“You may say I’m a dreamer.” – John Lennon, “Imagine”
“Son she said / Have I got a little story for you…”
Pearl Jam, “Alive”
CEQA, our state’s landmark environmental protection act, is a venerable law with an illustrious history now spanning over 45 years. But it’s also being abused every day, distorted for non-environmental ends not worthy of it – and our legislature refuses to sit up and take note. It’s as if Lady Justice had grown warts, been disrobed and had her scales smashed by vandals – yet those who could help, sit idly by and don’t seem to care.
CEQA reform has been a hot topic, on and off, over the years. Governor Brown has called it “the Lord’s work.” Calls for it wax and wane with the economy and perceived need to get development projects approved and built. While many CEQA practitioners, politicians, and members of the regulated community have acknowledged the need for reform, many others have denied it; some insist CEQA works “just fine” as it is, or even advocate further expansion of its reach. Proposals for meaningful legislative reform have been largely unsuccessful and have been criticized by opponents as proposals to “weaken” the state’s “signature” environmental law. It’s often said that the first step to recovery is acknowledging a problem exists. It’s difficult to build consensus for CEQA reform when there is not even consensus about the existence of CEQA abuses requiring reform.
Are There Really Problems Requiring Reform? A Closer Look At CEQA Standing Requirements In The Context Of Labor Union Actions Confirms It
Have Californians grown resigned – or blind – to CEQA abuses? Can it reasonably be disputed that some rather commonly encountered uses of CEQA are, indeed, abusive and should be considered unacceptable and prohibited? Any practitioner with significant CEQA litigation experience can attest that CEQA litigation abuses abound. A commonly cited example is labor unions bringing CEQA suits solely to secure a project labor agreement (PLA) from the project developer. While suing “in the name of the environment,” such petitioners are happy to drop their lawsuits in exchange for a PLA, which is a project-specific agreement favorable to union members. I can attest that some project developers become incensed when they find themselves embroiled in this type of CEQA litigation. In a recently published article addressing CEQA standing and litigation abuses, the attorney authors describe this particular variety of abuse as follows:
The use of CEQA litigation, or threats thereof, to leverage the execution of project labor agreements is well-known throughout the state. The process typically begins with a phone call from a law firm that regularly represents a certain union. The developer and local agency are then invited to sign a project labor agreement, and, if not interested, are informed of the union’s “environmental concerns” related to the subject project. Thereafter, CEQA litigation is often filed by the same law firm on behalf of an unincorporated association.
(Shardlow & Stratte, “Public Interest Standing Under CEQA: Will We Ever Know What Types of ‘Urgent Considerations’ Outweigh A Petitioner’s Standing?,” Environmental Law News, Vol. 26, No. 1 (Spr. 2017) 11, 13.)
Some may naively ask whether this conduct is really an “abuse,” or whether it is “fair game” to employ CEQA litigation in this manner given CEQA’s extremely “liberal-by-design” standing and exhaustion rules. My response is that – regardless of your views about the desirability of PLAs in general – this conduct is clearly an abuse because it is an illegitimate use of the CEQA litigation process to gain a collateral advantage that could not be obtained by successfully carrying out that process to its natural, intended conclusion. The union CEQA petitioners trying solely to leverage a PLA fundamentally lack legal standing to sue under CEQA – more specifically, they lack the legally required “beneficial interest” in the issuance of the writ of mandate that their lawsuits nominally seek. (See Code Civ. Proc., § 1086 [writ “must be issued upon the verified petition of the party beneficially interested”]; Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52 Cal.4th 155, 165 [confirming general standing rule requiring writ petitioner to have “beneficial interest” that it is “over and above” the general public’s interest, and that is “direct and substantial”].)
While obtaining a PLA from a project developer would certainly benefit a union CEQA petitioner and its members, that is not the relevant inquiry. The relevant point is that obtaining a PLA is not a “direct and substantial” beneficial interest that such a litigant can achieve through operation of a court’s writ of mandate issued in a CEQA action challenging the project. While a CEQA writ of mandate is a powerful thing – it can set aside project approvals in whole or part, command that project construction be halted or prohibited in whole or part, and order further environmental review and CEQA compliance – it cannot order parties to enter into a PLA. There is no legal right to a PLA under CEQA. A PLA does nothing to address the environmental issues with which the CEQA is concerned. A PLA has nothing to do with the adequacy of environmental review, the protection of the environment, mitigating a project’s significant environmental impacts, or enforcing any provision of CEQA – in short, it is not available as a “remedy” or “relief” in a CEQA writ action.
