The Vision California project, an effort funded by the California High-Speed Rail Authority in partnership with the California Strategic Growth Council, released its first report entitled “Charting Our Future” on June 23, 2010. The report discusses how changes in land use and infrastructure decisions can result in positive benefits for the State, its economy, and the environment.

The report compares “Business as Usual” and “Growing Smart” future scenarios. The Business as Usual scenario combines the trend in past land use decisions with assumptions about modest improvements in energy and water efficiency. On the other hand, the Growing Smart scenario paints a future of increased urban infill and compact growth. The report concludes that the Growing Smart scenario has a higher positive impact on the environment and our wallets, noting that the Growing Smart future reduces annual household costs for gas, auto maintenance and household utility bills by 45% in 2050.

The Vision California project seeks to explore the role of land use and transportation investments in meeting the environmental, fiscal, and public health challenges facing California over the coming decades. One of the major goals of the project is to clearly link land use and infrastructure priorities to the mandated targets set by AB 32, SB 375, and the California Air Resources Board.

A copy of “Changing Our Future” can be found at: www.visioncalifornia.org

In San Diego Navy Broadway Complex Coalition v. City of San Diego (June 17, 2010, Case No. D055699 ) 185 Cal.App.4th 924, the Court of Appeal, Fourth Appellate District, held that the City of San Diego was not required to prepare a subsequent or supplemental EIR to address a redevelopment project’s potential impact on global climate change. The court based its ruling on a finding that the approving agency lacked the discretion to address this particular issue, even though it had limited discretion over aesthetic issues.

The City of San Diego certified an EIR in 1992 for the Navy Broadway Complex Project, the redevelopment of a U.S. Navy administration site in the downtown area and, at the same time, entered into a development agreement for the project. The agreement established a development plan and design guidelines; it further provided that the developer must submit its construction documents to the City for a determination of consistency with the aesthetic criteria in the development plan and urban design guidelines. Later, in 2007, the City reviewed the developer’s plans, found they were consistent, and concluded that no further environmental review was necessary under CEQA. San Diego Navy Broadway Complex Coalition filed a petition for writ of mandate, claiming that the City was required to update the project’s EIR to address various impacts, including global climate change.

The court rejected this claim. It began by pointing out that once an EIR has been certified for a project, CEQA contains a “strong presumption” against further review. When additional discretionary actions are undertaken in the future with respect to the project, additional environmental review is required only when the circumstances set out in Public Resources Code section 21166 are present.

The most important part of the court’s holding dealt with the scope of potential review under section 21166. In evaluating whether there are changed circumstances warranting further review, the court held that the analysis should be informed by the scope of the agency discretion.

The court pointed to a line of case law starting with Friends of Westwood, Inc. v. City of Los Angeles (1987) 191 Cal.App.3d 259, holding that CEQA’s review was limited to discretionary projects, as opposed to ministerial projects. The Supreme Court embraced this line of reasoning in Mountain Lion Foundation v. Fish & Game Com. (1997) 16 Cal.4th 105, 117, wherein the Court explained that the limitation of CEQA to discretionary projects “implicitly recognizes that unless a public agency can shape the project in a way that would respond to concerns raised in an EIR… environmental review would be a meaningless exercise.” Thus, under Friends of Westwood cases following it, the discretion that triggers CEQA review must be of a kind that allowed an agency to deny or condition a project to address environmental issues. But Friends of Westwood and Mountain Lion Foundation dealt with whether a project was subject to CEQA in the first instance, not the scope of subsequent or supplemental review under Public Resources Code section 21166.

The court in San Diego Navy Broadway Complex Coalition extended the reasoning of Friends of Westwood and Mountain Lion Foundation to the context of 21166 to hold that, essentially, there must be a nexus between the scope of the agency’s remaining discretion over the project and the changed circumstances that might otherwise trigger environmental review. In this context, the court held: “The exercise of discretion does not automatically qualify an agency action as a project subject to CEQA. To trigger CEQA compliance, the discretion must be of a certain kind; it must provide the agency with the ability and authority to ‘mitigate environmental damage to some degree.’” Thus, in making a determination under section 21166 regarding the extent of the subsequent review that should be prepared, if any, petitioners may no longer be heard to argue that (1) there is a discretionary action and (2) there are changed circumstances, now go forth and study those changed circumstances in a new environmental document. Rather, in order to mandate further environmental review under CEQA section 21166, the San Diego Navy Broadway Complex Coalition case provides that there must be a nexus between those two factors.

