Poet, LLC v. State Air Res. Bd.

Most providers of petroleum and biofuels in California are subject to the reporting and carbon intensity value requirements

In December 2009, plaintiffs POET, LLC and James M. Lyons filed this litigation to challenge the LCFS regulations, alleging violations of CEQA and California's Administrative Procedure Act (APA; Gov. Code, § 11340 et seq. ). In November 2011, the trial court denied plaintiffs' petition for writ of mandate and filed a judgment in favor of ARB. Plaintiffs appealed.

In May 2013, oral argument was held in the appeal. In June 2013, this court issued an order requesting input from counsel regarding the terms of the disposition and attached a tentative disposition. We asked counsel to make certain assumptions, including that certain CEQA violations had occurred and the LCFS regulations would be allowed to continue to operate. We stated our preference for a disposition "drafted so the superior court can take the language from the disposition and insert it into the peremptory writ of mandate" and asked counsel to take this into account when proposing changes or alternatives to the tentative disposition. Our order sought input on six topics of interest, including (1) maintaining the status quo and whether the 2014 standards should have been allowed to go into effect and (2) the framework for ARB's analysis of NOx emissions on remand.

On July 15, 2013, our opinion in Poet I was filed. We reversed the denial of plaintiffs' petition for writ of mandate and remanded for the issuance of a writ directing ARB to correct its CEQA and APA violations. In August 2013, we denied ARB's

3. Interpreting the February 2014 Writ

The parties' dispute over ARB's compliance with the February 2014 writ is primarily a conflict about how to interpret the writ's provisions. We drafted the language in the writ that is the subject of the present dispute and, more fundamentally, we identified the CEQA violations the language was designed to remedy. Thus, we

The final Environmental Analysis's reference to biodiesel's "feedstock" as a factor affecting NOx emissions might encompass both the source of the organic matter (e.g., soybean, cottonseed, tallow, restaurant

The final Environmental Analysis attempted to justify its use of the 2014 baseline for analyzing NOx emissions by discussing the possibility of comparing project NOx emissions to conditions existing in 2009-the year ARB prepared and adopted the original LCFS regulations. The final Environmental Analysis stated:

"In the interest of public disclosure, ARB staff examined the current and expected future emissions of NOx from biodiesel relative to the NOx emissions from biodiesel that were occurring prior to the adoption of the original LCFS (2009). In 2009, there were few [new technology diesel engines], no renewable diesel, and little biodiesel in California, so the NOx emissions from biodiesel were minimal. Staff re-evaluated the 2009 data and determined that NOx emissions were approximately 0.3 [tons per day] greater than reported in the Draft ISOR and E[nvironmental Analysis]. However, since 2009, NOx emissions from biodiesel have increased with the increased use of biodiesel resulting from multiple incentives related to biodiesel since 2009. Thus, it is unclear and impossible to determine what portion of the increase in use is attributable to the original LCFS." (Underlining omitted.)

This discussion continued with a description of the incentives created by federal regulations for fuel standards and federal tax incentives. The final Environmental Analysis stated the view of ARB's staff that the economic incentives in the federal measures were more instrumental than the LCFS regulations in bringing biodiesel to California post-2009. The final Environmental Analysis stated California's proportionate share of the national supply of fuel

Another place where NOx emissions were addressed is the public comments to the draft Environmental Analysis and ARB's responses. Those comments included a challenge to ARB's use of a 2014 baseline to analyze the impacts of the 2015 LCFS regulations. One comment asserted an earlier baseline should have been used and an assessment made of the environmental changes between the adoption of the original LCFS regulations and the adoption of the 2015 LCFS regulations. ARB's response to the comment stated that an environmental baseline predating the beginning of the 2015 administrative proceedings (1) would be misleading, (2) was not required by law, and (3) was not required by Poet I . ARB's response stated it did not agree that an earlier "baseline would yield meaningful information for environmental analysis."

Another comment interpreted the information provided in the draft Environmental Analysis to mean the readoption of the LCFS regulations would result in additional NOx emissions of 1.29 tons per day. ARB's response explained that the figure of 1.29 tons per day for 2015 appearing in its disclosure documents represented the NOx emissions attributable to the use of biodiesel blends. The figure was higher than the NOx emissions that would have occurred if only conventional diesel was used to fulfill diesel fuel demand in California. As biodiesel was already used in 2015 to fulfill California's diesel fuel demand, ARB's response stated:

"[T]he emissions the commenter refers to are already occurring as part of the current conditions. [¶] Thus, the 2014 and 2015 NOx emissions (1.35 [tons per day] in 2014 and 1.29 [tons per day] in 2015) associated with biodiesel use are not NOx increases resulting from the implementation of the proposed regulation starting in 2016, but are estimated emissions associated with current conditions. For purposes of the E[nvironmental Analysis], ARB analyzed impacts against 2014 conditions, the time when the environmental analysis began. ARB staff's analysis of NOx emissions from 2014 through 2023 (displayed in Table B-1), shows that NOx emissions would decrease over time with the implementation of the regulatory proposal."

In other words, the 1.29 tons per day of NOx emissions referred to in the comment were not incremental NOx emissions caused in 2015 by the LCFS regulations operating at that time. When the total of 1.29 tons per day was compared to the 1.35 tons per day from 2014, it showed NOx emissions were decreasing.

The public's comments and ARB's responses to the comments were appended to the environmental analysis and were considered by the Board at its hearings in September 2015.

4. ARB's Return to the Writ

In November 2015, ARB filed its return to the February 2014 writ together with the final Environmental Analysis, ARB's responses to comments, and other supporting documents. The return explained ARB's attempt to comply with paragraph 3 by stating "[t]he Board addressed whether the project (the proposed LCFS and Alternative Diesel Fuel ('ADF') regulations) will have a significant adverse effect on the environment as a result of increased NOx emission." The return then set forth findings about NOx emissions caused by short-term construction projects for new or modified facilities built to satisfy the fuel demands incentivized by ARB's regulations. The return next addressed the emissions caused by using biodiesel, stating ARB found:

"[1] that use of biodiesel can increase NOx emissions in some engines, depending in part on feedstock and blend level;

"[2] that total NOx emissions from biodiesel will decline from the 2014 baseline level under the proposed LCFS and ADF regulations; and

"[3] that the use of biodiesel consistent with the proposed regulations will not result in a significant adverse impact to air quality.

"(Exhibit C at pp. 4-5, 14; see also Exhibit A at p. 4 [adopting findings].) Overall, ARB found that the LCFS and ADF regulations and the compliance responses to those regulations would result in long-term beneficial impacts to air quality through reductions in criteria pollutants (which include NOx emissions). (Exh. C at p. 1.) These findings are supported by substantial evidence. (E.g, Exhibit D at p. 30-31, 56-63, 127-130 [excerpts of EA]; Exhibit E [ADF ISOR Appendix B].) This satisfies paragraph 3 of the peremptory writ."

