Supreme Court Allows Future Conditions to Be Used as the Baseline Under Limited Circumstances

by Manatt, Phelps & Phillips, LLP
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Neighbors for Smart Rail v. Exposition Metro Line Construction Authority (August 5, 2013, S202828) __ Cal.4th __(“Neighbors”).

What is the baseline against which environmental impacts are measured?  There has been considerable confusion about whether agencies must use existing conditions or if they can use projected future conditions for large projects that may not be built or completed for many years. In a closely watched case, the California Supreme Court held that a lead agency may, under certain circumstances, use future projected environmental conditions to establish the “baseline” for assessing a proposed project’s environmental impacts in an EIR. The court’s criteria, however, are less than crystal clear. Specifically, a lead agency may use future projected conditions as the baseline if it can show that unusual aspects of the project or surrounding conditions exist, and if substantial evidence exists that the use of current conditions would be misleading or without informational value to the public and decision makers.

The court’s decision represents a welcome change from the inflexible rule established by several recent lower court decisions, which required lead agencies to analyze a project’s impacts only against the conditions existing when the notice of preparation (NOP) was issued, even if the proposed project might not be constructed or commence operations for many years after the NOP was issued or the EIR was prepared, when many environmental conditions would have changed.  Despite its allowance of the use of future conditions, the court continued to support the use of an existing conditions baseline as the norm.  Therefore, given the always-present threat of litigation regarding CEQA, regardless of the Neighbors decision, it may be advisable for lead agencies to act conservatively and, if a future conditions baseline is to be utilized in an EIR, to consider including a current conditions baseline analysis as well.

CEQA’s Requirements and Prior Decisions

The CEQA Guidelines require that an EIR “include a description of the physical environmental conditions . . . at the time the notice of preparation if published, or if no notice of preparation is published at the time environmental review commenced. . . .  This environmental setting will normally constitute the baseline physical conditions by which a lead agency determines whether an impact is significant.” (Cal. Code Regs., tit. 14, § 15125, subd. (a).) 

For most environmental impacts, existing conditions make sense as the baseline for analysis, but for certain types of projects, such as a major transportation project that may have a 10 to 20 year build out, impacts such as traffic have been analyzed against a horizon year when the project was expected to be completed.  In 2010 and 2011, two courts of appeal found a lead agency’s exclusive use of a future conditions baseline to be completely prohibited under CEQA.  (Sunnyvale West Neighborhood Ass’n. v. City of Sunnyvale City Council (“Sunnyvale”);Madera Oversight Coalition, Inc. v. County of Madera (“Madera”)).  This was followed by a second decision out of Sunnyvale in which the court upheld an EIR utilizing a future conditions baseline, but only because the EIR also analyzed impacts against a current conditions baseline.  (Pfeiffer v. City of Sunnyvale City Council).  Finally, in 2012, yet another court of appeal  sharply rejected the Sunnyvale/Madera rule in Neighbors for Smart Rail v. Exposition Metro Line Construction Authority (“Smart Rail”).As a result of these four cases, the baseline issue was mired in confusion and uncertainty. 

The Smart Rail EIR’s Future Baseline

The Smart Rail case involves an EIR prepared for Phase II of the Exposition Corridor Transit Project (“Phase II”), an extension of an existing light-rail line that, upon completion, would provide service between Culver City and Santa Monica.  The Project is expected to commence operations sometime in 2015. 

The Exposition Metro Line Construction Authority (“Expo Authority”) issued an NOP of an EIR for Phase II in February 2007, circulated a draft EIR in January 2009, and certified the final EIR and approved Phase II in February 2010.  While the EIR used existing physical conditions as measured in 2009 in a number of impact discussions, the Expo Authority used a 2030 future scenario baseline, and only this future baseline, for the EIR’s traffic and air quality impact analysis.  Specifically, the EIR compared the projected “with Project” levels of traffic congestion in 2030 against the projected “no Project” levels of congestion in 2030, and determined that no significant traffic impacts would result from Phase II.  Similarly, the EIR projected the number of vehicle miles traveled in the region in 2030 both with and without Phase II, and found that construction of Phase II would result in fewer vehicle miles traveled, thus producing fewer emissions in 2030 and resulting in no significant air quality impacts. 

The Expo Authority’s rationale for using a future baseline of 2030 instead of an existing conditions baseline was that population and traffic numbers from 2009, as compared to forecasted 2030 numbers, were less reliable in assessing impacts for a project with a construction date of 2015, at its earliest.  Neighbors for Smart Rail objected to the Expo Authority’s use of a future baseline, but the court of appeal upheld the EIR, finding that, as a major transit project that would not begin to operate until 2015 at the earliest, the Project’s impacts on presently existing traffic and air quality conditions would yield no practical information to decision makers or the public.  In 2012, the California Supreme Court granted review of the Smart Rail case.

Supreme Court Decision

The Supreme Court rejected the harsh rule of Sunnyvale and Madera requiring the baseline to be set at existing conditions,thereby allowing lead agencies to exclusively use a future conditions baseline for an EIR.  However, the court imposed two requirements on the exclusive use of future baselines.  First, the court held that a lead agency may only omit an existing conditions baseline and use a future conditions baseline “if justified by unusual aspects of the project or the surrounding conditions.”Second, in order to omit an existing conditions baseline, “the agency must justify its decision by showing an existing conditions analysis would be misleading or without informational value.”

The court then applied this rule to the case, and found that while the Expo Authority had argued that a future conditions baseline provided a more informative analysis, there was no evidence in the record supporting a finding that an existing conditions analysis would have been uninformative or misleading.  Absent this finding, the Expo Authority should have included an analysis of Phase II’s environmental impacts as measured against an existing conditions baseline.  Nonetheless, the court held that under these circumstances, the omission of an existing conditions baseline did not deprive decision makers or the public of substantial information relevant to approving the project and was therefore a non prejudicial error.

Conclusion

The Supreme Court’s decision in Neighbors establishes criteria for when an EIR may utilize a future conditions baseline instead of an existing conditions baseline.  Following this decision, a lead agency’s use of a future conditions baseline only, in lieu of an existing conditions baseline, must be justified by substantial evidence showing that (1) there are unusual aspects of the project or surrounding conditions, and (2) an existing conditions baseline would be “misleading or without informational value.”  Because the evidence in support of both of these criteria will be subject to judicial scrutiny, and not every situation may be viewed as nonprejudicial as in this case, it may be advisable to utilize both baselines in an EIR, as the justification required by the Supreme Court in Neighbors is only required when “an agency substitutes a future conditions analysis for one based on existing conditions, omitting the latter, and not to an agency’s decision to examine project impacts on both existing and future conditions.”

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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