“The more I know, the less I understand/All the things I thought I’d figured out, I have to learn again” – Don Henley, “The Heart of the Matter”

One of CEQA’s bedrock principles is that environmental review must precede project approval.  (E.g., POET, LLC v. California Air Resources Board (2013) 217 Cal.App.4th 1214; CEQA Guidelines, § 15004(a).)  To reverse the order and “put the cart before the horse” would be anathema, i.e., to sanction uninformed and undemocratic lead agency decision making, and to encourage irretrievable commitments of resources and post-hoc rationalizations that foreclose mitigations and alternatives and sweep environmental considerations under the rug.  Right?  Well …  maybe not.  In the area of State Water Resources Control Board (“SWRCB” or the “State Board”) water quality certifications (“WQCs”) under the Federal Clean Water Act (“CWA”; 33 U.S.C § 1251 et seq), this bedrock principle appears to have been watered down, and it may be significantly eroding under pressure from a preemptive federal law deadline.

Two recent developments, one judicial and the other legislative, suggest this conclusion.  The judicial development was the First District’s December 29, 2020 published decision in Santa Clara Valley Water District v. San Francisco Bay Regional Water Quality Control Board (2020) 59 Cal.App.5th 199, a case which I posted on here, and in which the remittitur was quietly issued on March 2, 2021, with no petitions for review or requests for depublication having been filed.  As noted in my post, the case involved unique – apparently aberrational – facts and circumstances.  As relevant here, the Court held that the responsible agency regional board (the SWRCB’s agent) was not barred from completing CEQA review, and imposing additional mitigation requirements based on that review, on the lead agency water district’s approved flood control project.  The board did so in the form of waste discharge requirements (“WDRs”) imposing substantial additional compensatory mitigation obligations on the district, which were issued long after the board had issued its first discretionary approval – a WQC – for the project.

Of course, this flies in the face of the bedrock CEQA timing principle mentioned above, as well as the generally understood CEQA rules governing the role and limited options of responsible agencies.  (CEQA Guidelines, § 15096(e).)  The First District nonetheless upheld this “second bite” at the “CEQA apple,” under CEQA’s “savings clause” (Pub. Resources Code, § 21174), despite what it termed the board’s “apparent violation of CEQA” by issuing the CWA § 401 WQC prematurely, under political pressure to allow rapid completion of the district’s project to protect a new BART station and avoid a loss of federal funding.  The Court opined that, “whatever the flaws in its CEQA procedure,” the regional board’s WDRs were validly issued under its independent Porter-Cologne Act authority, and that CEQA Guidelines § 15096 didn’t and couldn’t limit that independent authority, which was preserved by CEQA’s “savings clause.”  It appeared to recognize, however, that the case before it was not the norm, stating it could not be presumed that other responsible agencies would not carry out their CEQA duties properly and in good faith in future cases based on the decision, and pointing out that the board could have been (but wasn’t) sued by a third party CEQA enforcer to prevent it from unlawfully splitting its CEQA review as it did into two stages.  The Court also pointed out that the district had agreed to the board’s procedural CEQA violations.  So, while upholding the board’s WDRs, the Court also made clear it did not sanction the board’s granting of a discretionary WQC approval prior to full CEQA compliance.

The recent legislative development on the topic, however, takes things a step further:  California’s Legislature seeks not only to excuse, but to affirmatively authorize the CEQA noncompliance scenario addressed by the Court.  A statutory amendment to the Water Code, not mentioned in the First District’s opinion, but quietly passed as part of an omnibus budget trailer bill (Cal. Stats., A.B. 92, ch. 18, § 9) that became effective on June 29, 2020, adds further murk to these already-clouded legal waters.  In essence, it tries to institutionalize the unusual process addressed in the First District’s opinion by amending Water Code § 13160 such that it now reads in relevant part:

. . . .

(b)(1)  The state board is authorized to give any certificate or statement required by any federal agency pursuant to the [CWA] or any other federal water quality control law that there is reasonable assurance that an activity of any person subject to the jurisdiction of the state board will comply with applicable requirements of the federal law or any other appropriate requirements of state law.

