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CEQA: New Rules Narrow Scope of Environmental Review in California

July 1, 2014

California has actively been pursuing a variety of initiatives to reduce regulatory burdens and streamline permitting requirements for new and existing development projects. One area where these initiatives are having important consequences involves CEQA – the California Environmental Quality Act.[1]

CEQA is California’s pre-eminent environmental law. It originally was adopted by the California state Legislature and signed into law (by then Governor Ronald Reagan) in 1970, shortly after passage at the federal level of the National Environmental Policy Act, or NEPA[2] (on which CEQA is largely modelled). In a nutshell, CEQA requires California state and local agencies to undertake a process to publicly evaluate the significant environmental impacts of new development projects and regulatory proposals. NEPA requires a similar process for federal projects and proposals; however, unlike NEPA, CEQA requires government agencies to affirmatively adopt and implement feasible mitigation measures to reduce or eliminate significant adverse impacts.

Detractors complain that these environmental review and mitigation requirements create impediments to new development and drive up their costs, and there is anecdotal evidence that these complaints historically may have been valid.[3] Consequently, California’s business community has increasingly been pressing for changes that would lower or eliminate the development barriers that CEQA is perceived to have fostered. Some of those changes are procedural, addressing uncertainties created by the threat of litigation challenging project approvals on CEQA grounds. Others are more substantive, focusing on questions of how CEQA applies to different types of specific development activity in different situations.

CEQA and State Strategies to Address Climate Change

The latest efforts to modify CEQA have their origin in legislation enacted in 2008 to encourage the development of so-called “sustainable communities” strategies to help California meet greenhouse gas (GHG) emission targets under the state’s landmark global warming legislation, AB 32 (California Global Warming Solutions Act of 2006).[4] SB 375 (Steinberg), known as the “Sustainable Communities and Climate Protection Act of 2008,” required regional transportation planning organizations throughout the state to encourage transportation-oriented development (focused on high-density affordable housing). The objective was to create incentives for increased use of mass-transit and other theoretically more sustainable transportation options in lieu of GHG-emitting automobiles and trucks – thus contributing to the achievement of future AB 32 compliance goals.

SB 375 incorporates a number of changes to CEQA that also were designed to encourage transportation-oriented development. Among other things, the law exempts so-called “transit priority” projects from environmental review under CEQA, provided those projects meet certain specified statutory requirements and are declared by a local jurisdiction to be a “sustainable communities project.”[5] Other transit priority projects not meeting these criteria, while not exempt from CEQA, are nevertheless subject to less stringent environmental review requirements under the law.[6] Finally, even with respect to certain non-transit-oriented development (residential or mixed-use), the law exempts environmental review documents prepared under CEQA from considering growth-inducing and traffic-related impacts, provided projects are located within a sustainable communities or comparable land use planning area.[7] These exemptions are particularly meaningful given that growth-inducing and traffic-related impacts are often the most noticeable environmental impacts associated with economic development in urban and quasi-urban settings.

While the provisions of SB 375 seem arcane and technical, they already are having profound consequences on development within metropolitan areas throughout California. In Northern California, for example, they provided the impetus for Plan Bay Area, an ambitious proposal by the regional Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG) to implement a coordinated SB 375 sustainable communities strategy throughout the nine county San Francisco Bay Area (counties of Alameda, Contra Costa, Marin, Napa, San Francisco, Santa Clara, San Mateo, Solano, and Sonoma, with a total population of over 7.1 million people).[8] Plan Bay Area is highly controversial[9] and has been the focus of a number of lawsuits brought by such diverse groups as the Building Industry Association, Communities for a Better Environment, and the Sierra Club, some challenging the plan for alleged failure to comply with CEQA’s programmatic environmental review requirements.[10]

Requirements for “Environmental Leadership” and “Transit Priority” Projects

Several years ago, pressure to limit application of CEQA’s review requirements for projects with perceived environmental benefits resulted in the adoption of AB 900 (Buchanan), known as the “Jobs and Economic Improvement through Environmental Leadership Act of 2011.” AB 900 was a companion bill to another piece of legislation, SB 292, which was intended specifically to provide expedited judicial review under CEQA of a large convention center expansion and stadium construction project in Los Angeles. AB 900 theoretically had a broader application, establishing special rules for streamlined CEQA challenges to so-called “environmental leadership development projects.” Judicial streamlining under the law was allowed only for qualified projects certified by the state governor’s office, based on a finding that a project would result upon completion in a minimum $100 million investment in California, create new high-wage jobs, reduce unemployment, and result in no net additional GHG emissions to the environment.[11] Very few project can meet these criteria, however, which significantly limits the availability of streamlining under AB 900.[12] In addition, one key streamlining provision in the bill – allowing judicial review of qualified project approvals only in a California Court of Appeal – has been struck down as an unconstitutional exclusion of original jurisdiction in the lower state superior courts.[13]