Plaintiffs objected to ARB's return, contending ARB had not complied with paragraph 3. Plaintiffs argued ARB had failed to consider the original

The terms "activity" and "activities" appear throughout CEQA and the Guidelines, but they are not defined. The Guidelines' definition of "[p]roject," however, substitutes the phrase "the whole of an action" for the statutory phrase "[a]n activity." (Guidelines, § 15378, subd. (a).) Thus, courts routinely state the term "project" means the whole of an action. (E.g. North Coast Rivers Alliance v. Westlands Water Dist. (2014) 227 Cal.App.4th 832 , 858, 174 Cal.Rptr.3d 229 ; San Joaquin Raptor/Wildlife Rescue Center v. County of Stanislaus (1994) 27 Cal.App.4th 713 , 730, 32 Cal.Rptr.2d 704 .)

The broad interpretation of "project" to encompass "the whole of an action" (Guidelines, § 15378, subd. (a)) is designed to provide the fullest possible protection of the environment within the reasonable scope of CEQA's statutory language. ( Tuolumne County Citizens for Responsible Growth, Inc. v. City of Sonora (2007) 155 Cal.App.4th 1214 , 1222, 66 Cal.Rptr.3d 645 ( Tuolumne CCRG ); Friends of the Sierra Railroad v. Tuolumne Park & Recreation Dist. (2007) 147 Cal.App.4th 643 , 653, 54 Cal.Rptr.3d 500 ["CEQA's conception of a project is broad"]; Guidelines, § 15003, subd. (f).)

In Poet I , there was no dispute that the adoption of the original LCFS regulations was a "project" for purposes of CEQA. More precisely, the "activity" constituting the "project" was ARB's action in enacting the regulations plus its actions in implementing of the regulations (which includes enforcement activity). The concept of "activity" is not central to the parties' dispute over what paragraph 3 meant when it used the term "project." Instead, that dispute can be phrased as what constitutes "the whole of [ARB's] action." (Guidelines, § 15378, subd. (a).)

4. Legal Test for Determining Which Acts Are Part of the Whole

Answering the question about what constitutes the whole of ARB's action involves two steps. The first step identifies the legal test for determining the acts or activities that constitute the whole CEQA project. The second step applies that test to the facts of this case.

We discussed the scope of the activity constituting a project in Tuolumne CCRG , supra , 155 Cal.App.4th at pages 1222 through 1227, 66 Cal.Rptr.3d 645 , and the appropriate legal test for determining which acts to include in, or exclude from, the project. Tuolumne CCRG involved physical structures-a proposed road realignment and a proposed Lowe's home improvement center-that would become part of the physical environment, rather than the adoption of an ordinance or regulation. Despite the differences between physical construction projects and legislative action, we conclude the same test applies when determining what constitutes the whole of the action. In Tuolumne CCRG , the test we adopted and applied was whether the acts in question were " 'related to each other.' " ( Tuolumne CCRG , supra , 155 Cal.App.4th at p. 1225, 66 Cal.Rptr.3d 645 , quoting Plan for Arcadia, Inc. v. City Council of Arcadia (1974) 42 Cal.App.3d 712 , 726, 117 Cal.Rptr. 96 .)

We described the reach of this test by stating there are different ways actions can be related to (i.e., connected with) each other. ( Tuolumne CCRG , supra , 155 Cal.App.4th at pp. 1226-1227, 66 Cal.Rptr.3d 645 .) For instance, the two actions could be "related in (1) time, (2) physical location and (3) the entity undertaking the action." ( Id . at p. 1227, 66 Cal.Rptr.3d 645 .) We also examined how closely related the acts were to the overall objective of the project, stating: "The relationship between the particular act and the remainder of the project is sufficiently close when the proposed physical act is among the 'various steps

A simple way to conceptualize the goal of the writ is to consider the information that would have been provided if ARB had complied with CEQA in the first place. ARB's failure to comply with CEQA meant ARB's first set of environmental disclosure documents failed to provide all of the information required by CEQA. Paragraph 3 sought to remedy that informational deficit

Our Supreme Court has recognized that to achieve CEQA's goal of informing decision makers and the public of any significant environmental effects a project is likely to have, the environmental disclosure document (such as an EIR) "must delineate environmental conditions prevailing absent the project, defining a baseline against which predicted effects can be described and quantified." ( Neighbors for Smart Rail, supra, 57 Cal.4th at p. 447, 160 Cal.Rptr.3d 1 , 304 P.3d 499 .) Thus, the concept of a baseline is a key component in identifying and quantifying a project's environmental effects. CEQA does not use or define the term "baseline," but Guidelines section 15125, subdivision (a) provides in part:

"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." (Italics added.)

In Communities for a Better Environment v. South Coast Air Quality Management Dist. (2010) 48 Cal.4th 310 , 106 Cal.Rptr.3d 502 , 226 P.3d 985 , the court relied on this provision and case law "for the principle that the baseline for an agency's primary environmental analysis under CEQA must ordinarily be the actually existing physical conditions rather than hypothetical conditions that could have existed under applicable permits and regulations." ( Neighbors for Smart Rail , supra , 57 Cal.4th at p. 448, 160 Cal.Rptr.3d 1 , 304 P.3d 499 , citing Communities for a Better Environment , supra , at pp. 320-322, 106 Cal.Rptr.3d 502 , 226 P.3d 985 .) The court addressed the problem of defining an existing conditions baseline in circumstances where the existing conditions themselves change or fluctuate over time. ( Communities for a Better Environment , supra , at pp. 327-328, 106 Cal.Rptr.3d 502 , 226 P.3d 985 .) The court resolved this problem by concluding a single, uniform rule for determining existing conditions was not appropriate. ( Id. at p. 328, 106 Cal.Rptr.3d 502 , 226 P.3d 985 .) Instead, the court interpreted CEQA and the Guidelines as giving the agency "the discretion to decide, in the first instance, exactly how the existing physical conditions without the project can most realistically be measured." ( Ibid . )

In summary, the Guidelines and foregoing cases set forth two main principles relevant to this appeal. First, an existing conditions baseline is ordinarily used in analyzing a project's environmental impacts. Second, a lead agency has the discretion to choose to evaluate the impacts on future conditions, so long as it provides an adequate justification for omitting an existing conditions analysis. These principles serve CEQA's informational purpose by insisting the "CEQA analysis employ a realistic baseline that will give the public and decision makers the most accurate picture practically possible of the project's likely impacts." ( Neighbors for Smart Rail , supra , 57 Cal.4th at p. 449, 160 Cal.Rptr.3d 1 , 304 P.3d 499 .)

3. Application of Principles

The project in this case includes the original LCFS regulations. Thus, the normal baseline would be the physical conditions existing at the time the environmental analysis of the original LCFS regulations commenced. (Guidelines, § 15125, subd. (a); Neighbors for Smart Rail , supra , 57 Cal.4th at p. 455, 160 Cal.Rptr.3d 1 , 304 P.3d 499 ["Guidelines establish the default of an existing conditions baseline"].) Exactly when ARB's environmental analysis commenced is not clear from the record. It probably occurred after January 2007, when Governor Schwarzenegger directed ARB to determine if a LCFS could be adopted as a discrete early action under the California Global Warming Solutions Act of 2006. ( Poet I , supra , 218 Cal.App.4th at p. 700, 160 Cal.Rptr.3d 69 .) It might have commenced in "August 2007[ when] ARB began consulting with the public about a LCFS." ( Id . at p. 701, 160 Cal.Rptr.3d 69 .) Thus, the normal, existing conditions baseline for NOx emissions might have described conditions existing in August 2007 or, if a full calendar year was used to define the baseline conditions, the NOx emissions from calendar year 2006.

