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Major CEQA Guideline Revisions Remain Invalid

A superior court's decision that invalidated several changes the state made to the California Environmental Quality Act Guidelines in 1998 has been upheld almost entirely by a state appellate court. The appellate panel threw out six guidelines addressing cumulative impacts, thresholds of significance, and tiering. The court upheld one guideline addressing cumulative impacts but provided additional direction for interpreting the rule. And the court said one guideline addressing "probable future projects" was invalid but could be remedied with a small wording change. The court also upheld a narrow infill development exemption that environmentalists had contested. The ruling was a victory for the three environmental groups Communities for a Better Environment, Environmental Protection Information Center and Desert Citizens Against Pollution that challenged the Wilson administration's amendments to the Guidelines (14 Cal. Code Reg. 15000 et seq.). On the losing end was the California Building Industry Association (CBIA), which had taken up defense of the amendments. Richard Drury, attorney for Communities for a Better Environment, called the case "the most important CEQA decision in a decade." The losing side was unwilling to go that far, but no one denied that the ruling was important in the continuing evolution of CEQA. "CEQA is here to stay, EIRs are here to stay," said James Moose, a leading CEQA attorney with Sacramento's Remy, Thomas and Moose, which was not involved in the litigation. "It's a big decision, not only because it knocks out these guidelines that were high profile, but also because it addresses these issues that have caused practitioners trouble." Among those issues were ways to address cumulative impacts. The guideline changes attempted to provide more certainty in this area. The unanimous three-judge panel of the Third District struck down most of those changes. The court stated that "one molecule" of change was not the standard for requiring an EIR, but the court also struck down a guideline that allowed a lead agency to find that a project's contribution to cumulative impacts was de minimis and, therefore, did not need further study. "How do you assess?" asked Edward Casey, who represented the building industry. "What test do you use to determine a project's contribution to a cumulative condition? I don't know. We're back to square one. This has always been the toughest part of CEQA law." But Drury praised the court's ruling. So often, he said, environmental documents ignore cumulative impacts. But the issue is important for communities that get pollution from multiple sources, he said. Drury and Moose noted that the court's opinion repeatedly endorsed the "fair argument" standard. Under this standard, if someone can provide a fair argument based on substantial evidence that a project may have a significant impact on the environment, the lead agency must prepare an EIR. "It's a very strong reaffirmation of the fair argument standard," Drury said. "I think that's what the Wilson administration was trying to go after with these guideline revisions." The roots of the case extend to 1998, the most recent time when the Resources Agency revised the CEQA Guidelines (see CP&DR, June 1999, October 1998). The state amended scores of guidelines, but the lawsuit filed by environmentalists challenged only 12 of the changes. Most people believed that they were the 12 most important changes. In mid-2001, Sacramento County Superior Court Judge Ronald Robie (since elevated to the Third District bench) overturned eight of the amendments (see CP&DR Legal Digest, June 2001). The Davis administration declined to appeal the decision, but the CBIA, which had intervened in the lawsuit, did appeal. Environmentalists appealed the decision regarding an infill exemption that Robie had upheld, and the state did defend that part of the case on appeal. In a ruling issued at the end of October, the Third District upheld nearly all of Robie's decision. Guideline 15064(h) encouraged cities and counties to adopt thresholds of significance based on regulatory standards. Under this guideline, if a project's impact was below the adopted threshold of significance, a local agency was directed to determine the impact was insignificant. But the court found this approach too inflexible. "This direction relieves the agency of a duty it would have under the fair argument approach to look at evidence beyond the regulatory standard, or in contravention of the standard, in deciding whether an EIR must be prepared," Justice Rodney Davis wrote for the court. As for cumulative impacts, the appellate court upheld Guideline 15064(i)(3). That rule allows an agency to determine a project's incremental contribution to a cumulative effect as not significant if the project complies with an approved plan or mitigation program. However, the court said, the fair argument standard still applies, meaning an EIR could still be required. The court fully struck down 15064(i)(4) and 15130(a)(4), which allowed a lead agency to determine an incremental contribution to cumulative impacts as "de minimis," meaning no further study was necessary. The court reaffirmed a standard set in Kings County Farm Bureau v. City of Hanford, (1990) 221 Cal.App.3d 692, and in Los Angeles Unified School Dist. v City of Los Angeles, (1997) 58 Cal.App.4th 1019 (see CP&DR Legal Digest, December 1997). The court cited Kings County: "The relevant question to be addressed in the EIR is not the relative amount of precursors emitted by the project when compared with pre-existing emissions, but whether any additional amount of the precursor emissions should be considered significant in light of the serious nature of the ozone problems in this air basin." The court repudiated San Joaquin Raptor/Wildlife Rescue Center v. County of Stanislaus, (1996) 42 Cal.App.4th 608 (see CP&DR Legal Digest, March 1996), which allows agencies to weigh incremental contributions as a ratio. "[U]nder CEQA 21083, under the Guidelines 15355 definition of cumulative impacts and under the Kings County/Los Angeles Unified approach, the need for an EIR turns on the impacts of both the project under review and the relevant past, present and future projects," Justice Davis wrote. "We conclude that Guidelines 15064(i)(4) and 15130(a)(4) are inconsistent with controlling CEQA law because they measure a proposed project's de minimis incremental impact relative to the existing cumulative impact, rather than focus on the combined effects of these impacts." The court also invalidated 15152(f)(2) to the extent it incorporated the de minimis approach. As for defining "probable future projects," the court invalidated 15130(b)(1)(B)2 because it contained the word "or" rather than "and." The court held that a lead agency must refer to all categories of probable future projects, including projects for which an application has been submitted, projects in a capital improvement plan or general plan, projects that are part of a later phase of a previously approved projects, and public agency projects for which money has been budgeted. The court also rejected 15152(f)(3)(c) regarding tiering. The guideline allowed an agency to approve a project that had significant, unavoidable impacts without the agency making findings of overriding considerations if the earlier master or program EIR made such findings. The court held that the public agency must adopt overriding findings every time. Finally, the court upheld 15332, which provides a categorical exemption for infill projects of less than five acres in urban areas if the project would not impact traffic, noise, air quality of water quality. Environmentalists had hoped the court would overturn Judge Robie, who also backed this guideline. The appellate court read the exemption as narrow and noted that qualifying projects must comply with existing general plan, zoning and other regulations. Drury said environmentalists' complaint is not with infill development per se, but with the exemption from scrutiny an argument environmental justice advocates often present. "Even good projects are supposed to undergo environmental review," he said. "In some ways, infill development can impact more people than sprawl development." Deputy Attorney General Marian Moe said the exemption is so tight that "there are very few infill projects that it will apply to." Just about everyone foresees the Third District's decision leading to more litigation. Casey, the builders' attorney, said there will be future battles over how much discretion an agency has when setting thresholds of significance. The extent of the fair argument test also is unclear, he said. Moose predicted further litigation over cumulative impacts. "People are still scratching their heads," he said. The Case: Communities for a Better Environment v. California Resources Agency, No. C038844, 02 C.D.O.S. 10740, 2002 DJDAR 12379. Filed October 28, 2002. The Lawyers: For CBE: Richard Drury, (510) 302-0430. For the state: Marian Moe, Attorney General's office, (916) 322-5460. For the California Building Industry Association: Edward Casey, Weston, Benshoof, Rochefort, Rubalcava & MacCuish, (213) 576-1000.
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