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CEQA Reform and the California Supreme Court

The need for “reform” of the California Environmental Quality Act is acknowledged by development interests and environmental groups alike. The challenge is that these stakeholders have very different ideas of what that reform should look like.  As a result, despite the extraordinary costs of CEQA implementation and litigation, there appears to be little prospect for meaningful CEQA reform from the State Legislature. This article examines whether there is any prospect for meaningful CEQA “reform” from California’s Supreme Court.

California Supreme Court

The California Supreme Court

CEQA is 46 years old, yet CEQA litigation remains remarkably unpredictable. State and local agencies still cannot be confident that the courts will uphold their actions. The chances that an EIR will be upheld in court remain close to a coin-flip, even lower for a negative declaration. That level of uncertainty remains the great cost of CEQA—greater even than the enormous expense of trying to comply with CEQA.

In the first 40 years of CEQA, the California Supreme Court issued only about 40 decisions interpreting it. Then, a few years ago, the High Court started granting review in CEQA cases at an unprecedented pace. It rather quickly had nine cases on its docket for review. Many commentators speculated that the Court was going to undertake CEQA reform from the bench, perhaps recognizing that the Legislature seemed incapable of coalescing around any meaningful reform.

In the past year, the Court has issued four CEQA decisions, with five more pending. The early returns are mixed in terms of offering newfound certainty. But the Court will have several opportunities in the coming months and years to offer assistance to all participants in the CEQA process by resolving pending cases in a clear and decisive manner.

The Court considered various issues in its decisions over the past year. In Berkeley Hillside, it addressed the standard of review for categorical exemptions and adopted a somewhat tricky two-part test. It also held in City of San Diego v CSUSD that the state university system cannot limit its mitigation measures to those specifically funded by the Legislature, affirmed in Newhall Land that greenhouse gas (GHG) emission impacts can be measured against statewide GHG-reduction targets set out in AB 32, while at the same time finding the State’s GHG analysis lacking. In a key decision addressing  CEQA fundamentals, the Court held in CBIA v BAAQMD that CEQA generally applies to a project’s impact on the environment, not the environment’s impact on the project. While some might characterize this decision as “reform by court,” it really reflects a plain reading of the law, rather than reform.

Of the Court’s five pending CEQA cases, some could lead to important precedents that will either facilitate or further frustrate the CEQA compliance process. Two cases, in particular, have the potential to clarify or further confound basic application of the law. While these cases address very different issues, they each offer an opportunity for the Court to clarify one of the abiding conundrums in CEQA—the standard of review.

In Friends of the College of San Mateo, the Court is poised to decide the standard of review that should apply to a project that was earlier approved using a negative declaration, but is now back before the agency due to changes in the project or surrounding circumstances. This case gives the Court the opportunity to ensure that a lead agency can use a negative declaration without undue prejudice. On the flip side, however, the case could add significant additional risk to the use of negative declarations. After arguments, the Court issued an order requesting supplemental briefing, so this case will not be decided until September 2016.

Another case offering an opportunity to clarify the CEQA standard of review is Sierra Club v Fresno. While it ostensibly addresses details in the health risk assessment within the air quality analysis in an EIR, its real potential will be to establish whether lead agencies receive meaningful deference when making factual determinations in an EIR. If the lead agency’s factual determinations will be subject to a court exercising its independent judgment as to whether the agency adequately studied the project impacts, preparing and defending EIRs will become even more challenging. This decision could significantly undermine the little confidence lead agencies and project applicants now have in the CEQA process, or it could offer significant encouragement that reasonable factual determinations of lead agencies will be given deference by the courts. This case was fully briefed in July 2015 and could be set for argument soon.

While the California Supreme Court’s CEQA decisions deserve great attention, we are also mindful that true CEQA reform will require changes in the law itself.  Should the Legislature ever undertake true CEQA reform, however, the question remains as to whose definition of “reform” will prevail.