ARB used a 2014 baseline and thought such a baseline described existing conditions because ARB misconstrued and misapplied the term "project." The

Part of the background for the wording of paragraph 3 is provided in the section of our opinion addressing the CEQA violation relating to NOx emissions. In that section, we stated: "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." ( Poet I , supra , 218 Cal.App.4th at p. 740, 160 Cal.Rptr.3d 69 .) We used the phrase "will have" instead of the phrase "may cause" appearing in the definition of "project" (§ 21065) for two reasons. The first was an attempt to reduce the chances that ARB would continue its avoidance of the issue (as it did with its assumption) by making alternative findings that the project might or might not cause increased NOx emissions. The second was that the phrases "may cause" or "may have" are more appropriate for the inquiry conducted at the initial-study stage of review when a lead agency applies the fair argument standard to determine whether the project may cause or may have a significant environmental impact and, thus, requires the preparation of an EIR to complete a full environmental review of that impact. (See § 21080, subd. (d) [if "project may have a significant effect on the environment, an

The last element plaintiffs must establish to obtain a reversal is prejudice. Accordingly, we consider whether ARB's failure to comply with the writ and CEQA was prejudicial. A starting point for this inquiry is the proposition that employing an incorrect baseline is not necessarily prejudicial. For example, in Neighbors for Smart Rail , supra , 57 Cal.4th 439 , 160 Cal.Rptr.3d 1 , 304 P.3d 499 , the Supreme Court determined the use of a wrong baseline for analyzing traffic was "an insubstantial, technical error that cannot be considered prejudicial." ( Id . at p. 463, 160 Cal.Rptr.3d 1 , 304 P.3d 499 .)

In this case, we conclude that ARB's failure to comply with paragraph 3 resulted in its environmental disclosure documents omitting information (1) required by CEQA and (2) necessary to an informed discussion. ( Citizens Opposing a Dangerous Environment v. County of Kern (2014) 228 Cal.App.4th 360 , 382, 174 Cal.Rptr.3d 683 [test for prejudice].) At least two gaps in information occurred. First, ARB's disclosure did not analyze the increase in NOx emissions for the period from 2009 through the readoption of the regulations. Information about NOx emissions from this period was necessary to inform the public and decision makers. Second, the discussion of the NOx emissions forecast to occur after the adoption of the 2015 LCFS regulations was inaccurate because the wrong baseline was used and, as a result, the discussion misleadingly understated the increase in NOx emissions for 2016 and the years following. This understatement allowed ARB to conclude NOx emissions would decrease and to avoid (1) making findings of fact allocating the increased emissions among the various causes and (2) determining whether the amount of the increased emissions caused by the project was significant. These gaps in information are at the heart of the analysis used to determine whether a project is likely to have a significant adverse environmental impact and, thus, cannot be regarded as insubstantial, technical errors. Consequently, we conclude plaintiffs have shown the failure to comply with paragraph 3 was prejudicial to CEQA's informational goals.

ARB's prejudicial failure to comply with paragraph 3 is more than a failure by a public agency to fulfill the terms of a writ of mandate. The February 2014 writ was issued to remedy violations of CEQA. Thus, ARB's failure to comply with paragraph 3 also constitutes a violation of CEQA. In other words, since 2009, ARB has been in violation of CEQA because its environmental disclosure documents have not provided the public and decision makers with statutorily required information about the project's NOx emissions. As a result, ARB's corrective action taken in reliance on those environmental disclosure documents did not comply with CEQA.

2. Determining What Further Orders are Appropriate

The principle that a court may issue " 'further appropriate orders to compel obedience to the writ' " ( Sanders , supra , 3 Cal.3d at p. 262, 90 Cal.Rptr. 169 , 475 P.2d 201 ) gives rise to the question of how a court determines what is appropriate in a particular case. We have located, and the parties have cited, no case law explicitly addressing this question in a CEQA case. We conclude that, where a CEQA violation was addressed by the underlying writ of mandate, the determination of what further orders are appropriate to compel obedience with the writ is controlled and guided by CEQA's requirements, principles and policies. Consequently, a further order generally will be deemed appropriate if (1) the required action is among the types of relief permitted by CEQA and (2) it promotes the goal of compliance with CEQA, which is why the writ was issued in the first place. Restated in the negative, a further order is not appropriate in a CEQA proceeding if (1) the order contradicts express limitations on relief set forth in section 21168.9 or (2) the order is inconsistent with the purposes of CEQA.

Therefore, we conclude our authority to grant appellate relief in this case is derived from (1) the general provisions in Code of Civil Procedure section 906 and (2) CEQA's provisions governing remedies.

B. ARB's Claims of Unavailable Appellate Relief

ARB has not identified the statutory basis for this court's power to grant appellate relief, yet ARB contends our jurisdiction in this appeal is limited. Specifically, ARB claims the appellate relief available in this case cannot attempt to remedy errors in the way ARB adopted the 2015 LCFS regulations because "the court with jurisdiction over those questions is the superior court handling [plaintiffs'] direct challenge to the new regulation."

ARB also addresses the possibility that this court might enter relief affecting the 2015 LCFS regulations under the theory that the relief is preliminary in nature. ARB contends plaintiffs have not shown the requisite elements for preliminary relief-namely, the likelihood of success on the merits and irreparable injury absent relief.

We reject ARB's argument that we lack the jurisdiction or authority to suspend the 2015 LCFS regulations. First, ARB has cited no statutory authority for such a jurisdictional limitation on the general authority granted by Code of Civil Procedure section 906. Second, ARB has cited no case law recognizing such a limitation on the authority of an appellate court. Third, this court has not limited or surrendered the authority to remedy failures to comply with the February 2014 writ or enforce our disposition in Poet I . For instance, Poet I contains no provision surrendering or otherwise limiting our authority in subsequent appeals. Therefore, we conclude the analysis set forth in part II.A, ante defines our authority to enter relief in this appeal, which is limited to ARB's failure to comply with the writ and

To the extent ARB's argument implies plaintiffs' current request for suspension of the 2015 LCFS regulations is an improper collateral attack on the regulations, we disagree. The challenges raised by plaintiffs in this appeal are limited to issues previously raised in Poet I and dealt with by the February 2014 writ. Thus, the challenges considered in this appeal are not collateral in nature. The directness of the challenges is illustrated by, among other things, their satisfaction of the issue exhaustion requirement set forth in section 21177, subdivision (b) throughout this litigation.

C. Reversal with a Generic Order to Comply with the Writ

Here, the parties impliedly accept the conclusion that the order discharging the writ should be reversed if the order was granted in error. Such a reversal would require further proceedings on remand so ARB could comply with the writ and obtain an order discharging the writ. Consequently, we consider whether our disposition should simply (1) reverse the order discharging the writ and (2) instruct the trial court to issue a generic order directing ARB to comply with the writ.

