The 2013 legislative session began with high hopes that California’s landmark environmental law – the California Environmental Quality Act (CEQA) – would be reformed. Developers, builders, and public agencies across the state encouraged the Legislature to fix procedural flaws in the statute that result in crippling delays and steep carrying costs. Early iterations of Senator Steinberg’s CEQA reform bill (SB 731) would have helped to resolve some of CEQA’s procedural problems. Unfortunately, however, days before the close of the legislative session, SB 731 was gutted and amended.
The CEQA bill that Governor Brown ultimately signed was SB 743; it did not cure the hardships that significantly drive up development costs in California. Consequently, the motivation for developers and builders is now higher than ever to find ways to streamline and avoid duplicative environmental review. The good news is that there are two court cases, as well as one provision in SB 743, that enhance statutory exemptions for projects that are undertaken to implement specific plans that have been previously cleared by certified environmental impact reports (EIRs).
CEQA’s Current Streamlining Benefits for Projects Consistent with a Specific Plan for Which an Environmental Impact Report has been Certified
CEQA’s basic structure provides several meaningful methods for streamlining environmental review. The first, and probably the most useful, streamlining tool comes at the beginning of the CEQA process. Once a public agency makes a determination that an activity is a project subject to CEQA, it next determines whether the project is exempt from environmental review. There are two types of CEQA exemptions, statutory and categorical. Statutory exemptions are absolute, which means that they apply regardless of the environmental impacts that the project would have. Statutory exemptions are outlined in the Public Resources Code and other statutes throughout the codes of California. Categorical exemptions are qualified, which means that they only apply in certain circumstances and the lead agency must consider environmental factors before applying them.
One extremely powerful statutory exemption that is not currently listed in the Public Resources Code is the CEQA exemption for projects undertaken to implement a specific plan. The specific plan exemption is codified in Government Code section 65457, and it is often overlooked. Government Code section 65457 provides a CEQA statutory exemption for any residential development project (including subdivisions) or zone change that is undertaken to implement and is consistent with a specific plan for which an EIR has been certified after January 1, 1980. Thus, if a project is a residential project that implements and is consistent with a specific plan for which an EIR has been previously certified, then the project could qualify for the CEQA exemption in Government Code section 65457.
There is one caveat to this specific plan exemption. In order for it to apply, the lead agency has to make a determination whether any of the circumstances in Public Resources Code section 21166 are present and require further environmental review. In other words, if, after certification of the specific plan EIR, there are substantial changes proposed in the project or to the circumstances under which the project is being undertaken that will require major revisions to the specific plan EIR, or if new information that was not known and could not have been known at the time the specific plan EIR was certified becomes available, then the exemption does not apply unless a supplemental EIR is certified. But, once that supplemental EIR is certified then the specific plan exemption applies to projects undertaken pursuant to the specific plan.
The Courts Explain the Power Behind CEQA’s Streamlining Provisions for Specific Plan EIRs
Interestingly, this year there were two Court of Appeal decisions directly related to the specific plan exemption in Government Code section 65457. The first was Concerned Dublin Citizens v. City of Dublin. The second was May v. City of Milpitas.
1. A lead agency may use the specific plan exemption even if the specific plan contemplated mixed-use development
In Concerned Dublin Citizens, the California Court of Appeal dealt with the question of whether the specific plan and underlying zoning of the property have to be purely residential in order for the specific plan exemption to apply. Government Code section 65457 currently applies to residential development projects only. The City of Dublin determined that a purely residential project located within a transit center specific plan area (for which a Program EIR had been previously certified) was exempt from CEQA under Government Code section 65457. Concerned Dublin Citizens challenged the city’s use of the specific plan exemption because the transit center specific plan and accompanying development agreement authorized a limited amount of commercial usage within the specific plan and the land within the specific plan was zoned mixed-use. Accordingly, Concerned Dublin Citizens argued that because the zoning for the property was mixed-use the purely residential project was converted to a mixed-use project and therefore the specific plan exemption was inapplicable.
The Court of Appeal disagreed. The court held that there was substantial evidence in the record to support the city’s determination that the project was purely residential. Any future commercial use within the specific plan area would require further discretionary review under the city’s municipal code. Moreover, the absence of retail space did not render the project inconsistent with the mixed-use specific plan. Therefore, the city’s approval of the residential project did not constitute approval of a commercial usage. Because the project was residential only, the Court of Appeal upheld the city’s use of the specific plan exemption.
The take-away from the Concerned Dublin Citizens case is that the specific plan and underlying zoning do not have to be purely residential in order for the Government Code section 65457 exemption to apply. If there are mixed-use designations contemplated in the specific plan, so long as the implementing project that is being processed is purely residential, Government Code section 65457 applies.
