CEQA Update: Some Good News for Developers

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As compliance with the California Environmental Quality Act (“CEQA”) has grown increasingly more burdensome, costly and litigious over the past decade or so, 2012 brought some tangible good news.

Judicial Trimming of CEQA’s Scope. The scope of CEQA analysis has expanded over the years by many means, most particularly by aggressively pro-environmental official Guidelines (14 Cal. Administrative Code 15000, et seq.) and by broadly applied general practices and conventions that have evolved within the “CEQA compliance industry”; the consultants, attorneys and planners who conduct CEQA analyses. The courts provided relief from an official CEQA Guideline that was held to exceed the statute’s intent, and from the common practice of adding extraneous “public services” cost analysis into Environmental Impact Reports (“EIR’s”).

Impacts on a Project Caused by the Environment. In March, 2012, the California Supreme Court let stand an appellate court decision, Ballona Wetlands Land Trust v City of Los Angeles (2nd District, 2011), that effectively nullified parts of CEQA Guideline 15126.2. This Guideline required analysis of “any significant environmental effects the project might cause by bringing development and people into the area affected” and “any potentially significant impacts of locating development in other areas susceptible to hazardous conditions (e.g., floodplains, coastlines, wildfire risk areas) as identified in authoritative hazard maps, risk assessments or in land use plans addressing such hazard areas”. In the Ballona Wetlands case, project opponents alleged that parts of the low-lying project site could become inundated by sea level rise caused by global warming. The court held that “…identifying the environmental effects of attracting development and people to an area is consistent with CEQA’s legislative purpose and statutory requirements, but identifying the effects on the project of locating the project in a particular environmental setting is neither consistent with CEQA’s legislative purpose nor required by the CEQA statutes.” CEQA requires analysis of the effects of a proposed project on the environment, but not the effects of the environment on the project. The effects on a project caused by its environmental setting or pre-existing conditions are outside the scope of CEQA analysis.

The Ballona Wetlands decision put the California Supreme Court’s stamp of approval on a line of cases that had come to similar results in different appellate districts. In Baird v. County of Contra Costa (1995) 32 Cal. App 4th 1464, the court held that potential air pollution from a nearby sewage treatment plant need not be studied in a drug rehabilitation facility’s EIR. In City of Long Beach v. L.A. Unified School District (2009) 176 Cal. App. 4th 889, the court held that nearby freeways’ air pollution need not be studied for its potential impacts on a new high school. In South Orange County Wastewater Authority v. City of Dana Point (2011) 196 Cal. App. 4th 1604, the court held that the impact of a nearby treatment plant’s noxious odors on a project’s future residents was not a significant effect on the environment caused by the project.

The practical effects of the Ballona Wetlands decision should be to remove from EIR’s analysis of various pre-existing environmental considerations and constraints, and put that analysis into non-CEQA discussions of General Plan consistency, public health and safety, and consistency with local development standards and planning policies. Existing site constraints like odors, air pollution, seismic zones, etc. can be legitimate municipal “police powers” concerns, and they properly can influence the design and elements of new developments, but there is no legal or logical reason to draw them within CEQA’s complex jurisprudence involving “fair arguments”, “alternatives”, “mitigation”, “feasibility”, “significance”, Mitigation Monitoring Programs, etc. Removing from CEQA analysis various impacts on a project caused by the environment should have the beneficial effects of making that analysis simpler, cheaper, and less subject to the risks of litigation.

Fiscal Impacts Are Not Environmental Impacts. CEQA Lead Agencies and their consultants over time have yielded to the opposite trend; to throw into EIR’s analysis of topic areas unrelated to a project’s impacts on the physical environment. When public service and infrastructure topics like overcrowding of schools, additional demand for fire and police protection, sewage treatment capacity, public recreation and the like are included within EIR’s, CEQA consultants make more money, Lead Agencies get a credibly documented “nexus” analysis of new land use exactions that they can impose on project developers, elected officials get the excuse for doing so that “they have no choice; it’s required by CEQA”, and municipal counsel can label this practice “conservative”, preventing CEQA litigation challenges.

The new case of City of Hayward v. Trustees of the California State University (2012), 207 Cal. App. 4th 446 provided some welcome clarification regarding whether a project’s purely fiscal impacts must be treated as impacts on the physical environment. When Cal State Hayward proposed to increase its campus population, it prepared an EIR that determined that the increase would require additional fire protection services, amounting to one additional firefighting company. It also determined that the additional fire company would be provided by the Hayward Fire Department, either by adding a bay to an existing fire station, or by building a new fire station nearby. In either case, the physical impacts on the environment would be insignificant, since the area is completely urbanized and any new facility would be very small.

The City of Hayward reacted typically, by characterizing the fiscal impact of hiring eleven new firefighters and building a new facility as a significant adverse effect on “health and safety problems”; that is, “the environment”. Hayward sued the University under CEQA, insisting that the University must commit to pay for this additional public service as “mitigation”. The trial court agreed.

The Court of Appeal disagreed. It held that there was no evidence that adding a new fire company would cause any significant effect on the physical environment, and that CEQA does not require analysis of purely economic consequences of projects. It held that “The protection of the public safety is the first responsibility of local government and local officials have an obligation to give priority to the provision of adequate public safety services. The need for additional fire protection services is not an environmental impact that CEQA requires a project proponent to mitigate”. “Although there is undoubtedly a cost involved in the provision of additional emergency services, there is no authority upholding the city’s view that CEQA shifts financial responsibility for the provision of adequate fire and emergency response services to the project sponsor”, citing California Constitution Article XIII, Section 35(a)(2) regarding cities’ public safety obligations. The court relied on CEQA Guideline 15382 and Goleta Union School District v. University of California (1995) 37 Cal. App. 4th 1025, which held that school classroom overcrowding, as opposed to construction of a new school, was not in itself an impact on the physical environment.

The practical effects of the City of Hayward decision should be similar to those of Ballona Wetlands; to remove analysis of fiscal impacts on public services from EIR’s. While CEQA “initial study” checklists still must screen for physical effects of providing increased public services, where there are no such effects, Lead Agencies will have to rely on standard “nexus” analysis to justify exactions on projects for increased public services (Government Code Sec. 66000, et seq.). Not only will this shorten and cheapen EIR’s somewhat, it more importantly will eliminate the argument that CEQA independently authorizes “mitigation” exactions where there is no significant adverse effect on the physical environment.

Topics:  Ballona Wetlands, CEQA, Environmental Impact Report, Fiscal Impacts, Nexus

Published In: Construction Updates, Environmental Updates, Commercial Real Estate Updates, Residential Real Estate Updates, Zoning, Planning & Land Use Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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