This theoretically possible disposition would have the effect of reinstating all provisions of the writ. Reinstatement, however, would give rise to disputes between the parties over how the writ's provisions should be applied to the further proceedings. The potential disputes described below demonstrate (1) a simple reversal with directions for ARB to comply with the writ is not appropriate and (2) further orders are needed to clarify matters.

1. Paragraph 6 and the Status Quo

Reinstating the February 2014 writ would reinstate paragraph 6, which stated ARB shall continue "to adhere to the LCFS regulations standards in effect for 2013 until the corrective action is completed." ( Poet I , supra , 218 Cal.App.4th at p. 767, 160 Cal.Rptr.3d 69 .) Paragraph 6's purpose was to preserve the status quo until ARB had complied with the writ and remedied its CEQA violations. ( Ibid . ) The parties' appellate briefing shows they do not agree on paragraph 6's continuing role, if any, after remand.

The parties have adopted different interpretations of paragraph 6's phrase "until the corrective action is completed." ARB has interpreted "is completed" to refer to the point where it finished the administrative steps in its

D. Who Determines the Content of the Further Appropriate Orders

The need for "further appropriate orders" raises the question of which court should determine the content of those orders-this court or the trial court? There are three possible answers. First, we could remand to the trial court with generic directions for that court "to order defendants to comply with the writ and to make any further appropriate orders to compel obedience thereto." ( Sanders , supra , 3 Cal.3d at p. 256, 90 Cal.Rptr. 169 , 475 P.2d 201 .) Second, we could draft the further appropriate orders ourselves and direct the trial court to issue those orders on remand. Third, we could divide the drafting responsibility, addressing some of the

Therefore, we conclude the 2013 standards should not be reinstated. The further orders contained in our disposition will modify the terms of the February 2014 writ to implement this conclusion about the 2013 standards.

F. Voiding and Suspending?

If the 2013 standards are not reinstated, should we adopt plaintiffs' position and suspend operation of the regulations or, alternatively, should we adopt ARB's position and allow the 2015 LCFS regulations and ADF regulations to remain in effect? As the 2015 LCFS regulations and ADF regulations currently are in effect, the question is whether to invalidate (i.e., suspend) those regulations in whole or in part.

2. Principles Governing Severance

The statute directs courts to consider whether "the portion or specific project activity or activities are severable" (§ 21168.9, subd. (b)), but does not set forth a test for severability. Consequently, we turn to the analysis of severability adopted by our Supreme Court.

The first step of that analysis is to look for any severability clauses in the enactment. ( California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231 , 270, 135 Cal.Rptr.3d 683 , 267 P.3d 580 ( Matosantos ).) ARB included severability clauses in the ADF regulations and the 2015 LCFS regulations. (Cal. Code of Regs., tit. 13, § 2293.9 [ADF regulations]; Id ., tit. 17, § 95497 [2015 LCFS regulations].) These clauses establish a presumption in favor of severance, but are not conclusive. ( Matosantos , supra , at p. 270, 135 Cal.Rptr.3d 683 , 267 P.3d 580 ; Verner, Hilby and Dunn v. City of Monte Sereno (1966) 245 Cal.App.2d 29 , 35, 53 Cal.Rptr. 592 [invalid licensing requirements in ordinance materially affected remainder of regulatory scheme; entire ordinance held void despite severability clause].)

Determining whether the presumption holds or is negated involves an evaluation of the three judicially prescribed "criteria for severability: the invalid provision must be grammatically, functionally, and volitionally separable." ( Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d 805 , 821, 258 Cal.Rptr. 161 , 771 P.2d 1247 .) Grammatical (i.e., mechanical) separability exist when the invalid parts can be removed as a whole without affecting the wording or coherence of the remaining parts. ( Matosantos , supra , 53 Cal.4th at p. 271, 135 Cal.Rptr.3d 683 , 267 P.3d 580 .) Functional separability addresses how the enactment would operate without the invalid provision and is present when severance does not destroy the regulatory scheme or the utility of the remainder. ( Calfarm , supra , at p. 822, 258 Cal.Rptr. 161 , 771 P.2d 1247 ; Blumenthal v. Board of Medical Examiners (1962) 57 Cal.2d 228 , 238, 18 Cal.Rptr. 501 , 368 P.2d 101 .) In other words, functional separability depends on whether the remainder of the enactment is complete in itself and can be implemented without the continuation of the invalid provision. ( Matosantos , supra , at p. 271, 135 Cal.Rptr.3d 683 , 267 P.3d 580 .) Volitional separability exists when the legislative body would have

4. Severability of Portions of the LCFS Regulations

Next, we consider whether severing and suspending only a part of the 2015 LCFS regulations is permissible under section 21168.9, subdivision (b). There are many ways to divide the provisions of the 2015 LCFS regulations. For instance, as the CEQA violation concerns only NOx emissions from biodiesel, severance and suspension might be limited to (1) the provisions relating to biodiesel; (2) the provisions addressing all substitutes for conventional diesel, which substitutes include biodiesel and renewable diesel; or (3) the provisions addressing all types of diesel fuel, conventional or otherwise.

As to the first possibility, plaintiffs and ARB both suggest in their supplemental letter briefs that the biodiesel provisions in the LCFS regulations could be severed from the remainder of the LCFS regulations. They contend that severing and suspending the biodiesel provisions would increase the price of credits, which would have the beneficial impact of stimulating the production of fuels with lower carbon intensity values.

Despite the agreement of the parties, we reject a severance of the biodiesel provisions from the remainder of the LCFS regulations. Such a severance would place a disproportionate share of the financial burden of the increase in credit costs on the reporting entities that relied most heavily on biodiesel to bring down the average carbon intensity of the fuels they handled. This shift in the way the costs of the LCFS regulation are borne leads us to conclude the provisions relating to biodiesel are not functionally separable from the remainder of the regulation. The shift in costs would materially affect the operation of the regulatory scheme as to diesel such that the diesel portion of the scheme could no longer be regarded as functioning like the original scheme. ( Matosantos , supra , 53 Cal.4th at p. 271, 135 Cal.Rptr.3d 683 , 267 P.3d 580 .) In other words, the scheme as to diesel fuel and its substitutes would no longer be complete in itself.

The provisions involving biodiesel are intertwined with the provisions regulating the entire category of diesel fuels. For instance, the compliance

Severing the provisions of the LCFS regulations relating to all diesel fuels also meets the two other criteria in section 21168.9, subdivision (b). The provisions of the LCFS regulations addressing gasoline are in compliance with CEQA because the CEQA violation involving the analysis of NOx emissions from biodiesel did not affect the provisions addressing gasoline. (§ 21168.9, subd. (b).) Also, the record and arguments presented do not show that severing the provisions of the LCFS regulations relating to gasoline and allowing those provisions to remain in effect would prejudice ARB's complete and full compliance with CEQA in connection with NOx emissions from biodiesel. ( Ibid .)

