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California Supreme Court To Render Decision on “Reverse CEQA”

Does CEQA require an evaluation not only of a proposed project’s potential impacts on the environment, but also of the potential impacts of the existing environment on the proposed project and its future residents or users? If the answer is “both,” then public agencies will be required to expand what has been the traditional scope of environmental review under CEQA. The practical effects would likely include an increase in the cost of preparation of CEQA documents, an expansion of the scope and cost of project mitigation measures, greater reliance by agencies on statements of overriding consideration, and enhanced litigation opportunities for project opponents.

This issue, which has come to be known by the shorthand expression “reverse CEQA,” is now under consideration by the California Supreme Court in California Building and Industry Association v. Bay Area Air Quality Management District. Oral arguments were heard on October 7, 2015, and a decision is expected by the first week of January 2016. Cox, Castle & Nicholson Partner Andrew Sabey argued before the Court on behalf of the California Building and Industry Association.

While the specific context of this case involves air-quality issues, during oral argument the Justices focused on the broader question of whether CEQA requires evaluation of those existing environmental conditions that may affect future residents or users of a proposed project. Depending on the scope and direction of the Court’s upcoming ruling, many existing conditions could become subject to CEQA evaluation, such as degraded air quality, odors, shadows from existing buildings, urban blight, impaired views, loss of night sky, noise, and so forth.

CBIA contends that the purpose of CEQA is to inform the public and decision makers about a proposed project’s potential impacts on the environment, and, where feasible, to avoid or mitigate those impacts. CBIA argued that with “reverse CEQA,” developing in virtually any urbanized area will require the lead agency to evaluate potential impacts which are created not by the project itself, but rather by existing environmental conditions. This includes existing development entirely unrelated to the proposed project. If that occurs, then, in many cases, either new and costly mitigation requirements will be imposed or public agencies will need to adopt statements of overriding consideration if a project is to be approved.

This “reverse CEQA” controversy stems from the final sentences of Section 15126.2(a) of the CEQA Guidelines which require lead agencies to analyze the effect of the existing environment on the users of a project. CBIA argued, however, that the Court should find that CEQA does not require an analysis of the existing environment on a proposed project or its users. This is because the CEQA statute does not contain such a general requirement (although it has recognized some specific circumstances for reverse CEQA, including airports and school siting). CEQA’s Guidelines are not part of the statute, but rather are drafted by the Governor’s Office of Planning and Research to implement the statute. The question has become whether the language in the Guidelines goes beyond what CEQA requires, a conclusion reached by several lower courts. If the California Supreme Court agrees with those lower courts, then it is likely to follow a consistent line of cases holding that the CEQA Guidelines may not be used as a tool to expand the scope of CEQA. Notably, OPR has been engaged in a comprehensive revision of the Guidelines, but has expressly reserved changes to Section 15126.2(a) pending the Court’s resolution of this case.

When the Court makes its ruling, we will post our thoughts on the decision so that we can continue to keep our readers informed.