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CEQA Updates

Keeping You Up-to-Date on the California Environmental Quality Act

Posts from August, 2017

California Supreme Court Holds Federal Regulation of State Owned Rail Lines Does Not Preempt CEQA

Monday, August 14th, 2017

In Friends of the Eel River v. North Coast Rail Road Authority, 2017 Cal. LEXIS 5650, the California Supreme Court addressed whether the federal Interstate Commerce Commission Termination Act (ICCTA) preempts the application of the California Environmental Quality Act (CEQA) for a California railroad project governed by the state’s North Coast Rail Authority (NCRA) and operated by a privately leased entity.

NCRA was sued under CEQA for inadequacies in its rail line project EIR. NCRA argued that the line was subject to federal ICCTA regulation instead of CEQA, removed the matter to the Ninth Circuit, and rescinded its EIR. The federal court remanded the matter to state court. The trial court held that the ICCTA preempted CEQA, and the First Appellate District affirmed. In December of 2014, the California Supreme Court granted petitioners’ petition for review as it related to the preemption issue.

The Court examined the ICCTA’s statutory construction and historical background, finding that although the ICCTA contains an express preemption provision and contemplates a unified national rail system, it was intended to combat rail monopolies while minimizing the need for federal regulatory control. The ICCTA expressly allows private rail owners to govern themselves internally via market-based self-correction and corporate bylaws, as long as those internal governances do not conflict with the ICCTA or other federal regulatory agencies. The Court concluded that this freedom to govern a private rail company translates to the freedom to govern state-controlled rail companies as well.

The Court held that the federal interest in railroads does not entirely sweep away the exercise of a state’s regulatory police powers when such regulation merely implicates rail transport, and that it does not follow that any and all state regulations touching on powers that may be federally regulated are preempted. The Court determined that application of CEQA to a public entity charged with developing state property is not a classic regulatory behavior, especially when there is no encroachment on the regulatory domain of the Surface Transportation Board or inconsistency with the ICCTA. Rather, application of CEQA constitutes self-governance on the part of a sovereign state. The Court presumed that Congress did not intend to preempt a state’s adoption and use of the tools of self-governance, or to leave the state without any means of establishing the basic principles under which it will undertake significant capital expenditures. The Court further concluded that ICCTA’s preemption of CEQA would be improper because it would allow the state to start and fund a rail line, but restrict how work is done on the line, unlike private owners.

The Court, relying on analyses of Gregory v. Ashcroft (1991) 501 U.S. 452, Garcia v. San Antonio Metro. Transit Auth. (1985) 469 U.S. 528, and Nixon v. Missouri Municipal League (2004) 541 U.S. 125, held that when interpreting Congressional legislation, there must be unmistakably clear language to establish an intrusive exercise of Congress’ commerce clause powers against a state. The Court explained that when there is the possibility of preemption, the law should be presumed as preserving a State’s chosen disposition of its own power, in the absence of a clear and plain statement from the legislature. The Court utilized the presumption argument to support the view that CEQA is not preempted in this case, and concluded that preemption would interpose improper federal authority between a State and its municipal subdivisions. Particularly, the Court found that it would be improper to preempt the state’s ability to dictate how its own subdivision addresses environmental concerns caused by the state’s own railroad business.

Examining the market participant doctrine, the Court found that the while the doctrine ordinarily is used to analyze preemption when a state interacts with private parties as a participant in a private marketplace for goods, labor, or services, it does not address a state’s ability to govern its own governmental subsidiary. Nevertheless, the Court continued its analysis of the doctrine, and found that because states operating in a private marketplace are subject to the same burdens imposed by Congress on private owners, courts will presume that Congress would afford states, as owners, the same freedoms as private parties. The Court held that the state’s application of CEQA to NCRA’s proceedings can be analogized to a private corporation enforcing its bylaws.

The Court concluded that Congress did not intend to intrude upon state self-governance in this context. The Court found that affirming preemption would commit the state to a one-way ratchet—able to enter the rail business, but unable to require anything of the subordinate agency it set up to carry out the state’s rail initiative.

