Meaningful CEQA reform is a topic much discussed by politicians and stakeholders, but its realization remains elusive. For example, in-fill exemptions are fettered with multitudes of complex and convoluted conditions and exceptions to the point of uselessness. In addition, many of the law’s most basic concepts – e.g., standards of review for exemptions; standards for permissible deferred mitigation; requirements for EIR alternatives and cumulative impacts analysis; what constitutes a “project approval,” or the appropriate environmental “baseline” – are unclear and frequently misapplied. And what constitutes an “abusive” or “frivolous” CEQA lawsuit brings much debate among CEQA attorneys. The uncertainty that results from these circumstances can substantially delay, increase the costs of, and ultimately kill even thoughtful, well-designed development projects. Yet CEQA has undeniably protected and improved the quality ofCalifornia’s environment over the last 40 years and reform proposals understandably tend to be viewed with skepticism; many fear “throwing out the baby with the bathwater.”
Along with the law’s inherent broad application and complexity, the “all or nothing” positions often taken by stakeholders contribute to the reform logjam. On the one hand, counsel for CEQA petitioners and environmental advocates may litigate to expand the law’s reach and require even more complex analyses, while viewing every exemption or limitation as a “loophole” that must be “closed.” On the other hand, some development advocates have pushed hard to jettison the “fair argument” test in favor of “substantial evidence” review, even for the lead agency’s initial “potential significant impact” determination. In my view, realistic reform will require a more pragmatic, balanced approach. For instance, while the basic “fair argument” test is likely here to stay, it may also be appropriate to codify the “CEQA-in-reverse” case law, eliminate repetitive analyses, standardize mitigation measures for certain impacts, incorporate robust and clear policy-based exemptions and limitations, and disallow “late hit” administrative comments and evidence.
CEQA standing requirements are a frequently-discussed area of CEQA reform. A recent Second District decision, Chung v. City of Monterey Park (Oct. 23, 2012) 210 Cal.App.4th 394, while not directly presenting the issue, brought to my mind these recurring questions: Can anything feasibly be done to prevent abusive CEQA lawsuits motivated by anti-competitive or economic concerns, rather than genuine environmental concerns? Or would any legislative effort to narrow CEQA’s standing provisions to address this issue prove to be a “cure worse than the disease” by barring too many meritorious actions?
The Second District’s decision affirming a judgment in favor of a defendant city in a CEQA action was unremarkable in holding that government funding mechanisms or fiscal activities not involving a commitment to a specific project that may have environmental impacts are not “projects” subject to CEQA. The case, however, was more notable for its subtext. While the plaintiff (Chung) was a ballot argument sponsor, he may well have been affiliated with or financed by a waste disposal company (Athens) with a long-term exclusive franchise with the City, which was set to expire in 2017; Athens had administratively opposed the project and Chung sued (making the same arguments as Athens) when the City – without CEQA review – submitted a ballot measure to establish a competitive bidding process at 5 year intervals upon expiration of the existing franchise. The measure, overwhelmingly approved by the City’s voters, also gave the City flexibility to award the commercial waste franchise to up to three service providers, a provision Athens and Chung had both asserted would result in potentially significant noise, air quality and road damage impacts (from increased contractor fleet size) requiring CEQA review. After enduring the expense of CEQA litigation at the trial and appellate levels for approximately 2 years, the City’s action – which was designed to promote competition and transparency, and prevent favoritism and corruption in the awarding of public contracts – was vindicated: the City won and the election result stood. However, this decision does not address perhaps a more fundamental question: ifAthenshad either funded or actually filed the suit in its own name, should CEQA allow such a party standing to sue?
What then, if anything, in the way of CEQA reform can be done to prevent abusive lawsuits based on anti-competitive or economic motives rather than genuine environmental concerns? Preliminarily, the law recognizes that economically-motivated CEQA lawsuits are not intrinsically abusive or improper. Few would litigate without “skin in the game.” The Supreme Court has recently confirmed that the traditional “beneficial interest” standing requirement, can be (and often is) satisfied where the interest motivating the lawsuit is purely or primarily economic in nature; e.g., where the writ sought would overturn a law or regulation that will operate to harm plaintiff’s business interest. (Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52 Cal.App.4th 155, 170; see my 10/17/11 post “Supreme Court Reaffirms Corporate CEQA Standing.”) In addition to being a statutory mandate, this “beneficial interest” requirement is logical: when business and property interests are directly affected, these stakeholders – out of their own self-interest – are often engaged “experts” whose input can lead to more thoroughly-vetted and informed decisions.