Therefore, we conclude that the portion of the LCFS regulations that address fuels other than diesel fuel and its substitutes involve project activities that do not need

Our first inquiry addresses whether allowing the portion of the LCFS regulations addressing diesel fuel and its substitutes to remain in effect would "prejudice the consideration or implementation of particular mitigation measures or alternatives to the project." (§ 21168.9, subd. (a)(2).) In Poet I , we concluded that leaving the written standards in the original LCFS regulations in place instead of suspending them would not affect ARB's consideration of mitigations measures and alternatives. ( Poet I , supra , 218 Cal.App.4th at p. 762, 160 Cal.Rptr.3d 69 .) Plaintiffs argue we should not reach the same conclusion here because they have "demonstrated that, so long as the LCFS regulation remains in place, [ARB] will cut analytical corners, and refuse to consider alternatives and mitigation-all to the detriment of communities affected by criteria pollutants such as NOx-simply to defend the continuing existence of the LCFS program." Plaintiffs refer to ARB's analysis of alternatives after the issuance of the February 2014 writ, noting that ARB considered only a "no project" alternative and various iterations of the LCFS regulation and declined to consider feasible alternatives presented by the public.

Plaintiffs' arguments about bureaucratic momentum are realistic and have some merit. However, those arguments must be placed in the context of this case, which involves CEQA violations on a narrow topic (i.e., NOx emissions from biodiesel) and not CEQA violations that taint the entire project. Furthermore, any lack of discussion about alternatives geared to biodiesel makes sense because alternatives are considered only after a significant environmental effect has been identified. (See Guidelines, § 15126.6 [consideration of alternatives].) Here, ARB's flawed analysis

Our second inquiry under subdivision (a)(2) of section 21168.9 relates to whether suspension of the portion of the LCFS regulations addressing diesel fuel and its substitutes is warranted because that portion of the project activity "could result in an adverse change or alteration to the physical environment." (Italics added.) This inquiry includes distinct questions of fact. First, could the provisions in the LCFS regulations addressing diesel fuel cause an increase in biodiesel usage in California? Second, could any increase in biodiesel use attributable to the LCFS standards cause an increase in NOx emissions? Third, if increased NOx emissions have or will be caused, is the adverse change to the physical environment attributable to that increase outweighed by the reduction in other pollutants caused by leaving the portion of the LCFS regulations addressing diesel fuel and its substitutes in place? (See Poet I , supra , 218 Cal.App.4th at p. 762, 160 Cal.Rptr.3d 69 ; see fn. 6, ante [baby-with-the-bathwater problem].)

The levels of certainty required to resolve these factual questions is addressed by the statutory phrase "could result." (§ 21168.9, subd. (a)(2).) In this context, "could" refers to future events. Consequently, "could" was not used as the past tense of "can," which refers to past ability. ( Quinones v. Pin (2009) 298 S.W.3d 806 , 816.) In reference to future events, "could" is used to indicate possibility, meaning essentially the same thing as "might." ( Ibid . ; Dorrin v. Union Electric Co. (1979) 581 S.W.2d 852 , 859 ["could" denotes mere capability and often is used as meaning "might"].) In this context, the most likely interpretation of the ambiguous phrase "could result" is that it denotes the level of certainty contained in the fair argument standard. Thus, suspension of a project activity pending compliance with CEQA may be an appropriate remedy when there is a fair argument that the project activity might result in an adverse environmental impact. Conversely, suspension of a project activity is not appropriate when the possibility of an adverse environmental impact resulting from that activity falls below the fair argument standard.

At oral argument, ARB's counsel argued ARB acted in good faith, maintaining that under

DISCUSSION

A

. Standard of Review

1. Parties' Contentions

Plaintiffs contend that, under the applicable standard of review, the issue presented is whether ARB prejudicially abused its discretion in its attempt to demonstrate compliance with the February 2014 writ. Plaintiffs refer to the abuse of discretion standard set forth in section 21168.5, which requires the agency to support its findings with substantial evidence and to proceed in the manner required by law.

ARB contends the only issue on appeal is whether the superior court erred in discharging the writ. ( Los Angeles Internat. Charter High School v. Los Angeles Unified School Dist. (2012) 209 Cal.App.4th 1348 , 1355, 147 Cal.Rptr.3d 757 ["issue is whether the trial court erred in ruling that the respondent ... complied with the writ"].) To resolve this issue, ARB urges us to focus on its response to the writ and the superior court's assessment of that response. ARB contends the discharge order can be reversed only if ARB's action pursuant to the writ was so palpably unreasonable and arbitrary as to indicate an abuse of discretion as a matter of law. ( Id . at pp. 1355-1356, 147 Cal.Rptr.3d 757 .)

The parties' slightly different descriptions of the standard of review does not present an authentic controversy because, at bottom, both regard the fundamental issue as whether ARB's action complied with the writ and contend that action is reviewed for an abuse of discretion. We agree that the abuse of discretion standard applies to ARB's actions because ARB's attempt to comply with the writ is, for all practical purposes, an attempt to comply with CEQA. (§ 21168.5.)

2. General Principles Regarding Abuse of Discretion Standard

Our conclusion that the abuse of discretion standard of review applies does not complete the description of the principles applied to evaluate ARB's actions. "The abuse of discretion standard is not a unified standard; the deference it calls for varies according to the aspect of [the agency's action] under review." (

adverse environmental effect of increased NOx emissions, and adopt mitigation measures in the event the environmental effects are found to be significant." ( Id . at p. 767, 160 Cal.Rptr.3d 69 .)

This language was tracked in paragraph 3 of the trial court's February 2014 writ (paragraph 3), which stated:

"ARB shall address whether the project will have a significant adverse effect on the environment as a result of increased NOx emissions, make findings (supported by substantial evidence)

The final Environmental Analysis stated that if the proposed ADF and LCFS regulations were adopted in 2015, ARB's staff predicted future decreases in total NOx emissions from biodiesel and renewable diesel. Table 4-1 in the final Environmental Analysis set forth the projected changes in statewide NOx emissions for each year from 2014 through 2022. These projected changes were attributed to the total use of biodiesel and renewable diesel, not the incremental increase in use of these fuels caused by the ADF and LCFS regulations . Using 2014 as a baseline, the projected changes in net NOx emissions ranged from a reduction of 0.1 tons per day in 2015 to a reduction of 1.3 tons per day in 2022. Based on the progressively declining emissions of NOx and the projected reductions in other criteria pollutants, the final Environmental Analysis concluded the long-term impacts on air quality would be beneficial-that is, the regulations would not have an adverse environmental impact. We note that the final Environmental Analysis did not attempt to allocate the increased usage of biodiesel and renewable diesel between (1) the ADF and LCFS regulations and (2) other causes. Such an

5. Trial Court's Order Discharging the Writ

On January 5, 2016, the trial court filed an order without holding a hearing. The order (1) stated the court had read and considered plaintiffs' objections and ARB's response and (2) found ARB had demonstrated satisfactory compliance with the February 2014 writ. Based on this finding, the court ordered the writ discharged.

E. The Scope of Paragraph 3 and the Meaning of "Project"

1. Parties' Interpretations of "Project"

Plaintiffs contend the term "project" used in paragraph 3 includes the whole of an action and, as applied in this case, the whole of the action encompasses both the original LCFS regulations and the 2015 LCFS regulations. In contrast, ARB contends "project" is a reference to the proposed LCFS regulations mentioned in other paragraphs of our disposition and the February 2014 writ, which ARB interprets to mean any new LCFS regulations that ARB might have considered on remand.

