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“It’s Good to be King” – Tom Petty

California Senate Bill No. 174 (SB 174), a budget trailer bill that was passed by the Assembly with amendments on June 26, received Senate concurrence on the amendments the same day, and was enrolled and presented to the Governor the next day (June 27); SB 174 was approved by the Governor on July 2, 2024.  The new law does two noteworthy things relating to CEQA.

State Capitol Renovation Project Exemption

First, SB 174 amends Government Code § 9112, part of the State Capitol Building Annex Act of 2016 (“Annex Act”), to exempt all work performed pursuant to the Annex Act from various laws, including CEQA (see new Gov. Code, § 9112(c)(1)(F)), and makes conforming changes to the State Office Building Act of 2018.This part of the new law grew out of the State’s frustration with, and desire to avoid adverse financial consequences from, CEQA litigation-related delays hindering construction of its project to update the historic State Capitol Complex and Annex.

The Annex Act originally provided for highly expedited CEQA litigation challenges, to be resolved to the extent feasible within 270 days of record certification, but that streamlining provision wasn’t sufficient to stop the massive Capitol Renovation project from hemorrhaging money after project opponents’ litigation gained some traction in the Third District Court of Appeal.  For the better part of the past two years, that appellate court has consistently ruled against the State as to the adequacy of portions of its project EIR and its subsequent efforts to fix that EIR and comply with CEQA.  (For full background on the Third District’s initial rulings finding flaws in the project EIR, see my posts dated January 2 and January 23, 2023; for the State’s most recent litigation setback regarding this project, in which the Third District reversed the trial court’s discharge of its writ of mandate and held the State still hadn’t demonstrated it had remedied its EIR’s deficiencies, see my May 23, 2024 post.)

Now that the State has essentially completely exempted its own project from CEQA, in the midst of continuing litigation over its CEQA compliance, it no longer has to worry about delays caused by any pesky adverse judicial rulings.

Extension of Existing Exemption for Wildlife/Habitat Protection Projects

SB 174’s second significant CEQA-related aspect is its amendment of Public Resources Code § 21080.56 to extend by five (5) years, to January 1, 2030, an existing CEQA exemption for projects that exclusively “conserve, restore, protect, or enhance, and assist in the recovery of California native fish and wildlife, and the habitat upon which they depend” or that “restore or provide habitat for California native fish and wildlife.”  (Pub. Resources Code, § 21080.56(a)(1), (2).)  Projects eligible for the exemption may have incidental public benefits (such as public access and recreation), but cannot include construction activities (except those solely related to habitat restoration), and must “result in long-term net benefits to climate resiliency, biodiversity, and sensitive species recovery” and “include procedures and ongoing management for the protection of the environment.”  (Id., § 21080.56(b)-(d).)  To utilize this statutory exemption, the lead agency must obtain the Director of Fish and Wildlife’s concurrence, based on substantial evidence and best available science, that the above requirements are satisfied, and must promptly file a Notice of Exemption with OPR.  (Id., § 21080.56(e), (g).)

Conclusions and Implications

Amidst cries of hypocrisy by some, the Legislature publicly touted its blatantly self-serving Capitol Renovation project CEQA exemption as saving the taxpayers a lot of money, which is undoubtedly true.  Sadly, but predictably, however, our lawmakers’ own sour experience with CEQA failed to galvanize them to attempt any broader CEQA reform effort.  Instead, it was just more of what Bill Fulton calls “Swiss cheese CEQA,” a California phenomenon well illustrated by the Supreme Court’s recent Make UC a Good Neighbor decision that I blogged on here – i.e., if the Legislature doesn’t like a particular outcome of the CEQA process, it commonly “punches a hole” in the law to prevent that particular result without changing the law’s basic structure and general application.

And so it goes when it comes to CEQA; the Legislature is King and what it says goes.  As mere subjects, those in the regulated community will continue to hope that the king will rule wisely and someday enact comprehensive CEQA reform.

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 more than fifty years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 4th, 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, financing, common interest development, construction, management, eminent domain and inverse condemnation, title insurance, environmental law and land use. For more information, visit www.msrlegal.com.