CEQA s Substantive Mandate: When is it Defensible to Find Mitigation or Alternatives Infeasible?

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1 CEQA s Substantive Mandate: When is it Defensible to Find Mitigation or Alternatives Infeasible? Wednesday, May 8, 2013 Opening General Session; 1:00 2:45 p.m. Beth Collins-Burgard, Deputy City Attorney, Carpinteria League of California Cities 2013 Spring Conference Meritage Hotel, Napa

2 Notes: League of California Cities 2013 Spring Conference Meritage Hotel, Napa

3 CEQA s Substantive Mandate: When is it Defensible to Find Mitigation or Alternatives Infeasible? Beth Collins-Burgard, Brownstein Hyatt Farber Schreck LLP May 8, 2013 The National Environmental Policy Act (NEPA) was enacted in The California Environmental Quality Act (CEQA) was enacted the next year in NEPA has been described as a purely procedural statute. Although CEQA certainly also includes extensive procedural requirements, it contains significant substantive mandates that strictly proscribe certain agency actions. This paper provides a summary of the key legal tenets associated with CEQA s substantive mandate, focusing on what agencies must do to comply with CEQA before it can find mitigation or alternatives infeasible. 1. CEQA has a substantive mandate that before approving a project, an agency must mitigate potentially significant environmental impacts when feasible. (a) (b) (c) (d) Not only must an EIR disclose all feasible mitigation, a lead agency must require feasible mitigation measures for significant impacts. (Woodward Park Homeowners Assn, Inc. v. City of Fresno (2007) 150 Cal.App.4th 683, 723 [a lead agency must require feasible mitigation measures for significant freeway traffic impacts, just as it must for other significant impacts. ].) Feasible means capable of being accomplished in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors. [A]n agency is forbidden to approve a project unless it finds there are no significant impacts; or imposes mitigation measures for all significant impacts; or finds mitigation measures infeasible or within the jurisdiction of another agency. (Woodward Park Homeowners Assn, Inc. v. City of Fresno (2007) 150 Cal.App.4th 683, 725 [citing ( 21081(a); Guidelines 15091(a)].) CEQA does not authorize an agency to proceed with a project that will have significant, unmitigated effects on the environment, based simply on a weighing of those effects against the project s benefits, unless the measures necessary to mitigate those effects are truly infeasible. Such a rule, even were it not wholly inconsistent with the relevant statute (id., 21081(b)), would tend to displace the fundamental obligation of [e]ach public agency [to] mitigate or avoid the significant effects on the environment of projects that it carries out or approves whenever it is feasible to do so. (id., (b)). (City of Marina v. Board of Trustees of the California State University (2006) 39 Cal.4th 341.) (e) While the mitigation and feasibility findings typically focus on the feasibility of specific proposed alternatives and mitigation measures, the statement of overriding considerations focuses on the larger, more general reasons for 1

4 approving the project, such as the need to create new jobs, provide housing, generate taxes, and the like. (Concerned Citizens of South Central L.A. v. Los Angeles Unified School Dist. (1994) 24 Cal.App.4th 826, 847.) 2. When approving a project under CEQA, an agency must make specific findings to support any determination that mitigation or alternatives are infeasible. (a) For every significant environmental impact identified in an EIR, the city must make one of three findings (Pub. Resources Code 21081; CEQA Guideline 15091; City of Marina v. Board of Trustees of the Cal. State Univ. (2006) 39 Cal.4th 341, 366.) (i) (ii) (iii) The impact has been mitigated to a level of insignificance; Mitigation measures are the exclusive responsibility of another public agency that has adopted or will adopt them; or Specific economic, social, or other considerations make infeasible the mitigation measures or project alternatives identified in the final EIR. (b) (c) (d) Findings of legal infeasibility reviewed de novo. A finding of legal infeasibility presents a question of law that courts review de novo, without deferring to the agency s own explanation of legal infeasibility. (City of Marina v. Board of Trustees of the Cal. State Univ. (2006) 39 Cal.4th 341, 355.) Other findings of infeasibility reviewed with deferential substantial evidence test. When reviewing a finding of infeasibility on policy grounds, courts apply the substantial evidence test and defer to the agency s judgment regarding how to balance competing concerns. (California Native Plant Society v. City of Santa Cruz (2009) 177 Cal.App.4th 957; Defend the Bay v. City of Irvine (2004) 119 Cal.App.4th 1261, 1269.) Findings of economic infeasibility reviewed under substantial evidence test, but with skepticism. When reviewing a finding of economic infeasibility, courts apply the substantial evidence test, but courts are skeptical when the agency s finding is based largely on statements or information provided by the applicant. (Uphold Our Heritage v. Town of Woodside (2007) 147 Cal.App.4th 587, 598; Save Round Valley Alliance v. County of Inyo (2007) 157 Cal.App.4th 1437, 1461; Preservation Action Council v. City of San Jose (2006) 141 Cal.App.4th 1336, 1456.) (See also CEB, California Municipal Law Handbook ) Practice Tip: These cases suggest that, if a city wishes to reject a mitigation measure or alternative despite its environmental advantages, the city should cite competing policy concerns in support of that decision. If the city wishes to cite economic reasons in support of its finding, the record should reflect that the city has independently investigated the economic feasibility of the environmentally superior alternative. If the city wishes to cite legal reasons in support of its finding, the city should be confident that its legal analysis is correct. Whenever possible and appropriate, the city should cite multiple independent bases for rejecting the mitigation measure or alternative. (Id.) 2