(2)  The state board may issue the certificate or statement under paragraph (1) before completion of the environmental review required under [CEQA] if the state board determines that waiting until completion of that environmental review to issue the certificate or statement poses a substantial risk of waiver of the state board’s certification authority under the [CWA] or any other federal water quality control law.  To the extent authorized by federal law, the state board shall reserve authority to reopen and, after public notice, an opportunity for comment, and, when appropriate, an opportunity for a hearing, revise the certificate or statement as appropriate to incorporate feasible measures to avoid or reduce significant environmental impacts or to make any necessary findings based on the information provided in the environmental document prepared for the project.

(c)  The state board is authorized to exercise any powers delegated to the state and carry out any program a state is authorized to administer under the [CWA] and any amendments to that act.

(Emph. added, bracketed text added to replace Act titles and citations.)

Is it really better to rewrite CEQA’s fundamental rules than to require the SWRCB to complete its CEQA review and act on WQCs within the one-year federal deadline?  The First District held it “may be correct” that the regional board’s purported rescission and reissuance of the 2016 CWA § 401 WQC certificate in the case before it was invalid because it violated the federal CWA’s one-year time limit (33 U.S.C. § 1341(a)(1)), although the Court found it need not reach this issue to uphold the validity of the board’s subsequent WDRs issued under independent Porter-Cologne Act authority.  I’d venture to say it is undoubtedly “correct” under preemptive federal law that a WQC issued (or “revised” and “reissued”) past the one-year deadline is invalid, or at least not legally binding to the extent it purports to condition project approval.  The new state statute suggests that a reissued, revised WQC issued after expiration of the federal deadline might somehow pass legal muster “[t]o the extent authorized by federal law” and it directs, to that extent, that “the state board shall reserve authority to reopen . . . and revise the [WQC] or statement” after it completes CEQA review.  Setting aside the substantial federal preemption issue the statute raises, this “cart before the horse” approach clearly violates the bedrock state law principles that CEQA compliance must precede project approval and that CEQA review cannot be split or piecemealed, as well as the normal rules governing responsible agencies.  A law authorizing such a significant departure from the fundamental requirements of California’s signature environmental law should never be enacted lightly or without due consideration; but the Legislature’s passage of such an ostensibly significant CEQA exemption in the midst of a national pandemic, and as part of an “under-the radar” budget trailer bill, makes it all the more remarkable.

What about the looming federal preemption issue?  Some guidance will hopefully be forthcoming on that front in the not-too-distant future from the California Supreme Court.  Among the fully briefed cases before it now awaiting scheduling of oral argument is County of Butte v. Dept. of Water Resources, S528574 (39 Cal.App.5th 708).  (My previous posts on the Court of Appeal’s decision and the Supreme Court’s grant of review can be found here and here.)  According to the Pending Issues Summary on the Supreme Court’s website, one of the issues to be addressed in that case is:  “Does the Federal Power Act preempt state court challenges to an environmental impact report prepared under [CEQA] in order to comply with the federal water quality certification [requirement] under the federal Clean Water Act?”  The underlying Court of Appeal opinion’s federal preemption holding and analysis were supported, in part, by reasoning based on the limited authority granted to states under the CWA’s § 401 WQC process, which authority must be exercised within a reasonable time not to exceed one year, or it is deemed waived.  While California agencies are (in theory, at least) supposed to be able to complete EIRs within a one-year time limit – which is consistent with the federal deadline for WQCs – that CEQA deadline is merely “directory,” notoriously difficult to enforce, and is too often “honored in the breach.”  (See, Sunset Drive Corp. v. City of Redlands (1999) 73 Cal.App.4th 215, 221-223, 225; Schellinger Bros. v. City of Sebastopol (2009) 179 Cal.App.4th 1245; see also Pub. Resources Code, § 21151.5 [requiring that local agencies establish time limit not to exceed one year for completion and certification of EIRs].)  The recent Water Code amendment appears to implicitly recognize as much by proposing to compromise more fundamental CEQA rules in the ostensible interest of accommodating state agency delay or inefficiency.  Nonetheless, the supremacy clause may ultimately foil its scheme:  the federal time limit for WQCs seems to have real teeth that not even CEQA, the California Supreme Court, or the California Legislature may be able to evade.  In any event, it should be interesting to see how all this ultimately plays out, and what the real legal rules in this area are determined to be once the presently murky legal waters clear.


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.