In this case, where the scope of the City’s discretionary action was limited to aesthetic concerns, the court held that the City was not required to engage in further environmental review to evaluate the changed circumstances related to global warming in as much as there was no established nexus between the City’s discretion and the stated changed circumstances; while the City may have discretion as to aesthetic issues, this does not “establish that [the City] exercised any discretionary authority to mitigate the Project’s impact on global climate change.”

The Coalition has not argued on appeal that in exercising discretion in determining whether [the project was] consistent with the design plan and … design guidelines, the [City] could consider the impact of the Project on global climate change, and we see no basis for such an argument. Absent such a showing, there is no basis for requiring the City to conduct environmental review of an issue as to which it would have no authority to respond.

The court concluded that, under these circumstances, environmental review of global climate change would be a “meaningless exercise.”

The California Secretary of State has qualified an initiative for the November ballot that would delay enforcement of the Global Warming Solutions Act, more commonly known as AB 32, until certain prosperous economic conditions are observed. In substance, AB 32 requires the state to reduce emissions of certain greenhouse gases to 1990 levels by 2020 and charges various agencies with achieving that goal through various means. The initiative would suspend AB 32 until California’s unemployment rate drops to 5.5% or less for four consecutive quarters. The initiative specifies that, during the suspension, state agencies would be prohibited from implementing AB 32, and all regulations previously adopted under AB 32’s aegis would be void and unenforceable. Initiative proponents argue that AB 32 would increase energy costs and hurt businesses, something that will lead to lost jobs at a time when California’s unemployment rate is already above 12%. Opponents argue that the initiative is a boon to oil companies and an obstacle to developing a clean energy industry and that the initiative is funded largely by out-of-state interests, including out-of-state oil interests.

As a practical matter, it should be noted that the economic conditions that are cited in this initiative have rarely occurred in California’s history. The last time that the unemployment rate in California was below 5.5% was in 2007. According to the California Employment Development Department, there have been three periods since 1976 when unemployment in the state remained below 5.5% for four or more quarters:
• January 1988 through December 1989
• October 1999 through June 2001
• October 2005 through June 2007

Thus, the initiative if passed could arguably be described as an attempt to permanently defeat AB 32 rather than merely suspending it.

In Butte Environmental Council v. United States Army Corps of Engineers (9th Cir. 2010) 607 F.3d 570, Butte Environmental Council sued the Army Corps of Engineers, the Fish and Wildlife Service, and the City of Redding over their decisions to permit a proposed business park in Redding that would destroy 234.5 acres of critical habitat along Stillwater Creek in Redding. Specifically, the Council challenged the Corps’ decision under the Administrative Procedure Act to issue a Clean Water Act section 404 permit for the project and the FWS’s biological opinion that the project would not adversely modify critical habitat for endangered and threatened species.

Endangered Species Act Challenges. The Ninth Circuit, like the district court, upheld the FWS’s determination that the project would not result in the “adverse modification” of critical habitat. The Court first rejected the Council’s argument that the FWS applied an improper definition of “adverse modification” and thus failed to account for “recovery needs” of the affected species as required by Gifford Pinchot Task Force v. U.S. Fish & Wildlife Service (9th Cir. 2004) 378 F.3d 1059.). Gifford Pinchot found fatally flawed a critical habitat analysis that relied on an unlawful regulatory definition of “adverse modification” set out in 50 C.F.R. 402.02. (See Gifford Pinchot, 378 F.3d at p. 1070 [taking issue only with the use of “and” instead of “or” in the regulatory definition of “adverse modification”].) In rejecting the Council’s argument, the Court pointed to the FWS’s statement in the biological opinion that it did not rely on the flawed definition of “adverse modification” of critical habitat set out in 50 C.F.R. 402.02, but instead, relied upon the statute and the decision in Gifford Pinchot for its analysis with respect to critical habitat. In reaching this conclusion, the Court noted that nothing in the biological opinion suggested otherwise.

In perhaps the most significant ruling in the case, the Court explained that Gifford Pinchot did not alter the rule that “‘adverse modification’ occurs only when there is ‘a direct or indirect alteration that appreciably diminishes the value of critical habitat.’” The Court explained that “critical habitat can be destroyed without appreciably diminishing the value of the species’ critical habitat overall.” Therefore, the Court held that FWS’s determination that, while critical habitat would be destroyed, no “adverse modification” would occur because only a very small percentage of the total critical habitat for the affected species would be eliminated. FWS in the biological opinion explained that the affected 234.5 acres of critical habitat along Stillwater Creek in Redding, California would amount to only 0.04% of the vernal pool fairy shrimp’s 597,821 acres of total critical habitat nationwide and only 0.10% of the vernal pool tadpole shrimp’s 228,785 acres of total critical habitat nationwide.

