CEQA at 45

By William Fulton, AICP

This past spring, when the working-class Los Angeles suburbs of Carson and Inglewood were doing battle over which city would be the first to build a National Football League stadium, the biggest question each one faced was not how to pay for the stadiums, which teams would move in, or whether the NFL would approve either deal.

Typical of California real estate development projects, the biggest question was how the cities were going to navigate the intricacies of the California Environmental Quality Act quickly enough to move their projects forward on the NFL's schedule.

A stadium is a huge development project and under CEQA — California's version of the National Environmental Policy Act — it would almost certainly require the preparation of an environmental impact report. An EIR for such a large project would take at least a year and, in all likelihood, cost millions of dollars to complete. The draft EIR would be circulated to all interested parties, who would then make comments that the cities would have to respond to. And in the end, the city or the teams would probably have to provide millions of dollars of "mitigations" — measures to mitigate the impact of the stadium on the community and the environment — which could cripple or sink the project.

Fortunately for the two cities and the NFL, the California Supreme Court had approved a work-around in 2014 — one that had, curiously, been devised by Walmart in a tiny town in Tuolomne County, hundreds of miles away in the Sierra Nevada foothills. Under court interpretations in California, a ballot initiative is not subject to CEQA, because voters have ultimate authority. But under California's century-old initiative process, a ballot initiative proposed by "citizens" could simply be adopted by a city rather than placed on the ballot for voter consideration.

So, just like Walmart in Tuolomne County, stadium backers in Carson and Inglewood rounded up citizens willing to sign ballot initiatives to build the stadiums, and then the two city councils approved the projects rather than actually place the measures on the ballot.

It was a rare "poof, no EIR" moment in California. It showed just how creative people can get these days to try to avoid this seemingly ubiquitous law, and how powerful you have to be to succeed. (San Diego, which is trying to keep the Chargers NFL team from moving to LA, is attempting to ram through the CEQA process quickly in response.)

It's everywhere

Forty-five years after it was signed into law by Gov. Ronald Reagan in 1970, CEQA is still the tail that wags the planning dog in California. There is nothing quite like it anywhere else in America.

It is wound around every planning process and every planning decision. All public plans and private development projects are subject to CEQA analysis, and major plans and projects usually require an environmental impact report, which can add a year or more to the approval process.

EIRs are thicker than the underlying plans and require more time and money to prepare. In business terms, planning consulting firms regard the plans themselves as loss leaders — giving them the opportunity to do the CEQA analysis, where the real money can be made.

Not surprisingly, CEQA is regularly cited by conservative critics who claim that it is the biggest culprit in making California uncompetitive for business — a claim that is sometimes used to scare people elsewhere in the country. Although it is modeled on NEPA — and more than a dozen other states have CEQA-like laws — it is CEQA that is constantly singled out as obstructionist.

Last spring, when he unveiled his new Center for Opportunity Urbanism think tank in Houston, conservative urban pundit Joel Kotkin and his fellow speakers devoted most of the lunch program to a detailed attack on CEQA — this in a city without zoning and a state with no equivalent environmental law and no prospect of passing one.

The quest for change

Reforming CEQA is high on the agenda in Sacramento at the beginning of every legislative session. Gov. Jerry Brown, perhaps the most outspoken environmentalist governor in the country, calls reforming CEQA "the Lord's work." Three of his predecessors — two Republicans and a Democrat — have called for it to be overhauled. Everybody, it seems, complains about CEQA all the time.

Yet except for some nibbling around the edges in the last couple of years, CEQA remains largely unreformed. In the absence of a more logical system, it is the tool that almost everybody uses to gain leverage over development projects, no matter what their goal. NIMBYs, not surprisingly, use it to slow down or kill projects they don't like. (One recent analysis found that 60 percent of CEQA lawsuits target infill development.)

Labor unions have used CEQA repeatedly to try to kill Walmart stores and put pressure on nonunion companies. Cities regularly sue each other under CEQA over traffic issues resulting from development projects. Recently, environmentalists have tried to use CEQA to force California's regional planning agencies to adhere to a target of reducing greenhouse gas emissions 80 percent by 2050 — a policy goal articulated by the last two governors, but not one contained in a state law.

Businesses are not above using CEQA when it suits them. Individual businesses, especially retailers, often use CEQA to slow down or kill development projects that may house their competitors. And business advocacy groups often use CEQA to try to kill new regulations they don't like.

The plastic bag industry has slowed adoption of municipal plastic-bag bans in California largely by filing lawsuits claiming an environmental impact report is required under CEQA. Recently, a group of home builders sued the Bay Area Air Quality Management District, claiming that the agency's new regulations to implement CEQA were deficient because, well, because the agency had not subjected the new regulations to a CEQA analysis.

Mercifully, in that case, an appellate court ruled last year that CEQA does not apply to CEQA. But such lawsuits raise an important set of questions: Does CEQA do more harm than good? Does it truly protect the environment or just slow things down? And where will it all end?

