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Changing Climate, Changing Laws

Legislation is responding to new wildfire risk requirements faced in commercial real estate development.

With the increasingly common occurrence of wildfires throughout California, it’s clear that these destructive forces pose a serious threat to the public and environment. But in addition to these risks, wildfires — and the increasing potential of them — also impact commercial real estate development, which is dependent on clear and consistent regulations and guidelines to shepherd projects to completion.

New laws and regulations are starting to respond to these threats, including the California Governor’s Office of Planning and Research (OPR) amendment of Appendix G of California Environmental Quality Act’s (CEQA) regulations, designed to help public agencies identify and evaluate wildfire risks. These amendments along with a host of other updates became effective at the end of 2018 and are increasingly impacting CRE projects in the Golden State.

Assuming the project is not exempt from CEQA, the project’s environmental impacts must be evaluated before the lead agency can issue a permit. The types of significant impacts that should be discussed in an environmental impact report includes “any potentially significant direct, indirect, or cumulative environmental impacts of locating the development in areas susceptible to hazardous conditions (e.g., floodplains, coastlines, wildfire risk areas).”

These new amendments now guide California state agencies in how to evaluate wildfire risks as they begin preparing environmental review documents, a significant change from how agencies dealt with this issue before. Prior to these amendments, no specific wildfire-related questions prompted agencies to think about how new projects — including commercial real estate — would create or exacerbate wildfire risks. Now the Environmental Checklist Form (found in Appendix G of the CEQA Guidelines) includes new questions asking whether the relevant project is “located in or near state responsibility areas or lands classified as very high fire hazard severity zones.” State responsibility areas are areas where the state has a financial responsibility to prevent and suppress fires. 

Although the map included here is helpful in assessing whether a project is located within these areas, it is not always clear when a project is located “near” one. For those decisions, OPR stated in its “Final Statement of Reasons” that public agencies “will be best placed to determine precisely where such analysis is needed outside of the specified zone.” In other words, the agency will use its judgment to decide if the project is “near” these areas.

What if the project is located in or near these areas? In that case, the agency may rely on the checklist’s wildfire-related questions to assess whether the project will exacerbate wildfire conditions. For example, will the project have transmission lines that can spark in high winds? If yes, the project could make existing conditions worse, and the agency will need to thoroughly analyze this issue. What about the project’s location? Can it be built in a way to avoid a steep slope or prevailing wind patterns, which can intensify wildfire impacts?

Fire Hazard Severity Zones - California

State agencies should provide maps outlining fire hazard severity zones.

If the project could worsen environmental conditions, are there mitigation measures that can be adopted to reduce wildfire impacts by maintaining or improving infrastructure, fuel breaks, and emergency water sources? What do these mitigation measures look like? California’s Senate Bill 901 provides some guidance to answer these questions by requiring electrical corporations to submit wildfire mitigation plans to the California Public Utilities Commission. For example, on May 30, 2019, the commission approved the wildfire mitigation plans from Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric, and other corporations. Later that year, on Nov. 6, PG&E, SCE, and SDG&E filed progress reports on their wildfire mitigation efforts.

These wildfire mitigation plans can provide valuable insights into the types of measures other developers can implement for their own projects. In general, the plans consist of vegetation management, system hardening like electric line replacement with ones that have lower wildfire ignitions, and “situational awareness” technology, such as weather stations and cameras. These and other measures may be effective in mitigating and hopefully avoiding catastrophic fires.  

Finally, if the goal is to avoid a high wildfire-risk area altogether, the developer should check with the relevant public agency directly to have them determine the definition of “near” for you.

The new laws and regulations addressing wildfire threats will no doubt impact California’s future commercial real estate projects. A project developer should check the high fire hazard map first, and then reach out to counsel or consultants to navigate these ever-changing environmental and legal landscapes.

David Lazerwitz

David Lazerwitz is a partner at Farella Braun + Martel and chair of its Energy and Natural Resources Industry group.

Contact him at dlazerwitz@fbm.com.

Linda Sobczynski

Linda Sobczynski is an associate with Farella Braun + Martel.

Contact her at lsobczynski@fbm.com.

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