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CEQA: Prospects for Reform in 2013

April 4, 2013

To many observers hoping for renewed progress toward reform of California’s keystone environmental law – the California Environmental Quality Act (“CEQA”) – Senator Michael Rubio’s sudden resignation from the State Legislature on February 22, 2013 was something of a shock.[1] Rubio had been chair of the Senate Environmental Quality Committee and was widely seen as a key powerbroker in efforts backed by Governor Jerry Brown to push through a comprehensive reform of the decades-old law.[2]

CEQA is California’s principal environmental review statute, requiring developers to go through a lengthy public process to analyze the potential environmental impacts of proposed projects and assess how those impacts might be mitigated. While almost everyone (at least publicly) agrees that any reforms should preserve CEQA’s role in protecting the environment, critics take aim at how the law is used by labor groups to extract concessions from employers, by businesses as a sword to undermine their competition’s efforts, and by a host of other entities seeking to stop or delay developments for reasons other than environmental protection.[3]

Before Rubio’s departure, it appeared that the stars were aligning for the first comprehensive overhaul of CEQA since its adoption 40 years ago.[4] Democrats held a supermajority in both the State Senate and Assembly, and Democratic Governor Brown, a long-time supporter of reform, declared in his January State of the State address that “[w]e also need to rethink and streamline our regulatory procedures, particularly the California Environmental Quality Act. Our approach needs to be based on consistent standards that provide greater certainty and cut needless delays.”[5]

Senator Rubio was the charismatic moderate Democrat thought to be capable of bridging divides between business and industry groups on one side and environmental and labor groups on the other. While Rubio’s Senate seat will likely be filled with another Democrat[6] – restoring the Senate supermajority – the impact of losing his leadership is still playing out.

It is now unclear who might be capable of navigating a meaningful reform bill through the legislative process. Senate President pro Tem Darrell Steinberg is perceived by some as leaning more toward environmental interests that may prefer keeping the status quo,[7] Governor Brown has thus far been unwilling to fully engage reform efforts,[8] and Rubio’s replacement on the Senate Environmental Quality Committee, Senator Jerry Hill, has yet to make his mark.[9]

Only hours after Rubio’s resignation, Steinberg did propose SB 731 (California Environmental Quality Act and sustainable communities strategy) in an attempt to carry forward at least some CEQA reform.[10] While it is far from a complete piece of legislation, SB 731 may nevertheless be the best hope for substantial changes to CEQA this legislative session. Yet, numerous obstacles still lie along the path to this sparse proposed legislation being adopted into law.

In total, California legislators offered more than two dozen CEQA reform bills, none of which could out-compete the Rubio story for media attention.[11] Alongside SB 731, Republican Senator Tom Berryhill proposed SB 787 (Environmental quality: the Sustainable Environmental Protection Act), which has also garnered some attention.[12] While SB 731 currently includes only general principles of intent focused on facilitating infill and other widely supported development,[13] SB 787 essentially reintroduces a bill proposed by Senator Rubio last summer, favored by business interests, which would limit the use of CEQA where a project complies with other environmental laws.[14]

Both sides of the debate appear to be digging in for a fight. Environmental and labor groups are highlighting a report on the economic and environmental impacts of CEQA, written by a University of Utah professor, which concludes that California’s per capita GDP, housing relative to population, manufacturing output, and construction activity grew as fast or faster after CEQA was enacted as compared to before.[15] Meanwhile, business and industry groups point to examples of cases where CEQA has been used to delay or stop desirable projects, including a transit line in Los Angeles, a hospital expansion in Sacramento, and a housing development in Berkeley that would meet LEED Platinum building standards.[16]

Still, Senator Steinberg promised to make CEQA reform a priority in this legislative session,[17] and he is at least going through the motions of showing that he means to deliver. While the bill is limited on its face, the principles behind SB 731 do appear to enjoy a broad coalition of support, including the Natural Resources Defense Council, Silicon Valley Leadership Group, and the State Building and Construction Trades Council.[18]

SB 731 would convey a legislative intent to facilitate and advance infill development and to “further streamline the law for renewable energy projects, advanced manufacturing projects, transit, bike, and pedestrian projects, and renewable energy transmission projects.”[19] The bill also declares the intent to avoid duplicative review for projects completed pursuant to a specific plan for which an Environmental Impact Report (“EIR”) has been prepared, and to establish “clearer” procedures for trial court judges to remand to a lead agency to remedy inadequate portions of an EIR, rather than the entire document.[20]

Unlike SB 787, which would exempt from CEQA review many projects that comply with other existing environmental laws,[21] SB 731 does not provide for these types of exemptions, considered a deal-breaker by most environmental groups. SB 731 does call for the establishment of uniform thresholds of significance or impacts in the area of noise, aesthetics, parking, and traffic – impacts that often generate CEQA challenges against infill development.[22]

However, no part of SB 731 includes proposed statutory language to accomplish these goals, for reasons that remain unclear.[23] Instead, the bill consists of a single section with seven subsections, each of which expresses the “intent of the Legislature” to enact or amend new provisions.[24] This is somewhat surprising given that Steinberg began holding stakeholder meetings last fall,[25] which should have provided him with enough input to propose a more developed bill. Steinberg presumably wrote the bill this way for strategic reasons, anticipating that a more detailed bill would be torn apart and the process would undermine his capacity to secure compromise legislation down the road. Still, the result is a bill that will require substantial work if it is ever to see the Senate floor. Indeed, the absence of more legislatively refined language suggests that Steinberg and others may have been overinvested in Rubio’s carrying the torch of reform and ill-prepared for his sudden resignation.