2. Project Means the Whole of an Action

We used the word "project" in our disposition because of its breadth and its role in defining the scope of CEQA. We used "project" in the same sense it is used in CEQA, the Guidelines and our many published CEQA decisions.

3. Projects Involving Legislative Action

Guidelines section 15378, subdivision (a)(1) provides examples of "activity directly undertaken by any public agency." The examples include building physical structures, such as "public works construction and ... improvements to existing public structures." ( Ibid .) Direct agency "activity" also includes "enactment and amendment of zoning ordinances, and the adoption and amendment of local General Plans." ( Ibid .) These latter examples support the conclusion that the term "activity" includes a state agency's enactment of regulations. (See CURE , supra , 178 Cal.App.4th at p. 1240, 101 Cal.Rptr.3d 81 [the adoption of a rule or regulation can be a project subject to CEQA];

CEQAs' purpose in requiring an environmental disclosure document is "to inform decision makers and the public of any significant adverse effects a project is likely to have on the physical environment." ( Neighbors for Smart Rail v. Exposition Metro Line Construction Authority (2013) 57 Cal.4th 439 , 447, 160 Cal.Rptr.3d 1 , 304 P.3d 499 ( Neighbors for Smart Rail ).) The benefits of informed decision makers are obvious and need not be described here. The benefits of an informed public was explained over 40 years ago by this court:

"Only by requiring the [public agency] to fully comply with the letter of the law can a subversion of the important public purposes of CEQA be avoided, and only by this process will the public be able to determine the environmental and economic values of their elected and appointed officials, thus allowing for appropriate action come election day should a majority of the voters disagree." ( People v. County of Kern (1974) 39 Cal.App.3d 830 , 842, 115 Cal.Rptr. 67 ; Guidelines, § 15003, subd. (e).)

Here, voters will not be informed of the environmental values of ARB and the Board if they are not informed about all of the project's impacts, including the impacts of the original LCFS regulations. In particular, the public is entitled to know that ARB and the Board were willing to accept the risk of higher levels of NOx emissions, with the attendant increase in smog and human health impacts, in exchange for lower overall emissions of greenhouse gases to combat global warming. This information, which provides insights into ARB's environmental values, was omitted from ARB's earlier environmental disclosure document and this deficiency must be corrected if the purpose of CEQA and the February 2014 writ is to be fulfilled.

The dispute over the appropriate baseline cannot be resolved without the proper application of the term "project" to the facts of this case. When the whole of a project is properly identified, then the conditions defining the project's baseline can be determined. Here, ARB's interpretation of "project" was too narrow and, consequently, it chose the wrong year as the conditions establishing the baseline for NOx emissions.

Neighbors for Smart Rail , supra , 57 Cal.4th 439 , 160 Cal.Rptr.3d 1 , 304 P.3d 499 , is more pertinent to the baseline issues raised in this appeal. In that case, the Supreme Court

ARB attempted to justify the use of a 2014 baseline in the paragraph of the final Environmental Analysis that began: "In the interest of public disclosure, ARB staff examined the current and expected future emissions of NOx from biodiesel relative to the NOx emissions from biodiesel that were occurring prior to the adoption of the original LCFS (2009)." The final Environmental Analysis proceeded to make three main points. First, it stated that "[i]n 2009, ... the NOx emissions from biodiesel were minimal." Second, it stated that "since 2009, NOx emissions from biodiesel have increased with the increased use of biodiesel" and attributed the increased biodiesel use to "multiple incentives." This statement identifies the difficulty of determining causation-that is, apportioning the increased use of biodiesel among the factors causing the increase. Third, the final Environmental Analysis stated "it is unclear and impossible to determine what portion of the increase in use is attributable to the original LCFS." The final Environmental Analysis then discussed the federal regulations promoting biodiesel use.

ARB's defense of the 2014 baseline also included its response to a comment asserting the 2014 baseline was inappropriate. ARB stated it did not agree that an earlier "baseline would yield meaningful information for environmental analysis."

As described below, we conclude ARB has not demonstrated its "CEQA analysis employ[ed] a realistic baseline that [gave] the public and decision makers the most accurate picture practically possible of the project's likely impacts." ( Neighbors for Smart Rail , supra , 57 Cal.4th at p. 449, 160 Cal.Rptr.3d 1 , 304 P.3d 499 .) First, the assertion that NOx emissions from biodiesel in 2009 were minimal suggests a 2009 baseline would have been small, a fact that does not make its use

As to the final Environmental Analysis's statement that it would be "impossible" to apportion increases among the original LCFS regulations and other factors, counsel for ARB stated during oral argument that ARB was willing and able to decide the issues relating to causation. Thus, ARB has conceded such findings are not "impossible." Similarly, ARB's conclusory statement that use of a baseline earlier than 2014 would not yield meaningful information is unpersuasive, because it based on ARB's supposed inability to make findings of fact about the causes of increased biodiesel use.

Therefore, we conclude ARB failed to justify its use of a 2014 baseline for the project's NOx emissions and, as a result, ARB failed to comply with CEQA and paragraph 3. When this court decided to allow the original LCFS regulations to remain operative pending ARB's compliance with CEQA, we did not intend to deprive the public or decision makers of information about increased NOx emissions caused by the original LCFS regulations during that compliance period. A proper baseline would identify the conditions that existed before any impacts of the original LCFS regulations began to accrue and, thus, would provide a solid foundation for identifying those impacts. (See pt. II.G, post [baseline on remand].)

G. Meaning of the Phrase "Will Have"

The last question about the proper interpretation of paragraph 3 involves the command that ARB "[a]ddress whether the project will have a significant adverse effect on the environment as a result of increased NOx emissions...." (Italics added.) ARB points to the phrase "project will have" in paragraph 3 and argues it refers to effects of the 2015 LCFS regulations "that might occur from those new regulations in the future ." (Underlining changed to italics.)

As to the meaning of the phrase "will have," we note the verb "will" has many definitions and there are differences within those definitions as to timing. For instance, "will" can be "used to express simple futurity" or "used to express simple action or intention without conscious reference to future time." (Webster's 3d New Internat. Dict. (1993) p. 2616, col. 3.) Also, "will" can be "used to express capability." ( Ibid .) Here, the disposition in Poet I used "will have" to refer to the project's capability of causing adverse environmental effects due to increased NOx emissions. We intended ARB to address this capability for the project as a whole (i.e., original and modified regulations) and "make findings (supported by substantial evidence) regarding the potential adverse environmental effect of increased NOx emissions, and adopt mitigation measures in the event the environmental effects are found to be significant." ( Poet I, supra, 218 Cal.App.4th at p. 767, 160 Cal.Rptr.3d 69 .)