How it got here

To answer these questions, you have to look at the peculiar history of CEQA — and the unusual way the law works. CEQA is not, strictly speaking, an environmental protection law. Like NEPA, it is an environmental review law. It sets up a process that, ideally, puts information about the environmental consequences of government actions in front of the public so that elected officials can make informed decisions about what to do. Over time, it has morphed into what some people call a "mitigation machine" — a law that identifies the "impacts" of a development project and more or less requires a wide variety of costly "mitigations" to lessen those impacts.

The history of CEQA is deeply rooted in the American environmental movement. In January 1969, a blowout occurred on a Union Oil platform in the Santa Barbara Channel and close to 100,000 barrels of oil flowed toward the beaches of Santa Barbara and Ventura. Today this incident remains the third biggest oil spill in American history, surpassed since then only by the 1989 Exxon Valdez disaster and BP's Deepwater Horizon spill in 2010.

The Santa Barbara oil spill is widely regarded as the incident that launched the modern environmental movement. It quickly led to the passage of both NEPA and CEQA. As with NEPA, CEQA must be applied to every "project" that the government "carries out."

In principle, the process is simple. Every government action is subject to CEQA. First, the "lead agency" must determine whether CEQA applies or is subject to one of various exemptions. Second, the agency must identify all of the environmental impacts and determine if they are "significant." And third, if they are significant, the agency must do an EIR that details the impacts and identifies mitigation measures to minimize that impact. (If the impact is not significant, the agency files a "negative declaration" — a declaration in the negative about the impact — which is similar to a FONSI, or Finding of No Significant Impact, under NEPA.)

The CEQA process has always been somewhat cumbersome, hampered by — among other things — vagueness in both the law and implementation. Perhaps most important, significance — an enormous threshold in CEQA — is in the eye of the beholder. There is nothing in the law and little in the state's guidance on CEQA that provides a hard answer to the question of what is significant. A lead agency's determination of what's significant is often a reflection of the agency's underlying attitude about the project.

At first, CEQA applied, as NEPA does, only to actual government construction projects. But in 1972, two years after its passage, in a case called Friends of Mammoth v. Board of Supervisors of Mono County (8 Cal. 3d 247), the California Supreme Court ruled that the issuance of a permit for a private development project constitutes a "project" that is "carried out" by the government.

Few state court cases have had such a wide-ranging impact. Suddenly, CEQA applied not only to public works projects, but to all private building projects as well. It has been a major element in local land-use planning ever since. And in the environmentally friendly era of the 1970s and '80s, environmental and citizen groups used CEQA effectively to stop, slow down, or reshape development projects, largely because of another singular feature of the law: easy access to the courts.

Open door

In most cases, if you want to file a civil lawsuit, you have to have some interest in the outcome. Under CEQA, everyone has standing to sue, so long as they have participated in the administrative hearings. (The flip side is timing: Any lawsuit must be filed within 60 days after the CEQA process has been completed.) This feature of the law, designed to empower citizens as never before, fostered the creation of thousands of citizen groups around the state and launched dozens of law firms to represent them in court. (Despite a lot of publicity, there aren't that many CEQA lawsuits, but both the court rulings and the chilling effect of litigation threat have a vast impact.)

The California legislature has rarely made major changes in CEQA. Rather, most of the changes occurred in the courts, where judges often seemed to find some reason why a CEQA procedure had not been followed or why an EIR was inadequate and, during the '70s and '80s, added to the requirements.

One local planner in Southern California calls the whole CEQA process "Kafka-esque." "These things go to court," he says, "and the judges tell us how we're wrong. But they don't tell us how we can be right." In 1970, an EIR was maybe 15 pages long; by the late 1980s, it was hundreds of pages long.

During this period, CEQA's procedural requirements became so cumbersome that a cadre of very expensive lawyers emerged to interpret them, like biblical scholars interpreting scripture. And environmentalists and NIMBY groups in particular came to view CEQA as a kind of holy bible, rather than a law that could be amended or repealed at any time.

After Friends of Mammoth, the most important shift in CEQA during its first four decades came in 1990, when the California Supreme Court ruled against local citizens in Citizens of Goleta Valley v. Board of Supervisors (52 Cal.3d 553). In this case, which dealt with the construction of what is now the upscale Bacara Resort & Spa on the Goleta coastline near Santa Barbara, environmentalists had argued that the EIR should examine the impact of all possible alternative sites for the resort — essentially refighting the county's general plan land-use decisions. Clearly impatient, the court basically ruled that citizens can't reopen battles over land use that were resolved in local plans and sternly warned lower courts to stop allowing such expansive challenges.

After Citizens of Goleta Valley, CEQA's focus changed, away from direct challenges of projects toward challenges that sought to minimize the impacts by increasing the required mitigations. There was an uptick of lawsuits brought by cities against other cities, lawsuits designed not to kill projects but to extract traffic mitigation money. "CEQA used to be about stopping projects," one CEQA lawyer said not long after Citizens of Goleta Valley. "Now it's about getting money."