5 (e) Case examples re finding economic infeasibility and rejecting alternatives for failure to meet most of the project objectives: (i) Preservation Action Council v. City of San Jose (2006) 141 Cal.App.4th Lowe s proposed demolition of historic IBM Building. Court found analysis of reduced-size alternative inadequate and rejection of reduced-size alternative (which was the environmentally superior alternative) was unsupported. (1) Lowe s claims smaller store would place it at a competitive disadvantage in a large market such as San Jose due to its inability to meet the demands and requirements of a large market store in terms of throughput and merchandise availability. Record did not contain any data about the size of other home improvement warehouses in the area and not clear about size of reduced-size alternative as compared to Lowe s small market prototype. (2) No evidence that reduced-size alternative would be more expensive to build and stock or that the reduced-size alternative would be operationally infeasible. No meaningful detail or independent analysis of the validity of Lowe s claim that the reduced-size alternative is infeasible. No findings validating claim. Merely being less profitable does not itself render the alternative infeasible unless there is also evidence that the reduced profitability is sufficiently severe as to render it impractical to proceed with the project. (ii) Uphold Our Heritage v. Town of Woodside (2007) 147 Cal.App.4th 587. Steve Jobs proposed demolition of historic mansion. Insufficient evidence of economic infeasibility regarding two alternatives. No proponent, whether wealthy or not, is likely to proceed with a project that will not be economically successful. But if the project can be economically successful with mitigation, then CEQA requires that mitigation, regardless of the proponent s financial status. The question is whether the marginal costs of the alternative as compared to the cost of the proposed project are so great that a reasonably prudent property owner would not proceed with the rehabilitation. Jobs did not submit any estimates or other evidence indicating the likely cost of his proposed replacement home and there is no evidence of the average cost of building a 6,000 square foot home in Woodside, so the record does not support the Council s finding that two alternatives are economically infeasible. (iii) Sierra Club v. County of Napa (2004) 121 Cal.App.4th Beringer Wine Estates proposed developing an integrated winery facility on a 218- acre site. 3

6 (1) Court upheld findings re infeasibility of alternative design due to difficulty and expense of alternative and because the alternative did not meet certain project objectives. [T]here is uncontradicted evidence that the project is the only feasible means of accomplishing Beringer s objectives. a. Objective to put vineyards on the site and irrigate with wastewater resulting from operations. b. Objective to consolidate operations to minimize costs and reduce highway usage. (iv) Association of Irritated Residents v. County of Madera (2003) 107 Cal.App.4th Upheld rejection of reduced cattle herd alternative because economically infeasible and would not achieve the basic objective of the project. [E]limination of all profit and loss of construction financing adequately proves that the reduced-herd-size alternative is not viable. Does not meet objective of providing a livelihood for the owner/manager and his future employees. (v) California Native Plant Society v. City of Santa Cruz (2009) 177 Cal.App.4th 957. City proposed master plan for a greenbelt with trail segments. Four alternatives analyzed, three with different trail scenarios. Court upheld agency s dismissal of environmentally superior alternative because didn t meet key objective of providing an ADA-compliant eastwest connection (out of 10 objectives). Council s ultimate determination that a multiuse east-west connector was a key objective of the project does not undermine the legitimacy of the EIR s alternatives analysis. 3. Practice Tip: When dismissing mitigation or an alternative as infeasible avoid relying solely on economic infeasibility. Rely instead on inability to meet project objectives or other environmental, legal, social, or technological factors that make mitigation or alternatives themselves infeasible. Relying on more than one of these factors whenever possible is recommended. Discuss a reasonable range of mitigation and alternatives in the environmental analysis. Draft findings that explain the basis for finding of infeasibility and include substantial evidence in the record to support those findings. 4. Supreme Court Litigation with California State University Related to Mitigation In recent years, California State University (CSU) has been in a battle with local government over the level and type of mitigation CEQA requires. This battle has resulted in the Supreme Court accepting for review three CEQA cases, described in further detail below. CSU is the largest university system in the United States. CSU s 23 campuses across the state collectively enroll 405,000 students and employ 44,000 faculty and staff. (City of Marina v. Board of Trustees of the California State University (2006) 39 Cal.4th 341, 348.) 4