As a well-established rule, courts exist to adjudicate live legal disputes in the context of cases brought by parties with standing to bring them. But parties who wouldn’t benefit from the issuance of a CEQA writ of mandate clearly lack the required “beneficial interest” standing to pursue the writ. Petitioner labor unions typically have no “beneficial interest” in a CEQA writ because they do not benefit from defeating, further studying, or modifying a development project that does not actually adversely affect their members. To the contrary, they actually want the project to go forward; the benefit they seek is not stopping or modifying it, but for their members to be employed on favorable terms in its construction or operation.
Does Broad “Public Interest” Standing Cure The CEQA Abuse?
The Answer Is “No”
But wait, you may ask, can’t anyone litigate CEQA issues under the rubric of a broad “public interest” standing? (See Save the Plastic Bag Coalition, supra, 52 Cal.4th at 166 [noting “‘public right/public duty’ exception to the [beneficial interest] requirement”].) The answer is “no.” The Supreme Court has clearly indicated that public interest standing is an “exception” to the normal “beneficial interest” requirement that is not “freely available to business interests lacking a beneficial interest in the litigation” and that “[t]he policy underlying the exception may be outweighed by competing considerations of a more urgent nature.” (Id. at 170, n. 5, emph. added, citations omitted.)
Labor union petitioners filing CEQA actions to leverage a PLA should be held not to qualify for the “public interest” exception to the beneficial interest standing requirement. Among other considerations, this is because (1) they are not environmental NGOs with a well-established history of litigating environmental issues in the public interest, and (2) they obviously can’t adequately represent any “public interest” in enforcing CEQA because they will dismiss their CEQA lawsuits and allow the project to proceed – without additional study or mitigation – just as soon as their private economic interests are served, i.e., when a PLA is obtained. By design, their CEQA lawsuits simply serve as leverage to gain a private economic end that could not be achieved by court order even if the lawsuit were fully litigated and they prevailed on all asserted claims.
Such lawsuits are by definition abuses of the CEQA litigation process because the petitioners lack any type of standing – a conclusion further bolstered by the well-established principle that CEQA is an environmental disclosure and protection statute, not an economic protection scheme. (E.g., Joshua Tree Downtown Business Alliance v. County of San Bernardino (2016) 1 Cal.App.5th 677, 684-685.) Given the prevalence of these lawsuits, however, you might think that the attorneys who bring them would disagree with this legal analysis. But I’ve never seen a reasoned legal defense of such lawsuits as being brought by legitimate petitioners with valid legal standing. Rather, the thought seems to be “we will file these lawsuits as long as the law lets us get away with it.” And, unfortunately, the California legislature undoubtedly emboldens such improper conduct by failing to enact relevant CEQA litigation reforms that would stop it.
Would CEQA Standing Reform Be A Cure Worse Than The Abuse?
Not If Intelligently Drafted
I’ve previously suggested potential reform measures in this area of CEQA law. (See, e.g., “CEQA Standing Reform: Could Statutory Standing Requirements Feasibly Be Tightened To Bar Anti-Competitive Lawsuits Motivated By Economic Rather Than Environmental Concerns?” by Arthur F. Coon, posted December 12, 2012.). I’m not alone in so suggesting, and such reforms would not require “throwing out the baby” – i.e., meritorious CEQA actions by petitioners with standing – with the “bath water.” To be clear, I’m not arguing here that all CEQA petitioners who bring lawsuits that are motivated by non-environmental concerns lack standing and should have their actions barred or dismissed. Such a position would be overbroad, likely impossible to fairly implement as a practical matter, and would actually contravene the Supreme Court’s clear teaching that an economic interest not only can but often does serve as the “direct, substantial sort of interest required to seek a writ of mandate.” (Save the Plastic Bag Coalition, supra, 52 Cal.4th at 170.) But it is important to recognize that the type of economic interest the Supreme Court was referring to is one that would or could be directly served and benefitted by issuance of a CEQA writ of mandate. In other words, standing doesn’t require a petitioner to be an economically disinterested and selfless environmental saint, just to have some actual beneficial interest in the writ relief being sought. When a petitioner can’t clear even that minimal hurdle, however, the lawsuit is abusive and should be barred.
In this crucial respect, business competitor and NIMBY (“Not In My Back Yard”)-type petitioner CEQA lawsuits, considered by some to be “abuses,” must be distinguished from abusive labor union/PLA CEQA litigation. No matter how you might view their non-environmental subjective motivations, both business competitor and NIMBY petitioners normally do have a direct and substantial “beneficial interest” in the legal relief that a writ of mandate could provide. Setting aside challenged project approvals obviously directly benefits both business competitor and NIMBY petitioners. Compelling further environmental study leading to further mitigation and an environmentally superior project could also benefit both types of petitioners – although it remains maddeningly true that NIMBYs will often exhaust every available means to defeat any nearby project, no matter how environmentally sensitive, beneficial or reasonable its design. Because they have “skin in the game,” lawsuits filed by business competitor and NIMBY petitioners with such traditional “beneficial interest” standing are not “abuses” of the CEQA litigation process in the same clear-cut way as lawsuits filed by labor union CEQA petitioners who lack such standing because they are seeking solely to leverage a project PLA. Reform legislation or judicial holdings could intelligently be tailored to discretely address the latter type of litigation abuse.
