Supreme Court Holds California State University Cannot Avoid Off-Campus Mitigation

August 5, 2015

On Monday, the California Supreme Court issued its opinion in City of San Diego v. Board of Trustees of the California State University, ruling unanimously that the University’s Board of Trustees had failed to adequately mitigate impacts associated with the expansion of campus facilities, in accordance with the California Environmental Quality Act (“CEQA”).  The Board unsuccessfully argued that it could not feasibly mitigate off-site traffic impacts of a campus expansion project without a legislative appropriation made specifically for that purpose.  This case represents the first CEQA ruling since Justices Cuellar and Kruger joined the Court, and marks the latest roadblock in the CSU Board’s $9.9 billion program to expand its campuses statewide.

At issue in City of San Diego is the proposed renovation and expansion of the San Diego State University (“SDSU”) campus, including a new housing development for faculty, staff, and graduate students, a research and instructional facility, the expansion of a student residence hall, a new student union building, and a hotel.  The expansion is expected to enlarge SDSU’s student enrollment by 11,385 and add 1,282 faculty and staff members.  The SDSU expansion was first the subject of a 2005 EIR.  In that EIR, the Board found the proposed SDSU expansion would contribute significantly to cumulative traffic congestion at several off-campus locations.  As was its practice with other campuses, the Board declined, on narrow legal grounds, to contribute its share of the cost of improving those roads and intersections, finding that any contribution for off-site mitigation would amount to a prohibited assessment of state property and an unlawful gift of public funds.  On that basis, the Board concluded that SDSU could not feasibly mitigate the project’s off-site traffic impacts, and certified the EIR based on a statement of overriding considerations detailing the project’s otherwise beneficial nature.

The City of San Diego filed a petition for writ of mandate in superior court challenging the Board’s failure to share in the cost of off-site mitigation.  Contemporaneous to that proceeding, the California Supreme Court decided a related case, City of Marina v. Board of Trustees of California State University (“Marina”), which rejected the Board’s decision not to mitigate off-site environmental impacts arising from the expansion of CSU-Monterey Bay on the same narrow legal grounds—that off-site mitigation would amount to a prohibited assessment of state property and an unlawful gift of public funds.  The Court held that off-site mitigation could not be deemed infeasible on those narrow legal grounds, and that agencies have the duty to mitigate or avoid its projects’ significant effects within the area affected by the proposed project.  In dicta, however, the Court noted one example where the state’s appropriations process might render mitigation infeasible.  As the Court stated, “if the Legislature does not appropriate the money, the power does not exist” to mitigate the impacts of a particular project.  Ultimately, relying on the Supreme Court’s ruling in Marina, the superior court in the San Diego case refused the Board’s same arguments with respect to the SDSU campus expansion and issued a peremptory writ.

Instead of appealing the writ, the Board issued a new EIR for the SDSU project in 2007, once again finding that the proposed project would contribute significantly to off-campus traffic congestion.  For each affected location, the Board estimated the project’s “fair-share contributions” to mitigate the increased congestion, which averaged around 12 percent.  The Board also identified the specific improvements that would mitigate most of the impacts below the threshold of significance.  Perhaps viewing the Supreme Court’s off-handed statement about the appropriations process possibly rendering mitigation infeasible, the Board provided no assurance that it would pay SDSU’s fair share of the mitigation costs.  Instead, citing the dicta in Marina, the Board stated that: “the university’s fair-share funding commitment is necessarily conditioned up[on] requesting and obtaining funds from the California Legislature.  If the Legislature does not provide funding, or if funding is significantly delayed, all identified significant impacts would remain significant and unavoidable.”

In a resolution certifying the 2007 EIR and approving the campus master plan revision for SDSU, the Board found that the project’s significant impacts on traffic could not be feasibly mitigated given its interpretation of Marina, but that overriding benefits justified proceeding despite unmitigated effects.  The City and other regional entities filed a petition for writ of mandate challenging the 2007 EIR.  This time, however, the superior court denied the petition.  On appeal, the court reversed in part, ruling that the Board had erred in relying on Marina to find off-site mitigation infeasible. 

The Supreme Court granted the Board’s petition for review.  While mitigation is often reviewed under the more deferential “substantial evidence” standard, the Court reviewed as a question of law the Board’s finding that mitigation is infeasible without an earmarked appropriation.  With respect to the Board’s reliance on Marina, the Court explained that the case makes clear that the duty to mitigate a projects’ significant impacts attaches not just to the agency’s own property, but “within the area which will be affected by a proposed project,” including off-campus areas.  (Pub. Resources Code, § 21060.5.)  It was “beside the point” that the Board lacked authority to construct improvements in off-campus areas because payment to a third party to perform the acts may represent a feasible alternative.  Despite the Board’s repeated request for a $15 million systemwide mitigation fund for off-site campus development impacts, in no instance had the Legislature acted on this request.  And as the Court explained, “[n]either CEQA itself, Marina, 39 Cal.4th 341, nor any other decision suggests that mitigation costs for a project funded by the Legislature cannot appropriately be included in the project’s budget and paid with the funds appropriated for the project.”  Mitigation is always the rule.  (Pub. Resources Code, § 21002.1(b).)  Additionally, while the Legislature had previously exempted the Board from CEQA’s requirements, it had done so explicitly, and no such exception could be reasonably inferred here.

Finally, the Court repudiated the rule proposed by the Board that fair-share mitigation payments are infeasible unless funded with an earmarked appropriation, noting the unreasonable consequences of such an interpretation.  First, such a ruling would apply to all agencies and would have the unwelcome effect of forcing the Legislature to sit as a standing environmental review board to decide on a case-by-case basis whether state agencies’ projects should proceed despite unmitigated off-site environmental effects.  The Court disagreed that CSU should be treated any differently than another agency because the Board had identified no statute or regulation modifying CEQA requirements for CSU projects.  Second, the practical effect of such a rule would shift costs to local and regional governmental agencies, imposing a financial burden on them not recoverable through other means.  Third, under the Board’s proposed rule, off-site mitigation would likely be found infeasible for many, if not all, state projects that receive non-state funding, and more such projects would proceed without mitigation pursuant to statements of overriding considerations.

While seemingly narrow to the CSU practice of avoiding offsite mitigation through its particular budgeting process, the Court’s ruling further limits the circumstances under which mitigation can be deemed infeasible.  The ruling also adds to the growing list of cases to apply the non-deferential “de novo” standard to review of agency infeasibility findings.  Shortly after deciding to review the City of San Diego case, the Court granted review of a parallel case addressing the same legal issue concerning feasibility of off-campus mitigation in City of Hayward v. California State University Board of Trustees.  Given the unequivocal ruling in the instant case, the Hayward decision is certain to similarly invalidate the Board’s practice with regards to mitigation.