Clean Water Act Challenges. The Court also held that the Corps decision to issue a 404 permit for the project was neither arbitrary nor capricious. First, the Court concluded that the Corps properly applied 40 C.F.R. § 230.10(a)(3), the regulation that applies to non-water dependent activities. That regulation states that, where a proposed activity is not water dependent, “practicable alternatives that do not involve special aquatic sites are presumed to be available, unless clearly demonstrated otherwise.” The Court held that the Corps applied the proper presumption and found that it was rebutted under the appropriate standard. The Corps’ had determined that the project was not water dependent, but that, based on a review of over a dozen alternative sites, the City had “clearly demonstrated that there are no practicable alternative sites available.”

Second, the Court rejected the Council’s argument that the Corp’s decision to issue the permit was inconsistent with its earlier criticisms of the project in an Environmental Impact Statement. The Court concluded that the Council’s argument ignored evidence in the record that the City modified the project to address the Corps’ early criticisms. The Court also stated that agencies are entitled to change their minds and that it had no “trouble discerning the path of the agency’s reasoning over time.”

Third, the Court rejected the Council’s claim that the Corps “simply deferred” to the City’s judgment rather than making an independent determination of the business park’s purpose. The Court disagreed, pointing out that the Corps’ initial project criticisms, which resulted in project changes. Only after the City modified the project did the Corps agree with the City’s point of view. Noting that the Corps has a duty to consider an applicant’s purposes when they are “genuine and legitimate,” the Court found the Corps’ action to be reasonable on this point.

In Center for Biological Diversity v. County of San Bernardino (2010) 184 Cal.App.4th 1342, the Court of Appeal, Fourth Appellate District, held that the County of San Bernardino violated the California Environmental Quality Act when it certified a final environmental impact report for an open-air waste composting facility unconnected to any external piped water supply system. The court noted deficiencies in the alternatives analysis and in the water supply analysis.

Infeasibility of environmentally superior alternative. Despite significant and unavoidable air quality impacts of the proposed open-air facility that could be substantially mitigated by an enclosure, the FEIR rejected the alternative of an enclosed facility as infeasible, relying on a memorandum prepared by an environmental consultant, who opined that the alternative was economically and technically infeasible. This case is the latest in a series of exacting opinions, mandating detailed and extensive analysis by experts that an alternative’s costs would render it economically infeasible. (See, e.g., Uphold Our Heritage v. Town of Woodside (2007) 147 Cal.App.4th 587 and Preservation Action Council v. City of San Jose (2006) 141 Cal.App.4th 1336.)

In this case, the court concluded that the “infeasibility” memorandum prepared by the consultant lacked substantiality for at least three reasons. First, the court was critical of the qualifications of expert, suggesting that the expert lacked the necessary expertise on compost facility financing to render an opinion. After noting that the memorandum contained no facts indicating such expertise, the court stated that the expert’s opinion “is at best an irrelevant generalization, too vague and nonspecific to amount to substantial evidence of anything.”

Second, the expert estimated the cost of an enclosed facility based solely on one other particularly high-priced enclosed facility in Rancho Cucamonga, when there was evidence in the record that similar facilities were proliferating in southern California and across the country. The court found that because the expert ignored all of these other facilities in calculating the costs of the alternative, “there is no meaningful comparative data pertaining to a range of economic issues.”

Third, the court found insufficient the report’s conclusions that the alternative would be financially infeasible because it would be 30 times more expensive than the proposed project. The court cited the increasingly familiar refrain, taken from CEQA case law going back to 1988: “The fact that an alternative may be more expensive or less profitable is not sufficient to show that the alternative is financially infeasible. What is required is evidence that the additional costs or lost profitability are sufficiently severe as to render it impractical to proceed with the project.” The expert’s memorandum did cite to other open air facilities operated by competitors in Kern County and Arizona and stated that the costs of this project must be roughly equivalent to those projects in order to compete, but the record apparently did not contain evidence of the costs of these facilities or the prices they charge. Moreover, the court was troubled by the fact that the record did not include evidence of transportation costs that could render a closer, but more expensive facility more competitive than a distant, less costly facility.