In any event, the ambiguity in the phrase "will have" need not be discussed at length because ARB did not comply with paragraph 3, regardless of whether "will have" is interpreted as referring (1) to the future only or (2) to

1. Basic Principles

No statute specifically defines the appellate relief available when a trial court erroneously discharges a writ of mandate. Code of Civil Procedure section 906 sets forth the general authority of appellate courts to provide relief. Consequently, that section provides the statutory foundation for the appellate relief available in cases of erroneously discharged writs. Code of Civil Procedure section 906 states that an appellate court reviewing an appealable order "may affirm, reverse or modify" the order. The appellate court also "may direct the proper ... order to be entered, and may, if necessary or proper, direct ... further proceedings to be had." (Code Civ. Proc., § 906.) The express statutory authority to direct further proceedings that are necessary and proper fits with an appellate court's "inherent power to decide any issue deemed necessary for a proper disposition of the case." ( Canal-Randolph Anaheim, Inc. v. Wilkoski (1978) 78 Cal.App.3d 477 , 495, 144 Cal.Rptr. 474 .)

Reported decisions provide few examples of relief granted after an appellate court determines an order discharging a writ of mandate was granted in error. The first and obvious type of relief is the reversal of the trial court's order discharging the writ. (See Sanders v. City of Los Angeles (1970) 3 Cal.3d 252 , 261-262, 90 Cal.Rptr. 169 , 475 P.2d 201 [Court of Appeal's reversal of order discharging the writ affirmed] ( Sanders ); Lewis v. Steifel (1950) 98 Cal.App.2d 648 , 652, 220 P.2d 769 ["order discharging and vacating writ is reversed"].) In addition, the appellate court may expand upon the reversal by directing the trial court to order defendants to comply with the writ. ( Sanders , supra , at p. 256, 90 Cal.Rptr. 169 , 475 P.2d 201 ; see Sanders v. City of Los Angeles (1967) 252 Cal.App.2d 488 , 495, 60 Cal.Rptr. 539 ["the court is directed to order all defendants to comply with the writ of mandate"].) The appellate court also may direct the trial court to issue " 'any further appropriate orders to compel obedience to the writ.' " ( Sanders , supra , at p. 262, 90 Cal.Rptr. 169 , 475 P.2d 201 .)

To summarize, when an appellate court determines a public official or agency has failed to comply with a writ of mandate, the basic components of appellate relief are (1) reversal of the order discharging the writ and (2)

The role of CEQA in guiding the determination of what further orders are appropriate in this appeal returns us to Poet I 's discussion of the provisions that may be included in a peremptory writ of mandate issued to remedy CEQA violations. ( Poet I , supra , 218 Cal.App.4th at pp. 756-766, 160 Cal.Rptr.3d 69 .) We stated section 21168.9 provides that the writ may direct the agency "(1) to void, in whole or in part, a determination, finding or decision, (2) to 'suspend any or all specific project activity or activities' if certain conditions exist, or (3) to take specific action necessary to bring the determination, finding or decision tainted by the CEQA violation into compliance with CEQA." ( Poet I , supra , at p. 757, 160 Cal.Rptr.3d 69 fn. omitted; see § 21168.9, subd. (a)(1)-(3).) We concluded these categories of relief remain relevant to deciding what further orders may be appropriate in this appeal.

Also, section 21168.9 supplements its affirmative statement of available relief with provisions explicitly limiting the remedial action that courts may include in the writ of mandate. ( Poet I , supra , 218 Cal.App.4th at p. 758, 160 Cal.Rptr.3d 69 ; see § 21168.9, subds. (b)-(c).) Those express statutory limitations are not set forth here because our discussion of those limitations already is published in Poet I , supra , at page 758, 160 Cal.Rptr.3d 69 and severance is discussed in part II.F, post . As to specific implied limitations, none exist because subdivision (c) of section

Under our view of when ARB's corrective action would have been completed, a reversal of the discharge order would mean that ARB's corrective action would not be regarded as "completed" for purposes of paragraph 6. Thus, paragraph 6 would continue to require ARB "to adhere to the LCFS regulations standards in effect for 2013." ( Poet I , supra , 218 Cal.App.4th at p. 767, 160 Cal.Rptr.3d 69 .) In contrast, under ARB's interpretation, its corrective action was completed no matter what happened subsequently in court and, thus, reinstating the writ would not revive paragraph 6 or the 2013 standards. Under ARB's view, the applicable fuel standards on remand would be determined by the 2015 LCFS regulations because that version of the regulations is currently in effect.

These differing interpretations have had no effect on how this case has proceeded so far. However, these conflicting interpretations could generate uncertainty in subsequent proceedings if further orders do not clarify paragraph 6's role on remand.

2. Paragraphs 6 and 11: Suspending the 2013 Standards

Assuming the parties agreed with our interpretation of the phrase "is completed" and agreed paragraph 6 of the February 2014 writ would be reinstated on remand, a dispute would arise involving the last clause of paragraph 6. That clause states that "the LCFS regulations shall remain in operation and shall be enforceable unless its operationis suspended as provided below ." ( Poet I , supra , 218 Cal.App.4th at p. 767, 160 Cal.Rptr.3d 69 , italics added.) The phrase "as provided below" refers to a provision in Poet I 's disposition that became paragraph 11 of the February 2014 writ. Paragraph 11 states in full:

"ARB shall proceed in good faith without delay. In the event ARB fails to proceed in good faith with diligence, this [trial] Court immediately shall vacate Paragraph 6 of this writ, which preserves the status quo and shall direct ARB to set aside the LCFS regulations (i.e., suspend the operation and enforcement of the regulations)."

Plaintiffs contend ARB did not act in good faith and, therefore, whatever version of the LCFS regulations ARB believes would be in effect on remand should be suspended until ARB actually has complied with paragraph 3. In response, ARB argues it acted in good faith and, moreover, interprets paragraphs 6 and 11 in a manner that gives them no ongoing effect, thus rendering them irrelevant to any proceedings on remand. These arguments

The choice among these three possibilities lies within the discretionary authority of the appellate court. Code of Civil Procedure section 906 provides that an appellate court " may direct the proper ... order to be entered, and may , if necessary or proper, direct ... further proceedings to be had." We interpret the statute's use of "may" as signaling the grant of discretionary authority. ( Wells Fargo Bank, N.A. v. 6354 Figarden General Partnership (2015) 238 Cal.App.4th 370 , 384, 190 Cal.Rptr.3d 13 [generally, a statute using "may" grants discretion].)

In this case, we choose to exercise our discretionary authority by preparing the terms of the order to be issued on remand. Our choice is based on the fact that this court (1) identified the original CEQA violations, (2) drafted the terms of the February 2014 writ designed to remedy those violations, (3) identified ARB's failure to comply with paragraph 3, and (4) is familiar with the purpose of paragraph 3 and the CEQA policies it sought to promote. Also, the present case is a CEQA proceeding and, consequently, this court occupies nearly the same position as the trial court-that is, each court sits as a court of review considering the agency's action. ( Vineyard , supra , 40 Cal.4th at p. 427, 53 Cal.Rptr.3d 821 , 150 P.3d 709 .) This similarity of position, coupled with the trial court's workload, supports our decision to prepare the terms of the order issued on remand.

E. Reinstate the 2013 Standards?

The further orders we direct to be issued on remand should clarify whether the 2013 standards contained in the original LCFS regulations are reinstated and will be the operative standards pending discharge of the writ. (See pt. II.C, ante .) We conclude 2013 standards should not be reinstated and the February 2014 writ should be modified to prevent such a reinstatement.

