Cross-Border, Nature Based Market Solutions to Protect Blue Carbon Coastal Ecosystems in the Californias

March 2022

offsets, subject to broad CEQA guidelines. The California courts, in interpreting those guidelines, have set limits on the scope of lead agency discretion. Here, two recent court cases, both in the County of San Diego, offer some guidelines on the potential viability of cross-border GHG emissions offsets in the future. In a recent legal decision, Golden Door Properties, LLC, v. County of San Diego (June 12, 2020) 50 Cal.App.5th 467, the California Court of Appeals rejected on the CEQA grounds a County of San Diego GHG offset strategy including foreign offsets for land development projects inconsistent with the County’s General Plan. But in so doing, it identified factors that would provide grounds for court approval of a local offset mechanism. A similar case, Sierra Club v. County of San Diego (October 7, 2021), rejected the use of GHG emissions offsets for the proposed Adara at Otay Ranch residential development on the grounds that the County’s environmental impact report did not properly disclose or analyze numerous impacts of building new homes on coastal sage scrub habitat that were critical for survival of the endangered Quino checkerspot butterfly. Also, the court found that the County of San Diego’s plans to allow the project developer to use emissions offsets was troublesome because the County had not devised a proper framework for oversight of the offsets in question. 67 Specifically, the judge argued that “…cap-and-trade offset credits may be issued only if the emission reduction achieved is ‘real, permanent, quantifiable, verifiable, enforceable, and additional,” 68 something also stipulated in the Golden Door case. It must be noted that the Court 67 Joshua Emerson Smith, Kristina Davis, Judge strikes down envisioned Otay Ranch housing project, citing wildfire, climate change,” San Diego Union, October 7, 2021 https://www.sandiegouniontribune.com/news/envir

of Appeals in Golden Door was particularly skeptical towards offsets predicated on GHG reductions from projects located outside the U.S. The factors identified by the Court in the Golden Door case, as providing grounds for approval of an offset plan under the CEQA, were as follows: • If the local land use agency sets its own rules for use of offsets and those rules are sufficiently robust, the local agency need not rely on the CCTP offset rules to comply with the CEQA. • Offsets may be issued only if the emission reduction achieved is real, permanent, quantifiable, verifiable, enforceable, and additional to any GHG emission reduction otherwise required by law or regulation, and any other GHG emission reduction that otherwise would occur. • Offsets should be issued by official registries that are credible, which can be established if a registry has been approved for use by CARB • Offsets should be used as a last resort only after other mitigation efforts that are directed to benefitting the local jurisdiction are exhausted or otherwise not available. • There should be a mechanism in place to ensure enforcement, which may be through the registries if they take on that role. • It may be particularly difficult to establish that out-of-country offsets are valid because of the risk of corruption in establishing and administering the offsets, and because of uncertainty as to foreign enforcement of the offsets. The Golden Door case offers important lessons for the potential use in California of cross-border blue onment/story/2021-10-07/adara-otay-ranch development 68 Sierra Club v. County of San Diego, Case No. 37 2019-00038820-CU-TT-CTL, October 7 th , 2021 https://oag.ca.gov/system/files/attachments/press docs/Otay%2014%20Decision.pdf

30 | P a g e