The court also rejected the FEIR’s conclusion that the facility was technically infeasible because the proposed site lacked utility connections and was more than one mile from the nearest electric lines. The court reasoned that there was no evidence in the record demonstrating that the costs of establishing such connections would render the alternative financially infeasible.

Deficiencies in the water supply analysis. The court also found the FEIR defective because it did not include Water Supply Assessment (WSA), which is required to be included in EIRs for certain kinds of projects. The project proponent argued that the proposed facility was not such a project because the facility would not use water in amounts roughly equivalent to 500 residential units, one of the triggers for a WSA. (Water Code, § 10912.) The court rejected this reasoning, even though the modest water demand for the project would be satisfied either by an on-site well or water imported by trucks. Water Code section 10912, subdivision (a), defines seven types of “projects” that trigger the need for a WSA. One of those, defined in subdivision (a)(5), includes a “processing plant … occupying more than 40 acres of land, or having more than 650,000 square feet of floor area.” Pointing to this language, the court rejected the project proponent’s argument that section 10912 applied only to large buildings, which were not present on the proposed site, or large water users equivalent to 500 residential units. The court noted that the dictionary defines a “plant” to include land as well as buildings, and that, within subdivision (a)(5), the Legislature included acreage as a factor separate from square floor area. The court therefore concluded that an open-air composting facility was a “project” under section 10912 if it met the acreage threshold of subdivision (a)(5).

The court also disagreed with Gray v. County of Madera (2008) 167 Cal.App.4th 1099, which had held that a WSA is only required if a project impacts a “public water system,” which is defined by statute as a “system for the provision of piped water” involving the “collection, treatment, storage, and distribution” of water for human consumption. The court in this case reasoned that Gray contained no analysis to support its holding and that an analysis of Water Code section 10910 indicates that, even in the absence of a public water system, a WSA is required. The court noted that section 10910, subdivisions (b) and (c)(4), require a city or county to “prepare the water assessment required by this part” if the city or county cannot identify a public water system supplying the relevant project, and subdivision (g)(1) requires a public water system, “or the city or county if either is required to comply with this act pursuant to subdivision (b),” to approve a WSA. Citing these elements of the statute, the court disagreed with Gray and found that, where a city or county cannot identify a third party public water system to serve a proposed facility meeting the definition of a “project” as that term is used in Water Code section 10912, the city or county must prepare a WSA even if the groundwater source involved is not connected to any larger physical “public water system.” By departing from the rule expressed in Gray, the court arguably expanded the range of circumstances in which a WSA will be required. This could lead to closer scrutiny of groundwater use in some cases.

On May 19, 2010, the Transportation Committee of the Sacramento Area Council of Governments (SACOG) released for public comment its draft of proposed greenhouse gas emissions reduction targets. This proposal is part of SACOG’s participation in a Senate Bill 375 target-setting process with the California Air Resources Board (CARB), Caltrans, and other metropolitan planning organizations in the State. SACOG proposes per capita reductions between 5 percent and 6 percent for 2020 and between 14 percent and 15 percent for 2035, as compared to a 2005 base year. SACOG’s Board of Directors will consider the draft reduction targets for approval in June 2010.

SACOG proposed these ranges as a balance between CARB’s directions to pursue “achievable” and “most ambitious” goals, in anticipation of CARB’s own release of regional targets for 2020 and 2035. In implementing SB 375, once CARB settles on these targets in September 2010, SACOG must prepare a Sustainable Community Strategy (SCS) that meets those targets for the Sacramento region. SACOG must further incorporate its SCS into the Metropolitan Transportation Plan for 2035 (MTP). While SB 375 contains provisions for streamlined review under CEQA, the new MTP/SCS will require some level of environmental analysis. Therefore, SACOG is also in the initial stages of preparing both an MTP/SCS and an attendant environmental impact report.

In preparing its May 19 proposal, SACOG evaluated seven greenhouse gas reduction options. SACOG has organized the draft reduction options into four “bundles”: land use measures, transportation system development, transportation system and demand management, and transportation pricing. The most basic reduction option is the current MTP. The other six options expand on the implementation of policies found in the adopted MTP, with the exception of Option 5, which would add significant new transportation pricing policies that are not currently included in the adopted MTP. A larger discussion of the policy options can be found on SACOG’s website at: http://www.sacog.org/mtp/2035/mtpupdate2010-11/GHG%20Handout%20Packet.pdf