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, Colorado
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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 . . .
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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 Control District on GHG Environmental Analysis

Navigating the Politics of Climate Change with Local Anti-Oil Groups 

Steam Injection for Production in California’s Diatomite
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Photomicrograph of Diatomite
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Cyclic steam injection 

Injection

Soak

Production

Real time monitoring and analysis

Enhanced Oil Recovery

Kill Line

1– 3 weeks

Kill Line

3-5 days

Phase 1

Steam Injection

Phase 3

Production

Kill Line

Phase 2

Soak

1-3 days
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Creating the Steam 

Confidential & Proprietary
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Injecting the Steam and Producing the Oil
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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 Emissions
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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 Reduction
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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 Change
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The State GHG Emission Trend
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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 Plan
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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 Plan
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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%
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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 Program
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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 Program
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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 Program
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California Environmental Quality Act

And Then There is CEQA . . .
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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 CEQA
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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 CEQA
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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 State
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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 Energy
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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%
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CARB recently released reports showing that California is well on its way to meeting 

2020 goals1

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)

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(Revised) CARB 2011 GHG Reporting and Verification Summary
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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 Approach
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 On September 25th, 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 Mitigation
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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 Guidance
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15% = Fair Share

29% = 2x

10,000 = 4.5x 

Fair Share Defined
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Determining Fair Share...

Impact

Nexus

Mitigation

Rough

Proportionality
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 Expressly affirmed by California appellate courts

AB 32 = Fair Share
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Deny the appeal and

Approve de novo the Project

Instead, 1st/2nd/3rd 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:
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Questions?