Los Angeles, Port of Los Angeles, Santa Cruz County, Fresno County, San Bernardino County, City of Shasta, Napa County, City of Carlsbad, City of Corona, Merced County, SJVAPCD, Eastern Kern APCD, City of Temple City


###  The BAU threshold is a performance standard approach specifically authorized by CEQA Guidelines § 15064.4(a)( 2) 

##  Under CEQA Guidelines § 15064(b)(3 ), a project is less than cumulatively significant impact if it complies with requirements of approved plan, such as AB 32 

## Further Substantial Evidence for BAU Approach27 

##  On September 25 th , after 4 years of process, including three Planning Commission hearings


##  The Santa Barbara County Planning Commission approved our project, requiring 2X AB32 GHG mitigation ( 29% below BAU )


##  Within 10 days of this approval, the Decision was appealed to the Santa Barbara County Board of Supervisors by the Environmental Defense Center (EDC) on behalf of their clients calling for zero or 10,000 MT threshold 

## Project Approval . . .GHG Mitigation28 No County

- adopted policy guidance

No County

- adopted threshold

CEQA guidelines
“Fair share” contribution based on substantial evidence Essential nexus between mitigation & gov’t interest Rough proportionality between mitigation and impact Extent compliant with adopted local, regional, or state plans for reduction of GHG emissions

29 % below BAU = consistent with Plan & AB 32

County’s own Energy Climate Action Plan: (15% below baseline emissions by 2020) 

## On Appeal: Decision Maker Guidance29 

# 15% = Fair Share

29% = 2x
10,000 = 4.5x Fair Share Defined30 

## Determining Fair Share...

Impact

Nexus

Mitigation Rough Proportionality31 

##  Expressly affirmed by California appellate courts 

## AB 32 = Fair Share32 Deny the appeal and

Approve de novo the Project

Instead, 1 st /2 nd /3 rd District Supervisors:

Upheld the EDC’s appeal, overturned their own Planning Commission’s decision and imposed a 10,000 MT threshold requiring 4.5 X AB 32 

## We respectfully requested the Board to:33 

## Questions?