The Court was careful to establish that CEQA actions might cross the line into preempted regulation if the review process imposes unreasonable burdens outside the particular market in which the state is the owner and developer of a railroad enterprise. The Court also acknowledged that its holding does not mean that the ICCTA has no power to govern state-owned rail lines. State-owned rail lines, like private ones, clearly must comply with STB and ICCTA, and state regulation of rail carriers is preempted by these provisions.

Key Point:

The California Supreme Court found that Congress did not pen the ICCTA to infringe upon state self-governance in a manner dissimilar from private railway owners. Preempting the state’s ability to adopt laws governing its own development schemes would leave the state without the tools necessary to govern its own subdivision. This preemption would deprive the state of the ability to make decisions to carry out the goals the state embraced concerning development projects, including undertaking environmental mitigation or deciding not to undertake a project at all because of its environmental hazards. Although CEQA may be preempted by federal law when it imposes unreasonable burdens on rail line owners, when addressing the competing interests surrounding governance over NCRA’s contested railway, enforcing environmental procedures which California has imposed on itself does not constitute grounds for ICCTA preemption.

Supreme Court Upholds SANDAG Analysis of Greenhouse Gas Emissions; Cautions that it is not a Template for Future EIRs

Monday, August 7th, 2017

In Cleveland Nation Forest Foundation v. San Diego Association of Governments (2017) 3 Cal. 5th 497, 220, the Supreme Court of California held that San Diego Association of Government’s (SANDAG’s) environmental impact report (EIR) for its 2050 Regional Transportation Plan/Sustainable Communities Strategy need not include an analysis of the plan’s consistency with greenhouse gas emission reduction goals of 80 percent below 1990 levels by 2050, established by Executive Order (EO) No. S-3-05, in order to comply with the California Environmental Quality Act (CEQA) (Pub. Resources Code, § 21000 et seq.).

The case originated in 2011, when CREED-21 and Affordable Housing Coalition of San Diego filed a petition for a writ of mandate challenging the adequacy of SANDAG’s EIR under CEQA. The Cleveland National Forest Foundation and Center for Biological Diversity filed a similar petition, in which the Sierra Club and the state Attorney General later joined. Among other things, the complaints alleged that because SANDAG did not use the EO’s 2050 emission reduction goal as a threshold of significance, the impact conclusions within the report were misleading to the public.

The trial court granted the writ of mandate in part, finding the EIR failed to carry out its role as an informational document because it did not analyze the inconsistency between the state’s policy goals reflected in the EO and the transportation plan’s greenhouse gas emissions impacts post-2020. The lower court also found that the EIR failed to adequately address mitigation measures for the transportation plan’s greenhouse gas emissions impacts. In light of these findings, the court declined to decide the other challenges raised in the petitions. SANDAG appealed, arguing that the EIR complied with CEQA in both respects. Cleveland National Forest Foundation and Sierra Club cross appealed, contending that the EIR violated CEQA by failing to analyze a reasonable range of project alternatives, failing to adequately analyze and mitigate the transportation plan’s air quality impacts, and understating the transportation plan’s impact on agricultural lands. The Attorney General separately cross-appealed, arguing that the EIR further violated CEQA by failing to adequately analyze and mitigate the transportation plan’s impact on particulate matter pollution. The Court of Appeal affirmed the lower court’s decision, and concluded that the EIR failed to sufficiently consider feasible mitigation measures and project alternatives that would curb the rise in greenhouse gas emissions.

The Supreme Court recognized that SANDAG updated its RTP/SCS in 2015 (in response to the Court of Appeal’s opinion), and that the updated RTP/SCS included some analysis of the Plan’s consistency with the EO’s 2050 emission reduction goal. Although SANDAG’s 2010 regional transportation plan was superseded, the Supreme Court granted review on the question of whether a transportation plan’s EIR must include an analysis of the plan’s consistency with the EO’s 2050 greenhouse gas emission reduction goal. The Court found that this issue is an important question of law that is likely to recur, and needed to be addressed. The Court held that, in analyzing greenhouse gas impacts at the time of the EIR, SANDAG did not abuse its discretion by declining to adopt the EO as a measure of significance, or to discuss the EO in detail.