The problems associated with AB 900 prompted the state Legislature last fall to try a different approach. SB 743 (Steinberg), which was signed into law on September 27, 2013 by current California Governor Jerry Brown, received a certain amount of press attention mostly because of provisions allowing expedited judicial review for CEQA litigation brought to challenge projects associated with the so-called “Kings Arena,” a proposed $448 million sports complex in downtown Sacramento.[14] The bill also has garnered attention by replacing provisions for judicial streamlining in AB 900 with new requirements directing the Judicial Council of California (Administrative Office of the Courts) to adopt rules requiring that any actions or judicial proceedings, including potential appeals, brought to challenge the approval of an “environmental leadership development project” under CEQA must be resolved within 270 days after certification of the record of proceedings supporting the approval.[15] New California Rules of Court implementing these requirements were approved by the Judicial Council on April 25, 2014.[16]

Less widely reported than the new judicial streamlining provisions (which, again, are available to only a handful of very large development projects), are a number of substantive changes SB 743 has made to provisions of CEQA governing the scope of environmental review for urban infill and transportation-oriented development of the type encouraged by SB 375. Specifically, SB 743 adds a new CEQA chapter 2.7 (“Modernization of Transportation Analysis for Transit-Oriented Infill Projects”) with several new substantive requirements.

First, the law directs the state Office of Planning and Research (“OPR”) to develop new substantive criteria for determining the significance of transportation-related impacts within so-called “transit priority areas.”[17] These new criteria are required to “promote the reduction of greenhouse gas emissions, the development of multimodal transportation networks, and a diversity of land uses.” OPR currently is working on a draft of the new criteria and must circulate a draft proposal no later than July 1, 2014. Once the criteria are certified for adoption as regulations under CEQA (referred to as the “CEQA Guidelines”), they essentially will replace the standard level-of-service (“LOS”) criteria traditionally used to evaluate traffic impacts for CEQA purposes; in other words, according to SB 743, automobile traffic delays (as measured solely by LOS or similar measures of vehicular capacity or traffic congestion) will no longer be considered a significant environmental impact requiring assessment and mitigation under the law.[18]

Second, the adequacy of available parking will no longer be sufficient to support a finding that other impacts (on air quality, noise, safety, etc.) are significant environmental impacts, even if those impacts are caused by reductions in the availability of parking as a result of transit-oriented development.[19] Moreover, the statute goes on to provide that “[a]esthetic and parking impacts of a residential, mixed-use residential, or employment center project on an infill site within a transit priority area shall not be considered significant impacts on the environment.”[20] These provisions substantially reverse a recent decision of the California Fourth District Court of Appeal, in which the court found that parked cars are “physical objects” (as though there could have been a rational dispute about that) and therefore can have a direct impact on the environment.[21] More importantly, these provisions take aspects of two of what arguably are impacts of greatest public interest – visual and traffic-related impacts – off the table for purposes of any CEQA review of transportation-oriented development in both urban and suburban settings.

Finally, SB 743 provides a complete exemption from CEQA review for residential, employment center, and mixed-use development projects that are: proposed within a transit priority area; undertaken to implement and consistent with a specific plan (within the meaning of the state Planning and Zoning Law[22]) for which an environmental impact report has been certified; and consistent with a sustainable communities strategy or alternative planning strategy designed to achieve the state’s overall GHG emissions reduction targets.[23] This provision provides the final linkage to SB 375’s promotion of the state’s AB 32 climate change strategy – giving high-density, transportation-oriented development an effective pass in qualified circumstances from a rigorous review of other potentially significant environmental consequences associated with that type of development.

These changes are all designed to lessen, if not eliminate, regulatory constraints that many view as a serious impediment to substantial new development that will be required to accommodate California’s growing population and infrastructure needs. By doing so, however, some worry that the state is assigning a higher priority to state and regional policy goals (mitigating climate change, encouraging affordable housing, and promoting increased use of mass transit) than to the more mundane interests of local communities. A fundamental tenet of California planning policy has always been the preservation of local control over land use and development. By exempting broad categories of development from environmental scrutiny, SB 743 may diminish the value of CEQA’s procedural requirements as a tool that local governments (cities and counties) can use to effectively exercise that control. In the short term, there is a risk of further litigation (like that challenging Plan Bay Area) while the conflict between regional goals and local control is sorted out.

What’s Next?

