In a published opinion filed August 13, 2013, the First District Court of Appeal, Division Five, reversed a trial court judgment that had invalidated the Bay Area Quality Management District’s (BAAQMD) adoption of 2010 “CEQA Air Quality Guidelines” because BAAQMD did not conduct CEQA review of their potential environmental impacts. (California Building Industry Association v. Bay Area Air Quality Management District (1st Dist., Div. 5, 2013) ___ Cal.App.4th ___, 2013 WL 4083221.) In reinstating the 2010 Guidelines, which set forth new thresholds of significance for GHGs, toxic air contaminants (TACs), and PM2.5 (particulate matter 2.5 microns or less in diameter), the Court of Appeal held that a public agency’s promulgation of thresholds of significance pursuant to the procedures of the CEQA Guidelines is not itself a “project” subject to CEQA review. In so holding, and in rejecting the other arguments offered by plaintiff California Building Industry Association (CBIA) in support of the judgment, the Court touched on several significant CEQA issues, and in the process overturned a substantial CCP §1021.5 attorneys’ fee award to CBIA since it was no longer a successful party.
BAAQMD’s 2010 Guidelines set forth thresholds “represent[ing] the levels at which a project’s individual emissions of criteria air pollutants or precursors would result in a cumulatively considerable contribution to the [Bay Area]’s existing air quality conditions” and also suggest to lead agencies methods for assessing and mitigating significant impacts. For land use development projects, operational emissions generally will not be deemed to have significant impacts if the project complies with a qualified GHG Reduction Strategy consistent with AB 32’s goals, or produces annual carbon dioxide equivalent (CO2e) emissions of less than 1,100 metric tons per year, or 4.6 metric tons of CO2e/per service population (residents and employees)/per year. In addition to setting daily emissions thresholds for construction and operations, the 2010 Guidelines set significance levels for TACs and PM2.5 based on projected cancer risks to persons who would be living or working on the project site or in the area; for example, “significance will be found if the cumulative emissions from all TAC sources within 1,000 feet exposes receptors to an increased cancer risk greater than 100 in a million, or if the TACs from any single source within 1,000 feet exposes receptors to an increased cancer risk of greater than 10 in a million.” Further, “[a]t the level of general and specific plans, the TAC thresholds set overlay “buffer” zones around existing and planned sources of TACs and within 500 feet of all freeways.” CBIA successfully challenged these thresholds in the trial court claiming, among other things, that they could have the adverse environmental effect of discouraging infill development and displacing it to other areas, creating suburban sprawl, and that such potential impacts required CEQA review prior to adoption.
Key points of the Court of Appeal’s decision rejecting CBIA’s arguments and upholding BAAQMD’s 2010 Guidelines include:
- Whether an action is a “project” under CEQA “is a question of law to be decided de novo based on undisputed evidence in the record.”
- BAAQMD’s thresholds were not a “project” subject to CEQA review because “the CEQA Guidelines establish the required procedure for enacting generally applicable thresholds of significance … and a prior CEQA review of the thresholds is not a part of this procedure.” CEQA Guidelines section 15064.7(b) “provides [only] that thresholds of significance must be formally adopted through a public review process and supported by substantial evidence if … they are to be placed in general use. It does not additionally require an EIR or other CEQA review as a prerequisite for promulgating a threshold [because to do so, according to the Court]… would largely duplicate the public review process and substantial evidence standard set forth [therein].”
- “[I]t is difficult to see how th[e] information [provided in an EIR] would have substantially differed from what the District considered during the public review process it undertook before promulgating the Thresholds … . Requiring an EIR in addition to the process already in place would result in a duplication of effort, at taxpayer expense and to little if any purpose.” According to the Court, “[w]hile the definition of a “project” under CEQA is broad [citation], it should not be stretched so far as to require CEQA review in addition to the public hearings and substantial evidence standard already required … under … section 15064.7.”
- Alternatively, the Court held that even assuming section 15064.7 did not entirely define the enactment process, BAAQMD’s 2010 thresholds were not a CEQA “project” because they did not effect a “direct” or “a reasonably foreseeable indirect physical change in the environment.” (Pub. Resources Code, §21065; 14 Cal.Code Regs., §15378(a).) Changes that are only “speculative or unlikely to occur” are “not reasonably foreseeable” (14 Cal.Code Regs., §15064(d)(3)), and CBIA’s asserted “displaced development” impacts fall into this category. According to the Court, “[w]hile such a scenario is possible, it is too attenuated and speculative to be reasonably foreseeable, and it does not require CEQA review prior to the promulgation of the Thresholds themselves.”
- In bolstering this conclusion, the Court observed: “Teasing out the extent to which undefined future projects might be built or abandoned as a result of the Thresholds, and the extent to which land development projects might be relocated to a more suburban location, would require a prescience we cannot reasonably demand of the District. No public agency other than the District is committed to using the Thresholds, and the District does not act as the lead agency for the type of residential and commercial projects CBIA alleges will be displaced. Moreover, the Thresholds are not conclusive even when they are used by another agency; they simply set the levels at which an environmental effect will normally be deemed significant or insignificant.”