In reaching its holding, the Court nevertheless disagreed with SANDAG’s claim that because its role in achieving the EO’s 2050 emission reduction goal is ‘likely small’, the agency could reject the target as a measure of significance. According to the Court, given the global scale of climate change, a long term solution requires the aggregation of many small reductions in greenhouse gas emissions by public and private actors at all levels. The Court found that SANDAG’s response to comments in the final EIR, which stated that the EO is not an adopted greenhouse gas reduction plan and that there is no legal requirement to use it as a threshold, was not dispositive. Although lead agencies have discretion in preparing an EIR, the exercise of that discretion must be based on available scientific and factual data. The EO’s 2050 goal of reducing California’s greenhouse gas emissions to 80 percent below 1990 levels is a reflection of the effort the scientific community believes necessary to stabilize the climate, and the Court stated that this scientific information is important to policymakers and citizens when considering the emission impacts of a project.

Despite these initial observations, the Supreme Court ultimately found in favor of SANDAG, and held that the disputed EIR sufficiently addressed the fact that greenhouse gas emissions under the plan would exceed the EO’s 2050 emission reduction goal. The Court found that divergences between the plan’s projected emissions and the EO goal were readily apparent in the EIR, and did not find the inconsistencies to be omitted, obscured, scattered in appendices, or buried within the text of the EIR. The fact that part of the discussion of greenhouse gas impacts in 2050 appeared in the response to comments section of the final EIR (rather than the original draft) did not invalidate the adequacy of the entire document.

The Court held that SANDAG did not abuse its discretion in declining to adopt the 2050 goal as a measure of significance. Neither the Attorney General nor the other plaintiffs were able to point to guidance on how the 2050 goal translates into specific reduction targets broken down by region or sector, and there are no reliable means to forecast the effect of future state actions to reduce emissions by 2050.

However, in reaching its holding the Court stated that SANDAG’s EIR is not intended to serve as a template for future EIRs. The Court stressed that the holding was in no way an invitation for regional planners to “shirk their responsibilities” under CEQA, and delineated that as more and better data becomes available, regional planners are expected to straightforwardly address such data.

Noting the enactment of SB 32, which codifies the goal of a 40% reduction of greenhouse gas emissions below 1990 levels by 2030, the Court stated that this regulation may clarify the way forward for public agencies to meet the state’s 2050 climate goals in a manner that was not available at the time of the disputed EIR’s drafting. This regulatory clarification, together with improved methods of analysis, may change the manner in which CEQA analysis of long-term emissions impacts is conducted. For this reason, the opinion has narrow application.

The Court reversed the judgment of the Court of Appeal on the issue of the EIR’s analysis of greenhouse gas emission impacts. The Court did not address the remainder of the Court of Appeal’s holding, and remanded to the Court of Appeal for proceedings consistent with the decision.

In dissent, Justice Cuéllar argued that SANDAG’s EIR was not adequately transparent under CEQA and SB 375, and that the regional plan was drafted in disregard to California’s long range greenhouse gas emission and environmental stability goals. The dissent criticized the agency’s response to the issue of increasing emissions over time by burying the discussion “in a nearly 700-page appendix”, and found that approval of SANDAG’s EIR, while narrow in scope, harms not only the future of California’s environmental quality, but also the legal interplay between CEQA and SB 375.

Key Point:

While the decision was widely-anticipated to shed light on how to adequately address climate change in CEQA documents, the Court instead emphasized the narrowness of its holding, noting that it was not a general endorsement of the adequacy of the plan or its EIR, nor did it address whether SANDAG’s responses to the “indisputably significant greenhouse gas impacts” were adequate. The Court went so far as to caution that its decision may not serve as a template for future EIRs, and provided only that planning agencies must ensure that CEQA analyses stay in step with evolving scientific knowledge and state regulatory schemes.