Meanwhile, as SB 743’s new requirements are being fleshed out in regulatory terms, CEQA “reform” proponents are continuing their efforts to limit the availability of judicial review under the statute. Most recently, a number of Democratic members of the state Legislature introduced new legislation (SB 1451) that would present significant procedural hurdles to potential litigants seeking to pursue such challenges. Among other things, the proposed legislation would limit the public’s ability to pursue claims based on information presented to responsible government agencies after the close of government-designated public comment periods, even if the agency receives the information prior to final agency action.[24]

Recent reports indicate that hearings on this latest CEQA legislation may have been cancelled, with the bill tabled for the time being. But SB 1451 is unlikely to mark the end of CEQA reform. As long as questions remain as to the consequences of stringent environmental regulation on the competiveness of the California economy, the pressures for reform (whether justified or not) are only likely to increase.

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

[1] Cal. Public Resources Code §§ 21000 – 21189.3.

[2] 42 U.S.C. § 4321 et seq.

[3] Thornberg, The Conversation: Anecdote of Toyota Relocation of Jobs to Texas Misses the Full Economic Picture in California (May 18, 2014) Sacramento Bee (as of May 27, 2014).

[4] Cal. Health & Safety Code §38500 – 38599. AB 32, which was approved by Governor Arnold Schwarzenegger on September 27, 2006, is most widely known in establishing the basis for California’s “cap and trade” program, which restricts the amount of GHG emissions permitted statewide and provides emissions allowances that companies can trade to help meet those restrictions. AB 32 also envisions use of a variety of other GHG emissions control strategies, however, including land use and development management controls.

[5] Cal. Public Resources Code § 21155.1.

[6] Id. § 21155.2.

[7] Id. § 21159.28.

[8] Press Release, Plan Bay Area Charts Course for Stronger Economy, Cleaner Air (July 19, 2013) Metropolitan Transportation Commission (as of May 28, 2014).

[9] McQuillan, Plan Bay Area: ‘Smart Growth’ and ‘Sustainable Communities’ Hurt the Poor(November 7, 2013) Special to the San Jose Mercury News (as of May 28, 2014).

[10] Young, Controversial Plan Bay Area Settles One Lawsuit, But Three Remain(March 3, 2014) San Francisco Business Times (as of May 28, 2014).

[11] Public Resources Code § 21183.

[12] One project that did qualify was the new Apple, Inc. headquarters campus (Apple Campus 2) project located on a 176-acre site in Cupertino, California. That project involves the demolition of approximately 2,657,000 square feet of existing office space and construction of approximately 2,420,000 square feet of built space for office, research, and development uses; 245,000 square feet for auditorium, fitness center, and valet parking reception uses; 92,000 square feet of utility plants; and parking and ancillary buildings. See California Jobs (undated) Governor’s Office of Planning & Research (as of May 28, 2014). See also LSA Associates, Inc. Apple Campus 2 Project EIR, Introduction, p. 1 (as of May 28, 2014).

[13] See Conservation League v. State of California (Sup. Ct. Alameda, March 29, 2013, No. RG1262904).

[14] See Bizjak and Kasler, Steinberg Arena Bill Goes to Brown (Sept. 12, 2013) Sacramento Bee (as of June 2, 2014).

[15] SB 743, section 11; amending Public Resources Code § 21185.

[16] While the new Judicial Council rules do include appeals within the scope of the 270-day period for expedited review, they specifically exclude petitions for review of appellate decisions by the California Supreme Court.

[17] Public Resources Code § 21099(b)(1). “Transit priority area” is defined to include any area within one-half mile of a major existing or planned transit stop. Public Resources Code § 21099(a)(7). A “major transit stop” is defined to include “a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.” Public Resources Code § 21064.3.

[18] Public Resources Code § 21099(b)(2).

[19] Public Resources Code § 21099(b)(3).

[20] Public Resources Code § 21099(d)(1). “Employment center project” in this context means 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. Public Resources Code § 21099(a)(1). “Infill site” means “a lot located within an urban area that has been previously developed, or on a vacant site where at least 75 percent of the perimeter of the site adjoins, or is separated only by an improved public right-of-way from, parcels that are developed with qualified urban uses.” Public Resources Code § 21099(a)(4).

[21] Taxpayers for Accountable School Bond Spending v. San Diego Unified School Dist. (2013) 215 Cal. App. 4th 1013, 1066-1067, pet. review den. (Cal. Sup. Ct., July 31, 2013). The court expressly disagreed with a Second District decision, in San Franciscans Upholding the Downtown Plan v. County of San Francisco (2002) 102 Cal.App.4th 656, which had held that parking was merely a social inconvenience that could only be addressed under CEQA as a secondary impact, if at all.

[22] Cal. Government Code § 65000 et seq.

[23] Public Resources Code § 21155.4(a).

[24] Press Release, SB 1451 (Hill) Stops the “Document Dump” in the CEQA Process (undated), League of California Cities (as of June 3, 2014).


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