CEQA "Modernization"—Urgent End-of-Session Alert

by Manatt, Phelps & Phillips, LLP
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We recently reported in our August 20, 2013, newsalert that Senate President Pro Tem Darrell Steinberg’s August 6 amendments to SB 731, The CEQA Modernization Act of 2013, continued to stray further from meaningful CEQA reform. Purportedly in response to criticism from both sides of the CEQA reform debate, SB 731 has since been amended. Unfortunately, as with prior iterations, the latest amendments to SB 731 still fall short, increasing opportunities for unwarranted project delays and frivolous CEQA lawsuits.

As explained more particularly below, key concerns with the latest amendment include the following: (1) SB 731 adds a new impact area for consideration under CEQA, “economic dislocation,” potentially conflicting with existing law prohibiting consideration of purely socioeconomic impacts; (2) SB 731 further increases CEQA review time and notice requirements; and (3) SB 731 requires the lead agency to make publicly available an annual report on a project’s compliance with mitigation measures, upon request.

SB 731 continues to evolve, and we expect additional changes in the next 36 hours. We will continue to keep you informed about this significant legislation.

Explained in more detail, problems with SB 731 include the following:

  • SB 731 adds a new impact area for consideration under CEQA, “economic dislocation,” potentially conflicting with existing law prohibiting consideration of purely socioeconomic impacts. Existing law prohibits consideration of a project’s economic and social impacts, except where they would result in physical changes to the environment. (See CEQA Guidelines Sections 15064(f) and 15131.) As amended, SB 731 would upend that prohibition. It directs the Governor’s Office of Planning and Research (OPR) to formulate recommendations to be incorporated in the CEQA Guidelines on how to evaluate, prevent and mitigate “economic displacement” impacts. SB 731 defines “economic displacement” as “the involuntary departure of residents and businesses from a community due to increased housing and rental costs attributable to specific private or public investments.” This new provision (1) conflicts with existing CEQA law, (2) is internally inconsistent with other provisions in SB 731 that are designed to encourage infill development, (3) will lead to additional regulatory hurdles and mitigation costs for new development designed to redevelop or improve otherwise blighted areas, and (4) creates additional ambiguities in CEQA that will prolong the CEQA process and increase opportunities for litigation.
  • SB 731 increases CEQA review time and notice requirements, providing additional opportunities to delay projects. SB 731 requires the lead agency to make “findings” available to the public at least 10 days prior to their adoption and to provide public notice of the availability of the findings. Further, the 10-day notice period is expressly in addition to the public notice and review period required for negative declarations and EIRs. As we described in our previous newsalert, such additional noticing will result in increased processing costs for lead agencies and project proponents and could result in significant delay if revisions to findings and additional public review are necessary. From a practical standpoint, this also could lead to additional litigation claims against a project. Any public comments on the findings will require responses from the lead agency because such comments are part of the administrative record and may be litigated in court. Furthermore, a project opponent could challenge in court the adequacy of subsequent changes to publicly circulated findings on the basis that they were not re-circulated. While SB 731 as originally drafted expressed an intent to prohibit or restrict so-called “late hits” and “document dumps” (this intent language was eliminated in the August 6 amendments), this provision actually increases the opportunities for such untoward tactics.
  • SB 731 requires the lead agency to prepare and make publicly available online an annual report on a project’s compliance with mitigation measures required in an approved mitigation monitoring and reporting plan (MMRP), if requested by a member of the public. While previous iterations of SB 731 required an annual report to be made available even absent a request by a member of the public, this latest amendment does very little to address the inherent problems associated with this provision. Opponents intent on abusing CEQA’s true aim to protect the environment will most certainly request a report in order to delay development projects already determined to be legally adequate under CEQA. Ultimately, this provision will (1) require heightened agency and public oversight of project implementation and ongoing CEQA compliance, (2) provide additional opportunities for CEQA lawsuits, even where the report arguably identifies discrepancies with implementation of mitigation measures, and (3) impose additional annual costs to project proponents and the lead agency until all MMRP conditions are satisfied (some of which are ongoing operational conditions that technically are never “completed”).

In addition to the issues described above, the current amended SB 731 continues to include provisions that simply do not reform CEQA; instead, they merely reflect existing law and/or are otherwise substantially immaterial changes (e.g., providing for tolling agreements, adding clarifying language to existing CEQA exemption for residential development projects consistent with a specific plan for which an EIR was previously certified, providing that applicants for renewable energy projects may tout the environmental benefits of the projects during the CEQA process, etc.).

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Manatt, Phelps & Phillips, LLP
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