Are CEQA Lawsuits Brought By Petitioners LackingStanding Illegal?
To those inclined to quibble with my observations about prototypical abusive labor union CEQA actions, I will grant that these unions’ skilled CEQA attorneys can try to cover the union’s tracks by forming an impenetrable unincorporated association petitioner of unknown or unclear membership which is controlled by the union. But the law requires that “[e]very action must be prosecuted in the name of the real party in interest except as otherwise provided by statute” (Code Civ. Proc., § 367), and I’m not aware of any statute that allows unions to fund, control and hide behind a phony petitioner “front group.” Union attorneys can also artfully draft “fig leaf” settlements to provide “cover” and make it appear that some environmental benefits (in addition to a PLA) have been achieved by their lawsuits. Settling respondent developers may “agree” to minor concessions – such as using energy efficient appliances or materials – that likely would be used or required anyway. But those involved in such settlements understand that such provisions are “window dressing.” The reality is plain: it was the PLA, first and foremost, that petitioner union always sought; the CEQA suit would never have been filed had the developer initially agreed to a PLA; and it was the PLA that ultimately made the union’s CEQA lawsuit go away. Neither the suit nor the settlement ever had anything to with the legal remedies that might actually have been obtained by fully litigating the case to its ultimate conclusion on the merits. The lawsuit served only as a threat to the developer – i.e., you will suffer devastating financial hardship from the delay, uncertainty, and expense of CEQA litigation, which will drag on for years if appeals are taken – to obtain a wholly collateral advantage (the PLA).
The California Supreme Court, quoting the esteemed Dean Prosser, long ago defined the tort of “abuse of process” as having two elements:
[F]irst, an ulterior purpose, and second, a willful act in the use of the process not proper in the regular conduct of the proceeding. Some definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process, is required; and there is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions. The improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money, by the use of the process as a threat or a club. There is, in other words, a form of extortion, and it is what is done in the course of negotiation, rather than the issuance or any formal use of the process itself, which constitutes the tort.
(Spellens v. Spellens (1957) 49 Cal.2d 210, 232-233 emph. in orig.)
The above passage perfectly describes the essential nature of an abusive CEQA action brought by a petitioner lacking “beneficial interest” standing, which is that it is “a form of extortion” whereby the litigation itself is used as a threat or club to coerce and obtain a collateral advantage. Unfortunately for project developers for whom time is money, the “remedy” of lengthy and expensive tort litigation to redress lengthy, expensive and extortionate CEQA litigation that delays or prevents completion of their projects is, to say the least, impractical – it is the proverbial “cure worse than the disease.” And so, absent meaningful legislative or judicial CEQA reform curbing extortionate actions, it seems developers will either have to “pony up” with a PLA that will drastically increase their construction costs, or suffer years of carrying costs and lost sales or rents, while expending attorneys’ fees they can’t recover defending a CEQA lawsuit that may or may not have any actual merit. Faced with this unappetizing choice, it is no wonder that so many developers on the receiving end of these lawsuits are outraged that the law would “allow” this type of action. One way or another, these extortionate suits either increase construction costs or stymie construction – things it would seem California can ill afford with its ongoing housing crisis.
The Problem Is Getting Worse: “A Little Story” From The Litigation Trenches
But the problem of abusive and extortionate CEQA litigation brought by petitioners lacking standing gets even worse. Lest anyone think this particular type of CEQA abuse is limited to union petitioners, I’m unhappy to report that is not the case. Consider the following anecdotal example: An individual acquainted with CEQA lawsuits through experience (from formerly sitting on a city council) forms a tax-exempt “charitable” organization – let’s hypothetically call it “Environmental Justice, Inc.” or “EJI” – with unclear membership. EJI’s vague but high-sounding mission is seeking “environmental justice.” Rather remarkably, however, its admitted primary source of income is settlement of the CEQA lawsuits it files. EJI has filed numerous CEQA lawsuits, but does not appear to have any substantial history of involvement with environmental issues or causes, or of litigation success in CEQA cases; none of its CEQA actions appear to have ever actually proceeded to final judgment on the merits or appeal, and there are no published or unpublished appellate decisions involving it.