- Observing that remand would serve no useful purpose because “an appellate court’s role in a CEQA case is essentially the same as the trial court’s,” the Court of Appeal addressed additional issues raised by CBIA in support of the judgment but left unaddressed by the trial court. The most interesting of these was the so-called “CEQA-in-reverse” issue that has received revived case law attention in recent years. (See “From Baird To Ballona Wetlands: CEQA’s Logical Limits,” by Arthur F. Coon, posted 12/14/11.) Specifically, the Court addressed CBIA’s argument that “a CEQA analysis that applies the thresholds would consider both the effect of the pollution the project will create and the effect of existing pollution on the project and its future occupants” and that the Thresholds are therefore invalid because “CEQA does not require analysis of the impacts that existing hazardous conditions will have on a new project’s occupants.”
- While the Court of Appeal recognized and discussed at some length the “quartet of cases concluding an EIR is not required for a proposed project based solely on the effect of the environment on people who will live and work at the site of the project[,]” it found that it “need not decide whether Baird, Long Beach, SOCWA, and Ballona were correctly decided or whether, as a general rule, an EIR may be required solely because the existing environment may adversely affect future occupants of a project.” Because “CBIA’s challenge to the receptor thresholds as unauthorized by CEQA are [sic] analogous to a claim [that] a statute or regulation is unconstitutional on its face” the facial challenge could not succeed unless the 2010 Guidelines “present a ‘total and fatal conflict’ with the relevant CEQA provisions or will be unauthorized ‘in the vast majority of [their] applications.’” CBIA did not meet its burden under this standard; as the Court concluded “[t]he receptor thresholds are not facially invalid because the case law cited by CBIA does not bar their application in all or even most cases.”
- Accordingly, in putting off to another day its decision on “CEQA-in-reverse” analysis, the Court stated: “Because the receptor thresholds are not invalid on their face, it would be inappropriate to set them aside. The continuing validity of Baird et al is better reserved for a case in which the receptor thresholds have actually been applied to a project.” (Finally, in disposing of remaining issues, the Court held: “CBIA has not carried its burden of establishing the levels for cumulative and single-source TAC emissions were arbitrary or unsupported by substantial evidence.”)
The First District’s pragmatic opinion is interesting in numerous respects, and adds support for the hypothesis that appellate courts may be actively limiting CEQA’s scope in absence of meaningful legislative reform. (See “Are Courts Actively Limiting CEQA’s Scope In The Absence of Meaningful Legislative Reform?” by Arthur F. Coon, posted on 8/31/12.) It is, perhaps, ironic that CBIA’s loss in this case may actually be viewed as a “win” in some ways for CEQA reform. While CEQA’s Guidelines contain limited exemptions for regulatory actions designed to protect the environment and natural resources (see, e.g., “First District Holds CEQA Categorical Exemptions For Regulatory Agency Actions To Protect The Environmental Apply To Marin County’s Plastic Bag Ban Ordinance, Recognizes Case Law Split On Standard Of Review For Exemptions,” by Arthur F. Coon, posted 8/5/13), those were not in play here and the Court went even further in holding that a public agency’s promulgation of generally-applicable thresholds of significance aren’t even a “project” on CEQA’s radar screen, due to the essentially preemptive effect of a CEQA Guideline establishing adoption procedures. In reaching its holding, which basically treats the Guidelines’ prescribed process for adoption of thresholds of significance as the equivalent of an across-the-board, partial certified regulatory program for all lead agencies, the Court invoked the Supreme Court’s admonition calling for “common sense … at all levels of CEQA review.” Rough translation: the Court thinks “enough is enough,” CEQA goes too far when even the adoption of non-mandatory, environmentally-protective thresholds of significance becomes ensnared in CEQA review requirements and resulting litigation. Further, the Court’s opinion explicates limits on the concept of “reasonable forseeability” that will tend to limit correspondingly CEQA’s scope and reach. The Court’s artful dodge of the “CEQA-in-reverse” issue — after thoughtfully discussing all the relevant cases — allowed it to reach the desired result of reinstating the 2010 BAAQMD thresholds based on CBIA’s failure to meet its heavy burden on a “facial” challenge, while allowing CBIA and others to “fight another day” by raising the issue in future “as applied” challenges. While this decision may suggest the vitality of the “CEQA-in-reverse” cases is an open issue, its discussion on the point appears to be intellectually honest and even handed, and does not “tip the Court’s hand” either way on the merits of that important issue. Overall, whether it is right or wrong on the “project” issue, and while the CBIA may well disagree, the Court’s opinion seems to me to reflect a reform-minded approach tempered by caution, along with, perhaps, a circumspect recognition that including too much judicial CEQA reform in one opinion runs the risk of being viewed as “judicial activism.”
Questions? Please contact Arthur F. Coon of Miller Starr Regalia. Miller Starr Regalia has had a well-established reputation as a leading real estate law firm for over forty-five years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 3d, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. The firm has expertise in all real property matters, including full-service litigation and dispute resolution services, transactions, acquisitions, dispositions, leasing, construction, management, title insurance, environmental law, and redevelopment and land use. For more information, visit www.msrlegal.com.