California Supreme Court to Local Agencies: Hypothetical Future Baselines in CEQA are not per se Improper in All Cases, but likely are Improper in the Vast Majority

by Jeffer Mangels Butler & Mitchell LLP
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An August 5, 2013, the California Supreme Court provided some additional flexibility to local agencies in deciding what conditions properly constitute the "baseline" for analysis under the California Environmental Quality Act ("CEQA"). The decision, Neighbors for Smart Rail v. Exposition Metro Line Construction Authority ("Neighbors"), Case No. S202828, narrowly upholds the environmental impact report ("EIR") prepared for phase 2 of the Exposition Corridor Transit Project ("Expo Phase 2") and strikes a middle ground among previous decisions regarding the use of various future baselines. The court ruled, among other things, that although an agency may, in very limited circumstances, evaluate project impacts on the basis of conditions anticipated to exist at the time of certification of an environmental impact report ("EIR") for the project, or on a hypothetical longer-term future baseline, these cases remain the exception, rather than the rule. If using only a hypothetical future conditions and omitting existing conditions as a baseline, an agency must demonstrate that an analysis based on existing conditions "would detract from an EIR's effectiveness as an informational document" by providing an uninformative or misleading analysis. In most cases, an agency must still evaluate the impacts of a project in comparison to existing conditions, though nothing prevents additional analysis of long-term impacts, particularly in the context of a cumulative analysis or a "no project" alternatives analysis.

Existing Conditions in CEQA

CEQA and the CEQA Guidelines require an environmental document to evaluate the effects of a project on "the environment." Generally, "the environment" consists of the physical conditions that exist in an area at the time of publication of the notice of preparation ("NOP") for an EIR or, if no NOP is published, the time of commencement of environmental review. Exceptions to this general rule exist, but are rare, and substantial evidence in the administrative record for the project must support such an exception. One such exception, articulated in Sunnyvale West Neighborhood Association v. City of Sunnyvale ("Sunnyvale"), 190 Cal.App.4th 1351 (2009), is when conditions at the time of NOP publication somehow do not reflect typical circumstances, such as an unusual occurrence that would materially distort the conclusions of the EIR analysis. Another, articulated in Communities for a Better Environment v. South Coast Air Quality Management District ("CBE"), 48 Cal. 4th 310 (2010), is a fluctuating baseline. The overarching principle is the selection of the most realistic, accurate baseline possible, based on substantial evidence in the record.

The EIR in Neighbors and the Expo Authority's Error

In this case, the Los Angeles County Metropolitan Transportation Authority (the "Expo Authority") published an NOP in February 2007 and circulated a Draft EIR for the Expo Phase 2 project in January 2009. Most analyses in the EIR relied on conditions in or around February 2007. However, the traffic and air quality analyses measures conditions that existed at that time, but then generated hypothetical year 2030 scenarios (with and without the project) that formed the basis of those conclusions. The Expo Authority provided several justifications for this choice--which generally involved planning, implementation, operation, and anticipated project benefits--each of which the Court dismissed as unsupported by evidence in the record.

First, the Court noted the common practice for EIRs to assume for analytical purposes that a project can instantaneously reach full construction and operation. In this case, the Expo Authority could have assumed full ridership as well as full implementation of other aspects of the project, as ridership constitutes a feature of the project itself, not the environmental baseline.

The Court also posited that use of existing conditions generally yields both greater accuracy and comprehension. An agency can in most cases directly measure existing conditions and readers of an analysis can more readily understand comparisons to existing conditions that they have directly observed. However, agencies must derive or model future conditions, which can introduce substantial error, and such derivations also may pose a barrier to a reader's clear understanding.

Moreover, the Court noted that the routine use of future baselines rather than existing conditions would effectively allow agencies to choose a baseline depending on which impacts it wished to disclose (or hide), or to conceal short- and medium-term impacts for any project with long-term aspirations. Even if an agency anticipates a long project life or the provision of long-term benefits, CEQA requires that decision-makers and the public still must know the environmental costs of achieving those benefits. As various courts have held in previous cases, nothing prevents an agency from evaluating the impact of a project using both short- and long-term horizons.

Consequently, the Court determined that the Expo Authority erred in its use of a 2030 baseline for traffic and air quality impacts.

The Error was Not Prejudicial

The Court then conducted a detailed examination of the conclusions of the traffic and air quality analyses to determine whether the use of existing conditions would have provided substantially different information, and determined that no substantial change would have occurred. Among other things, the Court was persuaded by the following:

• No significant traffic or air quality impacts were projected to occur;
• A small number of intersections (less than seven percent) experienced traffic delays of more than ten seconds;
• The most impacted intersections were not close enough to an unacceptable level of traffic service that application of project-related traffic to existing conditions would have yielded different results, and the project actually would have beneficially affected most of these intersections;
• Overall, the project included features that reduced traffic delay, generally slowing the onset of impacts over time, compared to existing conditions; and
• The project would reduce vehicle miles travelled, which would reduce air emissions, creating a beneficial air quality impact, a general proposition that the Court characterized the plaintiffs as not having disputed.

As a result of the above, the Court concluded that, under the particular circumstances of this case, the use of an incorrect baseline constituted an "insubstantial, technical error" that did not deprive the public or decision makers of information necessary to make an informed decision regarding the project. Therefore, the error was not prejudicial, and the EIR survived the challenge.

Conclusions

Despite this decision, agencies should not rely on any court to conduct a similarly searching analysis of an EIR to determine whether the use of an incorrect baseline was prejudicial. Rather, agencies should carefully consider, in light of all available facts, whether any deviation from the use of existing conditions is necessary for greater accuracy or to avoid misleading the public and decision-makers, and whether substantial evidence exists or could exist in the record to support the decision to deviate.

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Jeffer Mangels Butler & Mitchell LLP
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