Environmental Impact Reports more likely for small projects

The California Supreme Court recently made it more probable that even small development projects will need costly and time-consuming environmental impact reports (EIRs). It did this by directing lower courts to favor the evidence supporting challenges to these small projects.

Understanding how this happened requires two bits of background: one about how environmental review works; the other about how courts look at regulatory cases.

First, the California Environmental Quality Act (CEQA) requires that agencies evaluate the environmental impacts of most projects before approving them. Projects that could cause significant impacts to traffic or noise, for example, must evaluate those impacts in an EIR that proposes ways to reduce or eliminate the impacts.

Yet the Legislature has exempted some projects. Building a prison in Riverside County, for instance, is easier than you might think. Furthermore, state regulators have exempted certain categories of projects that are unlikely to cause impacts, such as single-family homes and accessory structures.

Conversely, an additional regulation acts as an exception — basically, putting a project back into CEQA — if unusual circumstances could result in an impact.

The second bit of background concerns how courts look at regulatory cases. In a typical civil or criminal case, the judge or jury makes the initial decision about who did what.

The different “burdens of proof” in those cases are well known, such as “beyond a reasonable doubt” in a criminal case. In a regulatory case, however, judges are not the first decision makers. Instead, they are deciding whether to uphold someone else’s decision. In those cases, courts apply a “standard of review.”

The most common standard of review is very deferential to the lower public body: It requires courts to uphold the lower body’s action — for example, a city’s EIR — if it was supported by reasonably credible, relevant evidence.

Berkeley Hillside Preservation v. City of Berkeley, which the California Supreme Court decided in early March, concerned when to require an EIR for a type of project that does not usually harm the environment. The specific project in question was a single-family home.

The Court split the one-sentence regulation in half: Courts will now defer to the lower body, such as a city, in determining whether there were “unusual circumstances” that could cause impacts. However, courts will not defer to the city in deciding whether the project itself could cause impacts.

As to the possibility of project impacts, the court applied the “fair argument” approach taken from a related context: EIRs are required if a court thinks there is enough evidence to support a “fair argument” that there might be an impact.

That sounds like a lot of hair-splitting, and it is. The court itself acknowledged that what shows an impact — reviewed for a minimal “fair argument” — might also show unusual circumstances — reviewed with deference to the city.

It’s easy to see two practical effects of the case. The first effect is yet another increase in the costs of small and routine projects, more of which will now require time-consuming, expensive EIRs. Teams of planners and lawyers have already become necessary for even small developments.

Traditionally, single-family homes were not subject to CEQA because cities and counties had to approve them under objective construction standards. Even so, more and more cities and counties are reserving the right to reject even single-family homes, which in turn subjects them to CEQA. The Berkeley case now makes those projects even more likely to require EIRs.

The time and cost of preparing an EIR is not the only burden. Although the court’s opinion does not address this particular consequence, another line of court opinions makes it almost certain that the builder of the home in the Berkeley case will eventually be ordered to pay for his opponents’ attorneys. Six- (and seven-) figure fee awards have become common.

The second and broader effect is yet another increase in the uncertainties of doing business in California. CEQA, as passed by the Legislature, requires judges to defer to cities. The “fair argument” test that inverts this deference was created by courts, and what suffices as a “fair argument” to require an EIR is very unpredictable.

A neighbor’s comment that he fears a landslide might seem like unsupported speculation to most, but a judge might see it as substantial evidence to support a fair argument. An EIR would be the result.

Readers may recall learning of a recent Census Bureau study concluding that, adjusted for the cost of living, California has the highest poverty rate in the nation. The Berkeley opinion, despite its narrowly technical subject, is just another in a long line that makes these costs and risks a bit worse.

Schulman is an attorney with Hecht Solberg in San Diego, specializing in land use and municipal law.

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1 UserComments
Stuart Hansons 7:26am April 10, 2015

Very good article, especially the last paragraph which puts the decision in a socio-economic context. For the life of me I cannot understand why the courts in this state do not have a better sense of "the big picture" and the effect of their decisions. This is yet another arrow in the back of the small business person -- at least those that are trying to create something tangible to improve the well-being of the average Californian, as opposed to those making a living designing games for the smart phone or advising government (or attacking real estate projects). The rich in Silicon Valley, SF and LA will get richer, the middle class and small business owners will continue to be squeezed down and everyone else will live in high-cost rentals.