EJI, while having no demonstrable membership or other nexus to a certain large land development project it has determined to sue over, files a brief comment letter criticizing the project’s DEIR during the public comment period. The short letter asserts in a cursory manner that the DEIR is flawed, that the project will have adverse and unmitigated GHG, air quality and noise impacts, and that the City’s environmental review process has failed to ensure “environmental, social and economic justice” for its residents. The public agency’s responses to comments on the EIR explain in detail why the letter’s assertions lack merit and why the EIR’s analysis of the project’s potential environmental impacts is adequate and supported. Nonetheless, EJI files a writ petition following project approval alleging the CEQA claims raised in its letter (and, improperly, others), many of which appear to be substantially identical to those alleged in its prior suits. It asks for a writ of mandate setting aside the project approvals.
When the respondent City and real party developers reach out to EJI to try to discuss the merits of its lawsuit’s claims and the possibility of settlement, EJI’s attorneys decline to discuss the merits, and instead propose that a large cash settlement be paid to EJI to dismiss its action – absent which they make very clear that they are fully committed to litigating the matter, including appeals, which litigation they emphasize could take years, will be inherently uncertain in outcome, and will be extremely expensive for real parties whatever the ultimate outcome. EJI’s representative and attorney both frankly explain that (1) its business model is based on settling CEQA lawsuits for money (which it allegedly uses for its own “environmental justice” causes and purposes unrelated to challenged projects); (2) it has “comps” (akin to the “comparable sales” used by appraisers in real estate valuation) that determine the amounts it will settle for based on the various types of projects it sues on; and (3) the “comp” for this particular project is a six-figure sum approaching half a million dollars. At the mandatory CEQA settlement meeting, EJI and its counsel do not attempt to discuss or demonstrate the legal or factual merit of their claims, or to negotiate for any further environmental review or mitigating project modifications based on those claims. Their only settlement demand remains one for a large money payment in the amount of their “comp.”
Respondent’s and real parties’ counsel advise EJI’s representative and attorneys that they assess the CEQA claims to have no legal or factual merit; that the settlement demand far exceeds the anticipated costs of litigation defense; and that they consider the action to be an improper use of CEQA because even if petitioners fully litigated the matter and prevailed, while they could potentially obtain reasonable attorneys’ fees under CCP § 1021.5, they could never obtain a monetary “remedy” such as they seek through a CEQA writ of mandate. Undaunted, EJI continues to refuse to discuss the merits of the issues, or even to consider a lesser 5-figure “nuisance value” monetary settlement, and the case does not settle. The litigation proceeds a bit further. Fortunately, respondents and real parties are able to prepare and file a meritorious dispositive motion on procedural grounds – a fatal joinder defect that could be established from the face of the pleading and documents subject to judicial notice. Just before EJI’s opposition is due, and before its counsel must begin work in earnest on the administrative record it has elected to prepare, EJI voluntarily dismisses its entire action, as to all parties, with prejudice.
As the currently popular phrase goes: “That happened.” (But for the organization’s name, the above scenario is a factually accurate account of recent CEQA litigation in which I was personally involved as defense counsel.) Moreover, this “little story” is not an isolated incident, and most agencies and developers will not be as fortunate in being able to quickly dispose of such litigation without suffering significant delay and expense.
Conclusions And Implications For Potential CEQA Reforms
Does the above scenario constitute CEQA litigation abuse and an unlawful “abuse of process”? Of course it does. Like the union petitioner seeking solely to leverage a PLA, the petitioner entity was neither benefitted by nor remotely interested in any type of relief it might have gained through a CEQA writ of mandate, except as a threat to try to obtain a collateral advantage – money. While purely extortionate, the litigation was matter-of-factly treated as “business as usual” by the petitioner organization, as well as its attorneys, who routinely represent the same petitioner in other CEQA suits.
Does this “little story” underscore the need for standing reforms to curb extortionate CEQA actions? Again, of course it does. If you think that the type of litigation I’ve just described is an acceptable use of CEQA, you are probably incapable of being convinced that CEQA litigation abuses exist at all; perhaps you’ve grown too cynical or jaded to care about the integrity of litigation under, and judicial enforcement of, our state’s signature environmental law or the salutary environmental purposes it was enacted to accomplish. I sincerely hope this isn’t the case with Californians in general, but particularly with judges handling CEQA litigation and California state lawmakers considering future CEQA reform proposals. Under the best of circumstances, meaningful CEQA reform proposals are a “heavy lift” in a California legislature seemingly fueled by labor union money, but fortunately there is some cause for hope as they seem to regularly resurface as a result of those legislators who do care about the integrity of the law and who continue to “fight the good fight.” I am hopeful that, with some thoughtful legislative (or maybe judicial) reform, CEQA will someday be amended so that it serves its intended purposes, and we can one day have environmental litigation justice for all parties involved in CEQA actions. Or at least one can dream….