The question now is whether the Legislature is capable of regrouping on meaningful CEQA reform. After a flurry of proposed bills, little has been reported on how Senators Steinberg, Hill, Berryhill, and others will proceed. While environmental and union groups appear willing to support SB 731, it is unclear if business interests will lend support to any bill that continues to allow CEQA plaintiffs to bring lawsuits even when a project meets all other environmental standards of existing laws.[26]

The CEQA Working Group, a broad coalition of business interests, has described SB 731 as a positive first step, but calls for improved streamlining and integration with other environmental and planning laws to eliminate what it calls duplicative review.[27] While SB 731 undoubtedly includes ideas that the CEQA Working Group could support, it may ultimately decide to oppose any bill that does not provide for the more business-friendly comprehensive reform it seeks. Whether Steinberg can satisfy the business community’s desire for greater streamlining and integration – without incurring the wrath of labor and environmental groups – is an open question.

Meanwhile, the Rubio story has continued to cast a pall over any prospects for CEQA reform. The Fair Political Practices Commission is considering investigating Rubio for his participation in three real estate deals (two involving his own residences) with a Kern County oil executive.[28] Also, while Rubio claimed he had to put his family first and could no longer do so by serving in the Senate,[29] many continue to wonder why Rubio’s new employer Chevron would determine it was in its best interest to hire him when he could have proven even more valuable to the company by leading the charge for business-friendly reforms.[30]

Senator Rubio’s resignation undercut an already tenuous process, but some hope for reform remains. California legislators have discussed updating CEQA many times since the law’s adoption, but comprehensive reform has proved elusive.[31] Senator Steinberg appears best positioned to now lead the charge, but his scant bill is evidence of the many obstacles that stand in his way.

The X-factor may be whether Governor Brown makes good on his calls for reform by throwing his weight behind Steinberg. With Rubio now seeking to influence the process rather than lead it, Steinberg could benefit from a powerful ally as he finds himself in the middle of one of the more contentious ongoing reform efforts California has seen in recent years.

For more information on CEQA, please contact Kevin Haroff in Marten Law’s San Francisco office.

[1] P. McGreevy, State Sen. Michael Rubio resigns to work for Chevron, Los Angeles Times (Feb. 22, 2013).

[2] Id.

[3] J. Ewers, CEQA Roundup: Muscle-flexing in Sacramento complicates reform debate, California Economic Summit (Mar. 15, 2013); see also Senate Bill 787 – CEQA Reform Legislation, Official Website of Senator Tom Berryhill (Feb. 25, 2013).

[4] Id.

[5] Transcript of Brown’s State of the State Address (Jan. 24, 2013).

[6] J. Ellis, Who will replace Michael Rubio in state Senate?, Fresno Bee (Feb. 26, 2013).

[7] See Senate President pro Tem Darrell Steinberg Scorecard, California League of Conservation Voters.

[8] D. Siders, Jerry Brown: CEQA reform is ‘Lord’s work’; noncommittal on bill, The Sacramento Bee (Dec. 3, 2012).

[9] J. Ewers, CEQA Roundup: Debate resets with Jerry Hill appointment, California Economic Summit (Mar. 8, 2013).

[10] Steinberg Introduces Bill to Modernize the California Environmental Quality Act, Official Website of Senate President pro Tem Darrell Steinberg (Feb. 22, 2013).

[11] J. Ewers, CEQA Roundup: What’s next after Rubio?, California Economic Summit (Mar. 1, 2013).

[12] Sen. T. Berryhill, Demand CEQA reform, not phony tweaks, Fresno Bee (Mar. 22, 2013).

[13] SB 731 (Steinberg): Environment: California Environmental Quality Act and sustainable communities strategy (Introduced Feb. 22, 2013).

[14] Berryhill CEQA Legislation attacks most egregious abuses, Official Website of Senator Tom Berryhill (Feb. 25, 2013).

[15] K. Dayton, Opponents of CEQA Reform Cite New Study with Union Connections, UnionWatch (Mar. 12, 2013).

[16] J. Ewers, CEQA Roundup: Muscle-flexing in Sacramento complicates reform debate, California Economic Summit (Mar. 15, 2013).

[17] Steinberg Sets CEQA Reform as Agenda Priority, Official Website of Senate President pro Tem Darrell Steinberg (Sep. 13, 2012).

[18] Supra note 10.

[19] Supra note 13.

[20] Id.

[21] SB 787 (Berryhill): Environmental quality: the Sustainable Environmental Protection Act (Introduced Feb. 22, 2013).

[22] Supra note 13.

[23] Id.

[24] Id.

[25] Smart Regulation: CEQA, Progress, California Economic Summit (Dec. 28, 2012).

[26] Supra note 3.

[27] Id.; see also Principles for Reform, CEQA Working Group.

[28] T. Van Oot, Oil exec involved with former Sen. Michael Rubio in real estate deals, The Modesto Bee (Mar. 3, 2013).

[29] Senator Rubio: Family Comes First, Official Website of Senator Michael Rubio (Feb. 22, 2013).

[30] See D. Morain, After election losses, Chevron turns to Rubio, the Sacramento Bee (Feb. 27, 2013).

[31] M. Ouellette, CEQA: Reforming California’s Landmark Environmental Law, PublicCEO.com (Mar. 5, 2013).

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