Section 21168.9 states that a writ of mandate addressing a failure to comply with CEQA may direct "the determination, finding, or decision be voided by the public agency, in whole or in part" and, when certain conditions exist, may direct the public agency and real parties in interest to "suspend any or all specific project activity or activities." (§ 21168.9, subd. (a)(1)-(2).) The phrases "in whole or in part" and "any or all" raise the possibility of severing some part of the approvals and the project from other parts and then invalidating or suspending only the severed parts. Indeed, CEQA makes the consideration of severance mandatory by stating: "Any order pursuant to subdivision (a) shall include only those mandates which are necessary to achieve compliance with [CEQA] and only those specific project activities in noncompliance with [CEQA]." (§ 21168.9, subd. (b); see § 15 [shall is mandatory].) However, a suspension limited to noncompliant project activities is allowed "only if a court finds that (1) the portion or specific project activity or activities are severable, (2) severance will not prejudice

3. The ADF Regulations Will Remain in Effect

The parties agree that the ADF regulations and the 2015 LCFS regulations can be severed from one another. Our own analysis leads us to conclude that

As to the second possibility, broadening the severance and suspension to include the provisions relating to all substitutes for conventional diesel would not solve the foregoing problem. Under a scenario where neither biodiesel nor renewable diesel could be reported to reduce the average carbon content of the conventional diesel fuel handled by a reporting entity, the entity would have even more difficulty in meeting the compliance schedule. Therefore, we conclude neither the provisions relating solely to biodiesel nor the provisions relating to all substitutes for conventional diesel should be severed from the remainder of the 2015 LCFS regulations.

The third possibility involves severing the provisions relating to conventional diesel fuel and all its substitutes from the remainder of the 2015 LCFS regulations. This possibility, unlike the two possibilities previously discussed, was explicitly discussed by ARB as one of three possible alternatives to the project addressed in the final Environmental Analysis. That alternative project "would remove the diesel standard from the proposed LCFS regulation" and would address only gasoline and gasoline substitutes. ARB's consideration of this alternative demonstrates that it is feasible to sever the diesel provisions from the remaining provisions of the LCFS regulations. (Guidelines, §§ 15126.6, subd. (a), 15364 [definition of feasible].) This gasoline-only alternative was not rejected on the ground it would destroy the regulatory scheme or its utility. Instead, it was rejected because ARB determined greenhouse gas emissions could be more effectively reduced by including diesel in the regulation. The test for functional separability does not consider if the entire regulation is more effective, it considers whether the remainder is complete in itself and retains its utility. Here, the LCFS regulations would retain some utility if the diesel provisions were excluded because the gasoline

5. Suspending the Diesel Portions of the LCFS Regulations

In Poet I , the CEQA violations relating to the decision maker tainted the approval of the entire project and, thus, we did not consider suspending only a portion of the regulations. Instead, we considered whether to suspend the LCFS regulations in their entirety, which was a remedy within the discretionary authority granted by section 21168.9. ( Poet I , supra , 218 Cal.App.4th at p. 761, 160 Cal.Rptr.3d 69 .) We stated that the potential suspension of the LCFS regulations was "the most controversial issue regarding judicial relief presented in this appeal." ( Ibid . ) We identified two CEQA provisions addressing whether suspension is appropriate:

"First, suspension requires a finding 'that a specific project activity or activities will prejudice the consideration or implementation of particular mitigation measures or alternatives to the project....' (§ 21168.9, subd. (a)(2).) Second, the suspension appears to be limited to project activity 'that could result in an adverse change or alteration to the physical environment....' (§ 21168.9, subd. (a)(2).)" ( Poet I , supra , 218 Cal.App.4th at p. 761, 160 Cal.Rptr.3d 69 .)

We applied these two provisions to the record and arguments presented in Poet I and reached the unusual conclusion of allowing the LCFS regulations

Next, we consider the question of prejudice from the point of view of what would happen if the LCFS regulations addressing diesel fuel and its substitutes were suspended. Specifically, would "suspending the operation of [that portion] of the LCFS regulations ... open for consideration mitigation

The last factor we consider in exercising our discretionary authority to fashion a remedy in this appeal is plaintiffs' claim that ARB failed to act in good faith in addressing NOx emissions from biodiesel. Paragraph 11 of the February 2014 writ stated "ARB shall proceed in good faith and without delay" and a failure to proceed would cause the trial court to immediately suspend the operation of the LCFS regulations and vacate the part of the writ that preserved the status quo. Plaintiffs contend the language in paragraph 11 should influence the remedy adopted in this appeal.

Initially, we define what the term "good faith" meant. "In ordinary usage, the phrase 'good faith' is commonly understood as referring to a subjective state of mind." ( Ceja v. Rudolph & Sletten, Inc. (2013) 56 Cal.4th 1113 , 1120, 158 Cal.Rptr.3d 21 , 302 P.3d 211 .) A subjective good faith standard is satisfied by a state of mind denoting honesty of purpose and freedom from intention to mislead or defraud. ( Ibid . ; Madera Oversight Coalition, Inc. v. County of Madera, supra, 199 Cal.App.4th at p. 103, fn. 32, 131 Cal.Rptr.3d 626 ; see People v. Accredited Surety Casualty Company (2014) 230 Cal.App.4th 548 , 560, fn. 9, 178 Cal.Rptr.3d 809 [defining subjective good faith].) This court used the term "good faith" in the disposition of Poet I with the expectation that the parties and trial court would adopt the common understanding and treat the term as imposing a subjective standard.

Next, we apply the subjective good faith standard to the facts presented and consider whether ARB's remedial action was taken without honesty of purpose or sincerity of intentions. ARB's remedial action was multifaceted and some of that action complied with February 2014 writ and cured the corresponding CEQA and APA violations. Only ARB's evaluation of NOx emissions from biodiesel failed to comply. Therefore, plaintiffs' claim that ARB did not act in good faith is limited to ARB's evaluation of NOx emissions from biodiesel.

When ARB addressed NOx emissions from biodiesel pursuant to paragraph 3, ARB misconstrued the term "project" and wrongly determined the original LCFS regulations were not part of the "project." ARB's erroneous view of the "project" also provided its justification for choosing the wrong baseline.

Having decided ARB did not act in good faith, we address the role ARB's lack of good faith should have in determining the appropriate relief in this appeal. The agency's good faith is not a factor identified in section 21168.9, but we consider it relevant to the exercise of our discretionary

Accordingly, we will not decide whether a 2010 baseline is appropriate for use on remand. Furthermore, we limit our informal guidance on the choice of baseline to the following observations. First, ARB should determine when it commenced its environmental analysis of the original LCFS regulations. Second, if ARB chooses to adopt a baseline other than the normal, existing conditions baseline, it must provide an adequate justification for that choice and support that justification with substantial evidence. For instance, a conclusory statement that an existing conditions baseline would be misleading is not an adequate justification. Third, the choice of an existing conditions baseline would avoid challenges to that choice based on the argument that baseline chosen includes increases in biodiesel use because reporting entities already had begun modifying their behavior in anticipation of the adoption or implementation of the original LCFS regulations.

DISPOSITION

The order discharging the peremptory writ of mandate is reversed. The superior court is directed to vacate that order and enter a new order (1)