CEQA as a mitigation machine was further advanced by the ad hoc invention — later embedded in state law — of the "mitigated negative declaration," which permits a lead agency to avoid an EIR if it undertakes mitigation measures that reduce the impact below the level of "significant."

But if the CEQA mitigation machine reduced the likelihood that projects would get killed, it increased the cost and the uncertainty of getting out from under CEQA requirements. Developers operate off of pro formas; they and their lenders have to make judgments about how long entitlements are going to take and how much they will cost. By essentially requiring a case-by-case analysis of impacts and mitigations each time out, CEQA makes it almost impossible to know costs and timing in advance.

Swimming upstream

CEQA has always been a favorite whipping-boy of the business community, which tends to blame the law every time there's a recession and every time California loses an important company to a neighboring state. But since the Great Recession, pressure to reform CEQA has grown — at the same time that manipulative use of CEQA has increased.

Recent attempts to reform CEQA have fallen into two categories: sweeping, comprehensive change on the one hand, and one-off laws designed to favor certain large development projects on the other.

One-off laws are not new. The master politician Willie Brown, who served as both California Assembly speaker and San Francisco mayor, once rammed a bill through the legislature that simply determined what the mitigation measures required for expansion of San Francisco International Airport would be, no matter what the CEQA-identified impacts were. Gov. Arnold Schwarzenegger repeatedly attempted to get a bill through that would permit the state to exempt or truncate review of a small number of large projects per year, often at the behest of potential NFL stadium developers in Los Angeles.

But the move toward reform grew significantly when Jerry Brown returned as governor in 2011, 28 years after he first left office. As mayor of Oakland in the early 2000s, Brown had been a master facilitator of infill development — and he knew that CEQA challenges, especially over traffic, often killed infill projects. Early in his administration, his advisors recommended that he move toward "two CEQAs" — a kind of a "CEQA-lite" for infill projects and the traditional, more burdensome CEQA approach for greenfield projects. Swimming upstream against entrenched interests in Sacramento who like CEQA for their own reasons, he has made some progress.

In 2012, Brown pushed through a bill to streamline environmental review on infill, but the new law had complicated provisions, including a requirement that the projects conform to the regional Sustainable Communities Strategies adopted as part of the state's greenhouse gas emissions reduction law. As longtime CEQA expert Ronald Bass, AICP, of ICF International put it, the state's new rules on the infill exemption consisted of "streamlining by complexity" — meaning that CEQA had become so complicated over the years that even making it simpler was a complicated process.

A year later, Darrell Steinberg, then the state senate's leader, pushed through another CEQA reform bill, this time combining comprehensive reform with a one-off bill. Realizing he would succeed in passing a bill to streamline CEQA review for Sacramento's new basketball arena, Steinberg negotiated with Brown to include some overall reforms — principally, a proposal to replace the traditional "level of service" traffic standard contained within CEQA with a new standard focusing on vehicle miles traveled, which is more closely aligned with the state's GHG reduction goals.

There's no doubt that many unworthy development projects were killed early on because of CEQA, and many of the millions of mitigation measures all over the state have made things better, though often at a major cost. If a robust public debate about development was part of the original idea behind CEQA, that objective has been accomplished.

Yet comprehensive CEQA reform remains elusive. The law doesn't have many straight-up defenders. The leading CEQA group in the state is the Sacramento-based Planning & Conservation League, which has been vocal about maintaining CEQA in its current form.

"Yes, CEQA has occasionally been used to slow down infill reinvestment for our cities," says PCL board member David Mogavero, a well-known Sacramento architect. "The reform of CEQA, however, does not directly address what is by far the most significant barrier to infill: the distortions in the real estate economy from subsidized sprawl." He proposes that the state focus on sprawl reduction rather than CEQA reform — although, to be fair, California has an enormous body of antisprawl policy outside of CEQA already.

The bigger hurdle to CEQA reform appears to be the blackmail-greenmail aspects of the law, which permit stakeholders to use CEQA to extract money and other concessions from an agency or a developer. Brown is in a tough spot on this issue, because labor unions — which strongly support his governorship — are among those benefiting the most from this use of CEQA.

Meanwhile, environmentalists and NIMBY groups continue to treat CEQA like sacred text, pushing state leaders toward one-off bills to streamline the process for individual projects. Even so, comprehensive CEQA reform could happen. After all, Gov. Brown is calling reform the Lord's work.

William Fulton is director of the Kinder Institute for Urban Research at Rice University and author of the textbook Guide to California Planning. As planning director of San Diego, he was the city official who made final CEQA determinations under the municipal code.

Resources

Images: Top — Illustration by Peter Hoey. Middle — In a familiar sequence, legislation followed tragedy in California. CEQA was passed in 1970, just a year after an oil spill killed thousands of birds and marine animals and befouled Santa Barbara beaches. Photo from Dick Smith Collection. SBHC Mss 56. Department of Special Collections, Davidson Library, University of California, Santa Barbara.