But what about instances where this basic nexus between the lawsuit’s nominal objective and the plaintiff’s “beneficial interest” is further attenuated or lacking altogether; e.g., when the motivation is to stop a business competitor’s project, or to extract an advantageous business contract like a project labor agreement?
CEQA is clearly not an economic regulation or fair competition law, and the Supreme Court has pointedly admonished that it must not be used as “an instrument for the oppression and delay of social, economic, or recreational development and enhancement.” (Citizens of Goleta Valley v. Bd. of Supervisors (1992) 52 Cal.3d 553, 576.) While reasonable minds may differ as to the desirability of recognizing business competitors’ standing in specific cases, most would probably condemn extortionate lawsuits seeking to leverage the inherent expense and delay of litigation to gain a benefit wholly unavailable under the substantive law even if the plaintiff prevails.
In problematic situations like those mentioned above, CEQA plaintiffs often claim standing under the “public interest” exception to the traditional beneficial interest standing requirement. Courts have recently acknowledged that this exception is not automatic and its availability in individual cases may be limited by public policy requirements. (Save the Plastic Bag Coalition, supra, 52 Cal.App.4th at pp. 169-170 & fn. 5; Rialto Citizens for Responsible Growth v. City of Rialto (4th Dist. 2012) 208 Cal.App.4th 44, 54 [“Public interest standing is not ‘freely available to business interests lacking a direct beneficial interest in the litigation,’ and no party may proceed with a mandamus petition ‘as a matter of right’ under the public interest exception …. In some cases, “ ‘[t]he policy underlying the exception may be outweighed by competing considerations. …’”].) This seems correct – it is fitting that those who claim to pursue environmental litigation in the “public interest” should be held to higher-than-commercial standards to ensure that they will adequately do so.
It would also seem that “public policy” limitations on CEQA standing are uniquely suited to legislative action. A new statute addressing the requirements and limits of the “public interest” exception to the “beneficial interest” writ standing requirement, perhaps prefaced by legislative findings and policy statements condemning improperly-motivated actions, could be a pragmatic and modest step toward meaningful reform addressing abusive CEQA litigation. Such a statute could more firmly establish the “beneficial interest” standing requirement as the rule, and “public interest” standing as a strictly-circumscribed exception, presumptively available only to non-profit groups or individuals with a demonstrated history of actual public interest commitment through environmental advocacy and/or litigation. If a plaintiff cannot demonstrate any beneficial interest – whether environmental or economic – that it would gain directly from the writ its lawsuit seeks, then its claim of litigating in the “public interest” should be subjected to meaningful scrutiny before the case is allowed to proceed focused on whether the plaintiff has a demonstrated record of advocating for environmental concerns with a significant public interest history.
Plaintiff organizations attempting to rely on the “public interest” exception to establish standing could be required to plead with specificity and document their “public interest” history and record and, barring that, the geographical nexus of at least one individual group member to the area allegedly impacted by the project. Respondents could also be expressly provided with tools to explore and test standing allegations at an early stage. For example, extra-record discovery, even if limited, could explicitly be made available to defendants on the standing issue, so that dubious standing claims could be tested and challenged prior to extensive (and expensive) briefing and trial on the merits. The past litigation and environmental advocacy history of organizational plaintiffs could be subjected to scrutiny and exploration, as to environmental and economic motivations, through written discovery and depositions. Where tenuous claims of standing are based on the alleged residency or activities of group member(s), the member(s) (and the relevant documents) should be produced for limited deposition(s). The statute should also prevent “placeholder” lawsuits and “plaintiff-shopping” by expressly requiring that a group with standing bring suit within the statutory limitations period, and that if it relies on an individual member with standing to establish its own, that member must have been a part of the group both at the time the action was filed and throughout the suit.
The potential statutory standing reforms discussed above might merely be modest steps in the direction of comprehensive CEQA reform, but would nonetheless be important ones to help restore credibility to and public respect for an important law that has, unfortunately, too often been abused. Such statutory standing reform would not be an unfair hurdle for meritorious CEQA suits, and would prevent nullification of the salutary beneficial interest standing requirement by strengthening it and denying “public interest” standing to anti-competitive entities blatantly abusing CEQA in service of non-environmental ends.
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 fifty 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.