2. If a lead agency uses the specific plan exemption, the time for bringing a CEQA challenge starts to run on the date of approval not the date of a notice of determination
The second case dealing with Government Code section 65457 was May. In May, the question was what statute of limitations applies to projects that are statutorily exempt under Government Code section 65457. The plain language of subdivision (b) of Government Code section 65457 clearly provides that an action to challenge the use of the exemption must be brought within 30 days of the public agency’s decision to carry out or approve the project. This CEQA challenge period should be contrasted against other exemption situations where a lead agency files a notice of determination. In those cases, the statute of limitations is 35 days from the date that the notice of exemption is filed and posted.
What if the lead agency does not expressly find the project exempt from Government Code section 65457? Does the exemption still apply even if the lead agency files a notice of exemption that says the project is exempt on grounds other than Government Code section 65457? The court answered these questions in the affirmative.
In May, the city approved a residential development within a specific plan for which a program EIR had previously been approved. The city determined the project was exempt from CEQA and filed a notice of exemption that cited State CEQA Guidelines section 15061 (the “catch-all” exemption) and section 15168(c)(2) (which states that no new environmental document is required where a project is consistent with a prior program EIR and will cause no new effects). The notice of exemption did not state that the project was statutorily exempt under Government Code section 65457. Petitioner filed its CEQA challenge within 35 days of the posting of the notice of exemption, which is within the typical statute of limitations that applies when a notice of exemption is filed and posted. Nonetheless, the court held the petition was time barred because Government Code section 65457 applied and therefore the special 30-day statute of limitations in that code section applied. Even though the city did not cite to Government Code section 65457, the court found it was factually implied and applicable as an absolute statutory exemption. Therefore, the CEQA challenge could not proceed.
May demonstrates the true power of statutory exemptions. Even if a lead agency fails to cite a particular statutory exemption, if the record supports the fact that the statutory exemption applies, a court will rely on the statutory exemption. A word of caution, however. Best practice is to list all exemptions (statutory and categorical) that could exempt the whole of the project with supporting evidence for the use of each particular exemption. In other words, don’t leave your exemption to chance.
3. The legislature responds with SB 743 and adds teeth to the specific plan exemption
In what seems to be a direct response to the Concerned Dublin Citizens case, there was a push this legislative session to clarify the specific plan exemption. Senator Steinberg’s original CEQA reform bill (SB 731) specifically called for an amendment to Government Code section 65457 to provide greater specificity on what constitutes “new information” that would trigger a supplemental EIR under the specific plan exemption. That amendment fell flat when SB 731 was gutted and amended. The revisions to Government Code section 65457 were not carried forward into SB 743. Instead, SB 743 leaves the Government Code section 65457 exemption intact but adds a new CEQA exemption to the Public Resources Code. This new CEQA exemption is codified in Public Resources Code section 21155.4 and became effective on January 1 of this year.
Public Resources Code section 21155.4 provides that residential, employment center, and mixed-use development projects that meet three specific criteria are statutorily exempt from CEQA review. The new statute defines an “employment center project” as “a project located on property zoned for commercial uses with a floor area ratio of no less than 0.75 and that is located within a transit priority area.” (Pub. Res. Code § 21099(a)(1).)
The first criterion is that the project must be located within a transit priority area. (Pub. Res. Code § 21155.4.) Under the new statute, a transit priority area is defined as “an area within one-half mile of a major transit stop that is existing or planned, if the planned stop is scheduled to be completed within the planning horizon included in a Transportation Improvement Program adopted pursuant to Section 450.216 or 450.322 of Title 23 of the Code of Federal Regulations.” (Pub. Res. Code § 21099(a)(7).)
The second criterion is that the project must be undertaken to implement, and must be consistent with the specific plan for which an EIR has been certified. (Pub. Res. Code § 21155.4.) It is under this criterion where the new CEQA exemption tracks Government Code section 65457.
The third criterion is that the project must be consistent with the general use designation, density, building intensity, and applicable policies specified for the project area in either a sustainable communities strategy or an alternative planning strategy for which the State Air Resources Board has accepted a metropolitan planning organization’s determination that the sustainable communities strategy or the alternative planning strategy would, if implemented, achieve the greenhouse gas emissions reduction targets. (Pub. Res. Code § 21155.4.)
As with the specific plan exemption in Government Code section 65457, the new exemption in Public Resources Code section 21155.4 is subject to the caveat that the exemption does not apply if circumstances requiring subsequent environmental review are present. Like with all new CEQA exemptions, time will tell how useful this new exemption will be. In concept, however, it seems like a significant streamlining tool that deserves testing.
In sum, in addition to determining whether a project qualifies for the specific plan exemption in Government Code section 65457, lead agencies and project proponents should also consider whether the project in question qualifies for the expanded exemption in Public Resources Code section 21155.4. These are very powerful exemptions that could save time and money in the development process for projects that implement a specific plan for which an EIR has previously been certified.