7 (a) City of Marina v. Board of Trustees of the California State University (2006) 39 Cal.4th 341 On May 13, 1998, CSU Trustees approved a Campus Master Plan on a former Army base property near Monterey Bay, planning an expansion of the campus from 3,800 to 25,000 students. The EIR disclosed that the planned expansion would have significant effects on the local physical environment. While the Trustees agreed to mitigate effects occurring on the campus itself, they disclaimed responsibility for mitigating some effects occurring off campus. In particular, the Trustees refused to share the cost of certain infrastructure improvements proposed by Fort Ord Reuse Authority Act (FORA), the base s new governmental authority that the Legislature formed to assist with the transfer and reuse of the base property. The California Supreme Court directed CSU to vacate its certification of the EIR and approval of the project and set aside its statement of overriding considerations because three of its underlying findings were based on the erroneous legal assumption that the California Constitution precluded it from contributing funds to the FORA for mitigation of the project s environmental effects. The court then noted that CSU had not requested the legislature for off-site mitigation funding because CSU had erroneously concluded that it did not have any responsibility under CEQA to mitigate the off-site environmental effects of its project. The Supreme Court held that (1) CSU had a responsibility under CEQA to mitigate the significant off-site effects of its project, even though it had no legal power to actually construct the off-site improvements, and (2) if CSU could not adequately mitigate significant off-site effects by performing on-campus acts, it could feasibly mitigate those off-site effects by paying a third party to perform off-site mitigation. In its reasoning, the court stated that [A] state agency s power to mitigate its project s effects through voluntary mitigation payments is ultimately subject to legislative control; if the Legislature does not appropriate the money, the power does not exist. (39 C4th at 367.) This language is central to the City of San Diego case discussed below because CSU has relied on it heavily to support its claim that CSU satisfies its burden to mitigate off-site impacts by merely requesting money from the Legislature. If the Legislature does not grant the money or if it appears that the Legislature will not grant the money, CSU claims the mitigation is infeasible. (b) City of San Diego v. Trustees of the California State University Petition for Review Accepted, Fully Briefed In 2005, a Master Plan expansion of San Diego State University was approved by the CSU Board of Trustees and then challenged in litigation. During the litigation, the Supreme Court issued its City of Marina opinion and in reliance on the opinion, the trial court entered judgment against CSU, directing it to set aside certification of the EIR and approval of the project. CSU revised its Master Plan, certifying a final EIR and approving the project in The Master Plan will result in more than 38 significant off-site traffic impacts. Relying on the quote above from City of Marina, CSU made findings that there were no feasible mitigation measures to reduce the project s significant off-site traffic impacts because CSU might not obtain its fair-share of off-site mitigation funding from the legislature and Governor. CSU 5

8 found that its duty to mitigate off-site impacts under CEQA ended with a request for funding from the Legislature. The City of San Diego and San Diego Association of Governments (SANDAG) filed petitions for writs of mandate challenging CSU s certification of the FEIR and approval of the project. The trial court agreed with CSU. The Court of Appeal concluded that the language at issue in City of Marina was dictum because it was not necessary for the holding or disposition. In its briefing to the Supreme Court, CSU claims it is improper for local agencies and the courts to use CEQA as a mechanism to delve into CSU s budget that is the purview of the Legislature. The City, SANDAG, and Amici League of Cities and Association of Counties claim that if CSU relies on lack of budgetary funding, it must provide a factual basis for that finding, especially when CSU itemized the project separately from the mitigation and the project includes a partnership with private developers. (c) City of Hayward v. Trustees of the California State University Petition for Review Accepted, Briefing deferred pending decision in City of San Diego v. CSCU In September 2009, the CSU Trustees adopted a Master Plan for the Hayward campus to add million square feet of new/replaced academic, administrative, and support space, 3,770 new student beds, and up to 220 faculty/staff housing units and increase full time equivalent enrollment from 12,586 to 18,000. The portion of the Court of Appeal s ruling with the largest potential impact on cities relates to the EIR s analysis of fire and emergency medical services. The EIR disclosed that although the Master Plan would require eleven additional firefighters and new or expanded facilities to mitigate the impact to fire and emergency medical services, the project would not constitute a significant environmental impact under CEQA because the construction of a new engine company would not result in a less than significant impact because it would be built on less than an acre in an urbanized area. The City countered that the EIR should analyze the project s impacts to response times and CSU should mitigate that impact by paying for the construction of the facilities. CSU countered, quoting the California Constitution, that fire protection services are the responsibility of local government and local officials and therefore the need for additional fire protection services is not an environmental impact that CEQA requires a project proponent to mitigate. (See Cal. Const., art. XIII, 35, subd. (a)(2).) If the Supreme Court upholds this ruling it could have wide-ranging financial impacts on cities and their ability to collect fire mitigation fees. 6

CERTIFIED FOR PUBLICATION COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

Filed 12/13/11 CERTIFIED FOR PUBLICATION COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA CITY OF SAN DIEGO et al., D057446 Plaintiffs and Appellants, v. BOARD OF TRUSTEES OF