Desperate to boost tax revenue and improve a grim jobs outlook, the state Legislature is exploring various ways to reform regulations that hinder business. One regulatory regime relevant to development projects is the California Environmental Quality Act.

Enacted in 1970, CEQA’s noble goal was to “afford the fullest protection to the environment” when local agencies consider approval of development and other projects. However, 40 years of experience tells us that CEQA has been stretched to cover every conceivable “environmental” issue, often by groups whose agenda is not environmental protection at all. The result – development projects shelved, infrastructure projects stalled and jobs lost.

Yes, CEQA reform is sorely needed, but reform must adhere to the KISS principle – Keep It Simple, Stupid.

While anyone not steeped in CEQA law may understandably believe that it should be relatively easy to identify which issues are “environmental” and should be reviewed in an environmental impact report prepared under CEQA, that task has been fraught with difficulty. Based on the Legislature’s edict to give the greatest protection to the environment, virtually no issue is beyond the pale of CEQA. For example, a few years ago, a Court of Appeal struck down an EIR prepared by a state agency, which was proposing to improve our State Water Project so water supply in Southern California would be more reliable. Yet, under the rubric of no good deed goes unpunished, the court concluded that bringing more water to the region could “induce growth,” which could lead to adverse environmental impacts, which were not studied adequately in the EIR. (Luckily, the California Supreme Court reversed that ruling.)

The ability to conceive of some “environmental” issue that may occur if some chain of future events occurs has turned even economic issues into environmental ones. Now, based on a case involving a Wal-Mart Supercenter, large retail and commercial projects are often required to analyze “urban decay” in their EIRs. Under this novel theory, such projects may be so successful that existing businesses may close down, which may lead to empty stores, which may lead to “blight,” which may cause aesthetic impacts (yes, an environmental issue).

And, of course, there is the issue du jour, global warming. While no doubt an important environmental issue, each development project and each city in the state now has to quantify a project’s projected increase in greenhouse gases and somehow determine if such an increase will significantly worsen global warming, even though the international community and our federal government has not answered that question. Indeed, while most cities took guidance from the California Air Resources Board on this issue, a court last month invalidated one of that agency’s key climate change regulations. On what ground? Failure to analyze all environmental issues attributable to reducing greenhouse gases!

Variety of plaintiffs

The potential for mischief in conjuring up a potential environmental issue has also led to an interesting array of plaintiffs in CEQA lawsuits. CEQA case law has held that virtually any person with a claimed interest in the environment has legal standing to sue under CEQA. At first that allowed neighborhood groups looking to block development to use CEQA to delay projects interminably. But now, even unions and competitors bring CEQA lawsuits against projects not to their liking.

The ease by which any person can bring a CEQA lawsuit based on an “environmental” issue supposedly not examined in an EIR often leads to litigation that can delay worthwhile projects for years. CEQA lawsuits can last one to three years (depending on appeals). If a defect in the CEQA document is determined, then the project permits are invalidated and the applicant needs to renew the entitlement process to “cure” that defect (and even the cure can be challenged in court). To ward off death by delay, project applicants are often forced to offer benefits to opposition groups that are not contemplated by CEQA at all, such as “community” benefits, project labor agreements and programs to remedy existing environmental problems.

These stories of CEQA abuse are not new, and every few years some California legislator proposes reform. But, in my opinion, reforms aimed at identifying which “environmental” issues should or should not be analyzed in an EIR, or identifying which entities are “legitimate” CEQA plaintiffs are doomed to fail. Those issues are too susceptible to differing fact patterns, which allow groups to argue that such CEQA reforms will deprive them of their day in court.

So, let’s focus on two simple reform ideas. One – the loser in a CEQA lawsuit pays the winning party’s attorneys’ fees. If a party’s “environmental” claims are so meritorious, then the lawsuit deserves to be heard by the courts. If not, then plaintiffs should face a claim for hundreds of thousands of dollars in legal fees. (Indeed, under current law, only a plaintiff can recover its attorneys’ fees, not the defendant!)

Number two: If a particular environmental impact (such as air, storm water ) is governed by a different set of regulations, then the project applicant’s compliance with those regulations should be sufficient under CEQA – no independent analysis or additional mitigation could be required in an EIR.

These two reforms would go a long way to bring CEQA back to its noble origin.

Ed Casey is a partner with law firm Alston & Bird in downtown Los Angeles.

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