On December 17, 2015, the California Supreme Court wrapped up a very active year of California Environmental Quality Act (CEQA) interpretation with its long-awaited decision in California Building Industry Association v. Bay Area Air Quality Management District. The Court addressed a key issue, finding that agencies conducting CEQA review of a project are not required to analyze the impact of existing environmental conditions on the project’s future users or residents, in the absence of a specific statutory mandate. However, the Court confirmed that when a proposed project risks exacerbating hazards that are already present, an agency must evaluate those hazards in light of the project’s impacts.
In 2010, the Bay Area Air Quality Management District (BAAQMD) adopted thresholds of significance for determining when increases in air pollutants from proposed projects are significant in the context of CEQA review, including thresholds for “new receptors”—i.e., workers and residents who will be brought into the project area as a result of the proposed projects. The California Building Industry Association (CBIA) successfully challenged the thresholds in Superior Court by arguing that adoption of the thresholds itself constituted a “project” subject to CEQA review, which had not been performed by BAAQMD. The Court of Appeal reversed on this point and also rejected CBIA’s other arguments, including its claim that the “new receptor” thresholds were invalid because CEQA does not require analysis of the impacts that existing hazardous conditions – here, levels of toxic air contaminants and particulate matter in the project area – will have on a new project’s occupants.
The Supreme Court granted CBIA’s petition for review, but limited the scope of review to the following issue: Under what circumstances, if any, does CEQA require an analysis of how existing environmental conditions will impact future residents or users (receptors) of a proposed project?
The Court’s Ruling
The Court focused its analysis on the correct interpretation of Public Resources Code section 21083, which states that a proposed project may have a “significant effect on the environment,” and therefore require preparation of an environmental impact report (EIR) under CEQA, if the “environmental effects of the project will cause substantial adverse effects on human beings, either directly or indirectly.” The guidelines promulgated by the state’s Natural Resources Agency to assist with implementation of CEQA (“CEQA Guidelines,” 14 Cal. Code Regs. § 15000 et seq.) had interpreted this statute to require an EIR to identify “any significant environmental effects the project might cause by bringing development and people to into the area affected,” and to “evaluate any potentially significant impacts of locating development in other areas susceptible to hazardous conditions (e.g., floodplains, coastlines, wildfire risk areas . . . .” CEQA Guidelines section 15126.2(a) (emphasis added).
The Court held that requiring analysis of the existing environment’s effects on a project, as a general matter, would “impermissibly expand the scope of CEQA,” even if one assumes that CEQA’s definition of “environment” includes the people associated with the project in question: “Despite the statute’s evident concern with protecting the environment and human health, its relevant provisions are best read to focus almost entirely on how projects affect the environment.”
In support of its finding that CEQA generally does not require an evaluation of the effects of existing hazards on future users of a proposed project, the Court pointed out several exceptions to this rule that are specified in the CEQA statute. For example:
existing airport-related hazards must be addressed as part of the CEQA process for projects proposed to be located in the surrounding area (Pub. Res. Code § 21096);
CEQA review of proposed schools must consider certain health and safety risks posed by hazardous emissions from existing hazardous waste sites, freeways, and other potential sources of hazardous emissions (Pub. Res. Code § 21151.8); and
use of CEQA exemptions is limited where future residents or users of certain housing development projects may be harmed by existing conditions (e.g., Pub. Res. Code §§ 21159.21, 21159.22, 21159.23, 21159.24, 21155.1).
The Court reasoned that if the legislature intended for all CEQA review to include the effects of the existing environment on future project users, it would not have included these limited and specific requirements.
Finally, the Court confirmed that – regardless of the rule discussed above – CEQA does require analysis of “existing conditions in order to assess whether a project could exacerbate hazards that are already present” (emphasis added), and upheld the provisions of CEQA Guidelines section 15126.2(a) quoted above as consistent with that rule. However, while giving due deference to the Natural Resources Agency’s interpretation of CEQA, the Court invalidated another portion of section 15126.2(a) as “clearly erroneous and unauthorized” by the Court’s interpretation of CEQA: “An EIR on a subdivision astride an active fault line should identify as a significant effect the seismic hazard to future occupants of the subdivision. The subdivision would have the effect of attracting people to the location and exposing them to the hazards found there.”
This opinion – which is the California Supreme Court’s fourth and final CEQA decision of 2015 – confirms a reasonable interpretation of the CEQA statute that had been followed in a line of Court of Appeal decisions over the last 20 years: CEQA generally only requires analysis of project impacts on the environment, not vice versa. However, the Court’s corollary ruling that a CEQA lead agency must evaluate existing hazardous conditions to determine whether the project “exacerbates” those conditions, will undoubtedly result in significant additional litigation to determine the outer bounds of that obligation.
Looking Ahead to 2016
We anticipate several more key CEQA rulings from the Supreme Court in 2016. Questions currently pending before the Court include whether CEQA is preempted by federal law with respect to rail projects (Friends of the Eel River v. North Coast Railroad Authority, S222472), the standards and scope of judicial review under CEQA (Sierra Club v. County of Fresno, S219783), the standards for subsequent environmental review (Friends of the College of San Mateo Gardens v. San Mateo County Community College Dist., S214061), and whether an EIR for a regional transportation plan must analyze the plan’s consistency with the greenhouse gas emission reduction goals in Executive Order No. S-3-05 (Cleveland National Forest Foundation v. San Diego Assn. of Governments, S223603). Given the current focus on CEQA in the Supreme Court, as well as in the Courts of Appeal, understanding and complying with CEQA’s constantly-evolving mandates will remain a challenge for lead agencies and project proponents for the foreseeable future.